Photo by KIRILL KUDRYAVTSEV/AFP via Getty ImagesAFP via Getty ImagesAt the recent Fast Company Innovation Festival 2025, Duolingo CEO Luis von Ahn told the audience something unusual these days for a tech chief. He stated that artificial intelligence was enabling his employees to perform their jobs more effectively. Imagine that.Instead of using AI for the sugar high of increasing EBITDA metrics, von Ahn said what more leaders ought to be considering: AI should be regarded as a complementary tool that empow ...

Core Viewpoint - iHuman Inc. reported its unaudited financial results for the second quarter of 2025, highlighting a decrease in revenues and average monthly active users (MAUs), while maintaining profitability for the 14th consecutive quarter through product innovation and strategic partnerships [1][6][8]. Financial Performance - Revenues for the second quarter were RMB200.2 million (US$27.9 million), a decrease from RMB215.1 million in the same period last year [6][9]. - Gross profit was RMB135.7 million (US$19.0 million), down from RMB151.7 million year-over-year, with a gross margin of 67.8%, compared to 70.5% in the previous year [12][9]. - Operating income was RMB19.5 million (US$2.7 million), slightly up from RMB18.8 million in the same period last year [14][9]. - Net income increased to RMB31.9 million (US$4.5 million) from RMB24.7 million year-over-year, with basic and diluted net income per ADS at RMB0.62 (US$0.09) and RMB0.60 (US$0.08), respectively [15][9]. User Engagement and Product Development - Average total MAUs for the quarter were 23.72 million, down from 24.57 million in the same period last year [10][9]. - The flagship app, iHuman Chinese, introduced new features including photo recognition for Chinese characters and a speaking feature for real-time pronunciation feedback [4][6]. - Aha Makeover underwent a major upgrade, transforming into a story-driven experience with missions and a rewards system, enhancing user engagement [4][5]. Strategic Partnerships and Content Expansion - iHuman established a strategic partnership with Cricket Media to enhance its global content strategy, launching the Reading Stars app to provide interactive reading experiences [5][6]. - The company is expanding its entertainment content through its animation studio, Kunpeng, with the Cosmicrew franchise continuing to perform well on streaming platforms [6][7]. Operational Efficiency and AI Integration - Total operating expenses decreased by 12.5% to RMB116.3 million (US$16.2 million), with reductions in research and development, sales and marketing, and general administrative expenses [13][14]. - The company is actively integrating AI across its operations to improve user experiences and operational efficiencies [8][9].

Core Viewpoint - Duolingo is considered an undervalued stock despite recent declines, with comparisons drawn to the initial skepticism surrounding Google and AI technology [1][4]. Company Performance - Duolingo's shares fell over 7% to $285.11 after Apple announced a new translation feature in its AirPods Pro 3, leading to a total decline of about 13% since the start of the year [2]. - The company reported second-quarter results exceeding both analysts' and its own estimates, with revenues increasing by 41% year-on-year to $252 million, surpassing the Wall Street consensus of $241 million [3]. - Duolingo raised its annual revenue outlook for 2025 from a range of $987 million to $996 million to between $1.01 billion and $1.02 billion [3]. Industry Insights - Concerns that AI translation technology could render Duolingo obsolete are viewed as misguided, similar to past fears regarding Google [4][5]. - The belief that AI will eliminate the need for language learning is challenged, as there remains a demand for language education and tools like Google Translate [5]. - The potential for Duolingo to leverage AI technology to enhance its offerings is highlighted, suggesting that the company can improve and grow through AI advancements [6].

Company Overview - Duolingo, Inc. (NASDAQ: DUOL) is a consumer app that gamifies language learning for users, known for its engaging marketing campaigns featuring Duo the owl [1]. Investment Position - An analyst has initiated a small position in DUOL worth less than $10,000 and plans to potentially increase this position in the coming months, anticipating stock volatility for at least the next couple of quarters [3]. Market Perspective - The analyst expresses a bullish outlook on various stocks, including DUOL, and emphasizes the importance of understanding market behavior beyond just numerical data [1].

Company Overview - Duolingo, Inc. is a consumer app that gamifies language learning for users, known for its engaging marketing campaigns featuring Duo the owl [1]. Investment Position - An analyst has initiated a small position in Duolingo (DUOL) worth less than $10,000 and plans to potentially increase this position in the coming months due to expected stock volatility over the next couple of quarters [3]. Market Perspective - The analyst emphasizes a long-term investment strategy, focusing on understanding market behavior beyond numerical metrics, and expresses a bullish outlook on various stocks including Duolingo [1].

