In 2015, the losses of SoundCloud grew faster than its revenues. The company has admitted that its subscription service has flopped and funding may run dry this year. In 2015, the revenues of SoundCloud grew by 21.6% to €21.1 million (US$22 million) but its net losses increased by 30.9% to €51.22 million (US$52 million).
In spite of its financial woes, SoundCloud remains to be lucrative for its employees. Headcount grew by 25% in 2015 from 236 to 295 employees. About €26.77 million (US$28 million) was spent by the company on wages and salaries – up by 49% year-on-year. The average annual salary reached €90,729 (US$95,000) up by 19% from the average wages paid in the past year.
SoundCloud’s financial projections for three years were based on the assumption that there will be a successful launch of its new subscription service. It was a financial risk that can seriously affect the operating results and cash flow of the company but risks have to be undertaken in business. Occurrence of risks is bound to seriously affect the group’s ability to generate enough cash that will cover its expenditures and could require the Group to raise additional funds which have not been planned for.
Directors believe that the Group will be able to raise sufficient funding in order to meet its liabilities until December 31, 2017but the risks and uncertainties could cause the company to run out of cash earlier than said date. There is so much uncertainty regarding the ability of the Group to continue.
Earlier this week, there were high level rumours that Google was thinking of acquiring SoundCloud after Spotify has decided to walk away from a possible deal. There was also confirmation that three major music companies that include Universal, Warner and Sony all own stakes at SoundCloud.
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