Spotify has announced another quarter of record profits, marking a significant turnaround since it raised the prices of its Premium subscription plans for the first time last year.
The Swedish audio streaming giant reported an operating income of 266 million euros ($289 million) in the second quarter, a notable recovery from a loss of 247 million euros ($268 million) during the same period the previous year. The platform also saw its monthly active users increase by 14% year-over-year, reaching a total of 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.”
Following the positive earnings report, Spotify’s stock jumped nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price hike for its Premium service in the U.S. Starting this month, individual plan users will pay an additional $1, bringing the total to $12 per month. Duo plans will increase by $2 to $17, while Family plans will see a rise of $3 to $20. This pricing adjustment followed a similar increase last July, the first time in 13 years that membership costs were raised, averaging an additional dollar.
Despite the price hikes, Spotify was able to add seven million net subscribers during the quarter, surpassing its own forecasts by one million.
As the leading audio streaming service globally, Spotify’s membership cancellation rates are reportedly lower than those of other major audio and video streaming platforms, according to a Bloomberg analysis.
However, Spotify’s journey has not been without challenges. In 2022, the company’s stock plummeted by more than two-thirds as it grappled with several consecutive quarters of operating losses. In response to financial pressures, Spotify announced plans to lay off 600 employees in January 2023 and made further cuts of 1,500 jobs, amounting to approximately 17% of its workforce, less than a year later.