Massive loss in 2015 may cause SoundCloud to “run out of cash”
SoundCloud finds itself in a precarious position now that streaming services have become the most prominent means of consuming music. The Berlin-based company launched its paid subscription service —a critical move for the site’s continued viability — in 2016 and was reportedly looking to sell, with Spotify emerging as an early contender before dropping out. Plus yesterday’s report suggesting Google is interested in absorbing the site as well.
In spite of this, the site is still reeling from a 2015 fiscal year that, despite a 21.6% ($22.3 million) increase in gross revenue, still saw the company suffer a net loss of 30.9% or $54.3 million, according to a report from the UK’s Company House. Co-founder Alexander Ljung released a statement in conjunction with the report in which he revealed how heavily dependent the site is on the success of its paid subscription model and that, while the company expects to be able to cover its liabilities through the end of 2017, uncertainty and volatilities may cause the company to run out of cash sooner. He went on to say, “These matters give rise to a material uncertainty about the Group’s ability to continue as a going concern.”