Spotify has announced a record profit for the second quarter, following its first-ever price increase for Premium plans last year. The Swedish audio streaming service reported an operating income of 266 million euros ($289 million) for the quarter, a significant improvement compared to a loss of 247 million euros ($268 million) during the same period last year. Monthly active users also rose by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed optimism about the company’s future, 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.” He noted that the growth trajectory has exceeded even their own expectations.
Following the earnings report, Spotify’s stock surged nearly 14% in pre-market trading. In June, the company announced that it would be increasing prices for its Premium users in the U.S. starting this month. Individual plan users will see an increase of $1 to $12, Duo plan users will pay $2 more, bringing the total to $17, and Family plan users will experience a $3 increase, totaling $20. This followed a membership price hike last July, the first in 13 years, which averaged an increase of $1.
Despite these price hikes, Spotify gained seven million net subscribers during the quarter, surpassing its previous guidance by one million. A Bloomberg analysis highlighted that Spotify is the leading audio streaming service globally, with users being the least likely to cancel their subscriptions compared to other audio or video streaming platforms.
However, the company’s financial performance has not always been robust. In 2022, Spotify’s stock value dropped by more than two-thirds due to several quarters of operating losses. Earlier this year, the company announced layoffs of 600 employees, followed by a further reduction of 1,500 jobs, or approximately 17% of its workforce, within less than a year.