Spotify Technology surpassed revenue expectations with their recent second-quarter earnings on Tuesday, July 23. According to Yahoo Finance, the company posted an adjusted profit as its recent efficiency strategy began to show results. Following the earnings report, Spotify's stock surged more than 10% in premarket trading, reflecting investor confidence in the company's turnaround plan.

In June, VCPost learned that Spotify will increase the prices of its premium US subscription plans, with the hikes taking effect this month, which coincides with a higher-priced audio bundle that includes music, podcasts, and audiobooks. This follows a similar price increase last summer. 

Besides adjusting prices, Spotify has implemented multiple rounds of layoffs and introduced new initiatives to boost growth and improve margins.

READ MORE: Spotify Raises Premium Plan Prices in the US as Company Cuts Marketing Costs

Spotify 2024 Second Quarter Earnings

For the second quarter, Yahoo Finance detailed that Spotify reported an operating income of 266 million euros ($289 million), or 1.33 euros ($1.44) per share, compared to expected 1.04 euros ($1.13) per share, and an improvement from a loss of 247 million euros ($267 million) in the same period last year. This performance exceeded the company's guidance of 250 million euros ($251 million), driven by lower personnel and marketing costs. 

Gross margins also improved, coming in at 29.2%, above company guidance of 28.1%. 

The streaming giant also provided a strong outlook for the third quarter, anticipating an operating income of 405 million euros ($440 million), well above Wall Street's expectations of 298 million euros ($323 million). Spotify expects its margins to rise to 30.2% in the third quarter, driven by improvements in music and podcasting.

Overall, the revenue met expectations, totaling 3.81 billion euros ($4.14 billion), a 20% increase compared to the second quarter of 2023. 

Spotify anticipates revenue to reach 4 billion euros ($4.34 billion) in the third quarter, up from 3.4 billion euros ($3.69 billion) in the same period last year. 

However, total monthly active users (MAUs) came in slightly below company estimates at 626 million, though this still represented a 14% year-over-year increase. Premium subscribers exceeded expectations, reaching 246 million, a 12% increase from the previous year, with the company projecting further growth to 251 million in the third quarter.

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