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To Our Stockholders As I approach my two year anniversary as Pandora’s Chief Executive Officer, I wake up every day thinking how fortunate I am to be at Pandora. Our organization is stronger than ever and driving a powerful vision for the future of music and radio. Our long term vision to be the effortless source of music for billions guides our effort to make the future of music highly personalized to each listener’s tastes, provide exposure to the broadest possible number of artists and genres, and offer a targeted and efficient platform for advertisers. We made significant progress towards making this vision a reality in 2014. Pandora continued to deliver strong financial and operational growth while establishing new initiatives reflecting our unique leadership position in the music industry. At the end of calendar year 2014, listener hours grew to 20.03 billion from 16.70 billion in 2013, and active users for the 30-day period ended December 31, 2014 increased to 81.5 million. Non-GAAP total revenue for the 12 months ended December 31, 2014 reached $906.6 million, an increase of 40% from the prior year; revenue growth continued to be driven by mobile, where we grew total Non-GAAP mobile ad revenue 52% to $699.1 million. Monetization from advertising on mobile and other connected devices reached another record high RPM (revenue per thousand hours) in Q4 of $44.37 for the second year in a row, an increase of 18.8% from the same period last year. As one of the few media companies operating at scale across multiple platforms, we have an enormous market opportunity before us and multiple opportunities for growth. Pandora is uniquely positioned to capture growth from both the $20 billion plus US digital advertising market and the $15 billion plus US radio business as we continue to gain market share and expand meaningfully into local advertising markets once dominated by terrestrial radio. In fact, by the end of 2014, we had grown local advertising 124% to $152.9 million year-over-year. During the same time, according to our estimates, which include third party data, Pandora’s share of all U.S. radio listening was 9.7%, up from 8.6% a year earlier. For our listeners, we deliver a highly personalized experience driven by our proprietary Music Genome Project. In 2014, tens of millions of listeners actively engaged with Pandora, and we now have over 7 billion stations launched and 50 billion pieces of thumb feedback. Thumb feedback helps us further hone our playlist technology and provides insights we can leverage to continue delivering music people love. We also introduced a refreshed user interface and features like recommended stations, which increased thumb feedback by 19% and station creation by 20%. For our advertising partners, we are transforming how marketers engage their customers and delivering true return on investment. With 37 local offices and over 110 local salespeople, we are well-positioned to expand our share of the $15 billion plus US radio business . In terms of digital revenue opportunities, we are positioning Pandora to lead the transition in what we see as an inevitable shift to mobile programmatic buying. People will increasingly use their mobile devices for e-commerce, and advertisers are sure to follow – looking for high- engagement properties on mobile. As comScore data shows, Pandora is number one in the United States with regards to time spent per visitor on mobile, and with this top position, accurate targeting, and brand-safe environment, we are well-positioned to capitalize on this shift. For music makers, we accelerated our ongoing efforts to be an indispensable partner. In addition to being the highest paying form of radio to artists and writers – and growing – Pandora also has proven promotional impact – helping generate additional revenue for artists off of our platform. In 2014, we signed direct deals with Merlin and BMG, and more recently in 2015 with Naxos. We continued to further connect our 80 million plus listeners with their favorite artists, and vice versa. The launch of the Artist Marketing Platform (AMP) provided music makers with unprecedented data and information to strengthen their connections with fans. But this is just the beginning. In 2015, we will invest heavily in the development of additional initiatives, and you will see us working collaboratively with the industry to build and strengthen partnerships of mutual benefit. We believe our future will include more direct licensing arrangements with an expanded group of copyright holders and we will continue to pursue win-win licensing arrangements with labels and publishers. The majority of the royalties we pay to license music in the United States are based on rates set by the Copyright Royalty Board, or the CRB, and their ruling determining the rates for the next five years – 2016 through 2020 - will come near the end of 2015. While there may be some inherent investor uncertainty about Pandora until that time, we are very confident our position is well represented in the CRB proceeding and that it will result in a reasonable outcome. I see the year ahead as a critical inflection point where we are investing strategically in order to extend our leadership position for years to come. 2015 is not a year of caution. It is a year of conviction. In the coming year, you will see Pandora move decisively and assertively to capture the enormous market opportunity before us. We have already assembled the best combination of people, technology and content in our industry, and we’re entering 2015 from a position of strength. We will not be distracted from our mission to unleash the infinite power of music, and we will be laser-focused on advancing our key strategies. I believe we are extremely well-positioned to succeed on all of these fronts. This company has proven to be incredibly resilient in its history, and I am confident that no matter what challenges we might encounter, we will overcome them. We know we can, because we have what it takes: scale, data, technology, relationships, and people with talent and passion like no one else. Sincerely, Brian McAndrews Chairman, CEO & President Pandora Media Inc. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-35198 Pandora Media, Inc. (Exact name of registrant as specified in its charter) Delaware 94-3352630 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2101 Webster Street, Suite 1650 Oakland, CA 94612 (Address of principal executive offices) (Zip Code) (510) 451-4100 (Registrant’s telephone number, including area code) Securities registered pursuant to section 12(g) of the Act: Title of each class Name of each exchange on which registered Common stock, $0.0001 par value The New York Stock Exchange Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No The aggregate market value of the voting common stock held by non-affiliates of the registrant as of June 30, 2014 (the last business day of the registrant's most recently completed second quarter), based on the closing price of such stock on The New York Stock Exchange on such date was approximately $4,656 million. This calculation excludes the shares of common stock held by executive officers, directors and stockholders whose ownership exceeds 5% outstanding at June 30, 2014. This calculation does not reflect a determination that such persons are affiliates for any other purposes.

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