Spotify has announced a record profit for the second quarter, marking a significant turnaround since it first raised the price of its Premium subscriptions last year.
The Swedish audio streaming company reported an operating income of 266 million euros ($289 million), a substantial improvement compared to a loss of 247 million euros ($268 million) in the same period last year. The number of monthly active users also climbed 14% year-over-year to reach 626 million.
CEO Daniel Ek expressed optimism in a statement, highlighting that Spotify is not only becoming a great product but is also evolving into a robust business. He noted that the company is achieving results that have surpassed even its own expectations, paving the way for a promising future.
Following the positive earnings report, Spotify’s stock saw a nearly 14% surge in pre-market trading on Tuesday.
In June, Spotify announced a price increase for its Premium subscriptions in the U.S. Starting this month, individual plan users will pay an additional $1, bringing the total to $12, while Duo plan users will see a $2 increase to $17, and Family plan subscribers will pay $3 more, totaling $20. This price hike was the first in 13 years and followed an average increase of $1 the previous July.
Despite the price hikes, Spotify successfully added seven million net subscribers during the quarter, exceeding its guidance by one million.
As the leading audio streaming platform globally, Spotify has been reported as having the lowest membership cancellation rates among audio and video streaming services, according to a Bloomberg analysis.
However, the company has faced financial challenges previously, with its stock losing over two-thirds of its value in 2022 amidst several quarters of operating losses. Earlier this year, Spotify announced layoffs affecting 600 employees, and by January 2023, the company had cut approximately 1,500 jobs, representing about 17% of its workforce.