UPDATE 1/6 | A Soundcloud spokesperson reached out to deliver this statement regarding this story:
SoundCloud filed its 2015 accounts with Companies House in December, and they are now publicly available on their site as of today. The accounts show that, in 2015, we were heavily focused on putting the necessary measures in place to build out our monetization model, including our consumer subscription service, SoundCloud Go, and roll-out of advertising on the platform. This meant investing in technology, people and marketing, as well as securing complex licensing agreements with key music industry partners. As such, the company remained unprofitable.
In 2016, we saw solid growth not only for the industry but for SoundCloud too. And we see this trend continuing throughout 2017. To date, we have successfully launched SoundCloud Go, our subscription service, and our ads business in eight markets, including the US, UK, Ireland, France, Australia, New Zealand, Canada and Germany. We are on a very positive path to achieving our aim of enabling all creators to be paid for their work, while also building a financially sustainable platform where our connected community of creators, listeners and curators can continue to thrive.
As 2017 begins, we’re just beginning to learn of Soundcloud’s 2015 year and the growth of the company. At first glance, one might call it a success. Charting a 21.6% growth in revenue, the company was able to stave off its demise for another year in order to strike major deals with the major music labels in 2016, as well as launch its premium subscription service.
However, the company still suffered a net loss of 30.9% to the tune of a staggering $54.22 million in 2015, according to Companies House. Soundcloud has not had a profitable year in at least three years, losing $15 million in 2013 and a staggering $60 million in 2014.
In October 2016, SoundCloud’s financial auditor KPMG issued this statement regarding the company’s future:
“The directors have concluded that the combination of the circumstances… represents a material uncertainty which may cast significant doubt upon the Company’s and Group’s ability to continue as a going concern… Therefore the Company and Group may be unable to realize its assets and discharge its liabilities in the normal course of business.”
With the news of 2015’s losses in plain view, SoundCloud founder and CEO Alexander Ljung said:
“The assumption of a successful launch of the new subscription service is the key element of [our] financial projections for the next three years,” Ljung began. “Whilst the directors believe that the Group will have sufficient funds to continue to meet its liabilities through 31 December 2017, the risks and uncertainties may cause the company to run out of cash earlier than that date, and would require the Group to raise additional funds which are not currently planned. These matters give rise to a material uncertainty about the Group’s ability to continue as a going concern.”
It was rumored late last year that Spotify might purchase Soundcloud for a whopping $1 billion, however that plan eventually fell through. Days ago, rumors began swirling that Google is now looking at an acquisition of the company, which would bolster its already vast music library in Google Play, for a more meager $500 million.
H/T MixMag
