Daniel Ek Isn’t Happy with Spotify’s Ad Business

Spotify shares dropped more than 10% after the audio streaming giant released its second-quarter financial results, Andrew Nusca reported for Fortune Tech.

The company posted a net loss of about $100 million in Q2.

On the audience front, things looked strong. The Swedish company recorded 696 million monthly active users (MAUs), up 11%, surpassing its own forecast by seven million.

Paid subscribers also impressed, rising 12% to 276 million—three million more than expected. CEO Daniel Ek noted that subscriber growth year-to-date has outpaced last year.

Financially, however, the news was less positive. The company posted a net loss of about $100 million in Q2, a stark contrast to the roughly $316 million profit it recorded during the same period last year.

Analysts hadn’t anticipated the red ink. The culprits: higher costs for talent, services, and marketing. Disappointing ad revenue didn’t help offset expenses as much as expected.

“It’s really an execution challenge, not a problem with the strategy,” Ek told investors. “And while I’m unhappy with where we are today, I remain confident in the ambitions we laid out for this business.”