Spotify has announced record profits for the second quarter, marking a significant turnaround since it raised the prices of its Premium plans last year for the first time ever. The Swedish audio streaming service reported an operating income of 266 million euros ($289 million), a stark contrast to the 247 million euros ($268 million) loss it experienced in the same quarter a year prior. Monthly active users also saw a 14% increase year-over-year, reaching 626 million.
CEO Daniel Ek expressed optimism about the company’s trajectory, 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.”
In response to the positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price hike for its Premium users in the U.S. Starting this month, individual plan users will pay $12 (up by $1), while Duo plan users will see an increase of $2 to $17, and Family plan users will pay $20, an increase of $3. This price adjustment followed an average increase of $1 in membership costs last July, the first adjustment in 13 years.
Despite the price increases, Spotify successfully added seven million net subscribers in the quarter, exceeding its previous guidance by one million.
As the leading audio streaming platform globally, Spotify’s users are found to be less likely to cancel their subscriptions compared to users of other audio or video streaming services, according to a Bloomberg analysis. However, the company has faced financial challenges in the past; its stock plummeted by more than two-thirds in 2022 amid consecutive quarters of operating losses. In January 2023, Spotify announced the layoff of 600 employees, followed by the reduction of 1,500 jobs—approximately 17% of its workforce—just under a year later.