July 29 (Reuters) - Spotify ( SPOT ) forecast

third-quarter profit below Wall Street estimates on Tuesday as

higher taxes related to employee salaries outweigh upbeat demand

for its premium music-streaming plans.

Investors are closely watching the Swedish company's

profitability after price hikes, cost cuts and subscriber gains

in recent years helped it achieve its first annual profit in

2024.

Spotify ( SPOT ) said it expects operating income of 485 million

euros ($561.05 million) in the current quarter, below an

estimate of 562 million euros, according to data compiled by

LSEG.

Its third-quarter monthly active users (MAU) forecast of 710

million was in line with estimates, while its prediction for a 5

million increase in premium subscribers to 281 million was above

a Visible Alpha estimate of 279 million.

Its board has approved a $1 billion increase to its share

repurchase program, raising the total authorization to $2

billion, with $1.9 billion available for buybacks through April

2026.

Tough competition in music streaming and podcasts from

rivals from Apple ( AAPL ) and Amazon ( AMZN ) has also prompted

Spotify ( SPOT ) to increase marketing, which contributed to an 8%

increase in operating expenses in the April-to-June quarter.

Premium subscribers rose 12% to 276 million in the second

quarter, compared with a Visible Alpha estimate of 273 million.

Its MAU net additions of 18 million brought the total to 696

million, exceeding expectations.

Second-quarter revenue rose 10% to 4.19 billion euros ($4.85

billion), but fell short of an estimate of 4.26 billion euros.

Spotify ( SPOT ) said unfavorable currency movements reduced

year-over-year total revenue growth by about 440 basis points in

the reported quarter.

It forecast third-quarter revenue of 4.2 billion euros,

below the estimate of 4.48 billion euros.

($1 = 0.8645 euros)