Spotify has reported a record-breaking quarter of profits, a year after it implemented its first price increase on Premium subscriptions.
The Swedish audio streaming company announced an operating income of 266 million euros (approximately $289 million) for the second quarter, a significant turnaround from a loss of 247 million euros ($268 million) in the same period last year. Monthly active users rose by 14% year-on-year, reaching 626 million.
CEO Daniel Ek expressed optimism 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 positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced price increases for Premium users in the U.S. Effective this month, individual plan users will see a $1 increase to $12, Duo plan users will pay $2 more for a total of $17, and Family plan users will pay $3 more at $20. This was the company’s first membership cost increase in 13 years, raising prices by an average of $1 in July 2022.
Despite these price hikes, Spotify managed to add seven million net subscribers during the quarter, surpassing its previous guidance by one million.
Spotify has solidified its position as the world’s leading audio streaming service, with users showing the lowest likelihood of canceling their subscriptions compared to other audio or video streaming platforms, according to a Bloomberg analysis.
However, the company’s financial journey has faced challenges. In 2022, Spotify’s stock plummeted by more than two-thirds as the company experienced several quarters of operating losses. In January 2023, Spotify announced it would reduce its workforce by 600 employees, and less than a year later, it cut an additional 1,500 jobs, which represented about 17% of its total staff.