Duolingo Eyes 2027 Monetization Push After Daily User Growth Accelerates to 29%

Duolingo plans to increase its focus on monetization in 2027 after reporting faster daily user growth and quarterly revenue above analysts’ expectations.

The language-learning company raised its full-year revenue forecast to $1.221 billion, supported by stronger engagement and a fourth-quarter outlook that exceeded Wall Street estimates. Its shares rose in premarket trading on Wednesday following the results.

Management intends to build on that audience growth through subscriptions, advertising and in-app purchases while continuing to prioritise learning quality and the free user experience.

Daily User Growth Accelerates

Duolingo’s daily active users increased 29% year over year in the third quarter, accelerating from 23% growth in the preceding quarter.

Management attributed the improvement to better retention and product changes that encouraged learners to return more frequently. Partnerships with Brawl Stars and Eggy Party also brought millions of users to the platform, according to the earnings coverage.

The company expects fourth-quarter user growth to remain close to the third-quarter pace.

For Duolingo, a larger and more engaged audience creates opportunities to sell subscriptions over time. However, paid subscriber numbers fell slightly short of analysts’ expectations, showing that rapid audience expansion does not automatically translate into equally strong subscription conversion.

Revenue Beats Expectations as Earnings Fall Short

Third-quarter revenue reached $309.01 million, exceeding the analyst estimate of $303.23 million.

Benzinga reported adjusted earnings of 54 cents per share, below the expected 57 cents. The year-earlier diluted earnings figure of $5.95 also reflected a substantial one-time tax benefit of $222.7 million, complicating comparisons between the periods.

Duolingo recorded an $11.4 million performance bonus accrual linked to its fourth-quarter user growth target. It expects to pay the full bonus in early 2027.

These expenses form part of the company’s investment in growth as it seeks to expand its audience and improve its learning products.

Cheaper AI Video Calls Could Reach More Subscribers

A sharp reduction in the cost of Duolingo’s AI-powered Video Call feature could help the company make conversational practice available to a much larger audience.

According to the earnings coverage, the cost per call fell from approximately 30 cents to less than 1 cent. Management indicated that broader access through the Super subscription could expand the feature’s reach roughly tenfold.

Duolingo’s shareholder letter also announced plans to discontinue its highest subscription tier, Duolingo Max, as unlimited Video Call becomes part of Super.

The company plans to stop selling new Max subscriptions this month and move existing individual Max subscribers to a Super family plan at the same price. Arrangements for legacy Max family subscribers remain under consideration for 2027.

Lower AI costs give Duolingo more flexibility to offer advanced features without a proportionate increase in operating expenses. Management expects AI inference costs associated with free users to amount to only a few million dollars in 2027.

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Subscriptions, Advertising and In-App Purchases Take Priority

Duolingo is testing several ways to generate more revenue from its growing audience, including longer free trials, new subscription features, improved advertising and in-app purchases.

The strategy seeks to give learners additional reasons to pay while keeping the free product useful and engaging.

Its expansion beyond language learning is also gaining traction. The chess product reached 10 million daily active users, according to the report, creating another substantial audience within the platform.

Paid marketing spending exceeded $100 million, highlighting the resources being committed to attracting users alongside product-led growth.

The next challenge is converting that investment and engagement into sustained revenue growth without weakening retention.

Duolingo Raises Its Full-Year Outlook

Duolingo forecasts fourth-quarter revenue of $322 million, ahead of Wall Street’s estimate of $314.55 million.

Its updated guidance points to continued growth, although the company has yet to provide financial targets for 2027.

Fourth-quarter adjusted EBITDA is expected to reach approximately $84 million.

The revised annual revenue forecast is up from about $1.207 billion and above analysts’ estimate of approximately $1.208 billion.

Duolingo plans to release its 2027 outlook in February. That update should provide a clearer picture of how its monetization initiatives, subscription changes and expanding AI features will affect growth and profitability.

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