Spotify announced a record profit for the second quarter, marking a significant turnaround since it raised the prices of its Premium plans for the first time last year. The Swedish audio streaming company reported an operating income of 266 million euros ($289 million), a considerable improvement from a loss of 247 million euros ($268 million) during the same period last year. Monthly active users increased 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, which is promising for the future.”
Following the positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price increase for its Premium subscribers 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 users will see a $3 hike to $20. This marked the first membership cost increase in 13 years, which occurred last July when prices went up by an average of $1.
Notably, despite the price hikes, Spotify managed to gain seven million net subscribers in the quarter, surpassing its previous guidance by one million.
As the world’s leading audio streaming service, Spotify users reportedly show the least likelihood of canceling subscriptions compared to competitors, according to a Bloomberg analysis.
However, the company’s financial journey has faced challenges. In 2022, Spotify’s stock fell more than two-thirds of its value due to a series of operational losses. In January 2023, it announced the layoff of 600 employees, followed by another reduction of about 1,500 jobs, or approximately 17% of its workforce, less than a year later.