Spotify has announced another quarter of record profits, one year after it increased the prices of its Premium subscription plans for the first time in its history.
The Swedish audio streaming service reported an operating income of 266 million euros ($289 million) for the second quarter, a significant turnaround from a loss of 247 million euros ($268 million) in the same quarter last year. The number of monthly active users also saw a 14% year-on-year growth, reaching 626 million.
CEO Daniel Ek expressed enthusiasm about the company’s performance, 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 strong earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced plans to raise prices for its Premium service in the U.S. Starting this month, individual plan users will pay $12, an increase of $1, while Duo (two-person) plans will cost $17, up $2, and Family plans will rise to $20, which is a $3 increase. The previous July marked the first price increase in 13 years, averaging $1 more for members.
Despite these price hikes, Spotify was able to add seven million net subscribers during the quarter, exceeding its previous forecast by one million.
Spotify continues to be the leading audio streaming platform globally, with users showing the least tendency to cancel their subscriptions compared to other audio and video streaming services, according to a Bloomberg analysis.
However, the company has faced financial challenges in the past. In 2022, Spotify’s stock value dropped more than two-thirds as it dealt with several quarters of operating losses. In January 2023, the company announced the layoff of 600 employees, followed by the elimination of 1,500 jobs, or approximately 17% of its workforce, less than a year later.