Spotify has announced a record profit for the second quarter, marking a significant turnaround after it raised prices for its Premium subscriptions for the first time. The Swedish audio streaming platform reported an operating income of 266 million euros ($289 million), compared to a loss of 247 million euros ($268 million) during the same period last year. The number of monthly active users also increased by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed optimism about the company’s future, 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.” In pre-market trading on Tuesday, Spotify’s stock surged nearly 14% following the better-than-expected earnings announcement.
This month, Spotify implemented a price increase for its U.S. Premium subscriptions. Individual plan users will now pay $12, an increase of $1; Duo plan subscribers will face a $2 increase to $17; and Family plan users will see a $3 hike to $20. These adjustments follow a similar price raise in July 2022, which was the first in 13 years.
Despite the increased prices, Spotify successfully added seven million net subscribers in the quarter, exceeding its own guidance by one million. A Bloomberg analysis indicates that Spotify holds the top spot as the most popular audio streaming service globally, with its users being the least likely to cancel their memberships compared to other streaming giants.
However, the road to profitability has been challenging for Spotify. In 2022, the company’s stock value plummeted by more than two-thirds amid several quarters of losses. Earlier this year, Spotify announced layoffs that affected 600 employees, and by January 2023, it had cut an additional 1,500 jobs, marking a reduction of about 17% of its workforce.