Duolingo (DUOL) AI Stock Analysis

• Market Cap: $8.83B
• Dividend Yield: N/A
• Average Volume (3M): 2.22M
• Price to Earnings (P/E): 24.3
• Beta (1Y): 1.71
• Revenue Growth: 39.86%
• EPS Growth: 318.84%
• Country: US
• Employees: 830
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 5.95
• Shares Outstanding: 40,013,535
• 10 Day Avg. Volume: 2,010,228
• 30 Day Avg. Volume: 2,217,249
• PEG Ratio: 0.33
• Price to Book (P/B): 17.11
• Price to Sales (P/S): 18.86
• P/FCF Ratio: 51.59
• Enterprise Value/Market Cap: 1.68
• Enterprise Value/Revenue: 15.34
• Enterprise Value/Gross Profit: 21.31
• Enterprise Value/Ebitda: 112.46
• 1Y Price Target: $282.00
• Price Target Upside: 47.33% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 19
• EPS Forecast (FY): 8.12
• Revenue Forecast (FY): $1.03B

• Rating: 69 Neutral
• Price Target: $195.00 ▲(1.88% Upside)

Duolingo's strong financial performance and positive earnings call sentiment are key strengths, indicating robust growth potential. However, technical analysis shows bearish momentum, which could pose short-term risks. The moderate valuation suggests some room for growth, but the lack of a dividend yield may deter income investors.

Positive Factors

Revenue Growth

Duolingo's revenue growth exceeding expectations indicates strong market demand and effective monetization strategies, supporting future expansion.

User Growth

Significant increase in daily and monthly active users highlights Duolingo's growing user base, enhancing its competitive position and long-term revenue potential.

AI and Product Innovation

Duolingo's focus on AI to enhance teaching efficacy could significantly improve user engagement and retention, driving long-term growth and market leadership.

Negative Factors

Deceleration in Bookings Growth

Anticipated slowdown in bookings growth could impact short-term revenue, reflecting challenges in maintaining momentum amid strategic shifts.

Challenges with Social Media Engagement

Reduced social media engagement may hinder user acquisition and brand visibility, affecting growth in user base and potential revenue streams.

Max Subscriber Bookings Underperformance

Underperformance in Max subscriber bookings suggests challenges in premium service adoption, potentially limiting revenue growth from high-value segments.

Duolingo Business Overview & Revenue Model

Company Description

Duolingo, 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 Money

Duolingo generates revenue primarily through its freemium model, where users can access basic language learning features for free, while premium features are available through a subscription service known as Duolingo Plus. This subscription offers an ad-free experience, offline access, and additional learning tools. Additionally, Duolingo earns revenue through advertising displayed to free-tier users, as well as partnerships with educational institutions and businesses that leverage Duolingo's platform for language training and assessment. The company also explores monetization through language certification services, which provide recognized proof of language proficiency to users.

Duolingo Financial Statement Overview

Summary

Duolingo demonstrates strong financial health with impressive revenue growth, improved profitability metrics, and efficient cash flow management. The company maintains a low debt-to-equity ratio and a strong balance sheet, positioning it well for continued growth.

Income Statement

Duolingo has demonstrated strong revenue growth with a TTM increase of 8.94% and consistent gross profit margins above 72%. The net profit margin has improved significantly to 13.24% in the TTM, indicating enhanced profitability. EBIT and EBITDA margins have also shown positive trends, reflecting operational efficiency improvements.

Balance Sheet

The company maintains a healthy financial position with a low debt-to-equity ratio of 0.096, indicating low leverage. Return on equity has improved to 13.32%, showcasing effective use of equity to generate profits. The equity ratio remains strong, suggesting a stable capital structure.

Cash Flow

Duolingo's cash flow performance is robust, with a TTM free cash flow growth of 8.63% and a high free cash flow to net income ratio of 0.97, indicating efficient cash generation relative to net income. The operating cash flow to net income ratio of 0.71 further supports strong cash flow management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	964.27M	748.02M	531.11M	369.50M	250.77M	161.70M
Gross Profit	694.21M	544.38M	389.00M	270.06M	181.59M	115.71M
EBITDA	131.53M	73.45M	-6.16M	-60.33M	-57.28M	-13.76M
Net Income	386.02M	88.57M	16.07M	-59.57M	-60.13M	-15.78M
Balance Sheet
Total Assets	1.89B	2.40B	1.85B	1.44B	1.28B	175.74M
Cash, Cash Equivalents and Short-Term Investments	1.12B	877.64M	747.61M	608.18M	553.92M	120.49M
Total Debt	97.32M	54.66M	25.04M	28.41M	32.46M	9.24M
Total Liabilities	578.10M	1.58B	1.20B	902.45M	767.53M	256.43M
Stockholders Equity	1.31B	824.55M	655.50M	542.08M	513.06M	-80.69M
Cash Flow
Free Cash Flow	354.08M	273.40M	139.93M	43.53M	2.96M	13.69M
Operating Cash Flow	363.89M	285.51M	153.61M	53.66M	9.17M	17.71M
Investing Cash Flow	-174.86M	-217.33M	-13.58M	-14.17M	-6.21M	-4.01M
Financing Cash Flow	-31.89M	-30.00M	2.13M	14.78M	430.47M	46.95M

Duolingo Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 191.41
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DUOL, the sentiment is Negative. The current price of 191.41 is below the 20-day moving average (MA) of 199.78, below the 50-day MA of 268.68, and below the 200-day MA of 351.27, indicating a bearish trend. The MACD of -27.30 indicates Negative momentum. The RSI at 35.90 is Neutral, neither overbought nor oversold. The STOCH value of 69.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DUOL.

Duolingo Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
YOU	79 Outperform	$4.73B	18.61	130.93%	2.40%	17.83%	118.70%
CWAN	79 Outperform	$6.46B	14.42	32.91%	―	50.91%	54812.50%
DUOL	69 Neutral	$8.83B	24.34	36.25%	―	39.86%	318.84%
FRSH	68 Neutral	$3.42B	―	-2.98%	―	18.18%	70.94%
MNDY	66 Neutral	$7.30B	117.33	5.81%	―	28.62%	186.67%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
GTLB	60 Neutral	$6.85B	―	-0.63%	―	28.97%	98.96%

Duolingo Corporate Events

Duolingo Earnings Call Highlights AI Focus and User Growth

Duolingo’s recent earnings call conveyed a generally positive sentiment, underscoring the company’s robust user growth and strategic emphasis on artificial intelligence (AI) and long-term educational impact. Despite some short-term deceleration in bookings growth due to strategic shifts, the overall outlook remains optimistic.

Duolingo Reports Strong Q3 2025 Growth and User Engagement

Duolingo, Inc., a leading mobile learning platform, is renowned for its popular language-learning app and its commitment to making education universally accessible. In its Q3 2025 earnings report, Duolingo showcased impressive growth in user engagement and financial performance, with daily active users surpassing 50 million and revenue increasing by 41% year-over-year. Key financial highlights include a significant rise in net income to $292.2 million, driven by a one-time tax benefit, and an adjusted EBITDA margin expansion to 29.5%. The company also reported a 34% increase in paid subscribers, reflecting its successful monetization strategies. Looking ahead, Duolingo remains focused on long-term growth by investing in product enhancements and leveraging AI to improve its educational offerings. The management’s outlook for Q4 2025 is optimistic, with expectations of continued revenue growth and strategic product initiatives to drive user engagement.