Duolingo shifts focus to user growth, impacting monetization, profitability
AI video call features will expand to the Super Duolingo subscription tier
Quarterly and annual bookings forecasts below estimates
Duolingo, Inc. forecast first-quarter and 2026 bookings below expectations on Thursday as it shifts strategy toward faster user growth, a move it said will weigh on bookings growth and profitability this year, sending the company's shares down more 21% after hours.
As part of the push, the language learning app said it will expand access to its artificial intelligence-powered "Video Call with Lily" feature by adding it to its Super Duolingo subscription, rather than limiting it to the premium Max tier.
The language-learning app has spent recent years fine-tuning monetization through more ads and subscription prompts, helping lift bookings per user. But that coincided with slower user growth, prompting the renewed focus on engagement.
"If we're seeing faster user growth than we're expecting, and what we are expecting is about 20%, then that means the strategy is working," CEO Luis von Ahn told Reuters.
The Pittsburgh, Pennsylvania-based company also plans to roll out more AI-driven speaking tools to free users, reducing friction that previously nudged learners toward paid plans.
The AI-based video call is now more than ten times cheaper to run than at launch, and as costs continue to fall, Duolingo plans to expand access to all users to maximize learning, Von Ahn added.
Duolingo said daily active user growth decelerated through 2025 and is expected to fall to roughly half the pace it sustained in prior years.
Investors have increasingly scrutinized the company's moderating expansion as it scales, particularly after several quarters of breakneck growth.
Bar chart showing year-over-year bookings growth declining
Bookings are now expected to rise about 11% in 2026, compared with roughly 20% growth the company said it could have delivered under its previous approach.
Adjusted core profit margin is forecast to decline to about 25% this year as Duolingo invests in broader access to AI features and steps up marketing.
For the first quarter, Duolingo forecast bookings of about $301.5 million, below estimates of $329.7 million, according to Visible Alpha data.
For the full year, it expects bookings between $1.27 billion and $1.30 billion, below estimates of $1.39 billion.
The company expects revenue between $1.20 billion and $1.22 billion, lagging expectations of $1.26 billion, according to estimates compiled by LSEG.
The company also said its board has authorized a share buyback of up to $400 million.