Language App Duolingo Changes Course, Prioritizes More Users Over Profits

Popular language-learning platform Duolingo announced Thursday it's shifting focus from making money to attracting more users, which will hurt its financial performance this year. The company plans to make more AI-powered features available to free users instead of keeping them behind paid subscription walls.

The popular language-learning platform Duolingo announced Thursday it’s changing direction, choosing to focus on attracting more users rather than maximizing profits — a strategic shift that will impact the company’s financial performance throughout the year.

Following the announcement, the company’s stock price dropped more than 15% during after-hours trading.

As part of this new approach, Duolingo will make its AI-powered “Video Call with Lily” feature available to Super Duolingo subscribers instead of restricting it exclusively to the higher-priced Max subscription tier.

In recent years, the language app had concentrated on increasing revenue through additional advertisements and subscription prompts, successfully boosting earnings per user. However, this strategy coincided with a slowdown in new user acquisition, leading to the company’s decision to refocus on user engagement.

“If we’re seeing faster user growth than we’re expecting, and what we are expecting is about 20%, then that means the strategy is working,” CEO Luis von Ahn told Reuters.

The Pennsylvania-based company also intends to provide more AI-powered speaking features to users at no cost, eliminating barriers that previously encouraged learners to upgrade to paid subscriptions.

According to Von Ahn, the AI video call feature now costs more than ten times less to operate compared to its initial launch, and as expenses continue decreasing, Duolingo plans to make it available to all users to enhance the learning experience.

The company reported that daily active user growth has slowed throughout 2025 and is projected to drop to approximately half the rate maintained in previous years.

Wall Street analysts have been closely examining the company’s slowing expansion as it grows larger, especially following several quarters of rapid growth.

Revenue bookings are now projected to increase approximately 11% in 2026, compared to the roughly 20% growth the company indicated it could have achieved with its former strategy.

The adjusted core profit margin is expected to decrease to around 25% this year as Duolingo invests in wider access to AI capabilities and increases marketing spending.

For the upcoming first quarter, Duolingo projected bookings of approximately $301.5 million, falling short of analyst estimates of $329.7 million, based on Visible Alpha data.

For the complete year, the company anticipates bookings between $1.27 billion and $1.30 billion, below analyst projections of $1.39 billion.

Duolingo expects annual revenue to range from $1.20 billion to $1.22 billion, trailing analyst expectations of $1.26 billion, according to LSEG compiled estimates.