Key Highlights
- Q4 2025 earnings per share reached $0.84, surpassing the forecasted $0.83
- Revenue hit $282.9 million, exceeding analyst projections of $275.7 million
- Shares fell over 23% in after-hours trading following disappointing bookings guidance for Q1 and 2026
- Strategic pivot toward accelerated user acquisition will impact bookings and profit margins
- Full-year 2026 bookings guidance of $1.27B–$1.30B fell short of analyst expectations at $1.39B
- Company announced $400 million share repurchase authorization
Duolingo delivered fourth-quarter results that exceeded analyst estimates, yet shares plummeted after management issued forward guidance significantly below Wall Street expectations.
The language-learning platform reported earnings per share of $0.84, edging past the consensus estimate of $0.83. Quarterly revenue totaled $282.9 million, surpassing projected figures of $275.7 million. The company’s full-year 2025 adjusted EBITDA exceeded $300 million, while total bookings surpassed the $1 billion milestone for the first time in company history.
The platform’s daily active users reached 50 million — representing more than a fivefold increase since the company went public in 2021.
Despite these achievements, investor sentiment soured when management unveiled its outlook.
Management projected Q1 2026 bookings of approximately $301.5 million, falling substantially short of the $329.7 million analysts anticipated. The full-year bookings forecast of $1.27–$1.30 billion came in well below consensus estimates of $1.39 billion.
Revenue projections of $1.20–$1.22 billion for the year similarly lagged behind analyst expectations of $1.26 billion.
Shares plunged more than 23% during after-hours trading, though the stock partially recovered to close up 5.19% at $113.24 following the earnings announcement.
The conservative outlook stems from a strategic recalibration. Duolingo plans to prioritize expanding its user base at a faster pace rather than maximizing near-term monetization.
CEO Luis von Ahn explained the approach directly: “If we’re seeing faster user growth than we’re expecting, and what we are expecting is about 20%, then that means the strategy is working.”
AI-Powered Tools Expanding to Broader Audience
The company’s revised approach includes making AI-powered features available to more users. The “Video Call with Lily” feature, which had been exclusive to the premium Max subscription tier, will become available to Super Duolingo subscribers.
Additional AI-enhanced speaking tools will reach free users as well. Management highlighted that the cost of operating the AI video call feature has decreased to less than one-tenth of its initial launch cost, making widespread distribution financially feasible.
Adjusted EBITDA margin is projected to compress to approximately 25% in 2026 as the company increases spending on AI capabilities and marketing initiatives.
User Acquisition Momentum Moderating
Daily active user growth rates decelerated throughout 2025, with projections indicating roughly half the expansion pace observed in previous years.
Bookings growth for 2026 is anticipated to reach approximately 11%. Management acknowledged that maintaining the previous strategy would have yielded around 20% bookings growth — a conscious trade-off the company has elected to make.
In recent years, the platform had emphasized converting users to paid subscriptions through advertising and promotional offers. This approach increased revenue per user while simultaneously constraining overall growth, leading to the strategic recalibration.
The board of directors authorized a share repurchase program of up to $400 million.
At present trading levels, the stock remains considerably below its 52-week peak of $544.93, with a market capitalization of approximately $5.44 billion and a price-to-earnings ratio of 14.67.
