Duolingo (NASDAQ:DUOL) Posts Earnings Results, Misses Expectations By $0.03 EPS

Duolingo (NASDAQ:DUOL) issued its quarterly earnings results on Tuesday. The company reported $0.54 EPS for the quarter, missing the consensus estimate of $0.57 by ($0.03), FiscalAI reports. Duolingo had a return on equity of 10.54% and a net margin of 12.33%. The company had revenue of $309.01 million during the quarter, compared to analysts’ expectations of $303.20 million. During the same period in the previous year, the firm posted $5.95 EPS. Duolingo’s revenue was up 13.7% compared to the same quarter last year.

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

• User growth accelerated: Q3 daily active users rose 29% year over year, up from 23% in Q2, with growth accelerating across eight of the company’s ten largest markets. Management expects similar DAU growth in Q4.
• Product improvements remain the primary growth driver, particularly higher retention from Duolingo’s frequent A/B testing. Gaming partnerships with Brawl Stars and Eggy Party added millions of users who have shown strong retention, although management expects such partnerships to remain occasional.
• Duolingo is expanding monetization while preserving the free-user experience. It is moving Video Call from the Max tier to Super as AI costs have fallen from about $0.30 to under $0.01 per call, and it expects to focus more heavily on monetization testing in 2027.
• Q4 profitability is expected to be pressured by higher operating expenses, continued investments, and an additional employee bonus accrual; adjusted EBITDA is forecast to be roughly flat year over year at $84 million. Gross margin is also expected to decline slightly as Video Call rolls out broadly.
• Management highlighted substantial AI-driven efficiency gains, including roughly 90% year-over-year growth in experiments with only 10% headcount growth, while inference costs per DAU are declining. The company also expects improved advertising monetization and continued long-term potential in Chess, Math, and AI-powered tutoring.

Duolingo Stock Down 1.0%

Duolingo stock traded down $1.62 during mid-day trading on Thursday, hitting $159.65. The company’s stock had a trading volume of 753,658 shares, compared to its average volume of 1,794,620. Duolingo has a 52-week low of $87.89 and a 52-week high of $213.37. The company has a debt-to-equity ratio of 0.06, a current ratio of 2.72 and a quick ratio of 2.72. The company has a market cap of $7.47 billion, a PE ratio of 52.69, a price-to-earnings-growth ratio of 1.05 and a beta of 1.08. The firm’s 50 day moving average is $144.95 and its 200 day moving average is $124.13.

Insider Buying and Selling

In related news, CEO Luis van Ahn sold 110,046 shares of the company’s stock in a transaction on Wednesday, October 7th. The shares were sold at an average price of $151.70, for a total transaction of $16,693,978.20. Following the completion of the sale, the chief executive officer directly owned 110,046 shares of the company’s stock, valued at approximately $16,693,978.20. This represents a 50.00% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, General Counsel Stephen Chen sold 8,072 shares of the firm’s stock in a transaction that occurred on Monday, September 14th. The stock was sold at an average price of $149.33, for a total value of $1,205,391.76. Following the transaction, the general counsel owned 43,769 shares of the company’s stock, valued at $6,536,024.77. This trade represents a 15.57% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 260,740 shares of company stock valued at $39,049,693 in the last three months. 16.62% of the stock is currently owned by corporate insiders.

More Duolingo News

Here are the key news stories impacting Duolingo this week:

• Positive Sentiment: Q3 revenue of $309.0 million topped estimates of $303.2 million. Daily active users grew 29% year over year to 153.1 million, while paid subscribers rose 13.9%—evidence that engagement and subscriptions are expanding. Duolingo Q3 results
• Positive Sentiment: Management’s outlook added support, with Q4 bookings expected to grow 13% and adjusted EBITDA projected at $84 million. Lower costs for AI Video Calls may also help the company expand the feature to paid subscribers. Q4 outlook and Video Call rollout
• Neutral Sentiment: Wells Fargo upgraded DUOL from Underweight to Equal Weight and raised its price target to $120 from $80. The improved rating is a positive shift, though the target remains well below the recent share price. Wells Fargo rating update
• Negative Sentiment: Q3 EPS of $0.54 fell short of the $0.57 consensus. Director William Gordon also sold 10,000 shares, although the transaction was made under a pre-arranged Rule 10b5-1 plan, which may make it less indicative of a discretionary view on the stock. Director share sale
• Negative Sentiment: Multiple law firms are publicizing a securities class action covering shares purchased between May 2, 2025, and February 26, 2026, with a December 7 lead-plaintiff deadline. The claims are allegations, not established findings, but the case could create legal costs and uncertainty. Class action notice

Analysts Set New Price Targets

Several equities analysts have issued reports on the stock. Argus restated a “hold” rating and issued a $146.00 price objective on shares of Duolingo in a research note on Tuesday, August 25th. Wells Fargo & Company upgraded Duolingo from an “underweight” rating to an “equal weight” rating and upped their price objective for the company from $80.00 to $120.00 in a research report on Wednesday. Evercore set a $128.00 price target on shares of Duolingo in a research report on Wednesday. Scotiabank lifted their price target on shares of Duolingo from $120.00 to $140.00 and gave the stock a “sector perform” rating in a research note on Wednesday. Finally, Weiss Ratings lowered shares of Duolingo from a “hold (c)” rating to a “hold (c-)” rating in a research note on Tuesday. Eight equities research analysts have rated the stock with a Buy rating, fifteen have given a Hold rating and one has given a Sell rating to the company’s stock. Based on data from MarketBeat.com, Duolingo has an average rating of “Hold” and an average target price of $145.62.

Duolingo Company Profile

Duolingo, Inc develops technology-based learning products designed to make education accessible and engaging. Its flagship Duolingo mobile and web platform offers gamified courses in languages including Spanish, English, French, German and Japanese, among others. Lessons incorporate interactive exercises, personalized practice and achievement-based features intended to support regular learning.

The company also operates the Duolingo English Test, an online English-proficiency assessment that can be taken remotely and is accepted by educational institutions and other organizations.