Shares of Duolingo Inc (NASDAQ:DUOL) fell 7.7% on Tuesday after the language-learning app reported first-quarter results that, while modestly above expectations, were overshadowed by second-quarter guidance pointing to a sharp deceleration in bookings growth.
Duolingo posted first-quarter revenue of $292 million, up 27% year-over-year and ahead of the $289 million analyst estimate, while adjusted EBITDA came in at $83.4 million, reflecting a 28.6% margin.
Earnings per share of $0.89 surpassed the consensus estimate of $0.75.
Daily active users reached 56.5 million, a 21% increase year-over-year, and paid subscribers grew 21% to 12.5 million.
Despite the headline beats, investors focused on weaker forward guidance. Duolingo projected second-quarter bookings of $283.5 million, up just 5.8% year-over-year, and trimmed its full-year revenue and bookings midpoints by $4 million and $6 million, respectively. The company now guides for full-year revenue of $1.205 billion and bookings of $1.28 billion.
Jefferies, which maintained a Hold rating with a $95 price target, said the first-quarter upside was offset by second-quarter guidance implying a notable deceleration in bookings growth, placing greater reliance on a second-half rebound. The firm sees downside risk to forward estimates and said it prefers to remain on the sidelines pending better visibility into growth trends.
Also flagged as a concern was a slowdown in monthly active user growth to 6% year-over-year, down from 14% in the fourth quarter, which Jefferies views as a leading indicator of weakening top-of-funnel engagement.
The deceleration was said to be particularly pronounced in the US, where users monetize materially better than international counterparts.
Duolingo highlighted several engagement initiatives, including longer free trials, expanded video call functionality, and refined performance marketing, though Jefferies said it was too early to assess their impact.