Revenue from mobile ads also grew faster than listening on mobile devices, easing a key investor concern about the company's ability to make a profit from the booming segment.
Shares jumped $2.42, or 20.6 percent, to $14.15 in after-hours trading. The last time Pandora hit $14 was Jan. 27, 2012.
Kennedy, 53, has led the company as chairman and CEO since July 2004, will step down after a successor is found.
"As part of our board discussions of the road that lies ahead, I reached the conclusion and advised the board that the time is right to begin a process to identify my successor," Kennedy said in a statement.
The company also said Thursday that it lost $14.6 million, or 9 cents per share, in the three months through Jan. 31. That compares with a loss of $8.2 million, or 5 cents per share, a year earlier.
Excluding the cost of compensating executives with stock, the adjusted loss came to 4 cents per share, slightly better than the loss of 5 cents per share expected by analysts polled by FactSet.
Revenue grew 54 percent to $125.1 million, more than the $122.8 million Wall Street expected.
Revenue from mobile devices grew 111 percent to $80.3 million, outpacing the growth in mobile listening of 70 percent.
The company's ability to sell ads on mobile devices is a key concern because royalty costs rise every time a listener plays a song. Those concerns grew last week, when the company said it would cap free listening on mobile devices at 40 hours per month, suggesting it was having trouble with rising costs.
The company said that its total listener hours climbed 53 percent to 4.05 billion hours compared to the same period a year before. That same measure increased by 42 percent for February to 1.38 billion.
Pandora also forecast an adjusted first-quarter loss of 10 to 13 cents per share. It expects revenue of $120 million to $125 million for the period. Analysts had forecast a loss of 10 cents per share on revenue of $119 million.
The company said full year adjusted earnings could range from a loss of 5 cents per share to a gain of 5 cents per share. It expects revenue of $600 million to $620 million. Analysts forecast a loss of a penny per share on revenue of $602 million.