Spotify has achieved another quarter of record profits, marking a significant turnaround after it increased the prices 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) in the second quarter, a stark contrast to a loss of 247 million euros ($268 million) during the same period a year earlier. The company also saw a 14% annual growth in monthly active users, reaching 626 million.
“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,” stated CEO Daniel Ek. He expressed optimism about the company’s progress, noting that it has surpassed even their expectations, which bodes well for the future.
Following the company’s stronger-than-anticipated earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price hike for its Premium services in the U.S., which takes effect this month. Individual plan users will pay $1 more ($12), Duo plan users will see a $2 increase ($17), and Family plan subscribers will face a $3 rise ($20). This marked the first membership cost increase in 13 years, which occurred in July 2022, averaging an additional $1.
Despite these price hikes, Spotify was able to add seven million net subscribers during the quarter, exceeding its previous guidance by one million.
As the world’s leading audio streaming platform, Spotify users are reportedly the least likely among streaming services to cancel their subscriptions, according to a Bloomberg analysis.
However, the company’s financial history has not been without challenges; Spotify’s stock lost more than two-thirds of its value in 2022, as it experienced multiple quarters of operating losses. In January 2023, the company announced the layoff of 600 employees, and less than a year later, it eliminated 1,500 jobs, which is about 17% of its workforce.