Spotify has reported a remarkable quarter with record profits, marking a significant turnaround since its first-ever price increase for Premium plans last year.
In the second quarter, the Swedish audio streaming service announced an operating income of 266 million euros (approximately $289 million), a notable improvement from a loss of 247 million euros ($268 million) during the same period last year. The number of monthly active users increased by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed optimism about the company’s growth, 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 its better-than-expected earnings, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, the company revealed price increases for its Premium services in the U.S. Starting this month, individual plan users will pay an additional $1, bringing the total to $12 per month, while Duo plans will increase by $2 to $17, and Family plans will see a $3 hike to $20. This price adjustment came after the company raised its membership costs for the first time in 13 years by an average of $1 in July of the previous year.
Despite these increases, Spotify managed to add seven million net subscribers in the quarter, surpassing its previous guidance by one million.
Spotify remains the leading audio streaming platform globally, and a Bloomberg analysis indicated that its users show a lower tendency to cancel their subscriptions compared to other audio and video streaming services.
However, the company’s financial history has faced challenges. In 2022, Spotify’s stock lost over two-thirds of its value as it reported several quarters of operating losses. In early 2023, the company announced plans to lay off 600 employees, followed by another reduction of approximately 1,500 jobs, which represented about 17% of its workforce.