Spotify has announced a record profit for a recent quarter, marking a significant turnaround since raising the price of its Premium plans for the first time in its history just a year ago.
In its second quarter, the Swedish audio streaming service reported an operating income of 266 million euros (approximately $289 million), in stark contrast to a loss of 247 million euros ($268 million) reported during the same period last year. Additionally, Spotify’s monthly active user base increased by 14% year-over-year, reaching 626 million.
“It’s an exciting time at Spotify. We continue to innovate and demonstrate that we are not only a fantastic product but also an emerging business success,” stated CEO Daniel Ek. He added that the company is progressing faster than they initially anticipated, which is promising for the future.
Following the release of its strong earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced price increases for its Premium services in the U.S. Starting this month, individual plan users will see a $1 increase to $12, while Duo plans will become $2 more expensive at $17, and Family plans will rise by $3 to $20. This marked the first price adjustment in 13 years, averaging a $1 increase across memberships.
Despite these price hikes, Spotify added seven million new subscribers in the quarter, which was one million more than its original guidance.
As the leading audio streaming platform globally, Spotify users exhibit a lower tendency to cancel their subscriptions compared to other audio and video streaming services, according to a Bloomberg analysis.
However, the company’s financial journey has not been without its challenges. In 2022, Spotify’s stock declined by more than two-thirds as it faced several quarters of operational losses. In January 2023, the company announced the layoff of 600 employees, followed by another reduction of 1,500 jobs, representing around 17% of its workforce, less than a year later.