Spotify has announced another quarter of record profits, a year after it increased the price of its Premium plans for the first time. The Swedish audio streaming service reported an operating income of 266 million euros ($289 million) in the second quarter, a significant improvement compared to a loss of 247 million euros ($268 million) during the same period last year. The number of monthly active users rose by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed enthusiasm about the company’s success, 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 positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced price increases for its Premium services in the U.S. Starting this month, individual plan subscribers will pay $1 more, bringing the total to $12. Duo plan subscribers will see an increase of $2, raising their cost to $17, while Family plan users will pay an additional $3, totaling $20. This marked the first price hike for Spotify in 13 years, with an average increase of $1 implemented last July.
Despite the price hikes, Spotify managed to add seven million net subscribers in the latest quarter, surpassing its previous guidance by one million.
As the world’s leading audio streaming platform, Spotify has demonstrated strong user retention, with a Bloomberg analysis indicating that its users are the least likely among streaming services to cancel their memberships. However, the company’s financial performance has not always been favorable; in 2022, Spotify stock suffered a decline of over two-thirds of its value, resulting in multiple quarters of operating losses. In January 2023, the company announced plans to lay off 600 employees, and less than a year later, it reduced its workforce by 1,500 positions, approximately 17% of its staff.