Spotify has declared a record quarterly profit, marking a significant turnaround from the previous year when the company incurred losses. Following the increase in its Premium subscription prices, the Swedish audio streaming service reported an operating income of 266 million euros ($289 million) for the second quarter, a stark contrast to the loss of 247 million euros ($268 million) witnessed in the same period last year. Additionally, the platform experienced a 14% annual growth in monthly active users, totaling 626 million.
CEO Daniel Ek expressed enthusiasm about the company’s innovations and business 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.” Following the positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading.
In June, Spotify announced a price hike for its U.S. Premium users, effective this month. Individual plans will increase by $1 to $12, while Duo plans will rise by $2 to $17, and Family plans will see a $3 increase to $20. This move followed an average price increase of $1 last July, which was the first adjustment in 13 years.
Despite increasing prices, Spotify successfully added seven million net subscribers in the quarter, surpassing previous expectations by one million. A Bloomberg analysis indicated that Spotify remains the leading audio streaming service globally, with its users being the least likely to cancel their subscriptions compared to other audio and video streaming platforms.
However, Spotify’s financial journey has faced challenges, highlighted by a significant decline in stock value of over two-thirds in 2022 amid several quarters of operational losses. Earlier this year, the company announced layoffs affecting 600 employees, followed by another reduction of 1,500 jobs, roughly 17% of its workforce.