Spotify has announced another record profit quarter, marking a significant turnaround since raising the prices of its Premium plans last year for the first time in its history.
The Swedish audio streaming giant reported an operating income of 266 million euros (approximately $289 million) in the second quarter, a stark contrast to a loss of 247 million euros ($268 million) recorded during the same period the previous year. Monthly active users increased by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed optimism, 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 report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, Spotify announced a price increase for its Premium subscriptions in the U.S. Starting this month, individual plan users will see their monthly fee increase by $1 to $12, Duo plan users will pay $2 more at $17, and Family plan subscribers will face a $3 increase, bringing their monthly total to $20. This price hike followed an average $1 increase last July, which was the first adjustment in 13 years.
Remarkably, despite the price adjustments, Spotify gained an additional seven million net subscribers during the quarter, exceeding its previous guidance by one million.
As the leading audio streaming service globally, Spotify users are noted for having the lowest cancellation rates compared to other audio or video streaming services, according to a Bloomberg analysis.
However, the company’s financial situation has not always been robust. In 2022, Spotify’s stock lost more than two-thirds of its value as the company encountered multiple quarters of operating losses. In January 2023, Spotify announced plans to lay off 600 employees, and less than a year later, it reduced its workforce by an additional 1,500 jobs, which amounted to around 17% of its total staff.