Spotify has announced a record profit for the second quarter, marking a significant turnaround one year after increasing the prices of its Premium subscription plans for the first time.
The Swedish audio streaming platform reported an operating income of 266 million euros, equivalent to $289 million, compared to a loss of 247 million euros or $268 million the previous year. Additionally, the number of monthly active users surged by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed optimism, 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 earnings announcement, Spotify’s stock jumped nearly 14% in pre-market trading on Tuesday.
In June, Spotify revealed it would raise prices for U.S. Premium users. Beginning this month, individual plan users will see a $1 increase to $12, Duo plan users will pay $2 more at $17, and Family plan users will incur a $3 increase for a total of $20. This price adjustment followed the company’s first membership cost hike in 13 years, which occurred in July 2022.
Despite the price increases, Spotify successfully added seven million net subscribers in the last quarter, exceeding its projections by one million.
As the leading audio streaming service globally, Spotify’s users are reportedly the least likely to cancel their subscriptions when compared to other audio and video streaming platforms, according to a Bloomberg analysis.
However, Spotify’s financial journey has not always been smooth. In 2022, the company’s stock value plummeted by more than two-thirds due to several quarters of operational losses. As part of a restructuring effort, Spotify announced layoffs of 600 employees in January 2023, followed by an additional cut of 1,500 jobs, representing roughly 17% of its workforce, less than a year later.