Duolingo Earnings Signal Shift To User Growth
Duolingo earnings showed revenue gains, but a DAU-first pivot and softer guidance signal slower bookings and could temper near-term positioning.
KEY TAKEAWAYS
- Q4 revenue was $282.9 million and daily active users exceeded 50 million.
- Management pivoted to prioritize DAU growth and set a 100 million DAU target by 2028.
- Guidance called for bookings growth of 10-12%, revenue growth 15-18% and adjusted EBITDA near 25%.
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Duolingo Inc. (DUOL) reported Q4 and full-year 2025 results on Feb. 26, 2026, showing revenue gains but signaling a strategic shift to prioritize daily active user (DAU) expansion—targeting 100 million by 2028—while issuing fiscal 2026 guidance that slows bookings, revenue growth, and margins.
Quarter and Full-Year Results
The company said in a press release on Feb. 26 that Q4 2025 revenue reached $282.9 million, up 35% year over year. Daily active users surpassed 50 million in the quarter, a 30% increase from a year earlier. Total bookings for the quarter rose 24%.
For the full year, Duolingo reported bookings exceeding $1 billion for the first time. Full-year revenue was $1.037 billion, up 39% year over year. Adjusted EBITDA, a proxy for operating profit, exceeded $300 million with a margin near 29.5%. Net income for Q4 was $42 million, and gross margin rose 90 basis points to 72.8%.
User Growth Pivot and Outlook
Management announced a strategic shift to prioritize DAU growth over near-term monetization. Fiscal 2026 guidance calls for bookings growth of 10%–12%, revenue growth of 15%–18%, and an adjusted EBITDA margin near 25%. The company expects DAUs to grow roughly 20% year over year through 2026.
The bookings guidance reflects moderated user momentum and deliberate reductions in monetization friction. Management expects margins to decline in the first half of the year before improving in the second half.
For Q1 2026, Duolingo guided to bookings growth of 11%, revenue growth of 25%, and an adjusted EBITDA margin of 25.5%. Bookings were tracking above that guidance late last week, though the company faces tough year-ago comparisons in the first half.
The company highlighted product priorities including AI features such as Video Call and Speaking Adventures to reduce friction, plans to improve the free tier, and expansions into math, music, and chess. It is conducting roughly 1,000 A/B tests. Spending timing is flexible, with only modest early returns expected. Higher research-and-development and sales-and-marketing expenses, along with rolling out AI to a broader user base, will weigh on gross margins.
Alongside the strategic pivot, the board authorized a $400 million share repurchase program.
Executives said the short-term impact will be slower bookings growth and lower profitability, as reflected in the 2026 guidance.
