Spotify has announced another quarter of record profits, marking a significant turnaround from last year following its first-ever price increase for Premium subscriptions.
In the second quarter, the Swedish audio streaming giant reported an operating income of 266 million euros (approximately $289 million), compared to a loss of 247 million euros ($268 million) during the same period last year. The company also saw a 14% increase in monthly active users, reaching 626 million.
CEO Daniel Ek expressed optimism about the company’s trajectory, 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. This all bodes very well for the future.”
In reaction to the strong earnings report, Spotify’s stock jumped almost 14% in pre-market trading on Tuesday.
Earlier in June, Spotify announced a price increase for its Premium services in the U.S. Effective 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 be charged an additional $3, bringing their monthly cost to $20. This price adjustment follows an average $1 increase in July 2022, the first hike in 13 years.
Despite the price hikes, Spotify managed to gain seven million net subscribers this quarter, exceeding its previous guidance by one million.
As the leading audio streaming platform globally, Spotify boasts a loyal user base, with a Bloomberg analysis indicating that its subscribers are the least likely to cancel compared to users of other audio and video streaming services.
However, the company’s financial performance has had its challenges. In 2022, Spotify’s stock value plummeted by more than two-thirds due to multiple quarters of operating losses. The company implemented significant workforce reductions, cutting 600 employees in January 2023 and later laying off an additional 1,500 staff members, representing about 17% of its workforce.