Duolingo's AI-First Strategy Pays Off: Stock Soars Amid Strong Q2 Earnings and User Growth

The backlash against Duolingo going 'AI-first' didn't even matter | TechCrunch

Duolingo announced on Wednesday that it beat its quarterly revenue estimates, even though the company faced widespread backlash for choosing to embrace generative AI over human workers. Duolingo stock rose almost 30% on the news. In April, CEO Luis von Ahn shared that Duolingo would become an "AI-first" company, phasing out its use of contract workers. He also discouraged teams from hiring more employees, unless if the team is unable to automate more of its work. With the use of generative AI, Duolingo introduced 148 new language courses, more than doubling its previous offerings. "Without AI, it would take us decades to scale our content to more learners," von Ahn wrote at the time. "We owe it to our learners to get them this content ASAP." While some Duolingo users have argued that these AI features are making the app worse, the company's financial metrics tell a different story. Now, the company anticipates making over $1 billion in revenue this year, and daily active users have grown 40% year over year. The growth is significant, but falls in the lower range of the company's estimates of growing between 40-45%, which an investor brought up to von Ahn on Wednesday's quarterly earnings call.. "The reason we came [in] towards the lower end was because I said some stuff about AI, and I didn't give enough context. Because of that, we got some backlash on social media," von Ahn said. "The most important thing is we wanted to make the sentiment on our social media positive. We stopped posting edgy posts and started posting things that would get our sentiment more positive. That has worked." On TikTok, the top comments on Duolingo's videos often remain criticisms of the company's AI approach. Snarky commenters will ask if videos with multiple people in them are made with AI, to which Duolingo will reply, "Nope. Made by our great team!" But even if public sentiment has shifted toward Duolingo, its bottom line has not... and from the company's perspective, that's what matters.

Duolingo raises 2025 revenue forecast as AI tools boost user engagement

Aug 6 (Reuters) - Language-learning app Duolingo (DUOL.O), opens new tab raised its annual revenue forecast and beat second-quarter revenue estimates on Wednesday, anticipating broader adoption of its AI-enhanced subscription tier among its global user base. The company's shares rose about 20% in trading after the bell. Duolingo operates on a freemium model, offering basic language-learning features for free while providing premium capabilities through monthly or annual paid subscriptions. The company now expects revenue for 2025 to be in the range of $1.01 billion to $1.02 billion, compared to analysts' estimates of $996.6 million. It had earlier projected revenue between $987 million and $996 million for the year. Revenue in the April-June period was $252.3 million, compared with analysts' estimates of $240.7 million. Duolingo's two subscription tiers -- Super, designed for frequent learners, and Max, tailored for advanced users -- include AI-driven features such as video-call conversation practice with chatbots, personalized error analysis and enhanced feedback tools. Since launching an AI-powered video-call tool for Android in January, Duolingo has expanded the feature to additional languages, aiming to boost subscription growth by enabling users to practice natural conversations across a broader linguistic range. Duolingo's gross margin benefited this quarter from lower-than-expected AI costs, as the decline in margin from expanding Max and AI features was much smaller than the company had originally expected. "The cost of calling AI tools has come down a lot. Ads also did better; ads are not a big part of our business, but it turned out that it helped margin a little bit as well," CFO Matt Skaruppa told Reuters. Duolingo leverages generative AI to create and personalize bite-sized lessons across more than 100 language courses. In April, CEO Luis von Ahn said that after taking 12 years to develop the first 100 courses, the company's AI tools helped it introduce 148 new courses in roughly one year. Duolingo expects revenue for the third quarter to be in the range of $257 million to $261 million, compared to analysts' estimates of $253 million, according to data compiled by LSEG. The firm also forecast an adjusted core profit of $288.1 million to $295.5 million for 2025. Reporting by Akash Sriram in Bengaluru; Editing by Mohammed Safi Shamsi Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Artificial Intelligence Akash Sriram Thomson Reuters Akash reports on technology companies in the United States, electric vehicle companies, and the space industry. His reporting usually appears in the Autos & Transportation and Technology sections. He has a postgraduate degree in Conflict, Development, and Security from the University of Leeds. Akash's interests include music, football (soccer), and Formula 1.

