SoundCloud records first profitable quarter

Earlier this year, the music streaming platform said it topped more than $200m in 12-monthly gross revenue in the fourth quarter of 2019. The latest figures were announced by Music Business Worldwide (MBW), which said that SoundCloud reported €147.6m ($166m) in revenues in calendar 2019, representing a 37% increase year-on-year.

This showed significantly faster growth than the prior year. In 2018, SoundCloud’s revenue increased by 19% year-on-year. Also in the same year, the company’s operating losses dropped by 28% to €23.8m from €32.9m. In 2017, the Berlin-based streaming platform was forced to downsize its staff to ensure business continuity. The company's total expenditure on wages and salaries also dipped from €34.5m in 2017 to €25.8m in 2018.

“With the end of 2020 now in view, we will have achieved our third consecutive year of accelerating revenue growth and our first profitable quarter, with substantial cash reserves to continue investing in SoundCloud,” the company’s CEO, Kerry Trainor, said.

Additionally, SoundCloud says it now boasts a catalogue of more than 250 million songs, up from the 200 million reported earlier this year. Spotify, Apple Music and YouTube Music currently host about 70 million tracks each.

SoundCloud has more than 12 million users, including musicians, podcasters and DJs, and about 80 000 of them are monetising their content directly via the company’s distribution service, Repost. The music sharing platform acquired 100% of the Repost Network for €9.36m in June last year. The company also achieved its highest monthly active users, daily active users, listening time, subscribers and advertising buy-in last year.

MBW says SoundCloud’s business model is divided into two segments, namely its ‘listener business’ and its ‘creator business’. The listener business refers to the advertising and subscription revenues generated by consumers using SoundCloud’s platform, whereas the creator business denotes the money paid by creators for tools and services – such as those offered by the SoundCloud Pro Unlimited tier, and those offered by Repost.

According to SoundCloud’s 2019 figures, its listener business produced €99.5m, while its creator business generated €48.1m, making the former segment responsible for 67% of the company’s total revenue while the latter accounted for 33%. In the previous year, the company’s creator business was responsible for 30% of revenues, while its listener business made up 70%.

Additionally, SoundCloud says that other key drivers of its performance last year included integrations with DJ software partners such as Serato, Virtual DJ, Dex 3, Native Instruments and Pioneer, among others. The partnerships made SoundCloud “the most widely integrated streaming service in DJ performance software and hardware”.

“While it is too early to predict the impacts on the financial year 2020, we have seen a true mix of tailwinds and headwinds – with strong growth in our creator products and our subscription business lines, along with weakness in our US advertising business which we expect to recover in step with the broader market,” SoundCloud said.

“With multiple years of consistent growth, and the additional capital raised earlier this year, SoundCloud is well-positioned to weather the anticipated impact to the business and continue a sustainable growth path in 2020.”

Read SoundCloud’s full 2019 annual Companies House filing obtained by MBW below.