- DAU & Financials 2025: Surpassed 50 million daily active users; 2025 bookings exceeded $1 billion, adjusted EBITDA over $300 million.
- 2026 Guidance: Bookings growth 10-12%, revenue 15-18%, adjusted EBITDA margin ~25%; long-term target of $2.5 billion revenue and $700 million+ EBITDA by 2028.
- User Growth Strategy: 20% YoY DAU growth in 2026; 2028 goal of 100 million DAUs to drive higher bookings and profit.
- Product & Monetization Shifts: Introduced Super Duolingo video calls, chess app (7 million DAUs), and A/B testing for pricing; free-user experience improvements to boost 10% paid conversion rate.
- Capital Allocation: $400 million share buyback authorization; focus on scaling math and music courses, alongside refining social marketing for virality.
Financial Performance and Guidance
The company's guidance for 2026 implies an acceleration to much higher growth rates in the next couple of years, with a potential $2.5 billion business and over $700 million in adjusted EBITDA. The guidance assumes some modest results towards the end of the year, with the introduction of new features such as video calls in Super Duolingo. The company's focus on user growth, with a 20% year-over-year growth expected throughout 2026, is expected to drive long-term growth.
Valuation Metrics
Duolingo's current valuation metrics indicate a strong market position. The P/S Ratio is 4.5, and the EV/EBITDA is 21.63. The ROE is 36.6%, indicating a strong return on equity. The Free Cash Flow Yield is 8.07%, suggesting a healthy cash generation capability. These metrics suggest that the market has priced in a certain level of growth, but the company's guidance suggests that there is still room for upside.
User Growth and Engagement
The company is prioritizing user growth in 2026, with a focus on teaching languages better, improving the free user experience, and investing in new subjects like math, music, and chess. The company believes that its market lead and user engagement make it well-positioned, with a large pool of users due to its popular product and word-of-mouth. The company's goal is to reach 100 million daily active users by 2028, which would result in a more resilient brand and significantly higher bookings and profit.
Innovation and Competitive Advantage
Duolingo is innovating and expanding its offerings, with a focus on AI-powered features and new subjects. The company believes that its app is like a game, and text-based chatbots can't match its engagement. The company's focus on creating a beautiful, visual experience that keeps users engaged is expected to drive long-term growth. CEO Luis von Ahn noted that Duolingo has always tried to adopt AI quickly and will continue to take the next steps, with a focus on becoming AI-native.