Duolingo Lifts Sales Forecast, Acquires Music Startup NextBeat

Duolingo has lifted its full-year revenue forecast to $1.01 billion to $1.02 billion, citing strong performance of its subscription tiers in Q2. The company has also acquired music-gaming startup NextBeat to expand its offerings beyond language-learning games. Duolingo plans to experiment with new music courses, including guitar, voice, and rhythm, and expects more diverse music experiences. Daily active users rose 40% in Q2, the weakest rate of expansion since 2022.

Duolingo, the leading mobile language learning platform, has significantly boosted its full-year revenue forecast for 2025, anticipating revenues between $1.01 billion and $1.02 billion. This upward revision reflects the company's robust performance in the second quarter and its strategic expansion into new markets and product offerings [1].

In Q2 2025, Duolingo reported revenue of $252.3 million, exceeding analysts' estimates of $240.7 million. The company's shares surged approximately 20% following the announcement, demonstrating investor confidence in its growth trajectory [1]. The company's subscription tiers, Super and Max, which include AI-driven features like video-call conversation practice and personalized feedback, have been instrumental in driving this growth.

Duolingo's AI tools have not only enhanced user engagement but also reduced costs, contributing to improved gross margins. The company's CFO, Matt Skaruppa, highlighted that the cost of AI tools has decreased significantly, thereby benefiting the company's financial performance [1].

In addition to its strong financial performance, Duolingo has also expanded its product offerings. The company has acquired music-gaming startup NextBeat to introduce new music courses, including guitar, voice, and rhythm, aiming to diversify its user experience [2]. This strategic move aligns with Duolingo's mission to develop and deliver high-quality educational content across multiple disciplines.

Despite the robust growth in revenue and user engagement, Duolingo's user expansion rate slowed in Q2 compared to previous quarters. Daily active users rose by 40%, the lowest rate of expansion since 2022. However, this slowdown is expected to be temporary as the company focuses on enhancing its existing offerings and exploring new revenue streams [3].

Duolingo's forward-looking statements emphasize its commitment to innovation and long-term growth. The company's strategic initiatives, such as the introduction of new music courses and the continued development of its AI tools, position it well to maintain its competitive edge in the language learning market.

References:
[1] Reuters. "Duolingo raises 2025 revenue forecast as AI tools boost user engagement." Retrieved from https://www.marketscreener.com/news/duolingo-raises-2025-revenue-forecast-as-ai-tools-boost-user-engagement-ce7c5ededb8bf72d
[2] TradingView. "What to expect from Duolingo's Q2 earnings." Retrieved from https://www.tradingview.com/news/stockstory:da54621b9094b:0-what-to-expect-from-duolingo-s-duol-q2-earnings/
[3] Stock Titan. "Duolingo reports 41% revenue growth, 46% subscription revenue growth." Retrieved from https://www.stocktitan.net/news/DUOL/duolingo-reports-41-revenue-growth-46-subscription-revenue-growth-6fnnrg5ayann.html