Spotify has announced another quarter of record profits, following its first-ever price increase for Premium plans a year ago.
The Swedish audio streaming service reported an operating income of 266 million euros ($289 million) for the second quarter, a significant turnaround from a loss of 247 million euros ($268 million) the previous year. The company also saw a 14% year-on-year increase in monthly active users, reaching 626 million.
CEO Daniel Ek expressed enthusiasm about the company’s trajectory, stating, “It’s an exciting time at Spotify. We continue to innovate and demonstrate that we are not just a great product, but increasingly also a strong business.” He added that the pace of progress has surpassed even their own expectations, which is promising for the future.
Following the announcement of its better-than-expected earnings, Spotify’s stock rose nearly 14% in pre-market trading on Tuesday.
In June, Spotify disclosed plans to increase prices for its Premium services in the U.S., effective this month. Users with individual plans will see a $1 increase, bringing the total to $12, while Duo plans will go up by $2 to $17, and Family plans will increase by $3 to $20. This marked the first price adjustment in 13 years, averaging an increase of $1 across subscriptions.
Despite the price hikes, Spotify gained seven million net subscribers during the quarter, exceeding its previous forecast by one million.
Recognized as the leading audio streaming platform globally, Spotify users demonstrated the lowest likelihood of canceling memberships compared to other audio and video streaming services, according to a Bloomberg analysis.
However, the company’s financial performance has faced challenges in the past. In 2022, Spotify’s stock value dropped by over two-thirds as the company endured multiple quarters of operating losses. In early 2023, it announced a reduction of 600 jobs, followed by another cut of 1,500 positions, roughly 17% of its workforce, less than a year later.