Spotify has reported another quarter of record profits, marking a significant turnaround from last year when it raised the price of its Premium plans for the first time ever. In the second quarter, the Swedish audio streaming company posted an operating income of 266 million euros ($289 million), a notable improvement compared to a loss of 247 million euros ($268 million) during the same period last year. The platform also experienced a 14% annual increase in monthly active users, reaching 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,” said CEO Daniel Ek. He expressed optimism about their performance exceeding expectations, which he believes bode well for the future.
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 increase for its Premium users in the U.S., implemented this month. Individual plan users will see an increase of $1 to $12, Duo plan users will pay $2 more for a total of $17, and Family plan users will pay $3 more, totaling $20. This was the first membership cost increase in 13 years, with the last adjustment averaging $1 in July 2022.
Despite the price hikes, Spotify added seven million net subscribers in the quarter, surpassing its previous guidance by one million.
As the leading audio streaming service globally, Spotify users are reportedly less likely to cancel their subscriptions compared to users of other streaming platforms, according to a Bloomberg analysis.
However, the company’s financial journey has not always been positive. Spotify’s stock value fell by more than two-thirds in 2022 due to several quarters of operating losses. In early 2023, the company announced plans to lay off 600 employees, followed by another reduction involving 1,500 jobs, approximately 17% of its workforce, less than a year later.