Spotify has reported a record profit for the second quarter, marking a significant improvement following its first-ever price increase for Premium plans last year. The Swedish audio streaming giant achieved an operating income of 266 million euros ($289 million), a stark contrast to a loss of 247 million euros ($268 million) in the same period last year. The number of monthly active users rose by 14% year-on-year to reach 626 million.
CEO Daniel Ek expressed enthusiasm about the company’s performance, 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, Spotify announced a price increase for its Premium users in the United States. Starting this month, individual plan users will see a $1 increase to $12, Duo plan users will pay $2 more, bringing their total to $17, and Family plan users will pay $3 more, totaling $20. This followed an average membership fee hike of $1 the previous July, which was the first adjustment in 13 years.
Despite the price hikes, Spotify successfully gained seven million new subscribers in the quarter, exceeding its prior forecasts by one million.
As the leading audio streamer globally, Spotify’s users have been found to be the least likely to cancel their memberships compared to other audio and video streaming services, according to a Bloomberg analysis. However, the company has faced financial turbulence in the past; its stock value plummeted by more than two-thirds in 2022 as it recorded several quarters of losses. Earlier this year, Spotify announced job cuts, eliminating 600 positions in January and an additional 1,500 jobs, which accounted for roughly 17% of its workforce.