Spotify has announced a record profit for the second quarter, marking a significant turnaround from the operating loss reported just a year ago, shortly after the company raised its Premium subscription prices for the first time.
The streaming giant posted an operating income of 266 million euros ($289 million) for the quarter, a substantial improvement compared to a loss of 247 million euros ($268 million) a year earlier. Additionally, the number of monthly active users rose by 14% year-over-year to reach 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 positive earnings announcement, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced an increase in prices for its Premium services in the U.S. Starting this month, users on individual plans will see their fees rise by $1 to $12, Duo plans will increase by $2 to $17, and Family plans will go up by $3 to $20. This was the company’s first price hike in 13 years for Premium services after an average increase of $1 announced the previous July.
Despite these price hikes, Spotify gained seven million new subscribers during the quarter, exceeding its guidance by one million.
Spotify remains the leading audio streaming service globally and has been noted for having the lowest churn rate among streaming platforms, according to a Bloomberg analysis. However, the company faced significant challenges in 2022, leading to a decline of over 66% in its stock value due to consecutive quarters of operating losses. In January 2023, it announced a reduction of 600 jobs, followed by another cut of 1,500 positions, amounting to about 17% of its workforce less than a year later.