Spotify has announced record profits, but the music streaming heavyweight will still go ahead with raising its subscription prices next month.
The Swedish company’s quarterly gross profit was more than €1bn for the first time after it reigned in marketing spending, although that meant the music-streaming giant missed its forecast for monthly active users.
The results come as customers in the UK are being told that monthly individual subscription charges are increasing by £1 to £11.99 in May.
Meanwhile, the price of a family subscription is going up from £17.99 to £19.99.
The price jump comes after it had already increased charges by £1 for both individual and family subscriptions in August last year, although that was the first time the company had increased its premium prices since the service launched in 2008.
Spotify has been growing its user base for years by offering promotions and investing in podcasts and audiobooks.
But since last year it started to cut costs, including through layoffs and its marketing budget, to boost margins and profits.
“We are going to add back some marketing spend over the year,” CEO Daniel Ek said.
“Because we want to keep on having the growth and we saw that in some territories, we may have pulled back a little bit too much,” he added.
Gross margins rose to 27.6 per cent in the quarter from 25.2 per cent a year earlier, helped partly by profits in its podcast business.
Spotify invested over €1bn to build up its podcast business, including spending hundreds of millions on popular shows such as The Joe Rogan Experience.
The company’s quarterly revenue rose 20 per cent to €3.64bn euros, beating estimates of €3.61bn.
Spotify has raised prices to boost revenue and experimented with different subscription plans.
“We are also going to add a music-only tier for those consumers that only care about the music side,” Mr Ek said.
In the past few days, Taylor Swift’s 11th studio album The Tortured Poets Department has broken new records for the streaming giant.
Her critically-acclaimed new album became Spotify’s most-streamed album in a single day on Friday while Ms Swift became the most-streamed artist in a single day in the company’s history.
Further records were also broken, including the first album in Spotify’s history to have more than 300million streams in a single day and most-streamed song in a single day.
Spotify was contacted for further comment.