Language-learning app Duolingo (NASDAQ:DUOL) reported Q1 CY2025 results topping the market’s revenue expectations , with sales up 37.7% year on year to $230.7 million. The company expects next quarter’s revenue to be around $240 million, close to analysts’ estimates. Its non-GAAP profit of $1.43 per share was 20% above analysts’ consensus estimates.
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Revenue: $230.7 million vs analyst estimates of $223.1 million (37.7% year-on-year growth, 3.4% beat)
Adjusted EPS: $1.43 vs analyst estimates of $1.20 (20% beat)
Adjusted EBITDA: $62.8 million vs analyst estimates of $56.38 million (27.2% margin, 11.4% beat)
The company lifted its revenue guidance for the full year to $991.5 million at the midpoint from $970.5 million, a 2.2% increase
EBITDA guidance for the full year is $277.7 million at the midpoint, above analyst estimates of $270.9 million
Operating Margin: 10.2%, in line with the same quarter last year
Free Cash Flow Margin: 44.6%, up from 38.6% in the previous quarter
Monthly Active Users: 130.2 million, up 32.6 million year on year
Market Capitalization: $22.11 billion
Duolingo’s first quarter was marked by rapid expansion in new subjects and engagement features, with management crediting artificial intelligence as a key enabler of faster product development and improved efficiency. CEO Luis von Ahn highlighted the launch of chess, as well as ongoing growth in math and music, emphasizing that these subjects are already being monetized through existing subscription and ad models. The company reported continued strong user growth across both mature and emerging regions, pointing to product improvements and viral marketing campaigns as primary drivers.
Looking forward, management raised full-year revenue and adjusted EBITDA guidance, citing confidence in the scalability of AI-driven content creation and the expanding appeal of advanced language features. They discussed the opportunity to further reduce operating costs as generative AI models become cheaper and more efficient, especially for features like video-based language practice. CFO Matt Skaruppa noted that these optimizations are expected to support margin expansion in the second half of the year, while ongoing investments in new subjects and user engagement remain a priority.
Duolingo’s management discussed several drivers behind quarterly performance and their strategy for continued growth:
AI-Driven Content Creation: The company accelerated the rollout of new language courses and features by leveraging generative AI, which now produces nearly all course content. This shift has allowed Duolingo to add 148 new courses over the past year, compared to only 100 in the previous twelve years.
Expansion Beyond Language Learning: The addition of chess, and ongoing development in math and music, reflects a broader strategy to teach subjects that require long-term engagement. These new subjects are already monetized via subscriptions and ads, and while currently smaller than language learning, they are growing faster in daily active users.
Viral, Low-Cost Marketing: Duolingo continues to rely on highly efficient social media campaigns, often leveraging its mascot in viral content, which management says drives significant user acquisition at minimal cost. Recent campaigns, such as the “Duo owl faked his own death” storyline, generated over a billion impressions without notable marketing spend.
Product-Driven User Growth: Features such as Duolingo Max and the Video Call with Lily, powered by AI, are credited with increasing user retention and word-of-mouth growth, especially among English learners. The company noted that English learners now represent a higher proportion of Max subscribers compared to other user segments.
Pricing and Monetization Experiments: Management is actively testing different subscription prices across regions and evaluating which features to bundle at different subscription tiers. They recently tested a price increase for Super Duolingo for new users and are considering adjusting the feature mix between tiers based on user feedback and cost efficiencies.
