Spotify has announced another quarter of record profits, marking a significant turnaround since it raised the prices of its Premium plans for the first time last year.
The Swedish audio streaming service reported an operating income of 266 million euros ($289 million) for the second quarter, a stark contrast to a loss of 247 million euros ($268 million) during the same period last year. Monthly active users also saw a notable increase of 14% year-on-year, 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,” stated CEO Daniel Ek. He added that the growth trajectory has surpassed their own expectations, which bodes well for the company’s 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 that it would be increasing prices for its Premium users in the United States. Starting this month, individual plan users will see a $1 increase to $12, Duo plan users will pay an additional $2 for a total of $17, and Family plan users will incur a $3 increase, bringing the price to $20. This marks the first membership cost increase in 13 years, which occurred in July 2022 at an average of $1.
Despite the price hikes, Spotify managed to add seven million net subscribers during the quarter, exceeding its previous guidance by one million.
As the leading audio streaming platform globally, Spotify has demonstrated a lower cancellation rate among its users compared to other major audio and video streaming services, according to a Bloomberg analysis.
However, the company’s financial performance has not always been robust. Spotify’s stock plunged by more than two-thirds in 2022 as it grappled with several quarters of operational losses. In January 2023, the company announced a workforce reduction of 600 employees, followed by another cut of 1,500 jobs, which represented approximately 17% of its workforce.