Spotify has reported another quarter of record profits, marking a significant turnaround just a year after it increased the prices of its Premium subscription plans for the first time ever.
The Swedish audio streaming service announced an operating income of 266 million euros (approximately $289 million) for the second quarter, compared to a loss of 247 million euros (about $268 million) in the same period last year. The company also experienced a 14% annual 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 developments are occurring faster than expected, which is promising for the company’s future.
Following the release of the favorable earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, the company announced a price increase for its Premium users in the U.S. Effective this month, individual plan subscribers will see their fees rise by $1 to $12, while Duo plans will increase by $2 to $17, and Family plans will rise by $3 to $20. This followed a similar increase in July 2022, the first in 13 years, when membership costs were raised by an average of $1.
Despite the price hikes, Spotify experienced a net gain of seven million subscribers in the quarter, exceeding its previous guidance by one million.
As the world’s leading audio streaming platform, Spotify has been found to have the lowest cancellation rates among major audio and video streaming services, according to a Bloomberg analysis.
However, Spotify has not always enjoyed robust financial performance. In 2022, the company’s stock plummeted by more than two-thirds due to several quarters of operating losses. In response, Spotify announced layoffs affecting 600 employees in January 2023, and less than a year later, it cut approximately 1,500 jobs, which represents around 17% of its workforce.