Spotify has posted another record quarter of profits, following its first-ever price increase for Premium plans a year ago. 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) during the same period last year. Monthly active users also grew by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed optimism in a statement, highlighting the company’s ongoing innovation and successful business development. “It’s an exciting time at Spotify,” he said, adding that the company is outperforming its own expectations, which bodes well for the future.
In the wake of the strong earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a raise in prices for its Premium users in the U.S. Starting this month, individual plan users will see an increase of $1, bringing their monthly cost to $12. Duo plans will rise by $2 to $17, and Family plans will go up by $3 to $20. This price hike followed an increase last July of about $1 on average, marking the first membership cost increase in 13 years.
Despite the hikes, Spotify managed to gain seven million net subscribers during the quarter, exceeding its prior guidance by one million.
As the leading audio streaming platform globally, Spotify’s users are notably less likely to cancel their subscriptions compared to those of other streaming services, according to a Bloomberg analysis.
However, Spotify’s financial journey has had its challenges. In 2022, the company’s stock lost over two-thirds of its value due to several quarters of operating losses. In an effort to restructure, the company laid off 600 employees in January 2023 and later announced an additional cut of 1,500 jobs, representing about 17% of its workforce.