Duolingo, Inc.

Duolingo said Q2 was a strong quarter, with DAUs up 23% year over year, accelerating from Q1 and slightly ahead of expectations. Topline results were in line with expectations and profitability was slightly ahead of plan, though no Q2 revenue, EPS, or gross margin figures were stated on the call. For 2026, management reiterated full-year bookings growth of 10% to 12% and revenue growth of 15% to 18%, and increased adjusted EBITDA margin outlook to 26.5% from 25%; it now expects about 11% bookings growth, roughly 16% revenue growth, gross margin closer to 70%, adjusted EBITDA of approximately $320 million, and free cash flow of over $375 million. For Q3, the company expects bookings of approximately $307 million, revenue of $302 million, gross margin of 71%, and adjusted EBITDA of roughly $76 million at a 25.2% margin. The quarter also produced $79 million of free cash flow, with $1.3 billion in cash and investments and about $44 million of share repurchases during the quarter.

Luis von Ahn framed the quarter as evidence that Duolingo’s product-led strategy is working: daily usage is rising, retention is improving, and recent campaigns like Streak Revival are bringing users back and keeping them engaged. He emphasized the company’s “Green Machine” experimentation approach and said the team is still early in executing a strategy focused on growing users and teaching better. His tone was confident and upbeat, but disciplined—he repeatedly said the company is prioritizing DAU growth while looking for monetization methods that do not conflict with growth.

Gillian Munson said topline results were in line with expectations and profitability was slightly ahead of plan. She raised the full-year adjusted EBITDA margin outlook to 26.5% and said the company expects approximately $320 million of adjusted EBITDA, over $375 million of free cash flow, and gross margin closer to 70% versus the 69% initially expected, citing AI content and AI cost savings as offsetting factors. She also laid out Q3 guidance of $307 million in bookings, $302 million in revenue, 71% gross margin, and about $76 million in adjusted EBITDA. She highlighted a strong balance sheet with $1.3 billion in cash and investments, $79 million of quarterly free cash flow, and $44 million of stock repurchases, or about $72 million cumulative under authorization.

Analysts focused on why bookings guidance was not raised more despite stronger DAU growth, and management said monetization lags user growth because users do not monetize immediately and the company is intentionally staying within a bookings/revenue “box” this year. Questions also centered on new monetization tools: management said longer free trials are converting more users to payers without adding friction, video call costs have fallen from about $0.30 per call to under $0.01 per call, and Super subscribers are being given more access while the company decides what to do with Max. On ads and lower-priced tiers, management said it is more constructive than in the past, is testing Super Lite, and expects ad improvements over the next few quarters, but remains careful not to hurt user experience or DAU growth. Analysts also asked about China, AI costs, and model choice; management said China is its second-largest DAU market, uses local AI models there by law, and said AI and COGS expenses are in the tens of millions of dollars.