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Spotify Technology SA, the Swedish audio streaming platform, beat analyst expectations in its second-quarter results with its total active users rising 27% to 551 million.
- The company cited strong growth in all regions and among younger Gen Z listeners.
- Premium subscribers rose 17% to 220 million, the company said Tuesday in a statement. That was ahead of the 217.1 million average of analysts estimates compiled by Bloomberg. Revenue, at €3.18 billion, was slightly below expectations.
- The company’s adjusted operating loss was €112 million, beating analysts’ estimates for a loss of €127.4 million.
- The company forecast 572 million active users for its third quarter, 224 million of them premium subscribers. It forecast sales of €3.3 billion for the period.
Key Insights
- On Monday, the streaming service raised prices in the US for the first time since its launch. The standard premium plan now costs $10.99, the same price as Spotify’s primary competitors, Amazon Music and Apple Music.
- Spotify cut 2% of staff in June, primarily in its podcasting division, and pivoted its strategy away from exclusive releases to wide distribution. The company did so to focus on growing its advertising business and reaching more listeners.
- The company has additionally looked to cut costs by planning to introduce more expensive subscription tiers and reducing its real estate footprint.
Market Reaction
- Shares rose 3.7% in trading before markets opened in New York. They were down 4.7% on Monday, though they have more than doubled in the year to date.
Spotify raises prices for its premium plans across several countries
(Reuters) -Spotify Technology on Monday raised prices for its premium plans across several countries including the United States and United Kingdom, as the music-streaming company looks to boost profitability in an uncertain economy.
The move will result in a $1 price increase for Spotify’s U.S. plans, with the premium single now starting at $10.99, duo at $14.99, family at $16.99 and the student plan at $5.99.
Spotify has moved in recent months to boost margins with hundreds of layoffs and a restructuring of the podcast unit, which it had built up with billions of dollars in investment.
The price increases come at a time when streaming services, both audio and video, are under rising investor pressure to boost profitability after years of prioritizing user growth.
Rivals services from Apple and Amazon.com and Tidal have all increased prices this year, while YouTube also hiked prices last week on its monthly and annual premium plans in the U.S. for the first time since the subscription service was launched in 2018.
Spotify, which had indicated in April that it would raise prices in 2023, had also raised prices in 46 countries last year.
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