Spotify has announced another quarter of record profits, following its historic price increase for Premium plans last year.
The Swedish audio streaming giant reported an operating income of 266 million euros (approximately $289 million) for the second quarter, a significant turnaround from a loss of 247 million euros ($268 million) in the same period last year. Monthly active users surged 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed optimism about the company’s trajectory, stating, “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. We are doing so on a timeline that has exceeded even our own expectations. This all bodes very well for the future.”
Following the earnings report, Spotify’s stock saw an increase of nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced price hikes for its Premium users in the United States, effective this month. Individual plan subscribers will now pay $12 (an increase of $1), Duo plan subscribers will see their fees rise by $2 to $17, and Family plan costs will increase by $3 to $20. These adjustments were the first membership cost increases in 13 years, with an average increase of $1 last July.
Despite the price raises, Spotify added seven million net subscribers during the quarter, outperforming its previous guidance by one million.
As the world’s leading audio streaming service, Spotify boasts a loyal user base that is less likely to cancel their subscriptions compared to other audio and video streaming platforms, according to a Bloomberg analysis.
However, the company’s financial journey has not been without challenges. In 2022, Spotify’s stock lost over two-thirds of its value due to several quarters of operational losses. In response to financial strains, the company announced plans to reduce its workforce by 600 employees in January 2023 and made further cuts of 1,500 jobs, which accounted for approximately 17% of its staff, less than a year later.