Spotify has reported a record profit for another quarter, following its first price increase for Premium plans last year. The Swedish audio streaming company generated an operating profit of 266 million euros ($289 million) in the second quarter, a significant improvement compared to a loss of 247 million euros ($268 million) during the same period last year. The total number of monthly active users surged by 14% year-on-year, reaching 626 million.
CEO Daniel Ek expressed optimism about the company’s progress, 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 announcement of better-than-expected earnings, Spotify’s stock rose nearly 14% in pre-market trading on Tuesday.
In June, Spotify revealed plans to increase prices for its Premium customers in the U.S., starting this month. Individual plan users will see a $1 increase to $12, Duo plan users will pay $2 more, bringing their total to $17, and Family plan users will pay an additional $3, resulting in a new cost of $20. This marks the first increase in membership costs in 13 years, with an average rise of $1 implemented in July 2022.
Despite the price hikes, Spotify managed to add seven million net subscribers during the quarter, exceeding its previous guidance by one million.
Ranked as the most popular audio streaming platform globally, Spotify users have been found to be the least likely to cancel their subscriptions compared to other audio or video streaming services, according to a Bloomberg analysis.
However, the company has faced financial challenges in the past. Spotify’s stock value plummeted by more than two-thirds in 2022 due to multiple quarters of operating losses. In January 2023, the company announced layoffs of 600 employees, followed by an additional reduction of 1,500 jobs, representing about 17% of its workforce less than a year later.