Spotify announced record profits for the second quarter, marking a significant turnaround after it raised the prices of its Premium plans for the first time a year ago. The Swedish audio streaming service reported an operating income of 266 million euros ($289 million), contrasting sharply with a loss of 247 million euros ($268 million) during the same period last year. The number of monthly active users also increased by 14% year-over-year, reaching 626 million.
CEO Daniel Ek expressed optimism about the company’s direction, 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.” He noted that the progress has surpassed their own expectations, suggesting a positive outlook for the future.
Following the release of its earnings report, Spotify’s stock surged nearly 14% in pre-market trading on Tuesday.
In June, the company announced a price increase for its U.S. Premium users, which took effect this month. Individual plan subscribers will see an increase of $1, bringing their total to $12, while Duo plan users will pay $2 more, totaling $17. Family plan prices will rise by $3 to $20. This was the company’s first membership cost increase in 13 years, averaging a $1 hike last July.
Despite these price hikes, Spotify successfully added seven million net subscribers in the quarter, surpassing its forecast by one million.
As the leading audio streaming platform globally, Spotify has been noted for having the lowest cancellation rates compared to other audio and video streaming services, according to a Bloomberg analysis. However, the company has faced financial difficulties in the past, losing over two-thirds of its stock value in 2022 amid several quarters of operating losses. In January 2023, Spotify announced a reduction of 600 employees, followed by a further cut of 1,500 jobs, representing about 17% of its workforce, less than a year later.