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Duolingo (DUOL)
NASDAQ:DUOL
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Duolingo
(NASDAQ:DUOL)
65Neutral
Positive Factors
Market Potential
The total addressable market for Duolingo is vast, with billions of potential users due to the engaging and accessible nature of its learning platform.
Product Development
Strong adoption rates for Max and Family plans are a notable positive for revenues and subscriber lifetime value.
Negative Factors
Financial Guidance
The 2025 EBITDA guidance implies weaker than expected incremental margins due to increased investments in Max.
Stock Performance
Shares traded down 9% after hours despite a solid quarterly report, indicating market concerns about the future margin trajectory.
Duolingo (DUOL) vs. S&P 500 (SPY)
Market Cap
$13.99B
Dividend YieldN/A
Average Volume (3M)1.08M
Price to Earnings (P/E)178.7
Beta (1Y)2.07
Revenue Growth40.84%
EPS Growth437.52%
CountryUS
Employees830
SectorTechnology
Sector Strength48
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.85
Shares Outstanding39,044,190
10 Day Avg. Volume927,348
30 Day Avg. Volume1,081,193
Financial Highlights & Ratios
PEG Ratio0.41
Price to Book (P/B)N/A
Price to Sales (P/S)18.71
Price to Cash Flow (P/CF)42.00
P/FCF Ratio42.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$389.17Price Target Upside17.93% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
Duolingo Business Overview & Revenue Model
Company DescriptionDuolingo, Inc. develops a language-learning website and mobile app in the United States and China. The company offers courses in 40 different languages, including Spanish, English, French, Japanese, German, Italian, Chinese, Portuguese, and others. It also provides a digital language proficiency assessment exam. The company was incorporated in 2011 and is headquartered in Pittsburgh, Pennsylvania.
How the Company Makes MoneyDuolingo generates revenue primarily through a freemium model, where the core language-learning app is free to use, but users can pay for a premium subscription called Duolingo Plus. This subscription offers features such as ad-free learning, offline access, and additional benefits to enhance the learning experience. Additionally, the company earns money through advertisements displayed to free users. Duolingo also partners with educational institutions and other organizations to provide customized language-learning solutions, which further contributes to its revenue. The combination of subscription fees, advertising, and partnerships constitutes the key revenue streams for Duolingo.
Duolingo Financial Statement Overview
Summary
Duolingo exhibits robust financial health with high revenue growth, strong profit margins, and efficient cash flow management. The company maintains low leverage and a strong equity base, positioning it well for future growth.Income Statement
Duolingo has demonstrated strong revenue growth, with a 40.89% increase from 2023 to 2024. The company achieved a gross profit margin of 72.76% and a net profit margin of 11.84% in 2024, indicating efficient cost management and profitability. The EBIT and EBITDA margins improved significantly compared to previous years, reflecting operational improvements.85
Very Positive
Balance Sheet
Duolingo maintains a solid financial position with a low debt-to-equity ratio of 0.07, indicating low leverage. The return on equity (ROE) is 10.74%, demonstrating a good return for shareholders. The equity ratio is 63.34%, suggesting a strong reliance on equity financing, which enhances financial stability.78
Positive
Cash Flow
Duolingo has shown impressive free cash flow growth, with a 95.42% increase from 2023 to 2024. The operating cash flow to net income ratio is 3.22, indicating strong cash generation relative to earnings. The free cash flow to net income ratio is 3.09, highlighting effective cash flow management.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 748.02M | 531.11M | 369.50M | 250.77M | 161.70M | Gross Profit |
| 544.38M | 389.00M | 270.06M | 181.59M | 115.71M | EBIT |
| 62.59M | -13.26M | -65.19M | -60.01M | -16.01M | EBITDA |
| 73.45M | -5.83M | -60.03M | -57.28M | -13.76M | Net Income Common Stockholders |
| 88.57M | 16.07M | -59.57M | -60.13M | -15.78M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 877.64M | 747.61M | 608.18M | 553.92M | 120.49M | Total Assets |
| 1.30B | 953.96M | 747.35M | 661.31M | 175.74M | Total Debt |
| 54.66M | 25.04M | 28.41M | 29.12M | 9.24M | Net Debt |
| -731.13M | -722.57M | -579.77M | -524.80M | -111.25M | Total Liabilities |
| 477.18M | 298.46M | 205.27M | 148.25M | 256.43M | Stockholders Equity |
| 824.55M | 655.50M | 542.08M | 513.06M | -80.69M |
| Cash Flow | Free Cash Flow | |||
| 273.40M | 139.93M | 43.53M | 2.96M | 13.69M | Operating Cash Flow |
| 285.51M | 153.61M | 53.66M | 9.17M | 17.71M | Investing Cash Flow |
| -217.33M | -13.58M | -14.17M | -6.21M | -4.01M | Financing Cash Flow |
| -30.00M | 2.13M | 14.78M | 430.47M | 46.95M |
Duolingo Technical Analysis
Positive
330.00
Price Trends
345.32
Negative
338.78
Positive
279.79
Positive
Market Momentum
-10.37
Negative
55.83
Neutral
94.74
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DUOL, the sentiment is Positive. The current price of 330 is above the 20-day moving average (MA) of 304.70, below the 50-day MA of 345.32, and above the 200-day MA of 279.79, indicating a neutral trend. The MACD of -10.37 indicates Negative momentum. The RSI at 55.83 is Neutral, neither overbought nor oversold. The STOCH value of 94.74 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DUOL.
