Spotify has announced another quarter of record profits, marking a significant turnaround since it first raised prices for its 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 remarkable improvement from the loss of 247 million euros ($268 million) reported in the same period last year. The platform also saw a 14% year-over-year increase in monthly active users, reaching a total of 626 million.
CEO Daniel Ek expressed enthusiasm for the company’s performance, 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 better-than-expected earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price increase for its U.S. Premium users. Starting this month, individual plan subscribers will see their monthly fee rise by $1 to $12, while Duo plans (designed for two people) will increase by $2 to $17, and Family plans will go up by $3 to $20. This follows the first price hike in 13 years last July, when membership costs were raised by an average of $1.
Despite the higher prices, Spotify successfully added seven million net subscribers during the quarter, surpassing its own guidance by one million.
As the leading audio streaming service worldwide, Spotify users are reported to have the lowest cancellation rates compared to other audio and video platforms, according to a Bloomberg analysis.
However, the company’s financial situation has faced challenges in the past. In 2022, Spotify’s stock value plummeted by more than two-thirds due to several quarters of operating losses. In early 2023, the company announced a workforce reduction of 600 employees, followed by a larger cut of 1,500 jobs, accounting for approximately 17% of its workforce, less than a year later.