Duolingo, Inc. (NASDAQ: DUOL) issued a weaker-than-expected Q4 bookings forecast on Wednesday as the company prioritizes user growth and teaching quality over monetization, triggering a 20% pre-market plunge on Thursday.

According to Visible Alpha analyst surveys, the language-learning platform projected Q4 bookings between $329.5 million and $335.5 million, below the $343.6 million consensus estimate.

"We remain focused on monetization, but the balance is shifting slightly. We're investing more aggressively in teaching quality relative to recent periods," CEO Luis von Ahn told Reuters.

The soft bookings guidance eclipsed Duolingo's raised full-year revenue outlook following its Q3 earnings beat. The freemium-model company continues converting free users to paid subscriptions through offerings like ad-free Super Duolingo and AI-powered Duolingo Max.

"We're among the few companies that have figured out how to monetize AI. Our AI business is actually profitable," von Ahn noted.

While AI integration reduced Q3 gross margins to 72.5%, they still surpassed LSEG's 71.4% consensus. The company's expanding user base drove 34% paid subscriber growth to 11.5 million.

Strong performance in China contributed significantly, with Duolingo's July partnership with Luckin Coffee boosting regional visibility.

Q3 revenue reached $271.7 million, exceeding the $260.3 million estimate. The company has beaten revenue expectations every quarter since its 2021 IPO.

Duolingo raised its full-year revenue guidance to $1.028-$1.032 billion from $1.01-$1.02 billion, above LSEG's $1.02 billion analyst average.