Spotify has reported a record profit for the second quarter, marking a significant turnaround from a loss a year prior, following its first-ever price hike for Premium subscriptions. The Swedish audio streaming giant recorded an operating income of 266 million euros ($289 million) in Q2, compared to a loss of 247 million euros ($268 million) in the same quarter last year. Monthly active users rose by 14% year-on-year, reaching 626 million.
CEO Daniel Ek expressed his enthusiasm, 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, the company announced a price increase for U.S. Premium users, effective this month. Individual plan subscribers will see their fees rise by $1 to $12, Duo plan users will pay $2 more totaling $17, and Family plan subscribers will incur a $3 increase for a total of $20. This recent adjustment came after the first membership cost increase in 13 years, which averaged $1.
Despite the higher subscription rates, Spotify managed to add seven million net subscribers in the quarter, exceeding its own forecasts by one million.
Spotify remains the leading audio streaming service globally, with users showing a lower tendency to cancel their subscriptions compared to competitors, as noted in a Bloomberg analysis. However, the road to profitability has not been easy; the company saw its stock drop by over two-thirds in 2022 due to several quarters of operational losses. In response, Spotify announced workforce reductions, cutting 600 jobs in January 2023 and 1,500 positions, which accounted for approximately 17% of its staff, less than a year later.