By Jaspreet SinghSpotify forecast third-quarter profit and monthly active users below Wall Street estimates on Tuesday, underscoring the streaming service’s challenges in maintaining growth despite expanding its offerings of AI-based features to fend off competition.Shares of the company were down about 4% in premarket trading.The company has launched AI features like “Personal Podcasts” and new offerings such as “Reserved” to attract more users and fend off competition from rivals including YouTube and Netflix, and AI music start-ups like Udio and Suno.Operating income rose 61% year on year to €655m, while revenue increased 14% to €4.78bn, just below the €4.79bn estimate. Premium revenue came in at €4.33bn, slightly missing expectations.The company said it expects operating income of €670m in the third quarter.Gross margin expanded to 33.4% from 31.5% a year earlier. Monthly active users totalled 777-million, just under forecasts, while premium subscribers reached 300-million, ahead of expectations. Ad-supported monthly active users were 494-million, also above estimates.Its monthly active users forecast of 788-million was below Visible Alpha estimates of 793.6-million, while its outlook for a 5-million increase in premium subscribers to 305-million was largely in line with estimates.Shares have slipped around 16.2% so far this year.Separately on Tuesday, Spotify announced a new agreement with digital music licensing firm Merlin for the Swedish company’s upcoming paid tool for fan-made covers and remixing. It will allow artists on labels under Merlin’s Spotify agreement to participate.Such taxes, called social charges, are tied to the value of the company’s share price. The company’s stock has fallen about 16% so far this year.