Spotify has announced a new record for profits just one year after it implemented its first price increase for Premium plans.
The Swedish audio streaming service 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 quarter last year. The number of monthly active users has also surged by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed enthusiasm for the company’s performance, 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 release of its better-than-expected earnings, Spotify’s stock jumped nearly 14% in pre-market trading.
In June, Spotify announced a price hike for its Premium services in the U.S., effective this month. Individual plan users will see a $1 increase to $12, Duo plan users will be charged $2 more to total $17, and Family plan subscribers will pay $3 extra, bringing the total to $20. This price adjustment followed a $1 increase in membership costs last July, marking the first escalation in 13 years.
Despite the price increases, Spotify successfully added seven million net subscribers during the quarter, exceeding its previous guidance by one million.
As the leading audio streaming platform globally, Spotify boasts the lowest cancellation rate among major audio and video streaming services, according to a Bloomberg analysis.
However, the company’s financial history has been tumultuous. In 2022, Spotify’s stock value plummeted by more than two-thirds as the company experienced multiple quarters of operating losses. In January 2023, Spotify announced the layoff of 600 employees, and within less than a year, another 1,500 jobs were cut, accounting for roughly 17% of its workforce.