Spotify has announced another quarter of record profits, marking a significant turnaround for the company one year after it increased the price of its Premium subscription plans for the first time.
The Swedish audio streaming giant reported an operating income of 266 million euros (approximately $289 million) for the second quarter, a remarkable improvement compared to a loss of 247 million euros (about $268 million) in the same quarter last year. The number of monthly active users also rose 14% year-over-year to reach 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. We are doing so on a timeline that has exceeded even our own expectations. This all bodes very well for the future.”
Following the impressive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price increase for its Premium users in the U.S. Starting this month, individual plan subscribers will see a $1 increase to $12, Duo plan users will pay $2 more for a total of $17, and Family plan users will incur a $3 increase to $20. This follows a $1 average increase in membership costs that the company implemented in July 2022, the first such rise in 13 years.
Despite these increases, Spotify successfully added seven million net subscribers during the quarter, exceeding its previous guidance by one million.
As the leading audio streaming service globally, Spotify users are also statistically the 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 recent years, with its stock losing over two-thirds of its value in 2022 due to several quarters of operational losses. In early 2023, Spotify announced the elimination of 600 positions, and less than a year later, it cut 1,500 jobs, equating to roughly 17% of its workforce.