Spotify has announced another quarter of record profits, marking a significant turnaround one year after the company raised the prices of its Premium subscriptions for the first time in history.
The Swedish audio streaming service reported an operating income of 266 million euros ($289 million) for the second quarter, in contrast to a loss of 247 million euros ($268 million) during the same period last year. The number of monthly active users increased by 14% year-on-year, reaching 626 million.
CEO Daniel Ek expressed enthusiasm about the company’s current trajectory, 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 surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify revealed that it would be increasing the prices for Premium users in the United States. Starting this month, individual plan subscribers will pay $1 more, bringing the total to $12, while Duo plan users will see a $2 increase to $17, and Family plan subscribers will pay $3 more, totaling $20. Last July, the company had raised its membership costs for the first time in 13 years by an average of $1.
Despite these price hikes, Spotify managed to gain seven million net subscribers in the recent quarter, surpassing its previous guidance by one million.
Spotify remains the leading audio streaming service globally, with users less likely to cancel their memberships compared to other major streaming platforms, according to a Bloomberg analysis.
However, the company has faced financial challenges in the past. In 2022, Spotify’s stock plummeted by over two-thirds, resulting in several quarters of operational losses. To address these issues, the firm announced the layoff of 600 employees in January 2023, followed by an additional cut of 1,500 jobs, which accounts for approximately 17% of its workforce.