Monday, October 3, 2016

What does it mean that SoundCloud's Annual Revenues are way up?

Written by Paul Resnikoff — SoundCloud managed to boost its top-line revenues by 43% in just one year, according to financial data exclusively shared with Digital Music News this morning. But is this company still bleeding cash?

The following is a developing story, based on SoundCloud financial information that we’re exclusively aggregating. We’ll (hopefully) have a lot more information on other financial data, including net losses and valuations, in the coming hours. Please check back (last updated 10:45 am PT).

SoundCloud is frequently criticized for posting unsustainable losses, year after year. But maybe this company is doing something right. According to preliminary details shared this morning by PrivCo, SoundCloud managed to amass revenues of approximately €24,865,000, or $27,919,665 according to current exchange rates.

The financial estimate represents a 43% year-over-year increase. The gain is probably driven entirely by advertising revenues, though other explanations may also emerge.

PrivCo, based in New York, tracks private company financials, as well as M&A and venture capital transactions. They’re insiders when it comes to this stuff, and they’ve agreed to share some data with DMN.

The revenue bump is potentially a great sign, though major questions still surround SoundCloud’s sizable annual losses. In 2014, the streaming music gorilla lost an astounding €39.1 million, or $43.9 million. That occurred against a lower revenue base of €17.35 million, or $19.48 million, a figure that has now increased substantially.

Back from the brink?

Not only that, SoundCloud’s financial auditor, KPMG, issued a warning to investors about possible financial calamities ahead. “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,” the auditor stated. “Therefore the Company and Group may be unable to realize its assets and discharge its liabilities in the normal course of business.”

Since that point, the Berlin-based audio company has inked deals with Universal Music Group and Sony Music Entertainment, a major step. The company has also initiated a subscription-based platform, Go, though it’s not clear anyone’s paying.

The latest financial data is emerging at a critical moment. Spotify is now considering a possible purchase of SoundCloud, at least according to a recent Financial Times article. SoundCloud, currently valued at $700 million, has drawn funding of roughly $204.5 million ($229.7 million). Bloomberg pegged the potential sale price at $1 billion over the summer.

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