Spotify has announced another record-setting quarter of profits, marking a significant turnaround from previous losses, just a year after it increased the prices of its Premium subscription plans for the first time in its history.
The Swedish audio streaming service reported an operating income of 266 million euros (approximately $289 million) for the second quarter, a considerable improvement from a loss of 247 million euros ($268 million) during the same period last year. The platform also saw an impressive 14% annual increase in monthly active users, 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 this positive earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price hike for its Premium users in the United States. Beginning this month, individual plan users will see an increase of $1 to $12, Duo plan users will pay $2 more bringing their total to $17, and Family plan users will pay $3 more for a total of $20. Previous to this, the company raised membership costs for the first time in 13 years by an average of $1 last July.
Despite these price increases, Spotify welcomed seven million new net subscribers in the quarter, exceeding its prior guidance by one million.
As the largest audio streaming service globally, Spotify users are reportedly the least likely to cancel their subscriptions compared to users of other audio and video streaming services, according to a Bloomberg analysis.
However, Spotify’s financial journey has not always been smooth. The company’s stock lost more than 66% of its value in 2022 amid several quarters of operating losses. In January 2023, Spotify announced layoffs of 600 employees, and less than a year later, it cut an additional 1,500 jobs, representing about 17% of its workforce.