Duolingo (NASDAQ:DUOL) Issues Earnings Results, Beats Expectations By $0.06 EPS

Duolingo (NASDAQ:DUOL) released its earnings results on Wednesday. The company reported $0.66 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.60 by $0.06, FiscalAI reports. The company had revenue of $298.45 million for the quarter, compared to analysts’ expectations of $295.58 million. Duolingo had a return on equity of 14.07% and a net margin of 38.44%.The firm’s quarterly revenue was up 18.3% on a year-over-year basis. During the same quarter in the previous year, the firm posted $0.91 EPS.

Here are the key takeaways from Duolingo’s conference call:

• Daily active users grew 23% year over year in Q2, accelerating from Q1, while user retention reached an all-time high. Duolingo said growth was broad-based and supported by ongoing product experimentation.
• The company raised its full-year adjusted EBITDA margin outlook to 26.5% and now expects roughly $320 million of adjusted EBITDA, gross margin near 70%, and more than $375 million in free cash flow.
• Duolingo is expanding monetization in ways it believes support user growth, including longer free trials, a lower-priced Super Lite tier, improved advertising, and broader access to Video Call as AI costs decline. AI cost savings are expected to support margins while enabling more features for users.
• Management maintained full-year guidance of approximately 11% bookings growth and 16% revenue growth despite stronger user trends, noting that freemium users take time to monetize and that the company is prioritizing DAU expansion and product quality.
• The future of the higher-priced Max subscription remains uncertain as Video Call is rolled out to Super subscribers; management said Max could be restructured or even sunset, although it intends to avoid a material revenue loss.

Duolingo Stock Performance

NASDAQ:DUOL traded down $12.71 during trading hours on Thursday, reaching $122.61. 2,188,909 shares of the stock were exchanged, compared to its average volume of 2,036,413. The company has a quick ratio of 2.62, a current ratio of 2.62 and a debt-to-equity ratio of 0.07. Duolingo has a 52 week low of $87.89 and a 52 week high of $468.00. The firm has a 50 day simple moving average of $125.09 and a 200-day simple moving average of $115.19. The stock has a market capitalization of $5.71 billion, a P/E ratio of 14.14, a P/E/G ratio of 1.05 and a beta of 0.87.

Analyst Upgrades and Downgrades

Several equities analysts have weighed in on DUOL shares. DA Davidson restated a “neutral” rating and set a $120.00 target price on shares of Duolingo in a report on Monday, June 29th. Evercore set a $105.00 price objective on shares of Duolingo in a report on Thursday. Needham & Company LLC reaffirmed a “buy” rating and issued a $145.00 target price on shares of Duolingo in a research report on Thursday. Zacks Research upgraded Duolingo from a “strong sell” rating to a “hold” rating in a report on Tuesday, April 28th. Finally, UBS Group restated a “buy” rating and issued a $150.00 price target on shares of Duolingo in a report on Thursday. Three analysts have rated the stock with a Buy rating, eighteen have given a Hold rating and two have issued a Sell rating to the company’s stock. Based on data from MarketBeat.com, Duolingo presently has a consensus rating of “Hold” and an average price target of $146.47.

Duolingo News Summary

Here are the key news stories impacting Duolingo this week:

• Positive Sentiment: Duolingo reported second-quarter adjusted EPS of $0.66, exceeding estimates of roughly $0.60-$0.61, while revenue rose 18.3% year over year to approximately $298.5 million and also topped some analyst estimates. Duolingo Q2 earnings report
• Positive Sentiment: User momentum remained strong, with daily active users increasing 23% year over year. Management is targeting 100 million daily active users by 2028, supporting the longer-term growth thesis. Duolingo 2026 growth outlook
• Positive Sentiment: Needham reaffirmed its Buy rating and $145 price target, implying additional upside from the referenced share price. Needham price target report
• Neutral Sentiment: Duolingo generated $88.3 million in operating cash flow and ended the quarter with approximately $1.2 billion in cash. Full-year 2026 revenue guidance of about $1.2 billion was broadly in line with expectations.
• Neutral Sentiment: Management may sunset the Max subscription tier while emphasizing broader user acquisition and engagement. The strategy could expand the user base but creates uncertainty about near-term monetization. Duolingo subscription tier report
• Negative Sentiment: Third-quarter revenue guidance of approximately $302 million fell short of the roughly $303.9 million consensus estimate. Investors viewed the forecast as evidence that strong engagement may not translate into near-term revenue growth quickly enough. Reuters Duolingo revenue forecast report
• Negative Sentiment: Bank of America downgraded Duolingo to Underperform, adding to valuation and execution concerns despite the earnings beat. Bank of America downgrade
• Negative Sentiment: Profitability trends were softer year over year: EPS declined from $0.91 to $0.66, while reported net income fell approximately 26%, increasing investor sensitivity to the slower revenue outlook.

Insider Activity at Duolingo

In other news, General Counsel Stephen C. Chen sold 1,977 shares of the firm’s stock in a transaction on Monday, May 18th. The stock was sold at an average price of $113.61, for a total transaction of $224,606.97. Following the transaction, the general counsel directly owned 52,807 shares of the company’s stock, valued at approximately $5,999,403.27. This trade represents a 3.61% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider Natalie Glance sold 3,360 shares of the business’s stock in a transaction that occurred on Monday, May 18th. The stock was sold at an average price of $113.59, for a total value of $381,662.40. Following the sale, the insider directly owned 173,401 shares in the company, valued at approximately $19,696,619.59. The trade was a 1.90% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders sold 9,506 shares of company stock worth $1,073,864 in the last 90 days. 16.62% of the stock is currently owned by company insiders.

Institutional Investors Weigh In On Duolingo

Several hedge funds have recently modified their holdings of DUOL. Meiji Yasuda Asset Management Co Ltd. raised its holdings in shares of Duolingo by 3.5% during the 2nd quarter. Meiji Yasuda Asset Management Co Ltd. now owns 940 shares of the company’s stock worth $385,000 after buying an additional 32 shares in the last quarter. Evergreen Capital Management LLC boosted its stake in shares of Duolingo by 5.0% in the 2nd quarter. Evergreen Capital Management LLC now owns 818 shares of the company’s stock valued at $335,000 after purchasing an additional 39 shares in the last quarter. Public Employees Retirement System of Ohio increased its position in Duolingo by 0.6% during the 3rd quarter. Public Employees Retirement System of Ohio now owns 11,740 shares of the company’s stock worth $3,778,000 after purchasing an additional 73 shares in the last quarter. Vident Advisory LLC boosted its position in Duolingo by 5.8% in the fourth quarter. Vident Advisory LLC now owns 2,647 shares of the company’s stock valued at $465,000 after buying an additional 145 shares in the last quarter. Finally, EFG International AG bought a new stake in shares of Duolingo during the fourth quarter worth $26,000. 91.59% of the stock is owned by hedge funds and other institutional investors.

Duolingo Company Profile

Duolingo, Inc (NASDAQ:DUOL) is a technology-driven education company that operates a widely used language-learning platform. Founded in 2011 by Luis von Ahn and Severin Hacker, Duolingo offers a freemium service featuring bite-sized lessons, gamified exercises and adaptive learning algorithms. The company’s core product is its mobile and web application, which supports instruction in more than 40 languages, ranging from widely spoken tongues such as English and Spanish to lesser-taught options including Irish and Swahili.

In addition to its flagship language courses, Duolingo has expanded its product suite to include the Duolingo English Test, an on-demand, computer-based English proficiency exam designed for academic and professional admissions.