Spotify has announced another quarter of record profits, marking a significant turnaround since it raised the price of its Premium plans for the first time in its history a year ago.
In the second quarter, the Swedish audio streaming service reported an operating income of 266 million euros ($289 million), a remarkable recovery from a loss of 247 million euros ($268 million) in the same period last year. The platform saw a 14% annual increase in monthly active users, reaching a total of 626 million.
CEO Daniel Ek expressed enthusiasm about the company’s progress, 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 this positive earnings report, Spotify’s stock soared nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced that it would increase prices for its Premium subscribers in the U.S. Starting this month, individual plan users will pay $1 more ($12), Duo plan users will pay $2 more ($17), and Family plan users will see an increase of $3 ($20). This price hike came after the previous increase in July 2022, which was the first in 13 years, averaging $1 across plans.
Despite the price increases, Spotify added seven million net subscribers in the quarter, exceeding previous forecasts by one million.
As the leading audio streaming service worldwide, Spotify users are reportedly the least likely to cancel their subscriptions compared to other audio and video streaming platforms, according to a Bloomberg analysis.
However, Spotify’s financial journey hasn’t always been smooth. In 2022, the company’s stock value plummeted by more than two-thirds due to multiple quarters of operating losses. In January 2023, the firm laid off 600 employees, followed by a further reduction of 1,500 jobs, accounting for about 17% of its workforce, less than a year later.