Duolingo's soft bookings forecast overshadows revenue beat, shares plunge

Core Insights - Duolingo forecasts fourth-quarter bookings between $329.5 million and $335.5 million, below Wall Street estimates of $343.6 million, leading to a 20% drop in shares [1][2] - The company is shifting focus towards user growth and teaching quality, while still aiming for monetization [2] - Despite lower profit margins due to AI features, the company reported a 34% increase in paid users, reaching 11.5 million in the third quarter [4] Financial Performance - Duolingo's third-quarter revenue was $271.7 million, exceeding estimates of $260.3 million, marking a consistent trend of beating revenue estimates since going public in 2021 [6] - The annual revenue forecast has been raised to between $1.028 billion and $1.032 billion, up from a previous range of $1.01 billion to $1.02 billion, with analysts expecting $1.02 billion [6] User Growth and Monetization Strategy - The company operates on a "freemium" model, converting free users to paid subscriptions, including "Super Duolingo" and "Duolingo Max" [3] - A partnership with Luckin Coffee in China has enhanced visibility and contributed to user growth [4]