Spotify has announced another quarter of record profits, marking a significant turnaround following its first-ever price increase for Premium plans last year.
The Swedish audio streaming platform reported an operating income of 266 million euros ($289 million) in the second quarter, a stark contrast to a loss of 247 million euros ($268 million) from the previous year. Monthly active users also saw a notable increase, growing 14% year-over-year to reach 626 million.
“It’s an exciting time at Spotify. We keep on innovating and showing that we aren’t just a great product, but increasingly also a great business,” stated CEO Daniel Ek. He expressed optimism about the company’s future growth, noting that their progress has surpassed their own expectations.
Following the release of its better-than-expected earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price hike for its Premium services in the United States. Starting this month, individual users will see an increase of $1 to $12, Duo plans will rise by $2 to $17, and Family plans will go up by $3 to $20. This marked the first increase in membership costs in 13 years, averaging an additional $1 last July.
Despite these hikes, Spotify successfully added seven million net subscribers during the quarter, exceeding its earlier guidance by one million.
As the most popular audio streaming service globally, Spotify’s user base is noted to be the least likely to cancel subscriptions compared to other major audio and video streaming competitors, according to a Bloomberg analysis.
However, Spotify has faced financial challenges in the past. In 2022, its stock plummeted by more than two-thirds due to several quarters of operating losses. In response, the company announced a workforce reduction of 600 employees in January 2023, followed by a further cut of 1,500 jobs, which constitutes approximately 17% of its total staff, less than a year later.