Duolingo Stock Soars as AI Language Learning with 148 New Courses and Strong Earnings Beat

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•  02 May 2025
 

For Q1 2025, Duolingo reported revenue of $230.7 million, a 38% increase year-over-year. Even more impressive, earnings per share came in at $0.72, beating analyst expectations of $0.51 by a whopping 40%. Following the results, Duolingo’s stock surged 19%, closing Friday at $454.01.

CEO Luis von Ahn credited the company’s success to its bold investments in AI. “Our AI investments accelerated content creation dramatically, and we’re just scratching the surface of what’s possible for our users,” he stated.

In a company-wide memo shared on LinkedIn, von Ahn revealed a major strategic shift—transforming Duolingo into an “AI-first company.” He explained that switching from manual content creation to AI-driven generation allowed Duolingo to scale much faster. Case in point: the launch of 148 new language courses using generative AI.

This shift has helped the company break barriers that would have otherwise taken decades to overcome.

AI Replaces Contractors as Duolingo Ramps Up Efficiency
As part of its AI transformation, Duolingo plans to gradually phase out third-party contractors for tasks that AI can handle. While this move helps streamline operations, it also signals a long-term commitment to embedding AI deeply into every part of the company.

Duolingo premium tier, Duolingo Max, launched in 2023, provides users access to AI-based tools that enhance language learning. This innovation contributed to a slight decline in gross margin—from 73% to 71.1%—due to increased investment in generative AI. Still, analysts say the returns more than justify the costs.

UBS analysts noted Duolingo found “earlier-than-expected success in optimizing AI-related costs” in the quarter, though they cautioned some gains may have been one-off benefits from adopting ChatGPT 4.1.

Duolingo Expands Beyond Languages into Chess, Music, and Math
The AI push isn’t limited to language learning. Duolingo is broadening its educational portfolio, launching a beta version of a new chess course last week. This follows the 2023 rollout of music and math courses, reflecting a broader ambition to become a multi-disciplinary learning platform.

Analysts from J.P. Morgan praised Duolingo’s AI innovation, saying the expanded content could lead to a sharp rise in daily active users. They also highlighted that both language and chess require repetition and practice, making the chess course a seamless addition to the platform.

While the app’s basic version remains free, Duolingo generates the bulk of its revenue through premium subscriptions. By embedding AI into its premium products, the company has created a clear distinction between the free and paid experiences—driving higher conversion rates.

User feedback on the AI enhancements has been mixed. Some welcome the rapid innovation and new content, while others express concern over losing the human touch in the learning process. Despite these concerns, the company’s financial results prove that the AI-powered strategy is succeeding in both attracting and retaining users.

Duolingo’s AI-first strategy is paying off, with record revenue, strong earnings, and a soaring stock price. By leveraging generative AI to rapidly scale content creation and diversify offerings, Duolingo is not just teaching languages—it’s redefining the future of online learning.