Duolingo to bet on generative AI subscription plan (2024)

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Duolingo to bet on generative AI subscription plan (13)

Sabela Ojea , The Wall Street Journal 1 min read 10 May 2024, 01:10 PM IST

Duolingo to bet on generative AI subscription plan (15)

Summary

Duolingo says its investment in artificial intelligence is paying off after the language-learning app posted a 54% surge from last year in first-quarter paid subscribers to 7.4 million.

Duolingo says its investment in artificial intelligence is paying off after the language-learning app posted a 54% surge from last year in first-quarter paid subscribers to 7.4 million.

The company, which reported a 45% increase in first-quarter revenue to $167.6 million, said generative AI has accelerated its subscription growth and enabled faster content creation. The technology has enabled the company to boost its outlook while other online learning companies report sales declines for the quarter.

“What we’re seeing is that people are willing to pay even more to learn a language through Generative AI," Finance Chief Matt Skaruppa said in an interview on Thursday.

Duolingo aims to create a human-like tutor experience as it looks to boost AI-monetization efforts around expanding its family subscription plan and Duolingo Max plan, Skaruppa said. The company will be experimenting further with prices for its Duolingo Max plan, currently priced at $29.99 a month or $167.99 annually in the U.S., and to make it available in other geographies. Meanwhile, Duolingo plans to improve the family plan with smoother invites to the app and more engaging social features.

Generative AI has sped up content development exponentially, cutting some projects down from five years to three months, Chief Executive Luis von Ahn said on the company’s earnings call.

Developed with OpenAI’s GPT-4 technology, Duolingo Max is currently only available in six countries for Spanish- and French-language learners. The company plans to add more languages in the future, including English, the most popular language to learn.

“We are growing users very quickly with very low acquisition costs, since most of our growth comes from word of mouth," Skaruppa said. “The hardest thing is to keep users engaged when learning a language, making sure that they come back to the app every day."

For now, there seems to be enough content to keep learners engaged: During the quarter, daily active users rose to 31.4 million.

The number of Max subscribers is comparatively small, but the company is optimistic as it includes more Generative AI features that go beyond conversation.

The company on Wednesday raised its revenue outlook for the second quarter to between $175 million and $177.5 million. Analysts expected $176.9 million. Learning technology companies including Coursera and Chegg recently offered more cautious guidance, citing a challenging online learning outlook.

Write to Sabela Ojea at sabela.ojea@wsj.com

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Duolingo to bet on generative AI subscription plan (2024)
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