Spotify has announced a record profit for the second quarter of the year, marking a significant turnaround after raising the prices of its Premium subscriptions for the first time last year. The Swedish audio streaming platform reported an operating income of 266 million euros ($289 million), a dramatic improvement from a loss of 247 million euros ($268 million) during the same period in the previous year. Monthly active users also grew 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.” He added that the company’s performance has surpassed its own expectations, which is promising for future growth.
Following the announcement of its positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, the company revealed a price increase for its Premium subscription plans in the U.S. Starting this month, individual plans will increase by $1 to $12, Duo plans will rise by $2 to $17, and Family plans will be $3 more, totaling $20. This increment follows a previous price hike last July, which was the first increase in 13 years and averaged $1.
Despite these price increases, Spotify was able to add seven million net subscribers in the quarter, exceeding its previous estimates by one million.
Known as the leading audio streaming service globally, Spotify users are also seen as the least likely to cancel their subscriptions compared to other streaming services, according to Bloomberg analysis.
However, Spotify’s journey to profitability has not been without challenges. The company’s stock plummeted more than two-thirds in 2022 as it struggled through multiple quarters of operating losses. In January 2023, Spotify announced layoffs affecting 600 employees, and less than a year later, it reduced its workforce by 1,500 jobs, equivalent to approximately 17% of its total staff.