Duolingo (DUOL) AI Stock Analysis

• Market Cap: $7.21B
• Dividend Yield: N/A
• Average Volume (3M): 1.50M
• Price to Earnings (P/E): 19.6
• Beta (1Y): 1.65
• 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: 1,751,505
• 30 Day Avg. Volume: 1,500,438
• 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: 2.05
• Enterprise Value/Revenue: 15.34
• Enterprise Value/Gross Profit: 21.31
• Enterprise Value/Ebitda: 112.46
• 1Y Price Target: $262.69
• Price Target Upside: 68.10% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 17
• EPS Forecast (FY): 4.39
• Revenue Forecast (FY): $1.26B

• Rating: 72 Outperform
• Price Target: $193.00 ▲(23.50% Upside)

The score is driven primarily by strong financial performance (improving margins, low leverage, solid cash generation) and a positive earnings outlook (strong DAU/bookings guidance and healthy EBITDA margin). These are meaningfully offset by weak technicals (price below major moving averages with negative momentum), while valuation appears moderate with no dividend support.

Positive Factors

Strong Profitability and Gross Margins

Duolingo’s sustained gross margins above ~72% and a TTM net margin ~13% reflect the durable economics of a low-capex digital learning platform. High gross margins support reinvestment in product and AI, enabling long-term margin sustainability as scale grows and content costs remain relatively fixed.

Low Leverage and Financial Flexibility

A debt/equity near 0.096 and improving ROE provide durable financial flexibility to fund R&D, AI initiatives, and potential M&A while limiting interest burden. Low leverage reduces solvency risk in downturns and preserves capacity to scale marketing or invest in long-term teaching efficacy without capital constraints.

Large, Growing DAU Base and AI Strategy

Rapid DAU growth (36% YoY, >50M DAUs) combined with a strategic push into AI to improve teaching efficacy strengthens Duolingo’s durable competitive position. A large engaged audience and product-led learning improvements increase long-term monetization potential and barrier to entry versus smaller competitors.

Negative Factors

Near-term Bookings Deceleration from Strategic Shift

Prioritizing long-term teaching efficacy over short-term monetization can meaningfully slow bookings growth. While strategically sensible, the tradeoff may compress revenue growth for multiple quarters, delaying returns on R&D and making near-term operating leverage and investor expectations more uncertain.

Monetization Challenges at High-Tier Product

Underperformance of premium product bookings despite YoY growth signals structural difficulty upselling free users to higher-ARPU tiers. Persistent challenges converting users into premium subscriptions would limit margin expansion and make revenue growth more reliant on scale or advertising rather than higher-margin subscription mix.

Fragile Viral Growth from Social Media

Reliance on viral social tactics for user acquisition is a fragile, variable channel. Strategic shifts or moderation can reduce organic virality, forcing higher-paid acquisition or slower organic growth. Over time this increases marketing spend risk and could reduce scalable, low-cost user growth unless product retention fully compensates.

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: 156.27
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 156.27 is below the 20-day moving average (MA) of 175.91, below the 50-day MA of 186.08, and below the 200-day MA of 326.98, indicating a bearish trend. The MACD of -9.57 indicates Positive momentum. The RSI at 30.02 is Neutral, neither overbought nor oversold. The STOCH value of 6.46 is Positive, 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
CWAN	74 Outperform	$7.06B	15.81	32.91%	―	50.91%	54812.50%
YOU	73 Outperform	$4.49B	17.69	130.93%	2.11%	17.83%	118.70%
DUOL	72 Outperform	$7.21B	19.63	36.25%	―	39.86%	318.84%
FRSH	72 Outperform	$3.23B	-114.89	-2.98%	―	18.18%	70.94%
MNDY	66 Neutral	$6.62B	108.32	5.81%	―	28.62%	186.67%
GTLB	64 Neutral	$6.09B	-133.86	-5.17%	―	27.35%	18.18%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Duolingo Corporate Events

Duolingo Names New CFO Amid Strong Growth Momentum

On January 12, 2026, Duolingo announced that board member and Audit, Risk and Compliance Committee chair Gillian Munson will become Chief Financial Officer on February 23, 2026, succeeding long-time CFO Matt Skaruppa, who is stepping down after nearly six years in the role but will remain as an advisor through November 20, 2026 to ensure a smooth transition. Munson, who brings prior CFO experience at Vimeo, Iora Health and XO Group and a background in investment banking and venture capital, resigned from Duolingo’s board in connection with her appointment and received a compensation package that includes an $800,000 base salary, a substantial RSU grant vesting over four years, and severance protections, signaling the company’s intent to secure seasoned financial leadership as it scales. The company emphasized that neither Skaruppa’s nor Munson’s resignations from their prior roles stemmed from disagreements over corporate operations or policies, underscoring stability in governance. In parallel, Duolingo provided a preliminary update for the quarter ended December 31, 2025, reporting approximately 30% year-over-year growth in daily active users and bookings at or slightly above the high end of its prior guidance range, highlighting continued strong user growth and financial performance as management reiterates its strategy of investing in product and long-term expansion even at the expense of near-term trade-offs.

The most recent analyst rating on (DUOL) stock is a Buy with a $300.00 price target. To see the full list of analyst forecasts on Duolingo stock, see the DUOL Stock Forecast page.