Spotify has announced record profits for another quarter, following a price increase for its Premium plans for the first time last year. The Swedish audio streaming platform reported 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) during the same period last year. The number of monthly active users also rose 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed enthusiasm 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.”
In response to the positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced it would increase prices for its Premium users in the U.S. Starting 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 incur an additional $3, totaling $20. Last July marked the company’s first membership cost increase in 13 years, averaging an additional $1.
Despite the price hikes, Spotify gained seven million net subscribers in the quarter, surpassing its previous expectations by one million.
Regarded as the leading audio streaming service globally, Spotify has a lower cancellation rate compared to other audio or video streaming services, according to a Bloomberg analysis. However, the company faced challenges in the past, with its stock plummeting more than two-thirds in 2022 due to consecutive quarters of operating losses. In January 2023, Spotify announced it would lay off 600 employees, followed by another round of cuts in the same year that affected 1,500 workers, or around 17% of its workforce.