Pandora made $80M in U.S. app store revenue in Q3, booting Netflix from the top grossing spot

Sarah Perez

In the face of fierce competition from Spotify and Apple Music, Pandora has been growing its in-app subscription revenues, according to new data from Sensor Tower. The streaming music service earned the number one spot on the chart of top grossing apps in Q3 2017, excluding games. It's the first time Pandora has held that position since the third quarter of 2015.

Fueling the music app's rise was this year's launch of its Premium tier, which arrived in March in invite-only mode before becoming broadly available to users in April.

Pandora Premium is the company's own take on on-demand music, offering a combination of the radio-like listening Pandora is known for, along with the ability to search out and play tracks on demand and add them to playlists. The service costs $9.99 per month, which is also the going rate for Pandora's rivals, Spotify and Apple Music.

In addition, Pandora offers a mid-tier service called Pandora Plus, which debuted in fall 2016. For $4.99 per month, users can skip and replay more songs, listen offline, and avoid advertising.

Pandora achieved its ranking as the number one app by revenue in the U.S. in Q3 by grossing $80 million during the quarter.

That pushed it ahead of Netflix, which has held the top ranking on this chart for several quarters. However, Netflix was still the number one app by revenue globally (again, excluding games) in Q3.

Pandora's $80 million figure also represents 142 percent revenue growth over the same quarter last year, when Pandora's estimated gross revenue was $35 million.

To be clear, Sensor Tower's look into app store revenue is only includes in-app spending, which doesn't paint a picture of Pandora's business as a whole. In addition to subscriptions, which can also be bought on the web, Pandora has a free tier powered by ads. That business grew its revenue 5 percent year-over-year as of Pandora's last earnings, while subscription revenue was then up by 25 percent.

Pandora's earnings reported in July were better than expected, following a quarter that saw a lot of chaos, including the exit of CEO Tim Westergren amid a company shakeup, and the infusion of $480 million from SiriusXM, after Pandora stopped shopping for a buyer.

The company is set to announce earnings today, with new CEO Roger Lynch delving into his plan for Pandora going forward. This may include a stronger focus on Pandora's radio business, Barron's reported in an earnings preview.

Analysts are expecting that Pandora lost 8 cents per share in the past quarter on revenue of $380 million, it also said.

The growth in non-game app revenue is not a trend that's unique to Pandora. Sensor Tower also found that worldwide consumer spend in non-gaming apps increased from approximately $1.7 billion during Q3 2016 across both Google Play and the iOS App Store, to reach $2.8 billion in Q3 2017.

App Annie had also previously reported record app revenue globally. Its total, which includes games, was nearly $17 billion.