Duolingo (DUOL) AI Stock Analysis

• Market Cap: $4.66B
• Dividend Yield: N/A
• Average Volume (3M): 2.32M
• Price to Earnings (P/E): 12.0
• Beta (1Y): 1.75
• Revenue Growth: 39.86%
• EPS Growth: 318.84%
• Country: US
• Employees: 830
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.84
• Shares Outstanding: 40,013,535
• 10 Day Avg. Volume: 1,905,166
• 30 Day Avg. Volume: 2,316,793
• PEG Ratio: 0.00
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 0.80
• Enterprise Value/Revenue: 3.59
• Enterprise Value/Gross Profit: 4.97
• Enterprise Value/Ebitda: 21.63
• 1Y Price Target: $118.57
• Price Target Upside: 17.40% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 16
• EPS Forecast (FY): 4.31
• Revenue Forecast (FY): $1.26B

• Rating: 69 Neutral
• Price Target: $129.00 ▲(27.72% Upside)
• Action: Downgraded Date: 02/27/26
• Date: Action: Downgraded 02/27/26

The score is driven primarily by strong financial performance (profitable scale, high margins, rising FCF, and low leverage). This is tempered by weak technicals showing a pronounced downtrend versus key moving averages, and a mixed 2026 outlook that includes slower bookings growth and near-term margin pressure despite a supportive buyback and AI-led strategy.

Positive Factors

High Gross Margins & Profitability

Consistently high gross margins (~72–73%) and a profitability inflection from 2023–2025 provide durable operating leverage. These margins give the company room to invest in product and marketing while sustaining operating profits, though 2025's outsized net margin should be monitored for repeatability.

Scale: DAUs, Bookings and EBITDA

Material scale (>$1B bookings, >$300M adjusted EBITDA and 50M+ DAUs) signals strong product-market fit and durable engagement. A large active base supports multi-channel monetization, cross-selling to new subjects, and provides structural advantages for product experiments and yield improvements over time.

Balance Sheet Strength & Cash Generation

Rising operating and free cash flow and very low leverage give Duolingo financial flexibility. Strong FCF in 2025 underpins capacity to fund AI investments, product expansion and a $400M buyback, while limiting reliance on external financing and supporting durable capital allocation optionality.

Negative Factors

DAU Growth Deceleration

Slowing DAU growth (guidance ~20% in 2026) is a durable headwind: slower user adds reduce the expansion of the addressable paying pool and extend the timeline to reach scale targets (100M DAUs by 2028). Persistently weaker user growth makes monetization gains harder and increases execution risk.

Low Payer Penetration / Monetization Concentration

With only ~10% of active users paying, revenue depends heavily on a small cohort. Low conversion limits structural revenue uplift absent sustained conversion improvements or higher ad yields. Planned less-friction monetization experiments risk slower scaling or cannibalization of existing spend patterns.

Margin Pressure from AI Rollout & Investments

Management expects broader AI feature rollout and accelerated R&D/S&M, which will compress gross margins and press near-term profitability. If AI features raise variable costs or monetization lags, sustained margin compression could erode the benefits of scale and reduce cash flow conversion over the medium term.

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

Strong fundamentals: high and stable gross margins (~72–73%), clear shift to profitability in 2023–2025, rising operating and free cash flow, and very low leverage. Key risk is sustainability/quality of the sharp 2025 profit step-up and that operating cash flow has lagged net income in 2023–2025.

Income Statement

Duolingo shows strong scaling and a clear profitability inflection. Revenue expanded rapidly from 2020–2023 and continued to grow into 2024–2025, while gross margin stayed consistently high (~72–73%), supporting operating leverage. Profitability improved meaningfully, moving from losses in 2020–2022 to positive earnings in 2023–2025, with 2025 posting an unusually high net margin (~40%). The key watch-out is that the 2025 earnings level looks outsized versus prior years (net margin jumped sharply from ~12% in 2024), suggesting results may be less repeatable than the underlying revenue trajectory.

Balance Sheet

The balance sheet appears very conservative with low leverage: debt remains modest and debt-to-equity is low (~4–7% from 2021–2025), giving flexibility and lowering financial risk. Equity has grown substantially since 2020 (when equity was negative), and returns on equity improved sharply into 2024–2025, indicating stronger profitability on a larger capital base. A potential risk is that return metrics in 2025 may be inflated by the unusually large net income, so the sustainability of those returns should be monitored.

Cash Flow

Cash generation is a major strength: operating cash flow and free cash flow rose materially over time, with 2025 producing very strong free cash flow and positive growth versus 2024. Free cash flow has generally tracked earnings well (roughly ~81–96% of net income in 2021–2024), indicating decent earnings quality. The main weakness is that cash flow has not consistently exceeded earnings; in 2023–2025, operating cash flow covers only ~55–68% of net income, implying part of reported profitability is not translating into operating cash at the same pace.

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	196.80M	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	387.82M	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

• Technical Analysis Sentiment: Negative
• Last Price: 101.00
• 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 101 is below the 20-day moving average (MA) of 115.24, below the 50-day MA of 146.90, and below the 200-day MA of 290.23, indicating a bearish trend. The MACD of -11.21 indicates Negative momentum. The RSI at 30.18 is Neutral, neither overbought nor oversold. The STOCH value of 60.96 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	78 Outperform	$6.45B	43.52	58.05%	2.11%	17.83%	118.70%
FRSH	73 Outperform	$2.21B	12.02	16.93%	―	18.18%	70.94%
DUOL	69 Neutral	$4.66B	11.99	36.25%	―	39.86%	318.84%
CWAN	68 Neutral	$6.93B	-170.61	-2.58%	―	50.91%	54812.50%
MNDY	67 Neutral	$3.69B	32.42	10.43%	―	28.62%	186.67%
GTLB	65 Neutral	$4.20B	―	-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 Posts Strong 2025 Results, Authorizes $400M Buyback

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. Management said it is prioritizing user growth and teaching quality in 2026, focusing on enhancing the free learner experience and expanding into areas like chess, math and music, a strategy expected to temper near-term financial growth but support scale and durability over time.

The company also announced that its board authorized a share repurchase program of up to $400 million with no expiration date, underscoring an intention to return capital to shareholders and manage dilution while preserving flexibility for long-term investments. Repurchases may be executed in the open market or through private transactions at the company’s discretion, with the timing and amount dictated by market conditions, liquidity and other considerations, potentially affecting capital structure and shareholder returns.

The most recent analyst rating on (DUOL) stock is a Buy with a $200.00 price target. To see the full list of analyst forecasts on Duolingo stock, see the DUOL Stock Forecast page.

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.