Spotify beat expectations to rack up record profits in Q2. Its earnings report shows €3.81b ($4.13b)—a 20% YOY increase resulting in a net profit of €274m. The numbers were fueled by a 16% drop in operating costs stemming from layoffs and a "lower marketing spend."

Monthly active users grew 14% to 626m, subscribers increased 12% to 246m, gross margin hit 29.2% and operating income rose to €266m.

In its report, which can be perused here, Spotify touted a number of new services as growth drivers, including live listening parties, AI playlists and the expansion of its video podcast offerings.

“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,” said CEO Daniel Ek (pictured). “We're doing so on a timeline that has exceeded even our own expectations. This all bodes very well for the future.”

For Q3, Spotify expects to add another 5m paid subscribers for a total of 251m. Ek also floated the eventual launch of a more expensive iteration of the service at "around [a] $17 or $18" price point but said little else other than that it would offer "all of the benefits that this normal Spotify version has but a lot more control, a lot higher quality across the board."

The earnings news comes on the heels of Spotify's raising prices for its U.S. plans last month. The company is also facing legal challenges about its premium content and whether it's being licensed properly and/or at the correct royalty rate.

Spotify stock was up more than 37 points (+12.7%), a three-year high, in the wake of the news. The stock closed out the day at 330.79.