Spotify has announced another quarter of record profits, marking a significant turnaround for the company a year after it implemented its first-ever price increase for Premium plans.
The Swedish audio streaming giant reported an operating income of 266 million euros ($289 million) in the second quarter, a stark contrast to a loss of 247 million euros ($268 million) the previous year. Monthly active users also saw a 14% annual increase, reaching a total of 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,” said CEO Daniel Ek in a statement. “We are achieving this on a timeline that has exceeded even our own expectations. This all bodes very well for the future.”
Following the favorable earnings report, Spotify’s stock jumped nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price hike for its Premium users in the U.S., which took effect this month. Individual plan users will now pay $1 more (totaling $12), Duo plan subscribers will see an increase of $2 (now $17), and Family plan members will pay $3 more (totaling $20). This pricing adjustment followed an average increase of $1 in July 2022, marking the first rise in membership costs in 13 years.
Despite the price increases, Spotify gained seven million net subscribers during the quarter, surpassing its previous forecast by one million.
As the leading audio streaming service globally, Spotify’s users are reportedly less likely to cancel their subscriptions compared to other audio and video streaming platforms, according to a Bloomberg analysis.
However, the company’s financial journey has not always been smooth. Spotify’s stock suffered a significant decline of more than two-thirds in value in 2022 due to several quarters of operating losses. At the beginning of 2023, the company announced the layoff of 600 employees and, within less than a year, cut an additional 1,500 jobs, representing roughly 17% of its workforce.