Duolingo (DUOL)
NASDAQ:DUOL
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Duolingo
(NASDAQ:DUOL)
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Rating:74Outperform
Price Target:
$125.00
▲(24.37% Upside)
Action:ReiteratedDate:05/05/26
The score is driven primarily by strong financial performance (high margins, profitability inflection, growing free cash flow, and low leverage) and supportive earnings-call guidance for continued growth and solid EBITDA/FCF. This is tempered by mixed technicals (below longer-term moving averages with near-term indicators stretched) and only moderate valuation support given no dividend yield.
Positive Factors
Balance sheet strength & cash generation
A strong cash balance with negligible debt and expected >$350M free cash flow gives Duolingo durable financial flexibility to invest in AI, marketing experiments, buybacks, and product development without relying on external financing, lowering long-term financial risk.
Negative Factors
Earnings quality & cash conversion gap
A material gap between reported net income and operating cash flow and an outsized 2025 profit raise repeatability concerns. If earnings include non-cash items or one-offs, future profitability and cash available for investment or buybacks may be less durable than headline margins imply.
Read all positive and negative factors
Positive Factors
Negative Factors
Balance sheet strength & cash generation
A strong cash balance with negligible debt and expected >$350M free cash flow gives Duolingo durable financial flexibility to invest in AI, marketing experiments, buybacks, and product development without relying on external financing, lowering long-term financial risk.
Read all positive factors
Duolingo (DUOL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.18B
Dividend YieldN/A
Average Volume (3M)1.82M
Price to Earnings (P/E)―
Beta (1Y)1.54
Revenue Growth35.45%
EPS Growth319.65%
CountryUS
Employees830
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)9.02
Shares Outstanding40,594,240
10 Day Avg. Volume1,947,915
30 Day Avg. Volume1,816,690
Financial Highlights & Ratios
PEG Ratio0.06
Price to Book (P/B)5.96
Price to Sales (P/S)7.74
P/FCF Ratio21.73
Enterprise Value/Market Cap0.74
Enterprise Value/Revenue3.71
Enterprise Value/Gross Profit5.13
Enterprise Value/Ebitda25.65
Forecast
1Y Price Target
$105.94Price Target Upside5.40% Upside
Rating ConsensusHold
Number of Analyst Covering16
EPS Forecast (FY)2.96
Revenue Forecast (FY)$1.21B
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...
How the Company Makes Money
Duolingo generates revenue primarily through a freemium model and related education services. (1) Subscriptions: The company sells paid subscription tiers that provide an ad-free experience and additional premium features to users of the Duolingo ...
Duolingo Key Performance Indicators (KPIs)
Any
Monthly Active Users
Captures the size of Duolingo’s active user base over a month, indicating reach and brand traction. Trends in MAU reveal user acquisition strength, seasonal patterns, and the addressable market for upselling to paid tiers.
Captures the size of Duolingo’s active user base over a month, indicating reach and brand traction. Trends in MAU reveal user acquisition strength, seasonal patterns, and the addressable market for upselling to paid tiers.
Data provided by:
The Fly
The FlyDuolingo Earnings Call Summary
Earnings Call Date:May 04, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 12, 2026
Earnings Call Sentiment Positive
The call presents a broadly positive picture: strong DAU growth (21% YoY), double-digit bookings and revenue growth, robust adjusted EBITDA and cash generation, and a transformative ramp in AI-driven content and product features that materially improve teaching experience. Management is deliberately investing in 2026 to support long-term durability and provided transparent guidance and point estimates. Near-term headwinds include a tough Q2 bookings comp, flat MAU/top-of-funnel this quarter, and higher AI-related costs that pressure gross margins into the high-60s by year-end. These risks are framed as expected and being actively managed via experiments and marketing investments.Positive Updates
Strong DAU Growth
Daily active users (DAUs) grew 21% year-over-year; company expects DAU growth to remain around ~20% through 2026 with continued improvements in retention (DAU-to-MAU ratio increasing).
Negative Updates
Top-of-Funnel / MAU Deceleration
Top-of-funnel and monthly active users (MAU) growth was roughly flat in the quarter, representing a deceleration vs prior trends and creating a reliance on retention and word-of-mouth improvements to sustain DAU momentum.
