Spotify has announced a new record in profits for the second quarter, marking a significant turnaround from last year’s financial losses. The Swedish audio streaming service reported an operating income of 266 million euros ($289 million), in contrast to a loss of 247 million euros ($268 million) during the same period last year. Monthly active users increased by 14% year-over-year, reaching a total of 626 million.
CEO Daniel Ek expressed enthusiasm about the company’s progress, stating, “It’s an exciting time at Spotify. We keep innovating and proving that we’re not only a fantastic product but also a strong business.” He added that the company’s development has surpassed even its own expectations, indicating a promising outlook for the future.
Following the earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price increase for its Premium subscription service in the U.S. Starting this month, individual plan users will now pay $12 per month, an increase of $1, while Duo plan users will now pay $17, up by $2, and Family plan users will see their fees rise by $3 to $20. This marked the first price hike in 13 years, with an average increase of $1 last July.
Despite the price hikes, Spotify successfully gained seven million net new subscribers in the quarter, exceeding its own forecast by one million.
As the leading audio streaming platform globally, Spotify boasts a low cancellation rate among users compared to other audio and video streaming services, according to a Bloomberg analysis. However, the company faced considerable challenges in the previous year, with its stock losing over two-thirds of its value in 2022 due to a series of operating losses. To cope with these financial difficulties, Spotify announced layoffs of 600 employees in January 2023 and subsequently cut 1,500 jobs, approximately 17% of its workforce, less than a year later.