Duolingo made headlines this week by having its AI-powered chatbot, Lily, deliver the opening remarks during its quarterly investor call, marking an innovative approach to corporate communications. The purple-haired, sarcastic AI character—based on a longtime app personality—presented key financial metrics before CEO Luis von Ahn took over for analyst questions.
The chatbot’s appearance wasn’t just a marketing stunt; it highlighted Duolingo’s aggressive investment in artificial intelligence technology. Lily reported that daily active users grew an impressive 54% year-over-year to 37.2 million, attributing this growth directly to social media marketing and generative AI investments.
Duolingo reported strong financial performance with $192.6 million in revenue, beating analyst expectations of $189.2 million and representing a 40% year-over-year improvement. The company also raised its full-year 2024 revenue guidance from $738 million to as much as $744 million. However, paid subscribers came in slightly below expectations at 8.6 million versus the predicted 8.66 million, causing the stock to fall nearly 5% in after-hours trading despite being up over 40% year-to-date.
The company’s AI strategy extends far beyond earnings call theatrics. Duolingo utilizes OpenAI’s GPT-4 technology to power two-way interactions with learners. In September, the company launched a premium feature allowing users to video call Lily and practice speaking with the AI bot, available as part of its most expensive pricing tier called Duolingo Max.
The AI integration has had significant operational impacts as well. Earlier this year, Duolingo cut 10% of its contractor workforce as the company shifted to using AI rather than human workers to create lessons. This move reflects a broader trend across the tech industry of AI replacing certain job functions.
CEO Luis von Ahn joked during the call that “over time, she’s going to do more and more of my job, and I can just retire,” acknowledging the expanding role of AI in the company’s operations. Analysts responded positively to the presentation, with Piper Sandler’s Arvind Ramnani calling it “probably one of the most enjoyable earnings calls that I had in several quarters.”
Duolingo’s gamified approach to language learning has made it particularly popular with Gen Z users, who strive to maintain daily usage streaks. The company has successfully positioned its brand as a personality rather than just a business, with Lily serving as a central character in this strategy.
Key Quotes
Over time, she’s going to do more and more of my job, and I can just retire.
CEO Luis von Ahn made this half-joking comment during the earnings call, acknowledging the expanding role of AI in corporate operations. The statement reflects a broader industry conversation about AI’s potential to automate even executive-level tasks.
Our new Duolingo Max feature video call lets learners chat with me. Don’t worry, I won’t judge — much. Maybe just an eye roll here and there.
The AI chatbot Lily described Duolingo’s premium AI feature while maintaining her characteristic sarcastic personality. This quote demonstrates how the company is using AI not just as a tool but as a branded character that drives user engagement and premium subscriptions.
probably one of the most enjoyable earnings calls that I had in several quarters.
Piper Sandler analyst Arvind Ramnani praised Lily’s appearance on the earnings call, suggesting that AI-driven presentations could make corporate communications more engaging. This positive reception from Wall Street analysts indicates that innovative AI applications are being well-received in traditional business contexts.
Our Take
Duolingo’s strategic use of AI represents a masterclass in turning technology into brand differentiation. While competitors focus on AI as a backend efficiency tool, Duolingo has made it a front-facing personality that users want to interact with. The company’s willingness to have Lily present earnings results shows remarkable confidence in their AI technology and brand strategy. However, the contractor layoffs reveal the uncomfortable reality that AI’s benefits come with human costs. The slight miss on subscriber expectations despite strong revenue growth suggests the market may be questioning whether AI features alone can sustain premium pricing. As AI becomes commoditized across language learning apps, Duolingo’s challenge will be maintaining its competitive edge. The company’s success in driving 54% DAU growth through AI features provides a blueprint for consumer apps, but also raises questions about long-term differentiation in an AI-saturated market.
Why This Matters
Duolingo’s earnings call represents a significant milestone in how AI is being integrated into corporate communications and business operations. While having an AI chatbot present financial results may seem like a publicity stunt, it demonstrates the growing confidence companies have in AI’s capabilities to handle complex, high-stakes communications.
More importantly, this story illustrates the dual nature of AI’s business impact: driving user engagement and revenue growth while simultaneously displacing human workers. Duolingo’s 54% growth in daily active users, directly attributed to AI features, shows how generative AI can create compelling consumer experiences. Meanwhile, the 10% contractor reduction reveals the technology’s disruptive effect on employment.
For the broader tech industry, Duolingo’s success with AI-powered features validates the business case for significant AI investments. The company’s ability to charge premium prices for AI-driven features like video calls with Lily demonstrates that consumers will pay for sophisticated AI experiences. This could encourage other consumer-facing apps to accelerate their AI integration strategies, potentially reshaping how millions of people interact with educational technology and digital services.
Recommended Reading
For those interested in learning more about artificial intelligence, machine learning, and effective AI communication, here are some excellent resources: