The world’s biggest music streaming service, SoundCloud, has announced on Thursday that they have enough cash to last until fourth quarter even after laying off 40 percent of their staff. With competitors such as Apple (NASDAQ: AAPL), Spotify, and Amazon (NASDAQ: AMZN), SoundCloud is different where they rely more on amateur musicians. 3 years ago, their audience of 175 million is lacking compared to now with rivals such as Spotify’s large base of paying subscribers and Apple and Amazon’s subsidizing music services. SoundCloud never released how many paying subscribers that they have and also launched a budget subscription package last month hoping to persuade more listeners to convert from the free service offered.
Announced last week, SoundCloud fired 173 staffers and closed their London and San Francisco offices to focus on New York and Berlin. As a result, this layoff only saved the company enough cash to last until the fourth quarter. They are confident that this move will lead to their profitability and ensure long term viability. However, financial problems that will soon arise will definitely take up a lot of management’s time in trying to raise more money.
In March, SoundCloud raised $70 million in debt from Ares Capital, Kreos Capital, and Davidson Technology to meet their expected 2.5 times year on year revenue growth in 2017. Later in June, the firm raised $100 million from a group of investors such as Twitter which valued the company around $700 million. Co-founder Alex Ljung announced that SoundCloud is now fundraising with rumors trying to raise to $250 million.