Spotify has announced another quarter of record profits, marking a significant turnaround from last year when it first increased its Premium plan prices.
The Swedish audio streaming platform reported an operating income of 266 million euros ($289 million) for the second quarter, a stark contrast to a loss of 247 million euros ($268 million) in the same period last year. Additionally, the number of monthly active users surged by 14% year-over-year to reach 626 million.
CEO Daniel Ek expressed optimism about the company’s direction, 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 announcement of its better-than-expected earnings, Spotify’s stock saw a nearly 14% increase in pre-market trading on Tuesday.
In June, Spotify revealed it would raise prices for its Premium users in the U.S. Starting this month, individual plan users will pay an additional $1 ($12 total), while Duo plans (for two people) will increase by $2 ($17 total), and Family plans will see a $3 hike ($20 total). This price adjustment follows a similar increase in July 2022, the first in 13 years, which averaged $1.
Despite these price hikes, Spotify managed to add seven million net subscribers in the last quarter, surpassing its previous forecast by one million.
According to a Bloomberg analysis, Spotify remains the most popular audio streaming service globally, and its users are among the least likely to cancel their subscriptions compared to other audio and video streaming services. However, the company’s financial health has been inconsistent, suffering a 66% decline in stock value in 2022 due to multiple quarters of operating losses. The company has since made significant workforce reductions, announcing the layoffs of 600 employees in January 2023 and another 1,500 jobs—about 17% of its workforce—less than a year later.