TradingKey - Despite backlash over its AI-driven strategy, Duolingo (DUOL) delivered a blowout second-quarter performance on Wednesday, August 6, reporting revenue and subscriber growth that exceeded expectations and raising its full-year guidance. The strong results sent shares up nearly 20% in after-hours trading.
Duolingo’s Q2 2025 financial highlights:
CEO Luis von Ahn said:
“We exceeded our own high expectations for bookings and revenue this quarter, and did it while expanding profitability.”
Duolingo raised its 2025 revenue guidance from $987–996 million to $1.01–1.02 billion, surpassing the $996.5 million consensus.
The company expects:
Following the report, Duolingo’s stock jumped ~20% after hours, settling around 18% higher. Year-to-date in 2025, shares are up ~6%, slightly below the S&P 500’s 7.88% gain.
Von Ahn emphasized that the company still has significant growth potential, especially as AI improves user engagement and monetization.
Duolingo’s push toward an “AI-first” model — using artificial intelligence to rapidly expand course offerings and personalize learning — faced strong user resistance in May 2025.
Critics argued that:
Despite these challenges, growth remained robust — though signs of strain emerged. Q2 DAU growth of 39.9% was the second-slowest pace in recent history, down from 48.4% in Q1 and 59.3% in Q2 2024.
Additionally, AI investments did pressure profitability: gross margin declined to 72.4%, down from 73.4% a year ago. However, the decline was less severe than expected, as AI-related costs came in lower than projected.
To diversify its product offering, Duolingo announced it is acquiring NextBeat, a music game startup, in its largest acquisition to date (financial terms undisclosed).
Chief Business Officer said:
“We want to try to catch up in music and in chess and in math and have them be a bigger part of our business, faster.”
The company has already launched chess courses and is investing in non-language content to broaden its appeal and deepen user engagement.