Language-learning expert Duolingo (DUOL 13.81%) aced its second-quarter report, sending its stock price as much as 36.2% higher on Thursday. By 1:20 p.m. ET, the stock had cooled down slightly to a 24% gain.
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Duolingo's financial report card shows straight "A"s
The analyst consensus had called for earnings of approximately $0.58 per share on revenue near $241 million. Duolingo breezed past both targets with ease. Revenue rose 41% year over year to $252 million while earnings jumped 78% to $0.91 per diluted share.
The number of daily active users rose 40% to 47.7 million. The number of paid subscribers increased by 37%, landing at 10.9 million accounts.
Duolingo's growth story speaks fluent Mandarin
Duolingo enjoyed a richer mix of premium service plans, in conjunction with strong growth across the digital learning platform.
On the earnings call, CEO Luis von Ahn highlighted Asia as the fastest-growing region, with particular strength in China. The Duolingo Max plan is not yet available in that market due to strict regulations on artificial intelligence (AI) services, but Duolingo has done the paperwork and is waiting for approval to launch a Max plan in China that's based on a local large language model (LLM). If and when that request is approved, Duolingo's strongest growth market should generate even richer revenue streams.
Duolingo's stock is still trading nearly 30% below May's all-time highs, but it's hard to complain when share prices are up 142% over the last 52 weeks. This stock isn't cheap, but Duolingo has earned every penny of that top-shelf valuation the hard way -- with a promising business model and impressive financial results.
