Spotify has announced record profits for the second quarter, marking a significant turnaround after it first raised prices for its Premium plans last year. The Swedish audio streaming platform reported an operating income of 266 million euros ($289 million), a stark contrast to the 247 million euro ($268 million) loss reported in the same quarter the previous year. Additionally, the number of monthly active users increased by 14% year-over-year, reaching 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 the earnings announcement, Spotify’s stock rose almost 14% in pre-market trading. In June, the company disclosed plans to increase Premium subscription prices in the U.S., effective this month. Individual plan users will see a $1 increase to $12, Duo plan users will pay $2 more, bringing their total to $17, and Family plan users will see a $3 increase to $20. This marked the first price increase in 13 years for the streaming service. Despite these hikes, Spotify successfully added seven million net subscribers during the quarter, surpassing its earlier projections by one million.
Spotify remains the leading audio streaming service globally, boasting a loyal customer base that is less inclined to cancel subscriptions compared to competitors, according to a Bloomberg analysis. However, the company has faced challenges in the past, with its stock value decreasing by over two-thirds in 2022 due to several quarters of operating losses. In response, Spotify initiated job cuts, first laying off 600 employees in January 2023 and then an additional 1,500, roughly 17% of its workforce, in an effort to stabilize the business.