By Akash Sriram

(Reuters) -Duolingo Inc beat Wall Street estimates for third-quarter revenue and raised its annual revenue forecast on Wednesday, as the language-learning app attracted more paying subscribers for its AI-powered tier.

Shares of the Pittsburgh-based company rose 7% in trading after the bell.

The company operates on a “freemium” model and has sought to convert free users to paid subscriptions, such as “Super Duolingo” for an ad-free experience, and “Duolingo Max,” which incorporates generative AI features.

“We are one of the few companies that has found a way to make profit off of AI. This is actually profitable for us,” CEO Luis von Ahn told Reuters.

While the AI additions resulted in a lower profit margin in the third quarter of 72.5%, it was still higher than estimate

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