Spotify has announced another quarter of record profits, marking a significant turnaround for the company a year after it implemented its first-ever price increase for Premium plans.
The Swedish audio streaming service reported an operating income of 266 million euros ($289 million) for the second quarter, a stark contrast to the loss of 247 million euros ($268 million) recorded during the same period last year. Additionally, the number of monthly active users rose by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed optimism about the company’s trajectory, 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 release of the earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced an increase in prices for its Premium service in the U.S. Starting this month, individual plan subscribers will see a $1 increase to $12, Duo plan users will pay $2 more for a total of $17, and Family plan fees will rise by $3 to $20. This followed a price hike in July 2022, which was the first increase in 13 years and averaged $1 across plans.
Despite these price hikes, the company successfully added seven million net subscribers in the latest quarter, surpassing its previous guidance by one million.
Market analysis by Bloomberg indicates that Spotify is the leading audio streaming platform globally, with its users showing the least likelihood of canceling their subscriptions compared to other streaming services.
However, Spotify has not always enjoyed consistent profitability. In 2022, its stock plummeted by over two-thirds as the company experienced multiple quarters of operating losses. The firm announced significant layoffs, cutting 600 employees in January 2023 and later reducing its workforce by 1,500 jobs, approximately 17% of its staff, within the same year.