Spotify has announced another quarter of record profits, marking a significant turnaround a year after the company increased the prices of its Premium plans for the first time in its history.
The Swedish audio streaming platform reported an operating income of 266 million euros (approximately $289 million) for the second quarter, a substantial improvement from a loss of 247 million euros (about $268 million) during the same period last year. The number of monthly active users also rose by 14% year-on-year, reaching 626 million.
CEO Daniel Ek expressed enthusiasm 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 positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price hike for its U.S. Premium users. Starting this month, individual plan users will see a $1 increase to $12, Duo plan users will pay $2 more at $17, and Family plan users will face a $3 increase, bringing their total to $20. This was the first membership price increase in 13 years since an average hike of $1 was implemented last July.
Despite the price increases, Spotify successfully added seven million net subscribers in the quarter, exceeding its previous guidance by one million.
As the leading audio streaming service globally, Spotify users are noted to be the least likely to cancel their subscriptions compared to other audio or video streaming platforms, according to a Bloomberg analysis.
However, the company has faced financial challenges in the past. In 2022, Spotify’s stock lost over two-thirds of its value as it dealt with multiple quarters of operating losses. In January 2023, the company announced job cuts of 600 employees, and less than a year later, it laid off 1,500 employees, approximately 17% of its workforce.