Spotify has announced another quarter of record profits, marking a year since the company increased the prices of its Premium plans for the first time ever. The audio streaming service reported an operating income of 266 million euros ($289 million) in the second quarter, a significant improvement from a loss of 247 million euros ($268 million) during the same period last year. Monthly active users also saw a 14% year-over-year increase, reaching 626 million.
CEO Daniel Ek expressed enthusiasm about the company’s performance, 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 reaction to the positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price increase for its Premium services in the U.S. Starting this month, individual plan users will see their fees rise by $1 to $12, while Duo (two-person) plans will increase by $2 to $17, and Family plans will go up by $3 to $20. This followed an average price hike of $1 for all membership types last July, marking the first increase in 13 years.
Despite the price hikes, Spotify was able to add seven million net subscribers in the last quarter, outpacing its previous forecasts by one million.
As the leading audio streaming service globally, Spotify has been found to have users who are less likely to cancel their subscriptions compared to those of other audio and video streaming platforms, according to a Bloomberg analysis.
However, Spotify’s financial trajectory was not always positive. In 2022, the company’s stock plummeted by more than two-thirds as it experienced multiple quarters of operating losses. In January 2023, Spotify announced plans to lay off 600 employees, and less than a year later, it cut 1,500 jobs, amounting to around 17% of its workforce.