Spotify jumps 16% following a shift to profitability and an increase in paid subscribers.

Shares of Spotify Technology SA saw their largest surge in nearly two years following the company's announcement that it had turned a profit in the first quarter, driven by an increase in subscribers and the introduction of new features.

According to a statement released by the Swedish company on Tuesday, paid subscribers grew by 14% year over year to reach 239 million, meeting analysts' expectations. However, total active users, including those on free plans with advertising, reached 615 million, slightly below analysts' forecast of 617.9 million.

Spotify's shares climbed as much as 16% to $314.80 in New York, marking the largest intraday gain since July 2022.

In an effort to diversify its revenue streams beyond music streaming, Spotify has expanded into other audio entertainment categories such as audiobooks. After implementing its first price increase in over a decade last year, Spotify plans to raise prices again by the end of the month. The company is also exploring new subscription tiers, including one that excludes audiobooks for a reduced monthly fee, as well as a music-only option.

Total revenue grew by 20% to €3.6 billion ($3.8 billion), resulting in a net income of €197 million. Adjusted operating profit reached €168 million, a new record high for the company.

Spotify introduced audiobooks to its subscription plans last year and has since expanded into six markets. Approximately 25% of users with access to the audiobook offering have engaged with the content at least once.

While Spotify has been reducing its investment in podcasts and programming, it renewed its distribution deal with comedian Joe Rogan in February and began distributing his show more widely on platforms like YouTube and Apple Podcasts.

For the second quarter, Spotify forecasts 631 million active users, including 245 million premium subscribers, falling short of analysts' expectations of 637.1 million. The company anticipates sales of €3.8 billion, surpassing the average analyst estimate of €3.76 billion. Additionally, Spotify forecasts an operating income of €250 million, higher than analysts' estimates of €175.3 million.