Duolingo’s recent shift towards AI has resulted in impressive user growth, although it hasn’t completely won over investors. The language-learning platform exceeded Wall Street forecasts by generating an impressive $209.6 million in revenue from October to December, reflecting a remarkable 39% increase year-over-year. Despite this success, Duolingo’s stock took a downturn, dropping 17% as earnings per share did not meet expectations and the gross margin for the quarter tightened.
Much of Duolingo’s AI-related expenses stem from a new video call feature powered by OpenAI, introduced last year, according to CEO Luis von Ahn. This feature, exclusive to Duolingo Max subscribers, allows users to practice their language skills through virtual chats with a fictional character named Lily.
Lily has been instrumental in the success of Duolingo’s premium offerings, now representing 5% of all paying users. The total number of paid subscribers, which includes Duolingo Max and a more affordable option, has soared by 43% year-over-year, reaching 9.5 million users.
Co-founder Luis von Ahn boasts an estimated net worth of $1.2 billion and gained recognition in Silicon Valley for creating the CAPTCHA verification system, which was acquired by Google in 2009. Following its public debut in 2021, Duolingo has rapidly gained traction, amassing over 40.5 million daily active users by the end of 2024.
A.I. Drives Subscription Growth
AI integration has emerged as a key driver behind Duolingo’s recent surge in users. During the earnings call, von Ahn emphasized the significance of the company’s technological investments. “We recognize that these expenses can be optimized in various ways,” he acknowledged. However, Duolingo remains committed to quickly delivering high-quality features, fully aware of the unique opportunities presented by advancing technology.
Improving the video call feature is a top priority for 2025. Von Ahn envisions a more interactive chatbot that recalls past conversations and addresses users’ specific concerns. While this feature is available to most international users, it is not accessible in China due to restrictions on OpenAI’s technology. It has been particularly popular among English learners, who utilize it twice as frequently as non-English learners.
Creative Marketing Tactics
While AI certainly plays a pivotal role, Duolingo’s growth cannot be solely attributed to it. The app has gained significant attention through its unconventional and viral marketing strategies, including a staged ice-skating musical and a partnership with Netflix inspired by the popular series Squid Games.
In the latest quarter, Duolingo executed a marketing campaign featuring its beloved owl mascot, Duo. Social media buzz suggested that Duo had staged his own death, although he remained active for Japanese users, as humor about death is generally less accepted in that culture. After users completed their daily lessons to “revive” Duo, the mascot returned to encourage continued engagement with language learning.
