Duolingo, Inc. (NASDAQ: DUOL), the leading mobile language learning platform, reported stellar third-quarter 2024 results, with robust user growth and financial performance. However, the company's stock plunged over 6% in pre-market trading on November 7, 2024, potentially due to missing expectations on paid subscriber numbers.

In the quarter ended September 30, 2024, Duolingo witnessed remarkable user engagement, with Daily Active Users (DAUs) surging 54% year-over-year to 37.2 million, and Monthly Active Users (MAUs) climbing 36% to 113.1 million. This strong user growth translated into impressive financial performance, with total bookings soaring 38% to $211.5 million, driven by a 45% increase in subscription bookings to $176.3 million.

Duolingo's revenue for the quarter rose 40% year-over-year to $192.6 million, exceeding analyst estimates. The company's profitability also improved significantly, with net income of $23.4 million, adjusted EBITDA of $47.5 million (representing a 24.7% margin), and free cash flow of $52.7 million.

A key driver behind Duolingo's strong performance has been the success of its AI-powered "Video Call with Lily" feature, part of the company's premium Duolingo Max subscription tier. This feature, which allows users to practice conversational skills with an AI-powered virtual character, has been particularly popular among English learners, contributing to a 47% year-over-year growth in Duolingo's paid subscriber base, reaching 8.6 million at the end of the quarter.

Encouraged by the impressive results, Duolingo raised its full-year 2024 guidance, projecting total bookings of $843.5 million to $846.5 million, up from its previous range of $820.5 million to $827.5 million. The company also raised its revenue guidance to $741.0 million to $744.0 million, compared to the previous range of $731.3 million to $738.3 million.

Despite the strong performance and raised guidance, Duolingo's stock plunged nearly 6% in pre-market trading, potentially due to missing Wall Street's expectations on paid subscriber numbers. Analysts had predicted 8.66 million paid subscribers for the quarter, while Duolingo reported 8.6 million.