Duolingo Inc (NASDAQ:DUOL) reported its second-quarter financial results Wednesday after the market closed, and while the numbers beat expectations, the stock is taking a hit. Here's what happened.

Q2 Earnings: The Good

Revenue came in at $298.45 million, up 18% year-over-year and ahead of the Street consensus of $295.62 million. Earnings were 66 cents per share, beating the expected 61 cents.

The user metrics were also strong. Daily active users hit 58.7 million, up 23% year-over-year, and paying subscribers rose 17% to 12.7 million.

CEO Luis von Ahn attributed the acceleration to three factors: "product changes, marketing impact, and a one-time event to revive lost streaks." He added, "Since two of these are permanent, we expect DAU year-over-year growth throughout the rest of the year to remain above the 20% we had previously guided to."

What's Next: The Not-So-Good

Here's where the market's disappointment creeps in. Duolingo guided for third-quarter revenue of $302 million, up 11.1% year-over-year, but the Street was looking for $304.1 million. The company also raised its full-year revenue guidance from $1.205 billion to $1.207 billion, implying 16.3% growth, but analysts had expected $1.2088 billion.

So while the company is doing well, the guidance suggests a slight slowdown, and investors are reacting to that. Von Ahn remains ambitious, saying, "Our ambition is to teach a billion people, and every step we take toward a better product brings us closer to that goal."

Stock Price Action

Shares are down 11.54% to $119.70 in after-hours trading Wednesday, well off the 52-week high of $468 and near the low of $87.89. The market is clearly pricing in the softer outlook, even as the company continues to grow.