Cannot give 2 vCPUs to VM due to Licensing restriction

Hello,

I am running Esxi 6.7 Hypervisor the free version.

After I installed a second VM with one vCPU I wanted to add another vCPU, then I get the error that I do not have enough Licenses for this operation. My first VM runs with two vCPUs. Does this mean I can only have 3 vCPUs running???

Is this a limitation of the free version or have I missed something???

I thought there is only a limitation on physical CPU???