SoundCloud is closer to financial disaster than previously thought, according to new financial filings. This comes at a time when the streamer, which has supported the careers of many indie musicians, is hoping to sell to a contracting group of potential buyers.
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According to a new UK financial filings, SoundCloud’s net losses accelerated 31% to $52 million in 2015, even as revenue grew 21.6% to $22 million. All of this was prior to the launch of its paid streaming platform, which while offering new revenue opportunities, also brings growing payments to labels and artists.
Even more telling was the accompanying report from SoundCloud co-founder Alexander Ljung (bold added):
“The assumption of a successful launch of the new subscription service is the key element of [our] financial projections for the next three years… [This] bears financial risks regarding the operating results and cash flows of the group.
“The occurrence of these risks can seriously affect the ability of the group to generate sufficient cash to cover the planned expenditures and could require the Group to raise additional funds which have not yet been agreed.
“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.”
Will Google Save SoundCloud?
In Tuesday, we reported that Google was interested in buying SoundCloud for $500 million, half the reported $1 billion asking price. Both Spotify and Twitter had eyed SoundCloud in recent months, but walked away before making an offer.