Spotify has reported a quarter of record profits, marking a significant turnaround since it raised the prices of its Premium plans for the first time a year ago. The Swedish audio streaming company announced an operating income of 266 million euros ($289 million) for the second quarter, a notable improvement compared to a loss of 247 million euros ($268 million) in the same period last year. Additionally, Spotify experienced a 14% annual growth in monthly active users, reaching a total of 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. This all bodes very well for the future.” Following the release of its better-than-expected earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price hike for Premium users in the U.S. Starting this month, individual plan users will see an increase of $1 to $12, Duo plan users will pay $2 more for a total of $17, and Family plan subscribers will pay $3 more, bringing their total to $20. Last July marked the first price increase for Premium memberships in 13 years, averaging an additional $1.
Despite the price hikes, Spotify added seven million net subscribers during the quarter, exceeding its earlier guidance by one million. As the world’s leading audio streamer, Spotify users exhibit a low tendency to cancel their subscriptions, according to a Bloomberg analysis.
However, the company has not been without its struggles. Spotify’s stock lost more than two-thirds of its value in 2022, largely due to several quarters of operating losses. In January 2023, the company announced it would be cutting 600 jobs, and less than a year later, it laid off 1,500 employees, accounting for approximately 17% of its workforce.