Duolingo's growth outlook moderates as it prioritizes engagement over monetization

By Akash Sriram

May 4 (Reuters) - Duolingo ‌posted strong ​first-quarter results ​but signaled a more measured growth trajectory ahead, as the language-learning app prioritizes user engagement and product improvements over near-term monetization.

Shares ‌of the Pittsburgh-based company slumped 11% in volatile extended trading.

At the ⁠heart of Duolingo's strategy is a shift toward prioritizing user experience and long-term retention over near-term ‌monetization, as it invests in ‌product quality and engagement to build a larger base of paying subscribers.

"We are making long-term bets, and the returns on the investments we're making are ​going to be 2027 and beyond," CFO Gillian Munson told Reuters.

The company said it expects bookings growth of about 10.5% for the year, with ⁠a slower pace in the second quarter before accelerating later in 2026. Duolingo has set a goal ​of reaching 100 million daily active users by 2028.

Investors have increasingly focused on whether Duolingo can sustain its strong conversion of ​free users into paying subscribers under its ‌freemium model, particularly as bookings growth slows.

The language-learning platform reported revenue of $292.0 million in the first quarter, beating analysts' estimates of $288.5 ⁠million, according to data compiled by LSEG, as subscription growth remained the primary driver of its business.

Daily active users rose 21% to 56.5 million, while paid subscribers increased ⁠21% to 12.5 million, pointing to continued engagement across its global user base.

Total bookings grew 14% ​to $308.5 million in the first quarter, beating estimates of $301.7 million, according to data compiled by Visible Alpha.

Duolingo largely maintained its full-year revenue expectation, projecting revenue of about $1.21 billion, in ‌line with analyst expectations. For the second quarter, the company forecast revenue of about $295.5 million, slightly ahead of estimates of $294 ‌million.

The company has been investing heavily in product improvements, particularly in speaking features and ⁠AI-powered tools such as its ‌premium Duolingo Max tier. It ​said margins could moderate later in the year as usage of AI features increases.

(Reporting by Akash Sriram in Bengaluru; Editing by ‌Tasim Zahid)

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