Aug 6 (Reuters) - Language-learning app Duolingo ( DUOL )

raised its annual revenue forecast and beat

second-quarter revenue estimates on Wednesday, anticipating

broader adoption of its AI-enhanced subscription tier among its

global user base.

Duolingo ( DUOL ) operates on a freemium model, offering basic

language-learning features for free while providing premium

capabilities through monthly or annual paid subscriptions.

The company now expects revenue for 2025 to be in the range

of $1.01 billion to $1.02 billion, compared to analysts'

estimates of $996.6 million. It had earlier projected revenue

between $987 million and $996 million for the year.

Revenue in the April-June period was $252.3 million,

compared with analysts' estimates of $240.7 million.

Duolingo's ( DUOL ) two subscription tiers - Super, designed for

frequent learners, and Max, tailored for advanced users -

include AI-driven features such as video-call conversation

practice with chatbots, personalized error analysis and enhanced

feedback tools.

Since launching an AI-powered video-call tool for Android in

January, Duolingo ( DUOL ) has expanded the feature to additional

languages, aiming to boost subscription growth by enabling users

to practice natural conversations across a broader linguistic

range.

Duolingo's ( DUOL ) gross margin benefited this quarter from

lower-than-expected AI costs, as the decline in margin from

expanding Max and AI features was much smaller than the company

had originally expected.

"The cost of calling AI tools has come down a lot. Ads also

did better; ads are not a big part of our business, but it

turned out that it helped margin a little bit as well," CFO Matt

Skaruppa told Reuters.

Duolingo ( DUOL ) leverages generative AI to create and personalize

bite-sized lessons across more than 100 language courses.

In April, CEO Luis von Ahn said that after taking 12

years to develop the first 100 courses, the company's AI tools

helped it introduce 148 new courses in roughly one year.

Duolingo ( DUOL ) expects revenue for the third quarter to be in the

range of $257 million to $261 million, compared to analysts'

estimates of $253 million, according to data compiled by LSEG.

The firm also forecast an adjusted core profit of $288.1

million to $295.5 million for 2025.