Spotify has reported a record profit for the second quarter, achieving an operating income of 266 million euros ($289 million), a significant turnaround from a loss of 247 million euros ($268 million) during the same period last year. The company also noted a 14% annual increase in monthly active users, reaching a total of 626 million.
“Our continued innovation is proving that we are not only a great product but also a robust business,” stated CEO Daniel Ek. “The progress we’ve made has exceeded our own expectations, which is encouraging for our future.”
Following the positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price increase for its Premium subscription plans in the U.S., effective this month. Individual plan subscribers will see their fees rise by $1 to $12, while Duo plan users will pay $2 more for a total of $17, and Family plan users will pay an additional $3, bringing their total to $20. This marks the first price hike in 13 years, with the previous increase averaging $1 last July.
Despite these rising costs, Spotify managed to gain seven million net subscribers in the last quarter, outpacing its initial guidance by one million.
As the world’s leading audio streaming service, Spotify enjoys a high retention rate among its users, who are less likely than subscribers of other audio or video streaming platforms to cancel their memberships, according to a Bloomberg analysis.
However, the path to profitability has not always been smooth for the company. Spotify’s stock value plummeted by over two-thirds in 2022 amid consecutive quarters of operating losses. In January 2023, the company announced layoffs affecting 600 employees, and less than a year later, it reduced its workforce by an additional 1,500 employees, amounting to about 17% of its staff.