Following the company’s announcement of a strategic acquisition to improve its educational platform and the release of strong second-quarter results, shares of Duolingo, Inc. (NASDAQ: DUOL) surged 26.95% in pre-market trading on Thursday, reaching $436.20.
Outstanding Revenue and User Base Growth
Duolingo reported a 41% rise in revenue for Q2 that increased from $178.3 million to $252.3 million year-over-year rise. Additionally, total bookings also increased by 41%, from $190.1 million to $268.0 million. The net income increased 84% from $24.4 million to $44.8 million, almost doubling. The adjusted EBITDA increased from $48.1 million to $78.7 million, a 27% increase.
User engagement metrics followed a similarly strong trend. Monthly Active Users increased 24% to reach 128.3 million from 103.6 million a year earlier, while Daily Active Users increased 40% from 34.1 million to 47.7 million. From 8.0 million to 10.9 million, paid subscribers grew by 37%, while paid penetration went from 8.6% to 9.0%.
Product Expansion Drives Engagement
Duolingo attributed its sustained success to high user engagement and platform innovation. In order to improve user experience and retention, DUOL highlighted the successes of previous initiatives like the introduction of an energy mechanic and the launch of a chess course.
Duolingo intentionally invests in both new content categories and core offerings, despite the fact that it is still in the early phases of its overall development trajectory, in order to strike a balance between user expansion and profitability.
NextBeat Acquisition to Boost Music Course Development
In a major strategic move, Duolingo announced that it had purchased the team behind NextBeat, a London-based music gaming company. The 23-person team has expertise in mobile gaming, music licensing, monetization, and sound design. With the addition of engaging, game-like components, this acquisition is expected to improve Duolingo’s Music course.
The acquisition also marks Duolingo’s first formal entry into the UK, giving the company excellent access to a multitude of technical and artistic talent.
