Duolingo may be one of the unexpected winners of the second quarter revenue season.
The language learning platform reported its second quarter results on Wednesday, revealing significant revenue growth and record profitability, bringing Duolingo shares to a surge.
Subscription revenues increased by 46%, while overall revenues increased by 41%. Duolingo also reports record net profits, raises full year guidance, and shows high confidence in the future outlook.
Duol shares rose 30% in the first hours of trading Thursday, following the company's strong earnings report. The company also appears to be benefiting from the ongoing artificial intelligence integration.
More specifically, the company's leaders have revealed that AI tools and capabilities can be integrated into more products at a lower cost than expected. This includes conversational AI features available in Max, Duolingo's top tier subscription service.
CEO Luis von Ahn wrote in a letter to shareholders, CEO Luis von Ahn said:
Von Ahn added that the total margin fell by 100 basis points year over year due to the high AI costs associated with the MAX expansion. It was less than 300 basis points they initially predicted.
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“We currently expect the 2025 total margin to fall by approximately 100 basis points year-on-year, an improvement from the guidance provided in the last quarter,” he said, decreasing AI costs and strength in the advertising business.
This happens just months after Duolingo fired when Von Ahn announced plans to shift to an AI-first business model. He commented that he returned soon afterwards.
Duolingo's stocks have skyrocketed the attention of retailers who are optimistic about their growth outlook. Data from StockTwits shows that retail sentiment towards it is “very bullish” and the volume of the message is very high.
Meanwhile, Duolingo stocks have been attracting attention at popular retail investor forums such as R/Wallstreetbets. According to Apewisdom, Duol's mentions have skyrocketed 1,200% over the past 24 hours.
