Spotify (NYSE:SPOT) issued third-quarter guidance that missed expectations, citing negative currency impacts and rising payroll costs. Shares dropped over 11% in early U.S. trading Tuesday.

Despite previous cost-cutting measures, second-quarter operating expenses rose 8% from a year earlier. Share-based compensation totaled €115 million, exceeding internal forecasts by €98 million, due largely to increased stock prices and related tax burdens.

Revenue for the quarter increased 10% year-over-year to €4.19 billion, missing the Bloomberg consensus of €4.27 billion. Operating income was €406 million, falling short of projections of €490.3 million.

Spotify guided for Q3 operating income of €485 million on revenue of €4.2 billion—both below market estimates.

Still, the company projected monthly active users will reach 710 million in Q3, exceeding expectations. Management said they remain focused on expanding margins and driving growth into 2025.