Spotify has reported another record profit for the second quarter, marking a significant turnaround since it raised the price of its Premium plans for the first time last year. The Swedish audio streaming service announced an operating income of 266 million euros (about $289 million), a stark contrast to the loss of 247 million euros ($268 million) recorded in the same period the previous year. The company also reported a 14% annual growth in monthly active users, reaching 626 million.
CEO Daniel Ek expressed enthusiasm about the company’s current trajectory. In a statement, he emphasized the innovations at Spotify, highlighting its evolution from a strong product to a robust business, and noted that the company is surpassing its own expectations, which bodes well for its future.
Following the announcement of its better-than-expected earnings, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify revealed that it would be increasing prices for its Premium plans in the U.S. Starting this month, individual plan subscribers will see a $1 increase to $12, while Duo plans will rise by $2 to $17, and Family plans will increase by $3 to $20. This follows an average price hike of $1 implemented last July, marking the first membership fee increase in 13 years.
Despite the price increases, Spotify successfully added seven million net subscribers during the quarter, exceeding its previous guidance by one million.
As the leading audio streaming platform globally, Spotify has a lower churn rate compared to other streaming services, according to a Bloomberg analysis. However, the company’s financial history has been tumultuous. In 2022, Spotify’s stock value declined by more than two-thirds as it faced several quarters of operational losses. In response to its challenges, the company announced job cuts, including 600 positions in January 2023 and an additional 1,500 jobs, or approximately 17% of its workforce, less than a year later.