Duolingo (DUOL) AI Stock Analysis

• Market Cap: $14.30B
• Dividend Yield: N/A
• Average Volume (3M): 1.41M
• Price to Earnings (P/E): 129.7
• Beta (1Y): 1.64
• Revenue Growth: 39.51%
• EPS Growth: 68.53%
• Country: US
• Employees: 830
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.91
• Shares Outstanding: 39,694,546
• 10 Day Avg. Volume: 961,829
• 30 Day Avg. Volume: 1,405,402
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.34
• Enterprise Value/Revenue: 21.57
• Enterprise Value/Gross Profit: 29.93
• Enterprise Value/Ebitda: 194.83
• 1Y Price Target: $409.63
• Price Target Upside: 31.29% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 20

• Rating: 78 Outperform
• Price Target: $369.00 ▲(18.27% Upside)

Duolingo's strong financial performance and positive earnings call sentiment are the most significant factors driving the stock score. The company's robust revenue growth, profitability improvements, and strategic expansion efforts, particularly in China, contribute positively. However, the high valuation and technical indicators suggest caution, as the stock may face resistance and valuation risks if growth expectations are not met.

Positive Factors

Revenue Growth

Sustained DAU growth indicates strong user engagement and market demand, supporting long-term revenue expansion and market position.

Market Expansion

Expansion in China through strategic partnerships enhances brand visibility and opens new revenue streams, crucial for global growth.

Profitability

Record profitability and raised guidance reflect effective cost management and strategic growth, bolstering financial stability.

Negative Factors

Social Media Backlash

Social media backlash can harm brand reputation and user engagement, potentially impacting long-term growth and user retention.

Max Subscription Growth Challenges

Slower Max subscription growth suggests challenges in product adoption, which could limit revenue diversification and growth potential.

Duolingo English Test Demand

Reduced demand for the English Test impacts a revenue stream, highlighting vulnerability to external factors like macroeconomic trends.

Duolingo Business Overview & Revenue Model

Company Description

Duolingo (DUOL) is a leading language-learning platform that leverages technology to provide accessible and engaging language education to users worldwide. Founded in 2011, the company operates in the education technology sector, offering a wide range of language courses through its mobile app and website. Duolingo's core products include interactive lessons, gamified learning experiences, and various language proficiency assessments, making language learning fun and effective for millions of users.

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 performance with robust revenue growth and profitability improvements. The balance sheet is solid with low leverage, and cash flow metrics indicate healthy cash generation. While operational efficiency can be enhanced, the overall financial health supports continued growth and stability in the competitive software application industry.

Income Statement

Duolingo has shown impressive revenue growth with a TTM increase of 9.11%, indicating strong market demand. The gross profit margin remains robust at 72.05%, reflecting efficient cost management. Net profit margin improved to 13.24%, showcasing enhanced profitability. However, the EBIT margin of 9.95% suggests room for operational efficiency improvements.

Balance Sheet

The company maintains a healthy debt-to-equity ratio of 0.096, indicating low leverage and financial stability. Return on equity is strong at 13.32%, reflecting effective use of shareholder funds. The equity ratio stands at 63.34%, suggesting a solid capital structure. However, the total assets have decreased, which may need monitoring.

Cash Flow

Duolingo's free cash flow growth rate of 12.32% is a positive indicator of financial health. The operating cash flow to net income ratio of 0.71 shows strong cash generation relative to earnings. The free cash flow to net income ratio of 0.97 indicates efficient cash conversion. Overall, cash flow metrics are strong, supporting future growth initiatives.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	885.15M	748.02M	531.11M	369.50M	250.77M	161.70M
Gross Profit	637.72M	544.38M	389.00M	270.06M	181.59M	115.71M
EBITDA	97.98M	73.45M	-6.16M	-60.33M	-57.28M	-13.76M
Net Income	117.18M	88.57M	16.07M	-59.57M	-60.13M	-15.78M
Balance Sheet
Total Assets	1.54B	2.40B	1.85B	1.44B	1.28B	175.74M
Cash, Cash Equivalents and Short-Term Investments	1.10B	877.64M	747.61M	608.18M	553.92M	120.49M
Total Debt	93.84M	54.66M	25.04M	28.41M	32.46M	9.24M
Total Liabilities	565.53M	1.58B	1.20B	902.45M	767.53M	256.43M
Stockholders Equity	977.03M	824.55M	655.50M	542.08M	513.06M	-80.69M
Cash Flow
Free Cash Flow	325.95M	273.40M	139.93M	43.53M	2.96M	13.69M
Operating Cash Flow	335.92M	285.51M	153.61M	53.66M	9.17M	17.71M
Investing Cash Flow	-216.47M	-217.33M	-13.58M	-14.17M	-6.21M	-4.01M
Financing Cash Flow	-31.45M	-30.00M	2.13M	14.78M	430.47M	46.95M

Duolingo Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 312.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• 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 312 is below the 20-day moving average (MA) of 321.96, below the 50-day MA of 312.20, and below the 200-day MA of 368.00, indicating a bearish trend. The MACD of -0.67 indicates Positive momentum. The RSI at 44.72 is Neutral, neither overbought nor oversold. The STOCH value of 21.26 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
DUOL	―	$14.30B	129.66	13.44%	―	39.51%	68.53%
YOU	―	$4.16B	16.77	128.70%	2.46%	19.85%	135.66%
CWAN	―	$5.56B	12.01	34.61%	―	36.68%	―
MNDY	―	$10.02B	266.34	3.80%	―	30.24%	-6.69%
FRSH	―	$3.32B	―	-5.23%	―	19.78%	47.51%
GTLB	―	$8.09B	―	-0.63%	―	28.97%	98.96%
Sector *	―	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Duolingo Corporate Events

Duolingo’s Earnings Call: Growth and Challenges

Duolingo’s latest earnings call revealed a balanced sentiment, highlighting both strong financial performance and growth challenges. The company reported impressive metrics, such as increased profitability and Daily Active Users (DAUs), alongside successful expansion efforts in China. However, challenges like the adoption of the Max plan and regulatory issues in China were also discussed, presenting a mixed outlook.

Duolingo Reports Strong Q2 2025 Earnings Growth

Duolingo, Inc. is a leading mobile learning platform, renowned for its popular language-learning app, which is the top-grossing app in the Education category on both Google Play and the Apple App Store. The company focuses on providing a fun, engaging, and effective learning experience while striving to make education universally accessible.