Shares of Duolingo (DUOL) are up almost 30% at the time of writing after the company raised its full-year forecast, thanks to strong user growth powered by artificial intelligence. Indeed, the language learning app now expects to earn between $1.01 billion and $1.02 billion this year, up from its previous estimate of $987 million to $996 million. It also raised its bookings forecast to between $1.15 billion and $1.16 billion. Interestingly, CEO Luis von Ahn said that Duolingo beat its own high expectations for both revenue and bookings, and did so while growing profits.
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A key reason behind the company’s success is a 40% increase in daily active users, which reached nearly 48 million compared to around 34 million a year ago. To grow even more, Duolingo has introduced new AI-powered features, such as a video-call practice tool for paid users. It’s also expanding beyond language learning by offering new courses like chess. To support this growth strategy, Duolingo recently bought London-based music gaming startup NextBeat for an undisclosed amount.
Financially, Duolingo posted a strong quarter. In fact, revenue rose by 41% year-over-year to $252 million, which beat Wall Street’s estimate of $241 million. Net income also grew by 84% to about $45 million, or $0.91 per share. Looking ahead, the company expects third-quarter revenue to fall between $257 million and $261 million, which is higher than the $253 million analysts predicted, with CEO von Ahn saying that Duolingo is still just getting started and sees plenty of growth going forward.
Is DUOL Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on DUOL stock based on nine Buys, three Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average DUOL price target of $497.45 per share implies 13% upside potential. However, it’s worth noting that estimates will likely change following the earnings report.
