Company Overview - Duolingo's stock has surged by 53% in 2025, driven by its unique position as a tax-exempt education platform on smartphones [2] - The company reported a significant increase in daily active users, growing by 49% year over year to reach 46.6 million in Q1 2025 [4] Financial Performance - First-quarter revenue for Duolingo grew by 38% year over year, reaching $231 million, while sales and marketing expenses increased by only 34% to $26.7 million [5] - Total operating expenses rose by 33% year over year to $140 million, leading to a 44% increase in operating income to $23.6 million [6] - The operating profit margin improved to 10.2% in Q1, with potential for further expansion as the company scales [8] Subscriber Growth and Features - Duolingo has surpassed 10 million paying subscribers, indicating a strong potential for profit growth in the coming years [9] - The introduction of AI-driven features in the Max subscription tier, such as video calls with a bot named Lily and personalized feedback, is expected to enhance user engagement and retention [10][12] Valuation Metrics - Despite a high trailing price-to-earnings ratio of 249, the stock may still be reasonably valued when considering future earnings growth potential [13] - The forward price-to-earnings-growth (PEG) ratio stands at 0.38, suggesting that the stock's valuation is justified by projected earnings growth [15]