Spotify has reported record profits for the second quarter, following a price increase for its Premium plans implemented last year. The Swedish audio streaming giant posted an operating profit of 266 million euros ($289 million) for the quarter, a significant turnaround from a loss of 247 million euros ($268 million) during the same period last year. The company also saw a 14% year-on-year increase in monthly active users, reaching a total of 626 million.
CEO Daniel Ek expressed enthusiasm about Spotify’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.” He noted that the company’s growth has surpassed its own expectations, leading to positive projections for the future.
Following the release of its earnings report, Spotify’s stock rose nearly 14% in pre-market trading. The company restructured its pricing for Premium users in June, raising the cost of individual plans by $1 to $12, Duo plans by $2 to $17, and Family plans by $3 to $20. This marked the first increase in membership fees after 13 years, with the prior adjustment occurring in July 2022.
Despite the higher prices, Spotify successfully added seven million net subscribers in the latest quarter, exceeding its internal forecasts by one million. A Bloomberg analysis highlighted that Spotify is the leading audio streaming service globally, with its users being the least likely among streaming platforms to cancel their subscriptions.
However, the company has faced financial challenges in the past. In 2022, Spotify’s stock plummeted by over two-thirds as it experienced multiple quarters of operating losses. This led to significant layoffs, starting with the announcement of 600 job cuts in January 2023, followed by a further reduction of 1,500 jobs, representing approximately 17% of its workforce less than a year later.