Spotify has announced another quarter of record profits, marking a significant turnaround since it raised the prices of its Premium plans for the first time ever a year ago. In the second quarter, the Swedish audio streaming platform reported an operating income of 266 million euros ($289 million), a notable improvement from a loss of 247 million euros ($268 million) during the same period last year. The company also saw a 14% increase in monthly active users, reaching 626 million.
CEO Daniel Ek expressed his enthusiasm, 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 better-than-expected earnings, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify implemented a price increase for its Premium users in the U.S. Starting this month, individual plan users will see a $1 increase to $12, Duo plan users will pay $2 more to reach $17, and Family plan users will have to pay $3 more, totaling $20. This change followed a similar average price increase of $1 for memberships that took place last July, the first in 13 years.
Despite these price hikes, Spotify managed to add seven million net subscribers this quarter, exceeding its previous expectations by one million.
As the reigning leader in audio streaming globally, Spotify enjoys a lower rate of membership cancellations compared to other audio and video streaming platforms, according to a Bloomberg analysis.
However, the company’s financial journey has not always been smooth. In 2022, Spotify’s stock value dropped by more than two-thirds, as the business experienced multiple quarters of operational losses. In early 2023, the company announced a reduction of 600 employees and followed that with another round of layoffs that saw 1,500 jobs cut, representing around 17% of its workforce.