Duolingo shares increased by more than 16% after the company forecasted higher-than-expected revenue in 2024 as a result of a shift to online learning and AI integration on its platform.
Duolingo’s (DUOL.O) shares rose more than 16% on Thursday after the firm anticipated higher-than-expected revenue in 2024 as a result of a move to online learning and AI integration on its platform.
If gains are sustained, the company’s market value will increase by $1.68 billion.
According to LSEG statistics, Duolingo expects sales in 2024 to be between $717.5 million and $729.5 million, far exceeding analysts’ average estimate of $699.3 million.
According to Seaport Global, the language learning business is quickly migrating online, with Duolingo emerging as a clear leader with its “freemium” approach.
Analysts also noted that it has successfully integrated generative artificial intelligence (GenAI) into its solutions.
Duolingo Max, a new membership tier with GenAI features, was introduced in March of last year.
“We saw a lot of demand at higher prices for our Max offering,” CFO Matt Skaruppa said during a post-earnings call.
Duolingo is free to use, but it also offers a paid subscription and in-app purchases.
The company recorded record overall bookings of $191 million for the three months ended December 31, a 51% increase. Paid subscribers increased by over 60% to a record 6.6 million in the fourth quarter.
Shares were trading above $227, representing a more than 9% discount to 13 analysts’ median price objective of $251.50.
In the fourth quarter, the company’s daily active users increased by 65%, while monthly active users increased by 46% year over year.
“Most of the major KPIs are really good, which explains the positive share price reaction… It has had a significant increase in revenue, users, and subscribers,” stated Dan Coatsworth, an investment analyst at AJ Bell.
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