(Bloomberg) -- Duolingo Inc. jumped the most in nearly two years after its earnings and outlook beat analyst expectations, with its embrace of artificial intelligence lowering costs and an expansion into math and music courses attracting new learners.

Fourth-quarter profit was 26 cents per share on sales of $151 million, according to a statement Wednesday. Analysts expected 16 cents on sales of $148 million. Daily active users rose 65% to 26.9 million, above an expected 25.1 million. 

Shares of the Pittsburgh-based company rose as much as 23% in New York, the most since May 2022. 

They had risen 112% over the past year as at Wednesday’s close amid anticipation it will benefit from the boom in generative artificial intelligence. Duolingo cut 10% of its contractors in January, saying AI can make some of its content faster, and created a new premium tier with AI-generated feedback.

“We have no plans for layoffs in the future,” Chief Financial Officer Matthew Skaruppa said in an interview, adding that Duolingo will continue experimenting with AI. The company is chiefly using AI for content creation and interactive features currently, but will use it wherever it can, Chief Executive Officer Luis Von Ahn said on a call with analysts.

The language-learning software maker projected first-quarter sales of $164 million to $167 million, above an expected $159 million, but it sees user growth moderating “slightly” this year as it struggles to continue last year’s rapid growth. The company plans to test new subscription packages this year. 

Wednesday’s results were the first after Duolingo launched new math and music courses in November, hoping the added variety will attract new users and keep them coming back. The courses are “growing quite a bit,” Von Ahn said, but their overall impact this year is expected to be small as they are still “in the oven.”

Duolingo is considering adding more subjects, Skaruppa said, but there is “no kind of specific timeline or roadmap.”

(Updates with share move in third paragraph. Adds CEO comments in fifth and seventh paragraph and information on subscription packages in sixth.)

©2024 Bloomberg L.P.