Spotify has announced another quarter of record profits following the first-ever increase in the price of its Premium plans last year.
The company reported an operating income of 266 million euros ($289 million) for the second quarter, a significant turnaround from a loss of 247 million euros ($268 million) in the same period the previous year. Its monthly active users increased by 14% year-on-year to reach 626 million.
CEO Daniel Ek expressed optimism about the company’s trajectory, 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.”
Spotify’s stock surged nearly 14% in pre-market trading on Tuesday, buoyed by the better-than-expected earnings report.
In June, it was announced that the subscription prices for Premium users in the U.S. would be increasing. From this month, individual plans will see a $1 increase to $12, Duo plans will rise by $2 to $17, and Family plans will go up by $3 to $20. Last July marked the first price hike in 13 years, averaging $1 across membership types.
Despite the price increases, Spotify successfully added seven million net subscribers in the last quarter, surpassing its previous guidance by one million.
As the leading audio streaming platform globally, Spotify users tend to be the least likely to cancel their subscriptions compared to other audio and video streaming services, according to a Bloomberg analysis.
However, Spotify’s financial situation has not always been favorable. In 2022, the company’s stock lost over two-thirds of its value due to several consecutive quarters of operational losses. In January 2023, Spotify announced the layoff of 600 employees, followed by another cut of 1,500 jobs, accounting for around 17% of its workforce less than a year later.