Spotify has announced record profits for the second quarter, following its first-ever price hike for Premium plans a year ago. The Swedish audio streaming service reported an operating income of 266 million euros ($289 million) for the quarter, a significant improvement from a loss of 247 million euros ($268 million) during the same period last year. Monthly active users increased by 14% to reach 626 million.
CEO Daniel Ek expressed enthusiasm about Spotify’s progress, stating that the company is innovating and proving to be not only a great product but also a strong business. He noted that their growth has surpassed expectations, which is promising for the future.
Spotify’s stock surged nearly 14% in pre-market trading on Tuesday after the favorable earnings announcement.
In June, the company announced price increases for its Premium users in the U.S. Starting this month, individuals 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. This marked the first membership price adjustment in 13 years.
Despite the price hikes, Spotify gained seven million net subscribers in the quarter, exceeding its previous guidance by one million. Analysis from Bloomberg reveals that Spotify is the leading audio streaming platform globally, with users less likely to cancel their subscriptions compared to other streaming services.
However, the company’s financial journey has not been smooth. Spotify stock plummeted by more than two-thirds in 2022 due to several quarters of operating losses. Earlier this year, the platform announced the layoffs of 600 employees, followed by a further reduction of 1,500 jobs, amounting to roughly 17% of its workforce.