Pittsburgh's unicorn language learning app continues to grow.
East Liberty-based Duolingo (NASDAQ: DUOL) has raised its guidance for the year. Last quarter, the company expected revenue for fiscal year 2024 to range between $726.5 million and $735.5 million. Now, the company expects it to range from $731.3 million to $738.3 million. After the company disclosed this news, shares rose from $161.40 to $170.25 in after-hours trading.
But a raised guidance hasn't always helped the company's valuation. In the week that followed last quarter's earnings call, shares dropped from an all-time high of $248.84 to $178.4. Analysts at the time suggested that investors may have had hopes for a higher raise to the guidance and that some may have simply viewed it as an opportune time to make an exit.
The company said it saw "record levels of engagement" this quarter, which contributed to the decision to raise the guidance. Consistency is as key to learning a language as it is to Duolingo's business model, and the company has taken an aggressive approach with its marketing to keep users engaged.
In Q2 of 2024, the company had 34.1 million daily active users, a 59% year-over-year increase. The company also saw a 52% year-over-year increase in paid subscribers, climbing from 5.2 million to 8 million.
But CFO Matt Skaruppa said on the earning's call that the company does not expect to see that level of increase in the year ahead, noting that "a meaningful part of that acceleration came from an extraordinary set of tailwinds."
"Our signature ding was featured in the 'Barbie' movie, providing an incredible brand boost, and in many ways this was indicative of our commanding presence in the zeitgeist last year," Skaruppa said. "This year we feel good about our user growth and monetization, but we don't expect to see the same one-off accelerating tailwinds."
One way that the company hopes to maintain active users is a new feature where users can add friends and see how long they can keep a daily streak going together.
"We're very excited about a lot of the stuff that we're either already testing or putting out," CEO Luis von Ahn said during the call. "Now you and a friend can have a streak and you both have to use the app every day. If one of you doesn't do it, you lose your friend streak. It gives you a really good incentive to not disappoint your friends."
Von Ahn added that there would be more social features, as well as additional monetization features. He also emphasized that the company will continue its distinct social media presence, which he credited for the increase in users.
"We measure our social media impressions in billions, and to remind you this is organic," von Ahn said during the call. "We're not paying for these impressions, so we're getting billions of social impressions and we expect that to continue."
