For a brief stretch last Thursday, Duolingo was the feel-good tech story of the summer. The Pittsburgh-based language-learning company had just posted a quarter that checked every box on Wall Street’s wish list: revenue and profit ahead of expectations, growth guidance revised upward, and proof that artificial intelligence was translating into paid subscriptions.
CNBC reported that shares jumped 30% intraday, with CEO Luis Von Ahn telling investors, “We exceeded our own high expectations for bookings and revenue this quarter, and did it while expanding profitability.” The gains were driven by “strong user growth powered by artificial intelligence,” including a GPT-4-powered video-call conversation practice feature for paying subscribers.
That feature, part of Duolingo Max, the company’s top-tier subscription also offers role-playing sessions and real-time mistake explanations. The idea is to solve one of the most persistent pain points in language learning: the awkwardness of practicing conversation with another human. Average revenue per user rose 6% year over year, thanks largely to broader adoption of Max, which costs twice as much as the mid-tier Super plan.
