Spotify has announced another record profit quarter, marking a significant turnaround from last year after implementing its first-ever price increase for Premium plans.
The Swedish audio streaming service reported an operating income of 266 million euros ($289 million) for the second quarter, a considerable improvement compared to a loss of 247 million euros ($268 million) the previous year. The platform also saw a 14% annual increase in monthly active users, reaching 626 million.
“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,” stated CEO Daniel Ek. He added that their progress has surpassed even their own expectations, which reflects positively on their future prospects.
Following the announcement of better-than-expected earnings, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, the company revealed plans to raise prices for Premium subscriptions in the U.S. Starting this month, individual plan users will experience a $1 increase to $12, Duo plan users will pay $2 more at $17, and Family plan subscribers will see a $3 hike to $20. This followed a membership price adjustment in July 2022, which was the first in 13 years, averaging a $1 increase.
Despite these price hikes, Spotify managed to net an additional seven million subscribers during the quarter, surpassing its previous guidance by one million.
Spotify holds the title of the most popular audio streaming service globally, with findings from Bloomberg indicating that its users are the least likely to cancel their memberships compared to other audio or video streaming services.
However, the company has not had a consistently positive financial record. In 2022, Spotify’s stock lost over two-thirds of its value due to multiple quarters of operating losses. Earlier in 2023, the company announced significant layoffs, first cutting 600 jobs in January, followed by a further reduction of 1,500 positions, accounting for about 17% of its workforce.