Spotify has reported its latest quarter of record profits, marking a year since it first increased the prices of its Premium subscriptions. The audio streaming service announced 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) reported the same time last year. The platform also saw a 14% annual growth in monthly active users, reaching 626 million.
CEO Daniel Ek expressed enthusiasm about the company’s trajectory, stating that Spotify is not only innovating but is also positioning itself as a strong business. Ek noted that the company’s progress has outpaced their own expectations, indicating positive prospects ahead.
Following the earnings report, Spotify’s stock jumped nearly 14% in pre-market trading on Tuesday.
Earlier this year, Spotify announced price increases for its Premium subscriptions in the U.S. Starting this month, individual plan users will see a $1 hike to $12, Duo plan users will pay an additional $2 for a total of $17, and Family plan users will face a $3 increase, bringing their monthly cost to $20. This was the first price increase in 13 years, which previously occurred last July with an average rise of $1.
Despite the price hikes, Spotify successfully gained seven million net subscribers in this quarter, exceeding its own guidance by one million.
As the leading audio streaming service globally, Spotify users exhibit the lowest cancellation rates compared to other audio or video streaming competitors, according to a Bloomberg analysis.
However, Spotify’s financial journey has had its challenges. In 2022, the company’s stock plummeted over two-thirds of its value, and it faced multiple quarters of operating losses. In January 2023, Spotify announced a workforce reduction of 600 employees, followed by a further cut of 1,500 jobs, which represented approximately 17% of its workforce.