Duolingo surges as AI-led growth, forecast raise boost investor confidence

Aug 7 (Reuters) - Duolingo (DUOL.O), opens new tab shares surged nearly 30% before the bell on Thursday, after its annual forecast increase buoyed investor confidence in its ability to drive user growth through AI features and social engagement, while enhancing monetization. The company is maintaining user growth by experimenting with app features, using social engagement strategies and optimizing its subscription offerings to retain users and attract new ones. Duolingo runs experiments to determine which of its subscriptions are shown to which user and when, with the goal of maximizing long-term platform value rather than pushing any single plan. Average revenue per user grew 6% in the second quarter, driven largely by users migrating to Duolingo's higher-priced Max tier, which offers features such as AI-powered video calls for practicing conversational skills. It also saw growth in its $12.99-per-month Super plan. "While we maintain a more cautious stance on near-term user growth, we see several sources of upside still in the model, most notably across monetization efforts (price and improving paid conversion) and margins," Raymond James analysts said in a note. Duolingo's gross margin declined 100 basis points during the quarter, less than the 300-basis-point fall it had anticipated, due to lower-than-expected AI costs and stronger performance in ads business. "We did better on gross margin, in part because AI costs that power Max were lower than we expected, the cost of calling AI tools has come down a lot," Chief Financial Officer Matt Skarupa told Reuters. The company posted adjusted profit per share of 91 cents, surpassing analysts' estimate of 58 cents, prompting them to boost earnings expectations. It is set to add roughly $4.6 billion to its $15.62 billion market valuation, if premarket levels hold. Still, as of Wednesday's close, Duolingo shares traded at 85.21 times profit expectations before the results, above internet services companies such as Uber's 26.54 and DoorDash's 79.38. Reporting by Akash Sriram in Bengaluru; Editing by Shilpi Majumdar Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Artificial Intelligence Akash Sriram Thomson Reuters Akash reports on technology companies in the United States, electric vehicle companies, and the space industry. His reporting usually appears in the Autos & Transportation and Technology sections. He has a postgraduate degree in Conflict, Development, and Security from the University of Leeds. Akash's interests include music, football (soccer), and Formula 1.

Duolingo stock skyrockets 30% on boosted guidance as AI powers user growth

A Duolingo logo is seen on a smartphone.Pavlo Gonchar | LightRocket | Getty Images Duolingo shares skyrocketed more than 30% after the language learning platform boosted its guidance due to strong user growth driven by artificial intelligence. The mobile learning platform hiked its full-year guidance to between $1.01 billion and $1.02 billion, up from a prior range of $987 million to $996 million. Duolingo also lifted its bookings guidance to between $1.15 billion and $1.16 billion. "We exceeded our own high expectations for bookings and revenue this quarter, and did it while expanding profitability," said co-founder and CEO Luis von Ahn in a release. Daily active users jumped 40% to nearly 48 million from about 34 million in the year-ago period.

All that backlash against Duolingo going 'AI-first' didn't slow its growth: Why DUOL stock is soaring 24% right now

At least one company's bet on AI appears to be paying off -- for now. Language-learning platform Duolingo reported earnings results for the second quarter of 2025 on Wednesday after the market closed, and the numbers were eye-opening. The company's revenue increased 41% year-over-year to more than $252.3 million, and net income tallied $44.8 million, up 84%. Its number of paid subscribers was up to 10.9 million from 8 million a year ago, and its daily active users neared 48 million, up from 34 million last year. "I'm happy to report another quarter of great results, driven by product-led growth, a delightful learning experience, and fast iteration," wrote Luis von Ahn, Duolingo's co-founder and CEO, in a letter to shareholders. "Our user growth and engagement remain strong, and our subscription performance and profitability exceeded expectations." Von Ahn also thinks there's plenty of room to grow ahead, too, especially as AI is helping boost user engagement and profitability.