Duolingo announced on Wednesday that it beat its quarterly revenue estimates, even though the company faced widespread backlash for choosing to embrace generative AI over human workers. Duolingo stock rose almost 30% on the news.
In April, CEO Luis von Ahn shared that Duolingo would become an “AI-first” company, phasing out its use of contract workers. He also discouraged teams from hiring more employees, unless the team is unable to automate more of its work. With the use of generative AI, Duolingo introduced 148 new language courses, more than doubling its previous offerings.
“Without AI, it would take us decades to scale our content to more learners,” von Ahn wrote at the time. “We owe it to our learners to get them this content ASAP.”
While some Duolingo users have argued that these AI features are making the app worse, the company’s financial metrics tell a different story. Now the company anticipates making over $1 billion in revenue this year, and daily active users have grown 40% year-over-year. The growth is significant but falls in the lower range of the company’s estimates of growing between 40% and 45%, which an investor brought up to von Ahn on Wednesday’s quarterly earnings call.
“The reason we came [in] towards the lower end was because I said some stuff about AI, and I didn’t give enough context. Because of that, we got some backlash on social media,” von Ahn said. “The most important thing is we wanted to make the sentiment on our social media positive. We stopped posting edgy posts and started posting things that would get our sentiment more positive. That has worked.”
On TikTok, the top comments on Duolingo’s videos often remain criticisms of the company’s AI approach. Snarky commenters will ask if videos with multiple people in them are made with AI, to which Duolingo will reply, “Nope. Made by our great team!”
But even if public sentiment toward Duolingo has shifted, its bottom line has not … and from the company’s perspective, that’s what matters.