Spotify has reported record profits in the latest quarter, marking a significant turnaround from a year ago when it first raised the prices of its Premium plans. The Swedish audio streaming company posted an operating income of 266 million euros ($289 million) for the second quarter, a notable improvement from a loss of 247 million euros ($268 million) during the same period last year. Additionally, the number of monthly active users increased by 14% year-over-year, reaching 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. We are doing so on a timeline that has exceeded even our own expectations. This all bodes very well for the future.”
Following the surprise earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday. In June, Spotify announced price hikes for its Premium services in the U.S. Beginning this month, individual plan subscribers will see a $1 increase to $12, while Duo plan users will experience a $2 rise to $17, and Family plan users will pay an additional $3, totaling $20. This marked the first price increase in 13 years, with an average increase of $1 implemented in July 2022.
Despite these price adjustments, Spotify managed to attract seven million new subscribers in the quarter, exceeding its earlier forecast by one million. A Bloomberg analysis revealed that Spotify is the leading audio streaming platform globally, with its users being the least likely among streaming services to cancel their subscriptions.
However, Spotify’s financial journey has not always been positive. The company’s stock plummeted by more than two-thirds in 2022, leading to several quarters of operational losses. In early 2023, Spotify announced the reduction of 600 positions and subsequently cut another 1,500 jobs, amounting to approximately 17% of its workforce.