Financial Report: Soundcloud Reported Prolonged Losses, With 2014 Loss of $44 Million
Soundcloud has released its financial report that revealed the music streaming service's 2014 loss of $44 million. Combined with the result from 2012, the company has lost more than $85 million dollars in three years.
According to Billboard, the company's revenue actually shows a substantial growth of 53.9 percent, which brought $19.7 million to the company's financial. However, the company's expenses were far bigger than that number. In total, Soundcloud's expenses in 2014 alone reached $63.8 million, about three times bigger than the income.
The large expenses are mostly due to significant increase in administrative expenses. Expenses for staffs to develop and market the service including employee wages are up 67.8 percent to $54.1 million. Other expenses comes from other costs including cost of sales.
Soundcloud founder and CEO Alexander Ljung says that the investors remain supportive amid the huge losses the company faces year after year. He stated that they are optimistic that investors will continue to back them up because Soundcloud is one of the biggest music platforms in the world, and they're growing fast. The company claim that they have over 18 million music creators using the platform and 175 million monthly active listeners.
Ljung also acknowledged that to keep going, the company will need another round of funding. In the wake of the large losses, the company's business plan also stated that further capital investment will be required in the next 12 months.
According to Factmag, Soundcloud has got $77 million funds from investors last year. The company received backings from big names including Union Square Ventures and Kleiner, Perkins, and Caufield & Byers. However, if the company relies only on investments and revenue income, it's unlikely that they will achieve a positive cash flow.
The company stated that it expects losses for another three years as it strive to improve the concept and systems of financing. Complete Music Update reported that Soundcloud is trying to launch an advertising set-up and also a subscription service in its platform. The company has been in contact with music labels to make that happen and some major labels including Universal Music Group is on board.
Soundcloud is experiencing undoubtedly significant loss of $44 million in 2014 and a combined amount of $85 million between 2012 and 2014. The report for 2015 has not been released, but the company already expect another losses for the next three years. However, they remain optimistic that the business could grow with several strategy to increase income including advertising set-up and paid subscription service.