Language-learning application Duolingo has raised its annual revenue outlook and exceeded second-quarter revenue expectations on Wednesday, expecting a wider uptake of its AI-enhanced subscription level among its users worldwide. The company’s stock surged by approximately 20% in after-hours trading.
Duolingo follows a freemium model, where basic language-learning services are offered for free, while advanced features are available through monthly or annual paid subscriptions.
The company now predicts that its revenue for 2025 will fall between $1.01 billion and $1.02 billion, surpassing analysts’ forecasts of $996.6 million. Previously, it estimated revenues for the year would range from $987 million to $996 million.
Revenue for the April-June quarter was reported at $252.3 million, exceeding analysts’ predictions of $240.7 million.
Duolingo offers two subscription levels — Super, aimed at regular learners, and Max, designed for more advanced users — both of which feature AI-driven functionalities such as video-call conversation practice with chatbots, personalized error analysis, and improved feedback mechanisms.
Since launching its AI-enabled video-call feature for Android in January, Duolingo has expanded this capability to more languages, aiming to boost subscription growth by enabling users to engage in natural conversations across a broader range of languages.
This quarter, Duolingo’s gross margin benefited from lower-than-anticipated AI expenses, as the decrease in margin due to the expansion of Max and AI capabilities was not as severe as the company initially projected.
“The expenses associated with AI tools have decreased significantly. Advertising also performed better than expected; while ads are not a major component of our business, they provided a slight boost to our margin,” CFO Matt Skaruppa shared with Reuters.
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Duolingo utilizes generative AI to develop and customize brief lessons across over 100 language courses.
In April, CEO Luis von Ahn stated that while it took 12 years to create the first 100 courses, the company’s AI resources allowed for the introduction of 148 new courses in approximately one year.
Duolingo anticipates revenue for the third quarter to be between $257 million and $261 million, compared to analysts’ projections of $253 million, based on data compiled by LSEG.
The company also projected an adjusted core profit of $288.1 million to $295.5 million for 2025.
