By Akash Sriram (Reuters) – The language learning app Duolingo has reported a surge in growth that has caught the attention of many. The company is based in Pittsburgh, Pennsylvania, and has forecasted an annual revenue that surpasses the expectations of Wall Street analysts. Duolingo is anticipating a rise in the adoption of its subscription tier, which includes advanced artificial intelligence capabilities.
The company follows a “freemium” model, offering a basic set of features to all users for free, with the option to access additional features through paid monthly or annual subscriptions. Duolingo offers two subscription tiers – Super for dedicated users and Max, which includes a feature driven by generative AI that simulates natural conversations through video calls.
In recent months, Duolingo has been expanding this feature to encompass a variety of languages in order to attract more subscribers and increase revenue. However, the video call feature on its Max subscription has added to the company’s costs. For the year 2025, Duolingo expects its revenue to fall within the range of $962.5 million to $978.5 million, slightly higher than the analysts’ estimate of $965.9 million as per data compiled by LSEG.
The company has forecasted its revenue for the first quarter to be between $220.5 million and $223.5 million. Analysts, on average, were expecting revenue of $221.1 million. Chief Financial Officer Matt Skaruppa explained that there is a marginal cost associated with the Max subscription, specifically related to the generative AI models that power the video call feature, resulting in an impact to gross margin.
Duolingo’s primary focus is on innovation and experimentation to drive user engagement, with the aim of reducing costs over time. The company projects an adjusted core profit for this year to be between $259.9 million and $274 million, which falls below the estimated $272.1 million largely due to costs associated with the AI video call features.
Duolingo also noted that discussions surrounding the TikTok ban in January and a unique marketing campaign where the app’s mascot, Duo, staged his own death and subsequent return, have contributed to a spike in user numbers in February.
(Reporting by Akash Sriram in Bengaluru; Editing by Alan Barona)