Core Insights - The edtech market is experiencing growth driven by the demand for AI-based digital learning solutions and personalized learning across various educational segments [1][20] - Chegg, Inc. and Udemy, Inc. are two key players benefiting from these trends, with Chegg focusing on AI-driven tutoring and Udemy expanding its subscription model [1][6] Chegg Overview - Chegg operates a direct-to-consumer subscription model, providing digital study aids and AI-driven tutoring for college students [2] - The company is transforming its Chegg Study product into an AI-powered Personalized Learning Assistant, aimed at improving student graduation rates [3][21] - Chegg's investments in Busuu and Skills are enhancing its offerings in language learning and workplace readiness, with AI integration boosting engagement and retention [4][21] - The company has significantly reduced operating expenses by 72% year-over-year to $202.5 million in the first half of 2025, with expected adjusted savings of $165 million to $175 million for 2025 [5] Udemy Overview - Udemy operates as an online learning marketplace, with a market cap of approximately $1.05 billion, and is focusing on AI-powered innovations and subscription offerings [6] - About 70% of Udemy's revenue is now subscription-based, with plans to expand this model to reach over 250,000 consumer subscriptions by the end of 2025 [6][20] - The company is enhancing its partnership ecosystem, notably with Indeed and UKG, to integrate its content into broader career marketplaces and streamline enterprise learning management [7][8] - Despite growth in subscriptions, Udemy's Consumer segment faced a 6% year-over-year revenue decline to $143.1 million in the first half of 2025 due to macroeconomic challenges [10] Stock Performance and Valuation - Chegg's stock has outperformed Udemy's in the past six months, indicating stronger market momentum [11] - Chegg is currently trading at a discount compared to Udemy, which has a premium valuation despite facing headwinds [15][23] - EPS estimates for Chegg indicate a loss for 2025 but a break-even point for 2026, while Udemy's EPS estimates show significant growth potential [16][18] Investment Appeal - Chegg is positioned as a more compelling near-term buy due to its cost discipline, AI-led transformation, and relative valuation discount [23] - Udemy, while an attractive long-term player, faces macroeconomic risks and a reliance on discretionary spending, which may impact its near-term performance [22][23]

Group 1 - Duolingo's stock has decreased by 22.8% in less than a month, from $369.19 on August 18, 2025, to $285.11 currently, due to concerns over slowing active user growth and competition from AI-driven alternatives like Google's language tools and Apple's real-time translation feature in AirPods [1][2][4] - Historically, Duolingo has delivered a median return of 87% over one year and has shown a peak return of 87% after declines greater than 30% within 30 days [4][6] - The company offers a language-learning platform with courses in 40 languages, primarily targeting users in the U.S. and China [4] Group 2 - Duolingo has encountered five instances since January 1, 2010, where the stock experienced a dip of 30% or more within 30 days [5][6] - The median peak return following a dip event is 87%, with a median duration of 356 days to reach that peak [6] - Financial quality checks indicate that revenue growth, profitability, cash flow, and financial stability are essential to assess the business condition during dips [7]

Core Insights - Duolingo announced significant product updates at Duocon 2025, including integration of Duolingo Score with LinkedIn and expansion of the Duolingo Chess course [1][2] - The integration allows users to showcase their language skills on LinkedIn, enhancing the connection between language proficiency and professional opportunities [2] - The Duolingo Chess course has gained popularity since its iOS launch in June 2025, now expanding to Android with new features like player-versus-player mode [3][8] Product Updates - The Duolingo Score can now be linked to LinkedIn profiles, providing a real-time reflection of language skills [2] - Duolingo Chess is now available on Android, featuring live coaching and a new PvP mode for competitive learning [3][8] - The company emphasizes the use of AI and experimentation to enhance learning experiences, including improvements to its AI-powered Video Call feature [4][5] Learning Experience Enhancements - The AI-driven Video Call feature is now available for nine popular courses, offering real-time feedback and personalized interactions [5] - Duolingo employs rigorous A/B testing to refine its product offerings, ensuring data-informed decisions that enhance user engagement and learning outcomes [6] Company Overview - Duolingo is the leading mobile learning platform, offering a wide range of courses in languages, math, music, and chess, with over 250 language courses available [7] - The company's mission is to provide the best education globally and make it universally accessible [7]

Group 1 - Duolingo Inc. reported a strong performance with sales increasing to $252 million from $178 million year-over-year, and net income growing to $45 million from $24 million in the same period [2] - The company achieved an EPS of $0.91, exceeding the expected $0.55 [2] - Duolingo's Co-Founder and CEO emphasized record profitability and strong top-line growth, leading to an increase in full-year guidance [3] Group 2 - Wells Fargo initiated coverage of Duolingo with an Underweight rating and a price target of $239, citing concerns over user growth issues and downside risk in 2027 estimates [1][3] - Duolingo is investing in its core business and new areas like Chess, Math, and Music, which are expected to drive long-term growth [3] - The company operates as a mobile learning platform offering courses in 40 different languages through its app [4]

Group 1 - Coursera's stock has increased by 50% over the past six months due to a reacceleration of revenue growth in Q2 and an attractive valuation [1] - Ariel Sokol, with over twenty years of experience in corporate finance, has a background in strategy consulting and has held significant roles in education and finance sectors [1] Group 2 - Sokol founded Kolari Consulting, focusing on subscription and edtech businesses, and previously worked at Pearson in the Connections Education division [1] - Sokol has experience as a Wall Street equity research analyst covering education, software, and media companies [1]