Spotify has achieved record profits for another quarter, following its first-ever price increase for Premium plans last year.
The company reported an operating income of 266 million euros ($289 million) in the second quarter, a significant improvement from a loss of 247 million euros ($268 million) the previous year. Monthly active users also grew by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed enthusiasm for 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.”
Spotify’s stock surged nearly 14% in pre-market trading on Tuesday following the better-than-expected earnings report.
In June, Spotify announced a price hike for its Premium users in the U.S. Starting this month, individual plan users will see an increase of $1, bringing their subscription to $12, while Duo plans will rise by $2 to $17, and Family plans will increase by $3 to $20. This follows an average price increase of $1 last July, which was the first in 13 years.
Despite these price increases, Spotify gained seven million net subscribers during the quarter, exceeding its previous guidance by one million.
Recognized as the leading audio streaming service globally, Spotify’s users are reportedly the least likely to cancel their memberships compared to other streaming platforms, according to a Bloomberg analysis.
However, Spotify’s financial performance has not always been stable. The company’s stock fell by more than two-thirds in 2022 due to multiple quarters of operating losses. In early 2023, Spotify announced a reduction of 600 employees, and less than a year later, it laid off 1,500 workers, accounting for approximately 17% of its workforce.