Read all updates
Q1-2026 Updates
Positive
Negative
Strong DAU Growth
Daily active users (DAUs) grew 21% year-over-year; company expects DAU growth to remain around ~20% through 2026 with continued improvements in retention (DAU-to-MAU ratio increasing).
Read all positive updates
Company Guidance
Management reiterated full-year 2026 targets of 10%–12% bookings growth, 15%–18% revenue growth and an adjusted EBITDA margin of about 25% (point estimates: ~10.5% bookings growth, ~16.1% revenue growth, ~25.7% adjusted EBITDA margin). Near-term cadence: Q2 bookings growth of ~6% (tough comp), Q2 revenue growth ~17%, Q2 gross margin ~71% and Q2 adjusted EBITDA margin ~24%; gross margin is expected to trend to ~69% by year-end as AI usage expands, with Q3 EBITDA roughly flat-to-slightly down and approaching ~27% in Q4 as bookings accelerate (≈3-point lift in Q3 and further acceleration in Q4). Balance sheet and cash flow metrics: enter Q2 with >$1B cash, no debt, $400M buyback authorization with 514k shares repurchased (~1% fully diluted), and an expected >$350M of free cash flow for 2026; recent operating datapoints included Q1 DAUs +21% YoY and adjusted EBITDA of $83M (~29% of revenue).Duolingo Financial Statement Overview
Summary
Income Statement
84
Very Positive
Balance Sheet
86
Very Positive
Cash Flow
82
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.04B | 748.02M | 531.11M | 369.50M | 250.77M |
| Gross Profit | 749.46M | 544.38M | 389.00M | 270.06M | 181.59M |
| EBITDA | 149.96M | 73.45M | -6.16M | -60.33M | -57.28M |
| Net Income | 414.06M | 88.57M | 16.07M | -59.57M | -60.13M |
Balance Sheet | |||||
| Total Assets | 1.99B | 2.40B | 1.85B | 1.44B | 1.28B |
| Cash, Cash Equivalents and Short-Term Investments | 1.14B | 877.64M | 747.61M | 608.18M | 553.92M |
| Total Debt | 93.78M | 54.66M | 25.04M | 28.41M | 32.46M |
| Total Liabilities | 645.18M | 1.58B | 1.20B | 902.45M | 767.53M |
| Stockholders Equity | 1.35B | 824.55M | 655.50M | 542.08M | 513.06M |
Cash Flow | |||||
| Free Cash Flow | 369.73M | 273.40M | 139.93M | 43.53M | 2.96M |
| Operating Cash Flow | 387.82M | 285.51M | 153.61M | 53.66M | 9.17M |
| Investing Cash Flow | -107.68M | -217.33M | -13.58M | -14.17M | -6.21M |
| Financing Cash Flow | -29.55M | -30.00M | 2.13M | 14.78M | 430.47M |
Duolingo Technical Analysis
Neutral
100.51
Price Trends
102.52
Negative
137.09
Negative
223.76
Negative
Market Momentum
-1.97
Negative
51.75
Neutral
77.27
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DUOL, the sentiment is Neutral. The current price of 100.51 is above the 20-day moving average (MA) of 96.43, below the 50-day MA of 102.52, and below the 200-day MA of 223.76, indicating a neutral trend. The MACD of -1.97 indicates Negative momentum. The RSI at 51.75 is Neutral, neither overbought nor oversold. The STOCH value of 77.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $7.52B | 27.21 | 77.38% | 2.11% | 16.91% | -36.34% | |
78 Outperform | $2.51B | 4.52 | 18.54% | ― | 16.43% | ― | |
74 Outperform | $5.18B | ― | 36.60% | ― | 35.45% | 319.65% | |
71 Outperform | $7.21B | -148.02 | -2.19% | ― | 61.88% | -107.26% | |
67 Neutral | $3.96B | 24.86 | 9.88% | ― | 26.75% | 256.36% | |
65 Neutral | $4.18B | -557.66 | -6.24% | ― | 25.81% | -2156.00% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
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Duolingo Corporate Events
Business Operations and StrategyStock BuybackFinancial Disclosures
Duolingo Posts Strong 2025 Results, Authorizes $400M Buyback
Positive
Feb 26, 2026
On February 26, 2026, Duolingo reported its fourth-quarter and full-year 2025 results, highlighting that it ended 2025 with strong momentum, surpassing 50 million daily active users and exceeding $1 billion in bookings for the first time. Manageme...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.