Duolingo Inc was in danger of being demoted to the Obsidian League after the language teaching app reported the slowest rate of subscriber additions since 2022.
Famous for nagging its users, the app boomed during the pandemic as people stuck at home tried to learn a new language to fill the time but daily average use just beat market expectations in the three months to March, sending its shares tumbling 12% overnight.
Daily active users rose by 55% to 31.4 million, but chief executive Luis von Ahn told reporters: “We had 10 quarters of accelerating DAU growth and we kept saying almost every quarter: like, this can’t happen forever.”
Even so, the app developer still delivered "another quarter of stellar performance," von Ahn said, with "strong bookings and revenue growth, alongside record profitability.”
“Our 54% year-over-year growth in daily active users was driven by a record number of net daily user additions," he added.
"Our DAU-to-MAU ratio, a measure of user engagement, reached a record high thanks to the thousands of product improvements that have compounded over time.
Net income was $27 million, compared to a net loss of $2.6 million in the prior year quarter, while revenues rose by 45% to US$167 million.
Earnings were double consensus estimates while the forecast for revenues for the year overall was raised to US$735.5 million from US$729.5 million,
Higher price packages for families and Max unlimited use were behind the higher revenue forecast, with 10% of active users on the new rates.
Investors honed in on the additions even so and Duo shares were expected to open down 12% at US$244.64.