Duolingo Risk Analysis
Duolingo disclosed 55 risk factors in its most recent earnings report. Duolingo reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Duolingo Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $23.19B | 24.42 | 11.92% | ― | 3.05% | 55.96% | |
68 Neutral | $1.19B | ― | -13.11% | ― | 9.27% | 34.66% | |
67 Neutral | $11.86B | ― | -5.37% | ― | 18.03% | 82.15% | |
65 Neutral | $13.99B | 178.67 | 11.97% | ― | 40.84% | 437.52% | |
58 Neutral | $8.83B | ― | -20.84% | ― | -17.10% | 21.82% | |
58 Neutral | $22.44B | 10.62 | -18.36% | 2.37% | 4.68% | -25.01% | |
47 Neutral | $75.30M | ― | -147.16% | ― | -13.78% | -5297.96% |
* Technology Sector Average
Performance Comparison
DUOL
Duolingo
340.50
117.06
52.39%
CHGG
Chegg
0.62
-6.75
-91.59%
ROKU
Roku
81.73
17.08
26.42%
ZM
Zoom Video Communications
78.13
11.78
17.75%
U
Unity Software
22.89
-3.81
-14.27%
COUR
Coursera
7.29
-6.61
-47.55%
Duolingo Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -12.18% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
Duolingo's earnings call highlighted significant achievements in user growth, subscription expansion, and content enhancement through AI, contributing to strong financial performance in 2024. However, the call also noted challenges in maintaining high gross margins due to AI costs and a step-down in revenue growth rate for 2025. Despite these challenges, the company's strategic investments indicate a positive outlook for continued growth and profitability.Highlights
Record Quarter and Year-Over-Year Growth
Duolingo reported a record quarter with 51% year-over-year growth in daily active users, reaching 40 million. The company also achieved its highest quarterly bookings, revenue, and adjusted EBITDA.
Duolingo Max and Family Plan Success
Duolingo Max subscriptions contributed significantly to the quarter's outperformance. The Family Plan now represents 23% of total subscribers, showing higher retention and LTV than individual plans.
Total Bookings and Revenue Growth
Total bookings grew by 42% year-over-year, with revenue increasing by 39%.
Positive Outlook for 2025
Duolingo expects to surpass $1 billion in bookings in 2025, with subscription bookings projected to grow by approximately 31%.
AI and Content Expansion
Duolingo is leveraging AI to improve user experiences and expand content rapidly, particularly in Math and Music courses, which have shown strong early adoption with 3 million DAUs.
Lowlights
Temporary Impact on Gross Margin Due to AI Costs
The introduction of Duolingo Max is expected to temporarily impact gross margin by 170 basis points in 2025, primarily due to AI costs.
Lower Revenue Growth Rate Expected
The revenue growth rate is expected to step down throughout 2025, influenced by FX impacts and the mathematical outcome of previous bookings growth.
Ad Revenue Underperformance
Ad revenue came in lower than expected, attributed to a combination of volume and RPMs, and a focus on optimizing subscriptions over ad revenue.
Company Guidance
During Duolingo's fourth quarter and full year 2024 earnings call, the company reported significant growth metrics, including a 51% year-over-year increase in daily active users, reaching 40 million by the end of the year. The company also highlighted a 42% year-over-year growth in Q4 bookings and a 39% increase in revenue. Duolingo achieved a 25.7% adjusted EBITDA margin for 2024, with a projected expansion to 27.5% in 2025. The guidance for 2025 includes a 25% year-over-year growth in bookings, aiming to surpass $1 billion, and a 35% increase in subscription bookings for Q1. The company emphasized the success of Duolingo Max, which now comprises 5% of total subscribers, and the Family Plan, which accounts for 23% of subscribers. The focus for 2025 includes leveraging generative AI to enhance user experience and drive content expansion across language, math, and music courses.Duolingo Corporate Events
Executive/Board Changes
Duolingo Welcomes Bonnie Ross to Board of Directors
Positive
Dec 9, 2024
Duolingo, the leading mobile learning platform, has appointed gaming industry veteran Bonnie Ross to its Board of Directors. With 30 years in the gaming sector, including key roles at Microsoft, Ross brings expertise in creating engaging experiences and expanding global franchises like Halo. Her appointment aligns with Duolingo’s mission to make learning fun and accessible, leveraging her passion for innovative and entertaining educational experiences.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.