Spotify announced a record profit for the second quarter, marking a significant turnaround after it raised Premium plan prices for the first time in history last year. The Swedish audio streaming platform reported an operating income of 266 million euros ($289 million), recovering from a loss of 247 million euros ($268 million) during the same period last year. Additionally, the company saw a 14% increase in monthly active users, reaching 626 million.
CEO Daniel Ek expressed optimism, noting the company’s innovation and strong performance have exceeded expectations, indicating a promising future for Spotify. Following the positive earnings announcement, Spotify’s stock surged almost 14% in pre-market trading on Tuesday.
In June, Spotify confirmed it would increase subscription fees for its U.S. Premium users starting this month. Individual plan subscribers will see a $1 increase to $12, Duo plan users will pay $2 more ($17), and Family plan users will face a $3 rise ($20). This marked the first membership cost increase in 13 years, with the previous average hike of $1 occurring last July.
Despite the price hikes, Spotify successfully added seven million net subscribers during the quarter, surpassing its prior projections by one million. According to a Bloomberg analysis, Spotify holds the title of the world’s most popular audio streaming service, with users being the least likely to cancel their memberships compared to other streaming platforms.
However, the company has faced significant challenges in the past. In 2022, Spotify’s stock dropped by more than two-thirds as it dealt with multiple quarters of operating losses. In response, the company announced layoffs of 600 employees in January 2023, followed by a further reduction of 1,500 jobs, amounting to roughly 17% of its workforce.