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Spotify CEO Ek: 'We'd like to raise prices in 2023' but only when 'timing is right'

Spotify (SPOT) once again decided not to raise prices on its U.S. subscription plan, despite recent hikes at Apple Music (AAPL) and YouTube Premium (GOOGL) — but CEO Daniel Ek hinted an increase could come at some point this year.

"We'd like to raise prices in 2023," the executive said on the company's Q1 earnings call, but cautioned that decision will largely revolve around ongoing negotiations with label partners.

The executive said the music streaming giant raised prices last year in 46 different markets, which continued to outperform despite the increase.

"When the timing is right, we will raise it and that price increase will go down well because we're delivering a lot of value for our customers," he added.

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Spotify reported 515 million monthly active users (MUAs) in the first quarter, beating expectations of 502 million. Premium subscribers also outpaced estimates at 210 million versus the expected 207 million.

BERLIN, GERMANY - MARCH 14: Spotify founder Daniel Ek speaks at the 19th International Conference on Competition at Steigenberger Hotel am Kanzleramt on March 14, 2019 in Berlin, Germany. Ek discussed how fair competition enables consumers and innovators to win. (Photo by Sebastian Reuter/Getty Images for Spotify)
BERLIN, GERMANY - MARCH 14: Spotify founder Daniel Ek speaks at the 19th International Conference on Competition at Steigenberger Hotel am Kanzleramt on March 14, 2019 in Berlin, Germany. Ek discussed how fair competition enables consumers and innovators to win. (Photo by Sebastian Reuter/Getty Images for Spotify) (Sebastian Reuter via Getty Images)

Analysts largely expect Spotify to announce higher subscription fees in the coming months given its recent profitability push.

The company reiterated its guidance of gross margins between 30% to 35% over the long term amid plans to further scale its podcasting and ads business.

Still, execution remains murky amid macroeconomic challenges, particularly surrounding the ad market.

"The quarter was choppy again," Spotify CFO Paul Vogel told investors on the earnings call. "We're optimistic, but also cautious. Maybe cautiously optimistic would be the right word."

Ad market weakness pressured revenue in the quarter, but management maintained the company remains in a solid position: "We feel really good about our relative position in the ad market and how we performed," Vogel said.

In the first quarter, Spotify beat gross margin expectations of 24.9% to reach 25.2%.

The media giant had warned "severance-related charges" would impact results after the company laid off 6% of its workforce earlier this year. Spotify guided a slight Q2 boost in gross margins to 25.5%.

Overall, Ek said the company is "really trying to focus on how can we optimize for growth," adding there are many ways to achieve growth in the near-term, besides just increasing prices.

"We have many tools at our disposal as we're thinking about how to increase growth," he said, referencing more runway for premium subscribers and average revenue per user. "The industry realizes that, and our label partners realizes that as well. That's the constant dialogue we are in."

Alexandra is a Senior Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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