Spotify has reported a record profit for the second quarter, marking a significant turnaround since it implemented its first-ever price increase for Premium plans a year ago. The Swedish audio streaming company announced an operating income of 266 million euros ($289 million) for the quarter, a sharp contrast to 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 optimism, 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 bodes very well for the future.”
Following the positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday. In June, the company announced an increase in Premium subscription prices in the U.S. Starting this month, individual plan users will see a $1 increase to $12, Duo plan users will pay $2 more for a total of $17, and Family plan users will experience a $3 increase to $20. The price change came after the company raised membership costs for the first time in 13 years by an average of $1 in July of the previous year.
Despite these price hikes, Spotify gained seven million net subscribers in the quarter, surpassing its own guidance by one million. A recent Bloomberg analysis noted that Spotify remains the leading audio streaming platform globally, with its users being less likely to cancel their subscriptions compared to those of competitors in the audio and video streaming sector.
While the company is currently enjoying financial growth, it faced challenges in 2022, when Spotify’s stock lost more than two-thirds of its value due to several quarters of operating losses. In early 2023, the company announced a workforce reduction of 600 employees, followed by a further cut of 1,500 jobs, accounting for roughly 17% of its workforce.