Spotify has reported record profits for the second quarter, marking a significant turnaround since it raised its Premium plan prices for the first time last year.
The Swedish audio streaming service announced an operating income of 266 million euros (approximately $289 million), a stark contrast to the loss of 247 million euros ($268 million) reported during the same period last year. The platform also saw a 14% increase in monthly active users, reaching 626 million.
“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,” stated CEO Daniel Ek. He expressed confidence that the company’s progress has exceeded its expectations and is optimistic about the future.
Following the positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price increase for Premium subscriptions in the U.S. Effective this month, individual plan users will see a $1 increase, raising the cost to $12, while Duo plan users will pay $2 more, totaling $17. Family plan subscribers will see a $3 increase, bringing their total to $20. This marked the first price hike in 13 years, with an average increase of $1.
Despite the price increases, Spotify attracted seven million net new subscribers during the quarter, surpassing its previous guidance by one million.
As the leading audio streaming service globally, Spotify benefits from having users who are less likely to cancel their subscriptions compared to other platforms, according to a Bloomberg analysis.
However, the company’s financial journey has been challenging, with Spotify shares dropping more than two-thirds in value in 2022 amidst several quarters of losses. In January 2023, the company laid off 600 employees, followed by another round of cuts that affected 1,500 jobs, or about 17% of its workforce, less than a year later.