Spotify has reported a record profit for the second quarter, marking a significant shift as it raised the price of its Premium plans for the first time last year. The Swedish audio streaming company achieved an operating income of 266 million euros ($289 million), a notable improvement compared to a loss of 247 million euros ($268 million) during the same period last year. The number of monthly active users also rose by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed optimism about the company’s performance, 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.”
In response to the positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
Earlier this month, Spotify announced price increases for its Premium plans in the U.S. Individual plan subscribers will see a $1 increase to $12, while Duo plan subscribers will pay $2 more at $17, and Family plan subscribers will pay $3 more for a total of $20. This follows a $1 average increase in membership fees instituted last July, marking the first hike in 13 years.
Despite the rising prices, Spotify managed to add seven million net subscribers in the latest quarter, surpassing its previous guidance by one million.
As the leading audio streaming service globally, Spotify users are less likely to cancel their subscriptions than those of any major audio or video streaming service, according to a Bloomberg analysis. However, the path to profitability has not always been smooth for Spotify; its stock saw a decline of more than two-thirds in 2022 due to several quarters of operating losses. In January 2023, the company laid off 600 employees, and less than a year later, it cut 1,500 jobs, accounting for roughly 17% of its workforce.