When our analyst team has a stock tip, it can pay to listen. And these two things are propelling the stock to the higher end of my watch list right now. Moreover, it's gaining some operating leverage with scale.

Therefore, Duolingo is growing fast and sustaining growth longer than some thought possible. In 2023, management is guiding for an adjusted EBITDA margin of 10% to 12%, which is a massive improvement on an apples-to-apples basis. In 2021, Duolingo had negative adjusted EBITDA but swung to a positive 4.2% adjusted EBITDA margin in 2022. The other thing to keep an eye on here is Duolingo's progress on adjusted profitability - the company gives guidance for adjusted earnings before interest, taxes, depreciation, and amortization ( EBITDA). And this strong revenue guidance was another big reason the stock was up in March, if not the primary reason. The consensus revenue estimate was just $464.5 million, according to The Fly. Wall Street didn't expect anything close to this.

Now whatįor 2023, Duolingo expects to generate revenue of $486 million to $498 million, a potential year-over-year increase of 32% to 35%. However, the stock kept gaining after announcing its AI enhancements. The majority of the gains for Duolingo stock came early in March because of its strong earnings report. It introduced a new, higher-subscription tier called Duolingo Max, offering new features built on OpenAI's chatbot technology. But on March 14, the company gave the market another reason to be optimistic when it jumped on the artificial-intelligence (AI) bandwagon. The good news is that it now has 4.2 million of these paying subscribers, which was a whopping 67% year-over-year increase.Īccelerating user growth and impressive adoption of its subscription tier were enough to excite Duolingo investors in March. It also has a paid subscription tier called Super Duolingo, from which it generates most of its revenue. Moreover, the company is winning when it comes to selling users on higher-end subscription products.ĭuolingo is building a broad mobile-based education company, but it primarily generates revenue from its language-learning app, which is free with ads. Accelerating user growth from Duolingo is surprising a lot of investors, myself included.

Free language apps better than duolingo