Duolingo’s stock soared in early trading Thursday after the language-learning platform reported earnings that far surpassed Wall Street’s expectations, driven by user growth attributed to its AI features.
Duolingo reported better-than-expected earnings that showed its AI features are helping grow its paid and daily user base
Thomas Fuller/SOPA Images/LightRocket via Getty Images
Duolingo’s stock soared in early trading Thursday after the language-learning platform reported earnings that far surpassed Wall Street’s expectations, driven by user growth attributed to its AI features.
At its peak this morning, Duolingo’s stock surged 35%. As of about 1:30 p.m. Eastern, its price was up 17%.
Duolingo reported in its second-quarter earnings on Wednesday a 40% jump in daily active users compared to a year ago, plus a 37% rise in paid subscribers from last year. Its revenue increased 41% year-over-year to $252.3 million. Plus, the company said it had lower-than-anticipated costs for its AI.
“We believe we’re still early in our user growth journey,” co-founder and CEO Luis von Ahn said in a release. “We’ve delivered innovation while growing profitability — through strong performance across all subscription tiers, continued investment in our core product, and new subjects that help us increase engagement.”
“The goal for us to use AI is to teach better and to reach more users and have more content,” von Ahn said in an earnings call.
In April, Duolingo’s account shared an email from von Ahn to employees on Linkedin that stated the company would be “AI-first.”
“To teach well, we need to create a massive amount of content, and doing that manually doesn’t scale,” von Ahn wrote. “One of the best decisions we made recently was replacing a slow, manual content creation process with one powered by AI. Without AI, it would take us decades to scale our content to more learners.”
He also referenced Duolingo’s newer video-call feature before further outlining how the company would incorporate more AI into its workflow, such as replacing contractors with AI, looking for AI skills in hiring and in performance reviews, and more.
The post received hundreds of comments, mostly negative. Von Ahn said in the company’s earnings call that he didn’t give enough context on the post.
Duolingo had announced its new AI-powered video call feature, as well as an AI adventures feature, back in September of last year. In 2023, the company announced Duolingo Max, a subscription-based experience in the app that gives users access to AI-powered features.
Its earnings showed that Max has had “significant traction” since becoming fully available to users less than a year ago. The company said that its research shows its video call feature is improving users' speaking skills.
“Looking ahead, we have an exciting roadmap which includes making calls more engaging through gamification, interactive backgrounds, and longer sessions for learners who can handle them,” Duolingo said.
Due to its unexpected success last quarter, the learning platform is updating the midpoint of its full-year guidance. It raised its bookings guidance to 32% year-over-year and its adjusted EBITDA margin to 28.75%.
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