Spotify has announced a record quarter for profits, marking a significant turnaround since it raised the price of its Premium plans for the first time last year. The Swedish audio streaming giant reported an operating income of 266 million euros ($289 million) for the second quarter, sharply contrasting with a loss of 247 million euros ($268 million) during the same period last year. The number of monthly active users also rose, showing a 14% annual increase to reach 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 their timeline for growth has surpassed their expectations, suggesting a bright future ahead.
Following the positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify implemented price increases for its Premium subscribers in the U.S., effective this month. Individual plan users will now pay an additional $1 ($12 in total), Duo plan users will see a $2 increase ($17), and Family plan users will pay $3 more, bringing the total to $20. This adjustment follows a $1 price hike on average, the first in 13 years, that occurred last July.
Despite these price hikes, Spotify successfully added seven million net subscribers in the last quarter, surpassing its forecast by one million.
Recognized as the leading audio streaming service globally, Spotify users are reportedly the least inclined to cancel their subscriptions compared to other audio or video streaming platforms, according to a Bloomberg analysis.
However, the path to profitability has not always been smooth for Spotify. In 2022, the stock plummeted by over two-thirds amid several quarters of operating losses. In early 2023, the company announced plans to lay off 600 employees, followed by a substantial cut of 1,500 jobs, or approximately 17% of its workforce, less than a year later.