Duolingo
Q2 2026 (reported Aug 5) — DAUs 58.7M (+23% YoY, accelerating from Q1), MAUs 140.6M (+10%), paid subscribers 12.7M (+17%). Revenue $298.5M (+18%) but bookings only +8% to $289.1M as the company trades monetization for user growth. FY2026 guide — revenue +15-18%, bookings +10-12%, adj. EBITDA margin ~26.5% (raised ~1pt). Gross margin 72.6%, helped by moving Video Call AI workloads to cheaper open-source models. Former Max AI features, led by Video Call, are being folded into Super. Stock $144 on Oct 2, 2026 — roughly 73% below its 2025 peak but up from a ~$88 52-week low.
Scenarios
DAU growth accelerated to 23% in Q2 2026 despite free conversational tutoring from ChatGPT and Gemini, suggesting gamified habit loops rather than raw tutoring quality drive retention. AI is lowering content and inference costs (gross margin 72.6%), so a larger free base can be monetized later at high margin.
Bookings grew only 8% in Q2 2026 and Q3 guidance implies ~9% — engagement is not converting to revenue, and folding Max into Super removes the main AI upsell. General-purpose assistants keep improving at conversational practice for free, capping pricing power.
Key Factors to Watch
- ●Q2 2026 DAUs 58.7M (+23% YoY) vs bookings +8% — engagement-monetization gap
- ●Max AI features folded into Super (Aug-Sep 2026) — AI becomes a retention tool, not a premium upsell
- ●Q2 2026 gross margin 72.6% after shifting Video Call to open-source models
- ●FY2026 guide (Aug 5) — revenue +15-18%, bookings +10-12%, adj. EBITDA margin ~26.5%
- ●$400M buyback (Feb 2026), ~$72M executed by Aug 1, 2026
- ●Evercore upgrade to Outperform, $210 target (Sep 1, 2026) — sell-side view, not a fundamental event
Score History
| Date | Score | Direction | Note |
|---|---|---|---|
| 2026-10-03 | 5.4 | Neutral | Rotating refresh — Q2 2026 (Aug 5) DAU 58.7M +23%, bookings +8%, Max folded into Super; corrected stale Q4 2025 metrics, MAU-decline bear point and Max-premium bull thesis; score held 5.4 |
| 2026-03-08 | 5.4 | Neutral | Score 5.5→5.4 (formula reweight: sb 0.25→0.15, are 0.20→0.25, md 0.20→0.25, dr 0.20→0.25, aam 0.15→0.10) |
| 2026-03-08 | 5.5 | Neutral | Initial assessment from batch 9 blind spot review |
Education Peers
Last researched: 2026-10-03
This is research and analysis, not financial advice. Scores reflect AI impact potential, not investment recommendations.