Spotify has reported a record quarterly profit, marking a significant turnaround one year after the company raised prices for its Premium plans for the first time in its history.
The Swedish music streaming service announced an operating income of 266 million euros (approximately $289 million) for the second quarter, a stark contrast to the loss of 247 million euros ($268 million) recorded during the same period last year. Monthly active users also saw a 14% year-on-year increase, reaching 626 million.
“I’m excited about the current phase at Spotify. We continue to innovate and demonstrate that we are not just a top-tier product, but also a robust business,” stated CEO Daniel Ek. He added that the company’s success has outpaced even its own expectations, which bodes well for future prospects.
Following the positive earnings report, 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. Beginning this month, individual plan users will pay $12 per month, an increase of $1, while Duo plan users will see an increase of $2 to $17, and Family plan users will now pay $20, a $3 increase. Last July marked the first time in 13 years that the company raised membership costs, averaging an increase of $1.
Despite the price adjustments, Spotify experienced a net gain of seven million subscribers during the quarter, surpassing its previous guidance by one million.
Spotify remains the leading audio streaming platform globally, with users less likely to cancel their subscriptions compared to other streaming services, according to a Bloomberg analysis. However, the company’s financial history has not always been favorable; Spotify’s stock plummeted by over two-thirds in 2022 due to consecutive quarters of losses. In January 2023, the company announced it would lay off 600 employees, and less than a year later made further cuts, eliminating 1,500 jobs, which accounted for about 17% of its workforce.