Spotify has reported a record profit for the second quarter, following its first-ever price increase for Premium plans a year ago. The Swedish audio streaming platform posted an operating income of 266 million euros ($289 million) for the quarter, a significant turnaround from a loss of 247 million euros ($268 million) during the same period last year. The number of monthly active users also rose by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed excitement about the company’s progress, highlighting that Spotify is not only a fantastic product but also a thriving business. He indicated that their growth timeline has exceeded expectations, which he believes is positive for the company’s future.
Following the earnings report, Spotify’s stock experienced a nearly 14% increase in pre-market trading on Tuesday.
In June, Spotify announced a price hike for its Premium subscribers in the U.S., which took effect this month. Individual plan users will see an increase of $1 to $12, Duo plan users will pay an additional $2 for a total of $17, and Family plan users will pay $3 more, bringing the total to $20. This marked the first membership price increase by the company in 13 years, averaging $1.
Despite the price hikes, Spotify successfully gained seven million net subscribers during the quarter, surpassing its previous guidance by one million.
Spotify remains the leading audio streaming service globally, and a Bloomberg analysis suggests that its users are less likely to cancel subscriptions compared to those of other streaming platforms. However, the company faced significant financial challenges in 2022, seeing its stock value drop by more than two-thirds and experiencing consecutive quarters of operating losses. To address these issues, Spotify announced job cuts, reducing its workforce by 600 employees in January 2023 and further laying off 1,500 staff members—approximately 17% of its total workforce—within a year.