Internet radio company Pandora stock took a beating today in after-hours trading due to dismal fiscal year 2013 Q3 earnings results.

On the surface, it appears that Pandora is doing well, as it posted $120 million in revenue for the quarter, up 60 percent from the same period last year. It’s mobile revenue more than doubled compared to last year at $73.9 million, and its listener hours were also up, reaching 3.56.

But what shareholders are taking issue with is the exuberant amount of money Pandora is spending to maintain its library of licensed popular music, which is preventing the company from once again turning a profit.

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Pandora is also predicting a rough FYQ4, which makes its overall year look bad. The company expects a loss of 9 cents to 12 cents per share on revenue of $422 million to $425 million for the fiscal year. That’s off from Wall Street’s expectations of a 6 cent loss on revenue of $429.3 million.

The earnings call is beginning now, and we’ll update this post with new commentary from the executive team on what it plans to do to remain a viable business going forward.

Update: Pandora CEO Joe Kennedy said the disappointing FYQ4 (and fiscal 2013) guidance comes from an anticipation that advertising spending will be done. This, he attributes to a number of reasons, including the impending fiscal cliff, the lack of political campaign spending, and the market generally slowing down for the last quarter after the holiday shopping blitz.

But shareholders are looking for any excuse to bail on Pandora, even if all of those factors mentioned above are valid reasons for lower revenue. Kennedy’s other talking point, which several people tend to agree with, also probably didn’t exactly restore confidence in shareholder.

During the call, Kennedy also reiterated his position that music licensing royalties are the biggest problem for the company. (It’s the same position he took when speaking at a Congressional hearing on the reform of copyright licensing reform last week, as VentureBeat reported.) With Pandora paying out over half its revenue in music royalty fees, it leaves little room for profit, especially when these fees increase over time. The solution, he said, is for Congress to intervene by giving Internet radio stations a rate that’s comparable to satellite, cable, and the traditional radio businesses.

But since that argument is largely dependent on swaying congress, you can imagine why shareholders wouldn’t be very confident.

Key stats at a glance:

  • 3Q13 total revenue of $120.0 million grew 60 percent year-over-year
  • 3Q13 total mobile revenue of $73.9 million grew 112 percent year-over-year
  • 3Q13 total listener hours of 3.56 billion grew 67 percent year-over-year
  • Active users reach 59.2 million, growing 47 percent year-over-year