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The company said daily active users (DAU) rose 55% to 31.4 million, more than double what it was 18 months ago, but only narrowly above the average analysts’ projection of 31.1 million.
“We had like 10 quarters of accelerating DAU growth and we kept saying almost every quarter: like, this can’t happen forever,” said CEO Luis von Ahn on a call following Wednesday’s earnings release.
Shares fell as much as 16% in post market trading after closing at a record high on Tuesday. The stock rallied in recent weeks after Duolingo was added to the S&P MidCap 400 Index.
Investors honed in on the slowdown in user growth even though the company’s first-quarter earnings of 57 cents per share was double the consensus estimate.
Citing the broader rollout of its higher-priced subscription tier and its improved family plan, Duolingo raised its revenue outlook for the year to as much as $735.5-million, up from the previous forecast of as much as $729.5-million.
Duolingo’s higher-priced Max tier has been rolled out to as much as 10% of its active users, chief financial officer Matthew Skaruppa told Bloomberg, adding that subscription tiers would continue to be adjusted throughout the year.
The Pittsburgh-based company has rapidly added users over the past two years, thanks in part to a marketing push and new learning content.
Though its rise in popularity in recent years has been attributed to social media, Skaruppa said the potential ban of TikTok in the US would have a limited impact as more than half of Duolingo’s social-media impressions come from outside of the country.
