(Reuters) - Language learning app Duolingo DUOL.O forecast second-quarter revenue above Wall Street estimates and lifted its annual sales expectations on Thursday, as more users pay for subscriptions featuring AI features, sending its shares up 9% in extended trading.
Duolingo operates on a "freemium" model, offering a basic set of features for free to all users, with additional capabilities available through the Super and AI-powered Max subscriptions.
Users with the Max tier can practice conversations through video calls with a chatbot, as well as get access to error analysis and feedback.
After a phased roll-out, Duolingo's AI features have been available to the vast majority of users, fueling revenue growth.
CFO Matt Skaruppa told Reuters that the first quarter benefited from strong performance of the Max and family plans, a social media campaign based on the company's mascot and a New Year's promotion at the end of December and early this year that brought in more users.
Duolingo expects revenue for the second quarter in the range of $238.5 million to $241.5 million, well above analysts' estimate of $233.8 million, according to data compiled by LSEG.
It expects revenue for 2025 between $987 million and $996 million, compared to analysts' estimate of $977.2 million. It had earlier forecast revenue between $962.5 million and $978.5 million for the year.
Duolingo this week announced the launch of 148 new language courses, significantly expanding access to popular languages like Japanese and Korean.
It said the company used generative AI to rapidly develop content, enabling the creation of 148 new courses in under a year. This compares with 12 years that were required to create the first 100 courses.
The company is adopting an "AI-first" strategy, replacing many contract workers with AI to streamline operations.
The firm also forecast adjusted core profit between $271.4 million and $283.9 million for the full year, as it employs tools to make its AI models more efficient. It had earlier projected adjusted core earnings of $259.9 million to $274.0 million.
Revenue in the January to March period was $230.7 million, compared with analysts' estimates of $223 million.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.