Spotify has reported record profits for another quarter, a year after increasing the price of its Premium plans for the first time. The Swedish audio streaming service posted an operating income 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. Additionally, the number of monthly active users surged by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed optimism, 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 emphasized that the company’s progress has surpassed their own expectations, indicating a positive outlook for the future.
Following the announcement of its better-than-expected earnings, Spotify’s stock jumped nearly 14% in pre-market trading on Tuesday.
In June, Spotify revealed a price increase for its Premium service in the U.S. Starting this month, individual plan users will pay an extra $1, bringing the cost to $12. Duo plan users will see a $2 increase to $17, while Family plan users will pay $3 more, raising the total to $20. This marked the first price increase in 13 years, with an average rise of $1 implemented in July 2022.
Notably, even with these price hikes, Spotify gained seven million net subscribers during the quarter, exceeding its previous forecasts by a million.
As the world’s leading audio streaming service, Spotify maintains a high retention rate, with users being less likely to cancel their subscriptions compared to other streaming platforms, according to a Bloomberg analysis.
However, the company’s financial journey has not always been stable. In 2022, Spotify’s stock plummeted by over two-thirds as it endured multiple quarters of operating losses. In January 2023, it announced a workforce reduction of 600 employees, followed by a further cut of 1,500 jobs, accounting for roughly 17% of its staff less than a year later.