Duolingo (DUOL)
NASDAQ:DUOL
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Duolingo
(NASDAQ:DUOL)
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Rating:72Outperform
Price Target:
$112.00
▲(12.28% Upside)
Action:ReiteratedDate:02/28/26
The score is driven by strong financial performance (profitable scale, high margins, rising FCF, low leverage) and supportive valuation (low P/E). These are tempered by very weak technicals (price well below key moving averages, negative MACD) and an earnings-call outlook that points to slower 2026 growth and near-term margin pressure as investment and AI rollout ramp.
Positive Factors
High, stable gross margins
Duolingo’s sustained ~72–73% gross margins and the profitability inflection through 2023–2025 provide durable operating leverage for a scaled digital product. High gross margins support reinvestment in AI and product improvements, enabling margin recovery even if AI rollout raises costs temporarily.
Negative Factors
Decelerating DAU growth
Management now models roughly 20% annual DAU growth for 2026, a slowdown vs prior faster expansion. Sustained deceleration narrows the organic top-line runway, making long-term revenue gains more reliant on higher conversion or ARPU increases rather than user base growth alone.
Read all positive and negative factors
Positive Factors
Negative Factors
High, stable gross margins
Duolingo’s sustained ~72–73% gross margins and the profitability inflection through 2023–2025 provide durable operating leverage for a scaled digital product. High gross margins support reinvestment in AI and product improvements, enabling margin recovery even if AI rollout raises costs temporarily.
Read all positive factors
Duolingo (DUOL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.68B
Dividend YieldN/A
Average Volume (3M)3.19M
Price to Earnings (P/E)48.8
Beta (1Y)1.65
Revenue Growth39.86%
EPS Growth318.84%
CountryUS
Employees830
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.84
Shares Outstanding40,594,240
10 Day Avg. Volume2,237,795
30 Day Avg. Volume3,187,613
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 Cap0.78
Enterprise Value/Revenue3.51
Enterprise Value/Gross Profit4.86
Enterprise Value/Ebitda24.30
Forecast
1Y Price Target
$110.77Price Target Upside11.05% Upside
Rating ConsensusHold
Number of Analyst Covering16
EPS Forecast (FY)2.94
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 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...
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:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 13, 2026
Earnings Call Sentiment Neutral
The call balanced strong operating scale, profitability and a clear, AI-driven strategic plan (buyback authorization, >50M DAUs, >$1B bookings, >$300M adjusted EBITDA, new product traction) against meaningful near-term trade-offs: decelerating DAU growth (~20% guidance for 2026), lower gross margins from wider AI rollout, and increased R&D and sales & marketing spend that will pressure 2026 profitability. Management framed 2026 as a foundational investment year to reaccelerate DAUs and capture a larger long-term opportunity, but acknowledged uncertainty from A/B tests and tough early-year comps. Overall, positives (scale, cash generation, product roadmap, buyback) are balanced by concrete short-term execution and margin challenges.Positive Updates
Scale and User Milestone
Surpassed 50 million daily active users (DAUs) in 2025 — more than 5x the DAUs at IPO in 2021; medium-term goal to reach 100 million DAUs by 2028 (double).
Negative Updates
DAU Growth Deceleration
DAU growth decelerated through 2025; company now expects roughly 20% year-over-year DAU growth throughout 2026 (a slowdown from prior faster growth rates).
Read all updates
Q4-2025 Updates
Positive
Negative
Scale and User Milestone
Surpassed 50 million daily active users (DAUs) in 2025 — more than 5x the DAUs at IPO in 2021; medium-term goal to reach 100 million DAUs by 2028 (double).
Read all positive updates
Company Guidance
Duolingo’s 2026 guidance calls for bookings growth of 10–12%, revenue growth of 15–18% and an adjusted EBITDA margin around 25% (Q1: 11% bookings, 25% revenue, 25.5% adjusted EBITDA); management expects DAU growth of ~20% year‑over‑year through 2026 after surpassing 50M DAUs in 2025 and is targeting 100M DAUs by 2028. 2025 results included >$1B in bookings and >$300M in adjusted EBITDA, Q4 bookings were ~24%, and chess has ~7M DAUs while the top nine language courses cover >90% of DAUs. They cautioned that Q1 was tracking above guidance quarter‑to‑date but tough comps and planned investments mean modest early returns are modeled, revenue growth should track bookings with Q3–Q4 implied below Q1’s rate, gross margins will be lower as AI features are shared more broadly, R&D and S&M spend are expected to outpace revenue growth, Q2 adjusted EBITDA margin is expected to fall ~3 points sequentially from Q1 with Q4 the highest‑margin quarter, and the Board authorized up to $400M for buybacks.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
Negative
99.75
Price Trends
120.97
Negative
159.03
Negative
256.34
Negative
Market Momentum
-6.13
Negative
41.15
Neutral
36.56
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 99.75 is below the 20-day moving average (MA) of 101.65, below the 50-day MA of 120.97, and below the 200-day MA of 256.34, indicating a bearish trend. The MACD of -6.13 indicates Negative momentum. The RSI at 41.15 is Neutral, neither overbought nor oversold. The STOCH value of 36.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
78 Outperform | $7.13B | 27.21 | 77.38% | 2.11% | 17.83% | 118.70% | |
73 Outperform | $2.32B | 19.41 | 18.70% | ― | 18.18% | 70.94% | |
72 Outperform | $4.68B | 48.76 | 36.60% | ― | 39.86% | 318.84% | |
71 Outperform | $6.88B | -168.64 | -2.19% | ― | 50.91% | 54812.50% | |
67 Neutral | $3.83B | 63.93 | 9.88% | ― | 28.62% | 186.67% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | $3.79B | -103.64 | -6.24% | ― | 27.35% | 18.18% |
* Technology Sector Average
DUOL
Duolingo
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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...
Business Operations and StrategyExecutive/Board ChangesFinancial Disclosures
Duolingo Names New CFO Amid Strong Growth Momentum
Positive
Jan 12, 2026
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 ne...
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.