Spotify has announced a 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 reported an operating income of 266 million euros ($289 million), compared to a loss of 247 million euros ($268 million) during the same period last year. The company also experienced a 14% increase in monthly active users, reaching 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. 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.
In June, Spotify announced a price increase for its Premium users in the U.S., effective this month. Individual plan subscribers will pay $12, an increase of $1, while Duo plans will cost $17, up by $2, and Family plans will now be $20, reflecting a $3 increase. This price adjustment followed a similar raise in July, which was the first in 13 years.
Despite the higher membership fees, Spotify successfully gained seven million net subscribers in the quarter, surpassing its earlier guidance by one million.
As the leading audio streaming service globally, Spotify users are reportedly the least likely to cancel their subscriptions compared to other audio or video streaming platforms, according to a Bloomberg analysis.
However, Spotify’s financial journey has faced challenges; the company’s stock plummeted by more than two-thirds in 2022 due to consecutive quarters of operating losses. The company announced layoffs affecting 600 employees in January 2023, followed by another round of cuts in which approximately 1,500 jobs, or 17% of its workforce, were eliminated less than a year later.