Soundcloud may run out of cash before the end of 2017, if the company’s subscription service SoundCloud Go isn’t as successful as they hope.
That’s the story that has come out of recently revealed filings from the music streaming company that show Soundcloud lost $52M in 2015 as it geared up for the launch of the new service in the U.S., U.K. and Germany in 2016. The company sees the losses as necessary to launch that service and is pinning their hopes of remaining solvent on the success of the $9.99/month tier.
“The assumption of a successful launch of the new subscription service is the key element of [our] financial projections for the next three years,” said co-founder Alexander Ljung in a Director’s report obtained by Music Business Worldwide “[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.”
Ljung didn’t sugarcoat the fact that SoundCloud could run out of cash should their projections be far off.
“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,” he said. “These matters give rise to a material uncertainty about the Group’s ability to continue as a going concern.”
It’s not all doom and gloom, however. Soundcloud did see a 22% increase in revenue to $22M in 2015, and that likely grew along with the rest of streaming music in 2016. Though that all remains to be seen and its entirely possible that their net losses grew along with it.
Of course, none of this will matter if the company gets bought out by one of the giants like Google and Spotify who are rumored to be interested in the company.
