Spotify has announced another record profit quarter, marking a significant turnaround from previous financial challenges just a year after increasing the prices of its Premium subscription plans for the first time ever.
The Swedish audio streaming giant reported an operating income of 266 million euros ($289 million) in the second quarter, contrasting with a loss of 247 million euros ($268 million) during the same period last year. The number of monthly active users grew 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. We are doing so on a timeline that has exceeded even our own expectations. This all bodes very well for the future.”
Following the announcement of better-than-expected earnings, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price hike for its Premium users in the U.S. Starting this month, individual plan users will pay $12, an increase of $1, while Duo plan users will see their costs rise by $2 to $17, and Family plan subscriptions will go up by $3 to $20. This marked the first increase in membership costs in 13 years, which averaged $1 last July.
Despite the price increases, Spotify managed to gain seven million net subscribers in the quarter, exceeding its earlier expectations by one million.
As the most popular audio streaming service globally, Spotify’s users are notably less likely to cancel their subscriptions compared to those of other audio or video streaming platforms, according to a Bloomberg analysis.
However, the company’s financial outlook was not always as positive. In 2022, Spotify’s stock plummeted by over two-thirds due to multiple quarters of operating losses. In early 2023, the company announced layoffs of 600 employees, and less than a year later, it cut another 1,500 positions, accounting for approximately 17% of its workforce.