Spotify has reported a record quarter of profits, marking a significant turnaround since it implemented its first-ever price increase for Premium plans a year ago.
The Swedish audio streaming service announced an operating income of 266 million euros ($289 million) for the second quarter, in stark contrast to a loss of 247 million euros ($268 million) recorded a year earlier. The platform experienced a 14% year-on-year growth in monthly active users, bringing the total to 626 million.
CEO Daniel Ek expressed optimism about the company’s trajectory, 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.”
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 plans to increase its prices for Premium subscribers in the U.S. Effective this month, individual plan users will see a $1 increase to $12, Duo plan users will pay an additional $2, totaling $17, while Family plan subscribers will face a $3 increase, raising their cost to $20. This marked the first price hike in 13 years.
Despite the increased costs, Spotify successfully added seven million net subscribers in the latest quarter, exceeding its projections by one million.
As the leading audio streaming service globally, Spotify boasts users who are less inclined to cancel their memberships compared to other streaming platforms, according to a Bloomberg analysis.
However, the company has faced challenges in recent years, with its stock plummeting over two-thirds in value in 2022 due to multiple quarters of operating losses. In early 2023, Spotify announced plans to reduce its workforce by 600 employees, followed by a subsequent cut of 1,500 jobs, which equated to about 17% of its total staff.