To The Moon

$Duolingo, Inc.(DUOL)$ jumped 21% on the earnings day and hit an all-time high after the company beat all the metrics and lifted its full-year revenue forecast.

JPMorgan analysts lifted their price target to $500 from $360, and said they see room for Duolingo's user base to continue growing.

Financial highlights

EPS: 0.72, beats consensus of 0.47 (52.6% beat)

Revenue: 230.74 m vs. consensus of 222.45 m (3.73% beat)

DAU: 46.6 vs. 45.43 (2.57% beat)

MAU: 130.2 vs. 125.21 (3.99% beat)

Guidance: It expects revenue for 2025 between $987 million and $996 million, compared to analysts' estimate of $977.2 million

Investment highlights

1. AI-powered Content Supply & Enriched Learning Experience

CEO Luis von Ahn highlighted the successful launch of 148 new language courses developed using AI. This demonstrates AI's ability to scale content creation and rapidly develop new features such as Video Call with Lily (a key feature of Duolingo Max).

Management reiterated the strategic importance of AI in enhancing content creation, improving operational efficiency, and accelerating product innovation — with a particular emphasis on leveraging generative AI to rapidly expand and optimize product offerings.

Concern: However, AI also brings cost challenges. Management acknowledged ongoing difficulties in optimizing AI-related costs, especially for features like Video Call with Lily, which currently incur high marginal expenses.

2. Dual Growth Drivers: Viral Marketing + Gamified Product Expansion

In Q1, Duolingo ran the “Dead Duo” campaign, achieving a staggering 1.7 billion global impressions with a marketing spend of under $27 million. This campaign attracted 13 million active users, with a remarkably low average customer acquisition cost of just $2 per user. Notably, these users came from high-value, mature markets such as North America and Europe.

Duolingo also launched a new chess module, expanding beyond its math and music subjects to further boost user engagement. The CEO noted that these modules are already being monetized similarly to the core language programs, although they currently operate at a smaller scale.

The addition of chess reinforces Duolingo’s “gamified learning DNA,” pushing the company toward a subscription-based “cloud gaming + learning” model. This blends entertainment with educational value, enhancing the overall user experience and monetization potential.

Conclusion

Duolingo once again delivered a full beat on earnings and raised guidance despite the broader macro uncertainty, giving investors renewed confidence. Following the results, JPMorgan raised its price target, signaling institutional optimism toward Duolingo’s growth prospects.

With its proven strengths in AI and viral marketing, Duolingo continues to find new growth vectors — such as its chess module — even in a well-known product landscape. The Q1 campaign further validated the brand’s popularity and helped drive increases in DAU and MAU.

Currently, Duolingo Max contributes a small portion to overall revenue, but going forward, the company’s ability to balance the promotion of new AI products with cost optimization will be key to sustaining profitable growth.

However, the stock price is now above the PT by JPMorgan. Short term rise may be limited. But in the long term, if you are bullish on its product design, Duolingo Max is just the begining.