Spotify has announced a record profit for the second quarter, a year after it increased its Premium pricing for the first time. The Swedish audio streaming service reported an operating income of 266 million euros ($289 million) in the second quarter, a significant turnaround from a loss of 247 million euros ($268 million) during the same period last year. The company also saw its monthly active users rise by 14% year-over-year, totaling 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.” He noted that the company is achieving results beyond their initial expectations, which creates a positive outlook for the future.
Following the announcement of better-than-expected earnings, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify revealed it would be implementing price increases for its Premium service in the U.S. Users on individual plans will now pay $12, an increase of $1; Duo plans will cost $17, up by $2; and Family plans will be $20, an increase of $3. This price adjustment followed a previous increase in July 2022, the first in 13 years, which averaged an additional $1 per subscription.
Despite these price hikes, Spotify managed to gain seven million net subscribers in the latest quarter, surpassing their own projections by one million.
As the leading audio streaming platform globally, Spotify’s users are less likely to cancel their memberships in comparison to other audio or video streaming services, according to a Bloomberg analysis.
However, the company’s financial journey has not always been smooth. In 2022, Spotify stock plummeted, losing over two-thirds of its value due to several quarters of operating losses. In response, the company announced layoffs of 600 employees in January 2023 and later reduced its workforce by an additional 1,500 positions, representing approximately 17% of its total staff.