SoundCloud’s corporate structure is somewhat unusual: it began life as a German startup, then registered in the UK. It may not be a public company, but for many years now it has been big enough (in revenue terms) to have to file full accounts with Companies House in the UK, which are then published.
SoundCloud’s financials for 2020 were published this week, revealing that the company’s revenues grew by 31% to €193.5m (around $219.6m). “Total revenue exceeded expectations and our operating losses were lower than initially planned,” explained the company. So, it’s not yet profitable, but operating losses fell from €26.2m in 2019 to €15.4m in 2020.
That’s part of a longer-term move towards operational profitability for SoundCloud. Between 2010 and 2016 its annual operating losses grew rapidly, peaking at €70.5m in 2016. That trend reversed in 2017 – the year in which a new CEO, former Vimeo exec Kerry Trainor, was appointed in August – with the losses shrinking every year since.
The latest financials also show the split between revenues from SoundCloud’s streaming business (ads and listener subscriptions) and from its services for creators. The former grew by 24.8% to €175.1m in 2020, while the latter – arguably SoundCloud’s bigger strategic focus now – grew by 156.5% to €18.4m. So, much faster growth, if still a minority (just over 9.5%) of the company’s total revenues.
One final note: SoundCloud is thinking about acquisitions. “Having seen several mergers and acquisitions in our industry, we also see an opportunity in the current consolidation activities within the wider industry,” is how its filing put it. “Management continues to monitor those opportunities closely and reserves the right to react quickly to opportunities arising.”
The key question, of course, being whether those opportunities are as a buyer or a seller. As a growing business that raised $75m from selling a minority stake to US satellite radio firm SiriusXM two years ago, SoundCloud should have the capability to swoop for a startup or two.
However, in the current market its combination of DSP and distributor could also make it ripe for being swooped upon – with more leverage in any such transaction than it had at the peak of its financial troubles in 2017.
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