Duolingo’s stock took a big hit, falling 27%, after the company issued lower-than-expected guidance for the next quarter. The popular language-learning platform announced it’s focusing more on attracting new users than on making quick money right now.
Luis von Ahn, Duolingo’s CEO and co-founder, explained, “We’ve changed how we invest a bit over the last few months. We’re putting a lot more into long-term plans because we see a huge opportunity ahead.”
For the current quarter, Duolingo expects bookings of between $329.5 million and $335.5 million, below the $344.3 million that experts had predicted. They also expect adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be between $75.4 million and $78.8 million, slightly below the $80.5 million forecast.
Even though the stock dropped, Duolingo did see some good news. They added more paying subscribers, reaching 11.5 million, exceeding expectations. However, the number of people using the app daily (50.5 million) and monthly (135.3 million) was a little lower than analysts had hoped.
Recently, Duolingo has brought in many new artificial intelligence (AI) tools. These include an interactive video call feature designed to attract more paying users. The company has also used AI to create new language courses much faster than before.
Von Ahn shared that his job often involves balancing making money and growing the user base. He said that in the past few months, the company has “really shifted that trade-off to be much more towards user growth.”
Duolingo’s total revenue (earnings) grew by 41% during the quarter, hitting $272 million, exceeding the $260 million analysts expected. Total bookings, representing future sales, also jumped 33% from last year to about $282 million, beating predictions as well.
The company’s profit (net income) soared to $292.2 million, up from $23.4 million a year ago. This big jump in profit included a one-time tax benefit of $222.7 million. Duolingo also raised its full-year revenue forecast to $1.0275-$1.0315 billion, up from its earlier estimate.
