Soundcloud has posted its first profitable quarter in company history this year, as revenues jumped by $165.7 million up 37 percent year-over-year. The company’s quarterly revenues went up 17 percent year-over-year in Q1, while in Q4, they went up by 43 percent year-over-year. Their operating losses also went down significantly this year by a massive 28 percent ($26.7 million).
This success is massive considering the fact that the company was nearly collapsed in 2017. Soundcloud was eventually able to stay afloat that year thanks to $170 million investment.
The company’s financial success is due to quite a few factors. Despite the platforms smaller profile compared to giants such as Apple Music and Spotify, it has a massively large audio library, consisting of 250 million tracks, versus the other platform’s 70 million. The company’s business model is also split uniquely into two camps: its Listener Business and its Creator Business.
The Listener Business handles the advertising and subscription revenues generated by consumers using the Soundcloud platform, while its Creator Business handles the money paid by creators for tools and services, such as its popular Soundcloud Pro Unlimited accounts, and services brought by Repost. Repost, which is owned by Soundcloud, offers independent performers distribution to multiple platforms, such as Soundcloud, Spotify and Apple Music, with additional services like playlist pitching and promotional tools, for $30 a year.
While the Listener Business makes up 67 percent of Soundcloud’s revenues last year, its Creator Business is on the rise, pulling in 33 of revenue this year as opposed to 30 percent last year. Repost is also reportedly a big factor as to Soundcloud’s financial success.
“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.” Soundcloud CEO Kerry Trainor told Music Business World.
Soundcloud also has additional capital, which stems from the $75 million raised by its investor SiriusXM. The company has said that the COVID-19 pandemic has not affected their growth that dramatically so far, and are planning on seeing further growth in the future.
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