Spotify has reported a record profit for the second quarter, marking a significant turnaround since it raised the price of its Premium plans a year ago. The Swedish audio streaming company posted an operating income of 266 million euros ($289 million), a stark contrast to a loss of 247 million euros ($268 million) during the same period last year. The number of monthly active users surged by 14% year-over-year to reach 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.” He added that their timeline of growth has surpassed expectations, indicating a positive outlook for the future.
Following the announcement of the strong earnings report, Spotify’s stock rose nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price hike for its Premium users in the U.S. Starting this month, individual plan subscribers will see a $1 increase, bringing the cost to $12. Duo plan users will pay $2 more, totaling $17, while family plan subscribers will face a $3 increase, making it $20. This marked the first membership price increase in 13 years, averaging $1.
Despite the increased pricing, Spotify successfully added seven million net subscribers in the quarter, exceeding its previous guidance by one million.
As the leading audio streaming service globally, Spotify users are less likely to cancel their subscriptions compared to those of other audio or video streaming platforms, according to a Bloomberg analysis.
However, the company’s finances have faced challenges in the past. In 2022, Spotify’s stock value plummeted by over two-thirds as it struggled with multiple quarters of operating losses. Earlier this year, the company announced layoffs of 600 employees, which was followed by a further reduction of 1,500 jobs, equating to about 17% of its workforce.