On October 22, Pandora (NYSE: P) had good news and bad news to share. The good news – revenue was up 30% or more in every category, and the number of listeners and listener hours were up slightly over the same period last year. The bad news – Pandora missed its revenue projection by $1.4 million, driving down stock prices by 20% by the end of the day, a loss of $85.9 million, according to TechCrunch.* *

Pandora had previously offered guidance that estimated third quarter revenue between $310 and $315 million. Pandora fell within that range. The stock dive delivered an unexpected blow to Pandora who managed to survive and still grow after the anticipated hit following Apple’s June entrance into the streaming music market. Brian McAndrews, Pandora’s chairman and CEO, addressed the competition in its earnings call.

“This was obviously a unique quarter in the streaming music business. The June 30^th launch of Apple Music with its 3-month free trial, as well as significant category spending and trial offers across multiple players, brought increased focus to the broader on-demand category during the period. As we discussed on our Q2 call, we expected some short-term impact to our audience growth as listeners tried this highly-promoted new service,” McAndrews said.

“I am pleased to stay that, given the scale of press and consumer attention on this launch, the impact on our active users and listening hours was muted and was, in fact, consistent with what we experienced during the launch of Apple’s radio service in 2013…in an evolving marketplace, consumers try new technologies and experiment with other services, and we would naturally expect ebbs and flows in active users and hours as we grow our category leadership,” he added.

McAndrews wrapped up his thoughts in what he feels was a successful quarter this way:

“In summary, Pandora exited Q3 with strong financial results. In a quarter where a large new entrant came into the music streaming landscape and over a hundred million dollars in combined marketing was spent across the sector to drive awareness of a multitude of offerings, Pandora more than held its own for users and hours growth. We aggressively invested to deliver long-term growth and cement Pandora’s leadership in music. We believe our acquisition of Ticketfly will be truly transformative, extending our long-standing strength in music discovery to the large and fast-growing world of live events.”

Pandora’s third quarter 2015 highlights include:

• Total revenue $311.6 million, a 30% increase, year-over-year
• Advertising revenue $254.7 million, a 31% increase, year-over-year
• Total mobile revenue $255.2 million, a 36% increase, year-over-year
• Local advertising revenue $63.5 million, a 52% increase, year-over-year
• Total RPMs $60.52, a 26% increase, year-over-year
• Ad RPMs $56.84, a 28% increase, year-over-year
• 1 million active listeners, a 2% increase, year-over-year
• 14 billion total listener hours, a 3% increase, year-over-year
• 8 million total multi-platform unique visitors in Sept. 2015
• Pandora estimates its share of all U.S. radio listening is 9.49%, compared to 9.06% last year.
• comScore’s Sept. Mobile Metrix report ranked Pandora as the #1 mobile service in the U.S. in terms of average minutes per user – more than Facebook.

Despite the investors’ lack of faith in Pandora, the company put forth significant efforts in the third quarter to engage its audience and attract new listeners, including the following:

• On Sept. 9, nearly 30 million listeners tuned in for Listener Love Day to celebrate Pandora’s 10-year-anniversary.
• Increased its marketing spending to offset the impact of Apple Music
• Expanded direct marketing activities, including the launch of a new brand campaign – “the next song matters” – across multiple media channels, including television
• Acquired Ticketfly which uses technology to make it easier to discover events, buy tickets and share events with friends

In its fourth quarter guidance, Pandora expects quarterly revenue between $325 and $330 million, and year-end revenue to range between $1.153 billion and $1.158 billion, not including financial results from Ticketfly.

Insider Take: The numbers speak for themselves. Pandora held its own during a very competitive time, reaching its own projections and exceeding revenue goals across the board. Unfortunately, investors reacted quickly – too quickly perhaps – to punish Pandora for what seems to have been a successful quarter. The investors’ opinions reflect their own bottom line, even if it doesn’t match Pandora’s financial statements or internal assessment. In its analysis of the earnings report, TechCrunch says Pandora is having a hard time staying in the game, with services like Spotify catching up (Spotify has almost 75 million users) and Pandora’s stagnant growth.

We’re not sure we agree. Yes, Spotify is catching up, but Spotify, Pandora, Apple Music, Tidal and other streaming music services all have different features and price points, and there is crossover among music lovers who listen to, and perhaps subscribe to, more than one streaming music service. Despite the launch of Apple Music, Pandora still grew its listener base – modestly, yes, but it still experienced growth.

To regain their investors’ faith, Pandora will have to step it up in the fourth quarter to not only match its projections, but to exceed them. Apple Music might be able to help with that, as its three-month free trial period ends, and users either convert and subscribe or drop off. Regardless, investors expect more from Pandora.