Pandora will lay off 7% of its U.S. workforce, excluding workers from Ticketfly, by the end of the first quarter this year.
Pandora said the move was made to increase operational efficiency.
"While making workforce reductions is always a difficult decision, the commitment to cost discipline will allow us to invest more heavily in product development and monetization and build on the foundations of our strategic investments," Tim Westergren, CEO of Pandora, told investors in a letter released ahead of the company's Q4 earnings.
Mr. Westergren said Pandora will leverage its analytics platform and ad-insertion capabilities to drive additional revenue. The music-streaming platform added it expects to beat guidance for the first quarter ending Dec. 31 through increased in-app promotions, ad placements and concert recommendations.
Pandora has been fending off reports of it being a possible takeover target amid increased competition from the likes of Amazon and Apple Music.
Last October, the company launched a marketing campaign coupled with a new logo as part of a broader plan to increase the number of paid subscribers for its Pandora Plus offering to 11 million by 2020. Pandora said Thursday that it's captured 4.3 million paid subscribers, meaning it will need to add 150% more paid users to achieve its goal.
Pandora Plus is an ad-free experience allowing users to replay music, skip as many songs as they'd like and stream even when they're offline for a monthly fee of $4.99. Pandora Plus, which was introduced in September, is an improved and rebranded version of Pandora One, which debuted about eight years ago.
Additionally, Pandora said it wants to increase its non-paid user base to 110 million by 2020, a 41% increase from numbers shared with Ad Age in October.
The company is working with data management platform Krux and programmatic partner DataXu to run a highly targeted marketing campaign to help it achieve its goals. By using data it has on listeners, Pandora is showing a sequence of ads for its ad-supported and Pandora Plus offerings as it finds consumers across paid channels as well as its own email messages, mobile push notifications and in product messaging, the company said.
Later this year, Pandora will also launch Pandora Premium, which is more akin to Spotify or Apple Music.
The company saw revenue of $351.9 million during the third quarter of 2016, up 13% year-over-year. Advertising revenue came in at $274 million, up 7% when compared with the same time last year.