Spotify has announced a record profit for the second quarter, marking a significant turnaround from a loss a year ago, coinciding with its recent price increase for Premium subscriptions.
The audio streaming platform reported an operating income of 266 million euros ($289 million) for the second quarter, a substantial improvement compared to a loss of 247 million euros ($268 million) during the same period last year. Additionally, the number of monthly active users surged by 14% year-over-year, 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.”
Following the positive earnings report, Spotify’s stock rose nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced price increases for its Premium plans in the U.S. Starting this month, individual plans will cost $12, an increase of $1; Duo plans will rise to $17, up by $2; and Family plans will be priced at $20, which is $3 more. This marked the first increase in membership costs in 13 years, with an average raise of $1 implemented last July.
Despite the price hikes, Spotify added seven million net subscribers during the quarter, surpassing its initial projections by one million.
As the leading audio streaming service globally, Spotify customers 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 history has seen challenges. The company’s stock value plummeted by more than two-thirds in 2022 amid several quarters of operating losses. In January 2023, Spotify announced it would reduce its workforce by 600 employees, and less than a year later, it made further cuts, laying off 1,500 staff members, accounting for roughly 17% of its workforce.