April 29 (Reuters) - Spotify ( SPOT ) forecast monthly

active users and premium subscribers for the second quarter

above market estimates on Tuesday, signaling strong demand for

its audio streaming services as it leans on AI features to drive

growth.

However, the company's operating profit forecast for the

current quarter was below Wall Street estimates, dragged down by

higher payroll taxes tied to employee salaries and benefits in

some countries. The taxes also weighed on its March-quarter

profit.

A rival to Apple ( AAPL ) and Amazon's ( AMZN )

music-streaming offerings, Spotify ( SPOT ) has benefited in recent years

from price increases and cost-cutting initiatives.

To maintain growth, it has expanded its AI Playlist feature,

which lets subscribers create personalized playlists from

written prompts, to more than 40 new markets.

Spotify ( SPOT ) forecast current-quarter monthly active users of 689

million, compared with the average analyst estimate of 684.9

million, according to data compiled by LSEG.

The company expects premium subscribers in the second

quarter to increase to 273 million, above Visible Alpha

estimates of 271.5 million.

Spotify ( SPOT ) forecast operating income of 539 million euros

($614.24 million) for the second quarter, below estimates of

557.5 million euros, according to data compiled by LSEG.

"The underlying data at the moment is very healthy.

Engagement remains high, retention is strong, and thanks to our

freemium model, people have the flexibility to stay with us even

when things feel more uncertain," CEO Daniel Ek said.

"The short term may bring some noise, but we remain

confident in the long-term story."

Premium subscribers rose 12% to 268 million in the first

quarter, beating Visible Alpha estimates of 265.3 million. The

company had 678 million monthly active users, above estimates of

671.9 million.

Revenue rose 15% to 4.19 billion euros, slightly below

estimates of 4.20 billion euros.

Spotify ( SPOT ) forecast second-quarter revenue of 4.3 billion

euros, in line with estimates.

($1 = 0.8775 euros)