Spotify has announced record profits for the second quarter, marking a significant turnaround from losses a year earlier, following its first-ever price hike for Premium plans. The Swedish audio streaming service reported an operating income of 266 million euros ($289 million), up from a loss of 247 million euros ($268 million) in the same quarter last year. Monthly active users increased by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed optimism about the company’s 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.” He added that their progress has surpassed their own expectations, signaling a bright future ahead.
Following the positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday. In June, the company announced new price increases for U.S. Premium users, effective this month. Individual plan users will now pay $12, a $1 increase, while Duo plans will cost $17, up by $2, and Family plans will see a $3 increase to $20. This adjustment follows a previous membership cost raise after 13 years, implemented last July.
Despite the price hikes, Spotify welcomed seven million new net subscribers during the quarter, exceeding its prior forecast by one million. According to a Bloomberg analysis, Spotify remains the most widely used audio streaming platform, with its users showing the lowest rate of membership cancellations compared to other streaming services.
However, Spotify’s financial history has had its challenges, particularly in 2022 when its stock lost over two-thirds of its value due to multiple quarters of operating losses. The company also faced significant workforce reductions, announcing cuts of 600 jobs in January 2023 and an additional 1,500 positions, amounting to roughly 17% of its workforce, less than a year later.