Spotify announced record profits for the second quarter, following the first-ever increase in its Premium subscription prices a year prior. The Swedish audio streaming service reported an operating income of 266 million euros ($289 million), a significant turnaround from a loss of 247 million euros ($268 million) in the same quarter last year. Additionally, the company saw a 14% year-over-year increase in monthly active users, reaching 626 million.
CEO Daniel Ek expressed enthusiasm about Spotify’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.” He noted that the company’s development timeline has exceeded expectations, which he believes is promising for its future.
Following the release of its favorable earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced price increases for its Premium plans in the U.S. Starting this month, individual plan users will see a $1 increase, bringing their total to $12; Duo plan users will pay $2 more, totaling $17; and Family plan users will pay an additional $3, making it $20. This marked the first membership price increase in 13 years, which saw an average rise of $1 last July.
Despite the raises, Spotify managed to add seven million net subscribers in the quarter, surpassing its own guidance by one million.
Spotify remains the leading audio streaming platform globally, and a Bloomberg analysis revealed that its users are the least likely to cancel their memberships compared to other audio and video streaming services. However, the path to profitability has been challenging. In 2022, the company experienced a more than two-thirds decline in its stock value due to several quarters of operating losses, prompting the layoffs of 600 employees in January 2023 and an additional cut of 1,500 jobs, roughly 17% of its workforce, less than a year later.