Dive Brief:
- Duolingo is renewing its focus on monetization that preserves the free experience after achieving daily active user and retention growth in the third quarter, CEO Luis von Ahn said on a Q3 2026 earnings call Tuesday.
- The language learning app company grew daily active users 29% year over year to 64.9 million, an acceleration from 23% year over year in the second quarter.
- “Every new learner expands the audience we can monetize over time,” von Ahn said. “While teaching better and user growth remain our top priorities for this year, we're gradually leaning more into monetization in ways that preserve the quality of our free experience.”
Dive Insight:
Duolingo began the year prioritizing improving user growth through better teaching and removing friction in the free experience — over monetization.
“We have a strict guardrail inside the company to not degrade the free user experience anymore,” von Ahn said. “The good news is that we took this year to figure out how to monetize without degrading the free user experience. And I think we just found a number of levers that work that we feel pretty good about that.”
The focus appears to be paying off. The company reported revenue of $309 million, representing 14% year-over-year growth, according to its letter to shareholders. Paid subscribers increased 14% year over year to 13.1 million.
With daily active user growth achieved, Duolingo is turning its sights back on monetization and increasing that paid subscriber number in a frictionless manner.
“Subscriptions remain our largest monetization opportunity, and we believe the most durable way to grow them is to teach better,” von Ahn said in the letter to shareholders.
Some of the monetization tactics it's currently pursuing include offering longer free trials of its paid options, charging for avatar suits and offering its AI-powered video call feature to all paid subscriptions. It’s also sunsetting its most premium tier, Max, and focusing on its paid tier, Super.
Offering its video call feature to all paid subscriptions will not likely boost bookings in the short term, von Ahn said. “But in the long term, we think this is really going to help us because more and more people are going to get Super.”
Enhancements to the app and overall product was the main driver of increased current user retention rate and active daily user growth.
“We've in the past discussed our notion of the Green Machine, which is basically an optimization system that we have that just makes the app better over time,” von Ahn said. “Basically, every week, the app has hundreds of new A/B tests that make it a little better. The vast majority of our improvement in active users comes from improvements in retention because of that. The product's getting better.”
AI is supercharging those A/B tests, he said.
“The number of experiments that we ran, call it, the last month, is up about 90% year-over-year compared to last year,” von Ahn said. “And we're seeing not just significantly higher experiment count, which I believe will continue going up and up and up, but also the latency, the time between an idea to it being in front of the users is much shorter now. And that allows us to iterate a lot.”
