The popular mobile learning application Duolingo Inc. posted higher revenue in its second quarter, thanks to a sharp increase in total bookings and monthly active users, prompting the company to raise its full-year outlook ad sending its stock soaring after-hours.

The company reported second-quarter earnings before certain costs such as stock compensation of 91 cents per share, far exceeding Wall Street’s target of 59 cents per share. Revenue for the period jumped 41%, to $252.3 million, crushing the analysts’ forecast of $240.7 million.

The impressive growth had a predictable impact on Duolingo’s bottom line, with the educational tech firm delivering net income of $44.8 million, up from just $24.4 million in the year-ago period.

Duolingo said its revenue was boosted by a substantial leap in daily active users, which rose 40% from the same period last year, to 47.7 million. Meanwhile, monthly active users gained 24%, to 128.3 million. With more users, its total bookings soared by 84%, to $44.8 million.

Investors liked what they saw, and Duolingo’s stock gained more than 16% in late trading. Through today’s close, it’s now up 6% in the year to date.

Duolingo co-founder and Chief Executive Luis von Ahn (pictured) said the company’s growth is a direct result of its aggressive push into generative artificial intelligence, which has helped it to expand the number and scope of its educational course offerings.

“We exceeded our own high expectations for bookings and revenue this quarter, and did it while expanding profitability,” he said. “Engagement remained strong, and we’ve seen encouraging early signals from new product initiatives like our Energy mechanic and Chess course.”

Duolingo shot to fame as the creator of a gamified language learning app that can be used by students and teachers to provide a more engaging learning experience. Users create a cartoon avatar character, and then they can navigate their way through a series of learning games designed to impart new knowledge, earning rewards and learning as they progress through the game.

Its focused on the core language skills – reading, writing, speaking and listening. Because everything is gamified, it makes learning them fun and encourages students to keep expanding their knowledge outside of the classroom.

The company’s core application is free to use, but to make the most of it, it’s necessary to pay a subscription fee to access its advanced courses.

Duolingo said it’s raising its full-year revenue forecast as a result of the better-than-expected performance of its subscription tiers during the quarter. The Pittsburgh-based firm is now targeting total sales of between $1.01 billion to $1.02 billion in fiscal 2025, up from a previous range of $987 million to $996 million. That puts it even further ahead of Wall Street’s consensus estimate, which calls for annual revenue of $996.5 million.

For the third quarter, Duolingo is eyeing sales of $257 million to $261 million, well ahead of the $253.3 million analyst target.

While Duolingo’s core focus remains language, it has ambitions to become an educational “super app,” adding courses for subjects such as mathematics and music. In the most recent quarter, it expanded further with the debut of its first chess course.

Alongside its earnings results, the company announced its biggest acquisition so far, buying a London-based music gaming startup called NextBeat Ltd. for an undisclosed price. The addition of NextBeat’s 23-person team will enable Duolingo to enhance its music courses, which are so far limited to piano instruction.

Duolingo Chief Business Officer Bob Meese told Bloomberg that the company is investing so that its non-language courses can make “more of a dent” in terms of the revenue they generate. “We’re going to experiment. We could do guitar, we could do voice, we could do rhythm,” he said. “You will see more, different music experiences coming out of us.”

Holger Mueller of Constellation Research Inc. told SiliconANGLE that Duolingo is a great example of how AI is changing everything in business. He said the company has impressed, leveraging its AI innovations to generate more interest in its learning app, despite the fact that AI could also be seen as a threat to the company.

“With modern translation apps offering live translation for so many languages now, the motivation for humans to learn them may be more questionable, endangering Duolingo’s business model,” the analyst said. “But Duolingo has successfully leveraged AI itself to get people to invest their free time in learning new skills, with gamification as a key incentive. It’s using AI not only to increase the efficiency of its existing business, but also branch out to new areas of education, for which the management deserves kudos.”

Photo: Duolingo