Duolingo’s recent shift towards artificial intelligence has led to impressive user growth, despite mixed reactions from investors. The language learning platform exceeded Wall Street’s expectations by generating a record $209.6 million in revenue from October to December, reflecting a 39% increase compared to the prior year. However, the company’s stock took a downturn, dropping 17% as earnings per share fell below projections and the gross margin contracted during the quarter.
According to CEO Luis von Ahn, a significant portion of Duolingo’s AI-related costs stem from a new video call feature developed with OpenAI, which was rolled out last year. This feature, available exclusively to Duolingo Max subscribers, allows users to practice their language skills through virtual conversations with a fictional character named Lily.
Lily has been instrumental in boosting the success of Duolingo’s premium subscription tier, which now accounts for 5% of all paying users. Currently, the company’s total paid subscriber count, which includes both Duolingo Max and a more affordable option, has grown by 43% year-over-year, reaching 9.5 million users.
As a co-founder of the company, von Ahn has an estimated net worth of $1.2 billion. He gained recognition in Silicon Valley for creating the CAPTCHA verification system, which was sold to Google in 2009. Since going public in 2021, Duolingo has continued to thrive, boasting over 40.5 million daily active users by the end of 2024.
A.I. Drives Subscription Growth
The integration of AI has been a key driver behind Duolingo’s recent surge in user numbers. During the earnings call, von Ahn defended the company’s tech investments, stating, “We recognize that there are various ways to optimize these costs.” Nevertheless, Duolingo remains focused on quickly rolling out high-quality features to seize the unique opportunities presented by evolving technologies.
Improving the video call feature is a major goal for 2025. Von Ahn envisions a more personalized chatbot capable of recalling past conversations and addressing users’ specific concerns. Although this feature is generally available to users worldwide, it is not accessible in China due to restrictions on OpenAI’s technology. The video call feature has been particularly well-received by English learners, who use it twice as frequently as non-English learners.
Innovative Marketing Approaches
While AI significantly contributes to Duolingo’s growth, the app’s success also stems from its innovative and often quirky marketing strategies. The company has gained attention with viral campaigns, including a mock ice-skating musical and a collaboration with Netflix inspired by the popular series Squid Games.
In the latest quarter, Duolingo’s marketing efforts featured a stunt involving its iconic owl mascot, Duo. Social media posts humorously suggested that Duo had staged his own demise, although he continued to be active for Japanese users, where jokes about death are less socially acceptable. After completing daily lessons to bring Duo back to life, the mascot re-emerged to encourage users to stay committed to their language learning journey.
