Duolingo Earnings Call Features AI Chatbot Presentation

On Wednesday, Duolingo introduced a novel element to its earnings call: Lily, an AI chatbot inspired by a character from the company’s app. The chatbot began the session by summarizing the financial performance of the company, highlighting both accomplishments and shortcomings.

While Duolingo experienced substantial revenue growth this quarter, the company fell short of its target for paid subscribers, resulting in a 5% decline in its stock during after-hours trading. The earnings report showed that Duolingo generated $192.6 million in revenue, surpassing analyst expectations of $189.2 million, reflecting a remarkable year-over-year increase of 40%.

In addition to the revenue figure, Duolingo also updated its revenue guidance for the full year of 2024, raising it from a previous estimate of $738 million to a new high of $744 million.

Lily, characterized by her sarcastic tone, took the place of CEO Luis von Ahn at the start of the video call. Following Lily’s brief introduction, von Ahn addressed questions from analysts, jokingly mentioning, “Over time, she’s going to do more and more of my job, and I can just retire.” During her short speech, Lily highlighted an impressive 54% increase in daily active users, which now totals 37.2 million, attributing this growth to effective social media marketing and investments in generative AI features.

Among the latest innovations is Duolingo Max, which allows users to engage in video calls with Lily, promoting conversational practice without judgment. “Don’t worry, I won’t judge — much,” she remarked humorously, demonstrating the company’s unique branding strategy that humanizes its services.

The use of AI was a focal point throughout the call, illustrating Duolingo’s commitment to modern learning methodologies. Earlier this year, the company had made headlines by reducing its contractor workforce by 10%, opting instead to utilize OpenAI’s GPT-4 for creating interactive lessons.

Many analysts recognized the memorable nature of the call, with Piper Sandler’s Arvind Ramnani describing it as “probably one of the most enjoyable earnings calls that I’ve had in several quarters.” This sentiment aligns with a broader trend seen in recent earnings reports where discussions on AI technologies and their practical applications have gained prominence among major tech companies including Meta and Microsoft.

Despite the successes, the reported number of paid subscribers totaled 8.6 million, falling slightly short of expectations, which had anticipated 8.66 million subscribers. This disappointment may have contributed to the stock’s after-hours dip, although the company has maintained a positive trajectory, with its stock increasing over 40% year-to-date and an encouraged streak of six consecutive profitable quarters.

Duolingo remains popular among younger users, particularly Generation Z, thanks to its gamified approach to language learning. In September, the company launched another interactive element, enabling users to practice speaking through video calls with Lily, part of their premium service tier. As of now, the company has not released additional comments on the earnings report.