Spotify has announced record profits for the second quarter, just a year after implementing its first-ever price increase for Premium plans. The Swedish audio streaming service reported an operating income of 266 million euros, approximately $289 million, a significant turnaround from a loss of 247 million euros, or $268 million, during the same period last year. The platform also saw its monthly active users rise by 14% year-over-year, reaching a total of 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. 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 better-than-expected earnings, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify confirmed it would be raising prices for its Premium plans in the U.S. Starting this month, individual plans will cost $12, an increase of $1; Duo plans will rise by $2 to $17; and Family plans will go up by $3 to $20. Last July marked the first price increase in 13 years, averaging about $1 across all plans.
Despite the price hikes, Spotify managed to add seven million net subscribers in the latest quarter, exceeding its prior forecast by one million.
Spotify continues to hold the title of the most popular audio streaming service globally, with a Bloomberg analysis noting that its users are the least likely to cancel their subscriptions compared to other audio and video platforms. However, the company has faced financial challenges in the past, experiencing a significant stock decline of over 66% in 2022 amid several quarters of operating losses. In response, Spotify announced layoffs impacting 600 employees in January 2023 and subsequently reduced its workforce by an additional 1,500 jobs, or around 17% of its total staff.