Duolingo's narrow miss on earnings didn't slow its stock price's roll one bit. Instead, shares of the language-learning platform were trading up 35% Wednesday on one very important metric.

The company reported third quarter earnings of 54 cents a share and revenue of $309 million, up 13.7%. Analysts expected earnings of 57 cents a share and revenue of $303 million.

But the real story is its growth in engagement. Daily active users in the third quarter rose 29% from a year ago to 64.9 million. It's also an increase from the second quarter, when daily active users rose 23% compared to the same period a year earlier.

Monthly active users or MAU rose a more modest 13% from a year ago to 153.1 million for the third quarter.

"We are most encouraged by the acceleration in MAU," Wells Fargo's Alec Brondolo said, adding that it "proves that top of funnel is improving, not just frequency." Brondolo also raised his rating of the stock to Equal Weight from Underweight.

That increase has paid off in terms of rising bookings, which were up 12% to $316 million.

Duolingo said fourth quarter revenue was expected to be $322 million and bookings are expected to be $382 million, which would mean an acceleration of bookings, up 13% from the prior year.

CEO Luis von Ahn said "this year, we're prioritizing teaching better and user growth, and we're seeing that strategy paying off."

Analysts remain cautious, however, with just six of the 27 who cover it, according to FactSet, rating it a buy. Duolingo stock is still down 1.% for the year at $169.48 even with Wednesday's gains.

The biggest concern, according to KeyBanc's Justin Patterson, is the company's subscriber conversion rate as its phases out its Max plan for other options.

"If Duolingo can maintain healthy DAU growth while monetizing, there is potential for a material bookings acceleration," Patterson noted. Currently just 13.1 million or less than 9% of the service's monthly active users are paid subscribers.