Spotify has reported a record profit for the second quarter, marking a significant turnaround from last year’s losses following its first-ever price hike for Premium plans.
The Swedish audio streaming service announced an operating income of 266 million euros ($289 million) for the second quarter, a stark contrast to the loss of 247 million euros ($268 million) reported a year earlier. The company also saw a 14% annual increase in its monthly active users, reaching 626 million.
In a statement, CEO Daniel Ek expressed enthusiasm about Spotify’s progress, highlighting the company’s ongoing innovation and business success, which has surpassed their expectations and bodes well for the future.
Following the positive earnings report, Spotify’s stock experienced a nearly 14% increase in pre-market trading on Tuesday.
In June, Spotify announced a price increase for its Premium subscription in the U.S. Starting this month, individual plan subscribers will pay an additional $1, raising the monthly fee to $12. Those on Duo plans will see a $2 increase to $17, and Family plans will rise by $3 to $20. This marked the first membership cost hike in 13 years, which occurred last July with an average increase of $1.
Despite these price hikes, Spotify managed to add seven million net subscribers in the quarter, exceeding its guidance by one million.
As the world’s leading audio streaming platform, Spotify users are reportedly the least likely to cancel their subscriptions compared to other audio and video streaming services, according to a Bloomberg analysis.
However, the path to profitability has not always been smooth for Spotify. The company’s stock plummeted over 66% in 2022 due to several quarters of operating losses. In response, Spotify announced layoffs of 600 employees in January 2023, followed by another round of job cuts affecting 1,500 workers, or approximately 17% of its workforce, less than a year later.