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SoundCloud has been eyeing a sale — and actively pursuing initiatives internally “that would increase the valuation of the company” — since the second half of 2022, according to two former employees who spoke to Billboard on the condition of anonymity. Meanwhile, COO and CFO Drew Wilson is preparing to leave the company after nearly three years in the role, according to a staff memo obtained by Billboard. 

Sky News reported on Sunday that SoundCloud was planning to pursue a sale in 2024. This has been in the works “for some time,” one former employee tells Billboard. “A lot of decision making has been based on this.”

SoundCloud announced it was slashing 8% of its workforce last May — less than a year after a 20% cut — to achieve “profitability this year,” as CEO Eliah Seton wrote in an email to staff at the time. “The ambition to reach profitability was not just for the obvious reason of being profitable,” the former employee continues. “The bigger need was for this, to sell the company. The stakeholders have major investments; it’s time.” (SoundCloud previously secured a $170 million investment led by The Raine Group and Temasek in 2017, and an additional $75 million investment from SiriusXM in February 2020.) 

A rep for SoundCloud declined to comment. The Raine Group also declined to comment.

SoundCloud leadership had previously tossed around the idea — a best case scenario — of reaching a $2.5 billion valuation for the company, sources said. (The company likes to aim big: In internal meetings, executives also expressed a hope that one of the artists SoundCloud signed to deals in 2022 would have a major chart hit, one of the employees said; this has not happened.)

The more commonly cited valuation goal, the sources say, was around $1 billion. “There’s a billion-dollar-plus opportunity in front of us,” Tracy Chan, who joined SoundCloud as senior vp of creator in 2022, said at an all-hands meeting that year. One of SoundCloud’s former employees said most of the interest in the company came from private equity firms, not music companies. 

For comparison’s sake, when Square acquired TIDAL in 2021, the streaming service was valued at around $375 million. Though SoundCloud is not just a streaming service — it also provides tools to creators to help them distribute, market, and monetize music. Creator tools and services brought in more than $26 million for the platform in the first quarter of 2023, according to screenshots from an all-hands meeting shared with Billboard, nearly as much as subscriptions ($29.9 million).

Those screenshots indicate that SoundCloud had a gross profit of around $22 million in the first quarter of the year. But it spent around $4 million on marketing and another $23 million on staffing and general and administrative expenses, leaving it around $5 million short of breaking even. 

In May 2023, SoundCloud aimed to reduce that headcount cost through a second round of cuts. (Profitability has been a goal since 2022, if not before: “Investors are looking for companies that are a little more stable right now,” former CEO Michael Weissman told staff during an all-hands meeting that followed the first round of layoffs in 2022. “Investors are looking for companies that are very profitable.”) The company said it finally reached profitability in December. 

“Now that we have achieved profitability and are making progress on our strategic plan, we have nothing but opportunity in front of us,” Seton wrote in an email to staff on Monday (Jan. 8) that was obtained by Billboard. “As we have mentioned in previous All Hands [meetings] and AMAs, we will explore a range of options for our capital structure, but there is nothing to report right now, nor will there be any time soon.”