Spotify has announced another quarter of record profits following the first-ever price increase of its Premium plans last year.
The Swedish audio streaming platform reported an operating income of 266 million euros ($289 million) in the second quarter, a significant turnaround from a loss of 247 million euros ($268 million) during the same period last year. Monthly active users rose by 14% year-over-year 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. We are doing so on a timeline that has exceeded even our own expectations. This all bodes very well for the future.”
In pre-market trading on Tuesday, Spotify’s stock surged nearly 14% following its strong earnings report.
Earlier this month, Spotify announced that it would be increasing prices for Premium users in the United States. Individual plan users will see an increase of $1, bringing their monthly fee to $12, while Duo plan users will pay $2 more, totaling $17, and Family plan users will pay $3 more, for a total of $20. This marks the first membership cost increase in 13 years when prices were raised by an average of $1 last July.
Despite these price hikes, Spotify successfully added seven million net subscribers during the quarter, exceeding the company’s own forecast by one million.
Spotify remains the leading audio streaming service globally, with user retention rates significantly higher compared to other audio or video streaming services, according to a Bloomberg analysis.
However, the company’s financials faced challenges in the past, with Spotify stock plummeting by over two-thirds in 2022 due to several quarters of operational losses. In January 2023, the company announced the layoff of 600 employees, followed by another reduction of 1,500 jobs, which accounts for about 17% of its workforce, less than a year later.