Spotify has announced another quarter of record profits, marking a year since it first raised the price of its Premium plans. The Swedish audio streaming service reported an operating income of 266 million euros ($289 million) for the second quarter, a significant improvement from a loss of 247 million euros ($268 million) during the same period last year. The number of monthly active users rose by 14% year-on-year, reaching 626 million.
CEO Daniel Ek expressed enthusiasm about the company’s progress, 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.” He emphasized that the company’s growth timeline has surpassed their expectations, indicating positive prospects for the future.
Following the announcement, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday due to the stronger-than-anticipated earnings report.
In June, Spotify confirmed that it would increase prices for its Premium offerings in the U.S. Effective this month, individual plan users will see a $1 increase to $12, while Duo plan users will pay an additional $2, bringing their total to $17. Family plan users will experience a $3 increase, now totaling $20. This marked the first membership price hike in 13 years, averaging an increase of $1.
Despite the price hikes, Spotify managed to attract seven million net new subscribers during the quarter, exceeding its previous guidance by one million.
Spotify remains the leading audio streaming service globally, with users being least likely to cancel their subscriptions compared to other audio or video streaming platforms, according to a Bloomberg analysis.
However, the company has faced financial challenges in the past. In 2022, Spotify’s stock value plummeted by more than two-thirds as it experienced multiple quarters of operating losses. Earlier this year, the company announced plans to lay off 600 employees, followed by another round of cuts in January 2023, impacting about 1,500 employees, or roughly 17% of its workforce.