Spotify has announced record profits for another quarter, following its decision to raise the prices of its Premium subscription plans last year for the first time ever.
The Swedish audio streaming giant reported an operating income of 266 million euros (approximately $289 million) in the second quarter, a significant turnaround from a loss of 247 million euros ($268 million) during the same period last year. The platform also saw its monthly active users increase by 14% year-over-year, reaching 626 million.
“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,” CEO Daniel Ek stated. He emphasized that the company’s progress has surpassed even their own expectations, signaling a positive outlook for the future.
Following the announcement of its better-than-anticipated earnings report, Spotify shares surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced price increases for its Premium users in the U.S. Starting this month, individual plan users will see a $1 increase to $12, Duo plan users will pay $2 more at $17, and Family plan subscribers will have an additional $3 charge, bringing their total to $20. Prior to this, the company had last raised its membership costs in July 2022, marking the first increase in 13 years.
Despite the price hikes, Spotify successfully added seven million net subscribers in the recent quarter, which exceeded its earlier guidance by one million.
As the world’s leading audio streaming service, Spotify’s users exhibit the lowest propensity to cancel their subscriptions compared to any other audio or video streaming platform, according to a Bloomberg analysis.
However, Spotify’s financial performance has not always been robust. In 2022, the company’s stock value plummeted by over two-thirds due to several quarters of operating losses. In January 2023, Spotify announced plans to reduce its workforce by 600 employees. Less than a year later, the company made a more significant cut, laying off 1,500 employees, or about 17% of its staff.