By Akash Sriram<\/p>\n
(Reuters) -Duolingo forecast fourth-quarter bookings below Wall Street estimates on Wednesday as the company prioritizes user growth and teaching \u200bquality on its app, sending its shares tumbling 20% in trading after \u200cthe bell.<\/p>\n
The company forecast bookings to be between $329.5 million and $335.5 million for the quarter, \u200cbelow estimates of $343.6 million, according to analysts polled by Visible Alpha.<\/p>\n
“We will focus on monetization, but the balance is shifting a little bit. On a relative basis, we’re going to work more on teaching quality than we have in the recent \u2060past,” CEO Luis von \u200cAhn told Reuters.<\/p>\n
The downbeat bookings projections overshadowed an annual revenue forecast raise following a third-quarter beat.<\/p>\n
The company operates on a “freemium” model \u200dand has sought to convert free users to paid subscriptions, such as “Super Duolingo” for an ad-free experience, and “Duolingo Max,” which incorporates generative AI features.<\/p>\n
“\u200bWe are one of the few companies that has found a way to make profit \u200coff of AI. This is actually profitable for us,” von Ahn said.<\/p>\n
While the AI additions resulted in a lower profit margin in the third quarter of 72.5%, it was still higher than estimates of 71.4%, according to data compiled by LSEG.<\/p>\n
A growing user base continued to drive conversions from free users to paid \u2060subscribers. Paid users jumped 34% to 11.\u200b5 million in the third quarter.<\/p>\n
Growth was bolstered by \u200boutsized performance in China. A partnership with Luckin Coffee in July helped boost visibility in the region.<\/p>\n
In the third quarter, revenue of $271.7 \u200dmillion beat estimates of \u2060$260.3 million. Duolingo has topped revenue estimates every quarter since the company went public in 2021.<\/p>\n
The company raised its annual revenue forecast to between $1.028 billion \u2060and $1.032 billion, from $1.01 billion to $1.02 billion. Analysts on average were \u200cexpecting $1.02 billion, according to LSEG data.<\/p>\n
(Reporting by Akash \u200cSriram in Bengaluru; Editing by Sriraj Kalluvila)<\/p>\n","protected":false},"excerpt":{"rendered":"By Akash Sriram (Reuters) -Duolingo forecast fourth-quarter bookings below Wall Street estimates on Wednesday as the company prioritizes…\n","protected":false},"author":2,"featured_media":273844,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[45],"tags":[182,181,507,47065,11315,61704,74,72058,83419],"class_list":["post-273843","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-duolingo","tag-forecast","tag-luis-von-ahn","tag-technology","tag-visible-alpha","tag-wall-street-estimates"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/273843","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=273843"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/273843\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/273844"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=273843"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=273843"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=273843"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}