Spotify has announced a remarkable increase in profits for the second quarter, marking a significant turnaround from the previous year when the company reported losses. The Swedish audio streaming giant posted an operating income of 266 million euros ($289 million), compared to a loss of 247 million euros ($268 million) during the same period in 2022. Monthly active users surged by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed enthusiasm about the company’s progress, highlighting their focus on continuous innovation and business growth. “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 stated, indicating that their achievements have surpassed even their own expectations and bode well for future prospects.
In reaction to the positive earnings report, Spotify’s stock saw a nearly 14% increase in pre-market trading on Tuesday.
In June, Spotify announced a price hike for its Premium subscribers in the United States, effective 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 face a $3 increase to $20. This marked the first membership cost increase in 13 years, with an average rise of $1 initiated last July.
Despite the changes, Spotify managed to gain seven million new subscribers during the quarter, exceeding earlier estimates by one million. A Bloomberg analysis revealed that Spotify remains the most popular audio streaming service worldwide, with subscribers showing a lower likelihood of canceling their memberships compared to other streaming platforms.
However, the company has faced challenges in its financial journey. In 2022, Spotify stock plummeted more than two-thirds of its value as it grappled with several quarters of financial losses. In January 2023, Spotify announced a workforce reduction of 600 employees, followed by a further cut of 1,500 jobs, accounting for approximately 17% of its total staff, less than a year later.