Duolingo Q2 Beats on Revenue but AI Investment to Cut Gross Margin From 71% to 69% by Year-End

Duolingo posted Q2 revenue up 18% YoY to $298.5M and paid subs up 17% to 12.7M, missing estimates, and guided Q3 revenue below Street expectations. Management said gross margin will trend down from ~71% to ~69% by year-end as AI-powered feature usage expands, and adjusted EBITDA came in around 24%. Shares dropped 11%+ after hours.