Duolingo (DUOL) saw its shares shoot up over 20% in premarket trading Thursday after its Q4 results and full-year 2024 guidance notably beat expectations.
For the fiscal Q4 2023, the language-learning software developer posted an EPS of $0.26, significantly above the consensus estimates of $0.04.
Revenue reached $151 million in the quarter, above the anticipated $148.32 million.
The number of paid subscribers by the quarter's end stood at 6.6 million, marking a 57% increase from the same period last year.
Furthermore, Duolingo's platform engagement showed noteworthy growth, with daily active users (DAUs) climbing by 65% year-over-year to 26.9 million, and monthly active users (MAUs) expanding by 46% to 88.4 million.
Looking ahead, Duolingo expects Q1 2024 revenue to be between $164 million and $167 million, which is above the expected $159.4 million.
For the full fiscal year 2024, revenue is estimated to be in the range of $717.5 million to $729.5 million, well ahead of the $700.9 million expected by analysts.
UBS equity analysts reiterated a Buy rating on DUOL and hiked the price target from $230 to $275.
“We increase our PT to $275 and reiterate our Buy rating as we increase our above consensus '24E rev/EBITDA by 2%/$16M to reflect 100K more subscribers added in 4Q vs our expectations and a 1Q revenue guide almost 3% above our prior estimate at the high-end,” analysts said.
“Stepping back, while we expect user growth to slow in '24, we continue to expect a larger cohort of Subscribers to be added in '24 vs '23 and we are incrementally positive on commentary around testing pricing in '24, as well as a investing resources behind the strength in the family plan,” they added.