Spotify has reported a record profit for the second quarter, marking a significant turnaround from a year ago after the company increased the price of its Premium subscription plans for the first time. The Swedish audio streaming service achieved an operating income of 266 million euros ($289 million), compared to a loss of 247 million euros ($268 million) during the same period last year. Additionally, Spotify’s monthly active users grew 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 company’s growth trajectory has exceeded expectations, which is promising for the future.
Following the positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday. Just last June, the company announced price increases for Premium users in the U.S., which took effect this month. Individual plan users are now required to pay $12, up by $1, while Duo plans increased to $17, a $2 rise, and Family plans now cost $20, up by $3. This was the first membership cost increase in 13 years.
Despite the price hikes, Spotify successfully gained seven million net subscribers in the quarter, surpassing its previous forecast by one million. A Bloomberg analysis highlighted that Spotify remains the leading audio streaming service globally, with users showing the least likelihood of canceling their subscriptions compared to other audio or video streaming platforms.
However, Spotify’s financial history has seen challenges, including a steep decline in stock value by over two-thirds in 2022, amid ongoing operational losses. In early 2023, the company announced plans to reduce its workforce by 600 employees and later cut 1,500 jobs, amounting to approximately 17% of its staff.