Duolingo (NASDAQ:DUOL) Issues Earnings Results

Duolingo (NASDAQ:DUOL) announced its quarterly earnings data on Wednesday. The company reported $0.66 earnings per share for the quarter, beating analysts’ consensus estimates of $0.60 by $0.06, FiscalAI reports. The company had revenue of $298.45 million for the quarter, compared to analyst estimates of $295.58 million. Duolingo had a return on equity of 12.23% and a net margin of 35.88%.The firm’s revenue for the quarter was up 18.3% compared to the same quarter last year. During the same quarter in the previous year, the company earned $0.91 EPS.

Here are the key takeaways from Duolingo’s conference call:

• Daily active users grew 23% year over year in Q2, accelerating from Q1, while user retention reached an all-time high. Duolingo said growth was broad-based and supported by ongoing product experimentation.
• The company raised its full-year adjusted EBITDA margin outlook to 26.5% and now expects roughly $320 million of adjusted EBITDA, gross margin near 70%, and more than $375 million in free cash flow.
• Duolingo is expanding monetization in ways it believes support user growth, including longer free trials, a lower-priced Super Lite tier, improved advertising, and broader access to Video Call as AI costs decline. AI cost savings are expected to support margins while enabling more features for users.
• Management maintained full-year guidance of approximately 11% bookings growth and 16% revenue growth despite stronger user trends, noting that freemium users take time to monetize and that the company is prioritizing DAU expansion and product quality.
• The future of the higher-priced Max subscription remains uncertain as Video Call is rolled out to Super subscribers; management said Max could be restructured or even sunset, although it intends to avoid a material revenue loss.

Duolingo Price Performance

Shares of DUOL traded up $2.85 during mid-day trading on Friday, reaching $125.43. 641,624 shares of the company’s stock were exchanged, compared to its average volume of 2,039,973. The company has a quick ratio of 2.62, a current ratio of 2.62 and a debt-to-equity ratio of 0.07. The company has a 50-day simple moving average of $125.37 and a two-hundred day simple moving average of $114.99. Duolingo has a 52-week low of $87.89 and a 52-week high of $415.76. The company has a market cap of $5.84 billion, a price-to-earnings ratio of 14.87, a PEG ratio of 1.04 and a beta of 0.87.

More Duolingo News

Here are the key news stories impacting Duolingo this week:

• Positive Sentiment: Duolingo reported second-quarter revenue of approximately $298.5 million, up 18.3% year over year, and adjusted earnings of $0.66 per share, beating analyst estimates of roughly $295.6 million and $0.60, respectively. DUOL Q2 Earnings Beat Estimates on Strong User Growth
• Positive Sentiment: Daily active users rose 23% year over year, while paid subscribers and engagement continued to expand. Management also cited lower artificial-intelligence costs as support for its profitability outlook. Strong User Growth
• Positive Sentiment: Needham reaffirmed its Buy rating and $145 price target, suggesting potential upside from recent trading levels. Needham Price Target
• Neutral Sentiment: Truist raised its price target to $120 from $100 but maintained a Hold rating, indicating improved valuation support but limited conviction in near-term upside. Truist Financial Issues Positive Forecast
• Neutral Sentiment: Duolingo is considering discontinuing its Max subscription tier as it focuses on broadening its user base and long-term engagement, a strategy that could support scale but may affect monetization. Duolingo Subscription Tiers
• Negative Sentiment: Third-quarter revenue guidance of about $302 million fell short of the roughly $303.9 million consensus estimate. The cautious outlook overshadowed the Q2 beat and prompted a sharp post-earnings decline. Lower Revenue Forecast
• Negative Sentiment: Profit declined from the prior-year quarter despite revenue growth, while analysts raised concerns that Duolingo’s growth engine is slowing. Bank of America downgraded the stock to Underperform. Bank of America Downgrade

Analyst Upgrades and Downgrades

Several analysts have recently commented on the company. DA Davidson raised their price target on Duolingo from $120.00 to $130.00 and gave the company a “neutral” rating in a report on Thursday. Needham & Company LLC reiterated a “buy” rating and issued a $145.00 price objective on shares of Duolingo in a research report on Thursday. Morgan Stanley boosted their target price on shares of Duolingo from $95.00 to $125.00 and gave the stock an “equal weight” rating in a research report on Thursday, July 16th. UBS Group upped their price target on shares of Duolingo from $125.00 to $150.00 and gave the stock a “buy” rating in a research note on Thursday. Finally, KeyCorp reiterated a “sector weight” rating on shares of Duolingo in a report on Thursday, June 4th. Three research analysts have rated the stock with a Buy rating, eighteen have given a Hold rating and two have assigned a Sell rating to the stock. Based on data from MarketBeat, Duolingo has an average rating of “Hold” and a consensus price target of $148.12.

Insider Buying and Selling at Duolingo

In other Duolingo news, insider Robert Meese sold 1,420 shares of the firm’s stock in a transaction on Friday, May 15th. The stock was sold at an average price of $112.16, for a total transaction of $159,267.20. Following the completion of the transaction, the insider owned 170,745 shares of the company’s stock, valued at approximately $19,150,759.20. This trade represents a 0.82% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is accessible through this link. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider Natalie Glance sold 3,360 shares of the business’s stock in a transaction on Monday, May 18th. The stock was sold at an average price of $113.59, for a total value of $381,662.40. Following the completion of the transaction, the insider directly owned 173,401 shares of the company’s stock, valued at approximately $19,696,619.59. This trade represents a 1.90% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last 90 days, insiders have sold 9,506 shares of company stock worth $1,073,864. 16.62% of the stock is owned by insiders.

Institutional Inflows and Outflows

A number of institutional investors and hedge funds have recently added to or reduced their stakes in the company. Alpine Woods Capital Investors LLC purchased a new position in shares of Duolingo during the 4th quarter worth about $333,000. Vident Advisory LLC raised its stake in Duolingo by 5.8% during the fourth quarter. Vident Advisory LLC now owns 2,647 shares of the company’s stock worth $465,000 after purchasing an additional 145 shares during the period. Cim LLC boosted its holdings in shares of Duolingo by 6.0% in the 4th quarter. Cim LLC now owns 4,390 shares of the company’s stock valued at $770,000 after purchasing an additional 248 shares during the last quarter. Empowered Funds LLC purchased a new stake in shares of Duolingo during the 4th quarter valued at $331,000. Finally, Wellington Management Group LLP increased its holdings in shares of Duolingo by 1.7% during the 4th quarter. Wellington Management Group LLP now owns 25,404 shares of the company’s stock worth $4,458,000 after buying an additional 431 shares during the last quarter. 91.59% of the stock is currently owned by hedge funds and other institutional investors.

Duolingo Company Profile

Duolingo, Inc (NASDAQ:DUOL) is a technology-driven education company that operates a widely used language-learning platform. Founded in 2011 by Luis von Ahn and Severin Hacker, Duolingo offers a freemium service featuring bite-sized lessons, gamified exercises and adaptive learning algorithms. The company’s core product is its mobile and web application, which supports instruction in more than 40 languages, ranging from widely spoken tongues such as English and Spanish to lesser-taught options including Irish and Swahili.

In addition to its flagship language courses, Duolingo has expanded its product suite to include the Duolingo English Test, an on-demand, computer-based English proficiency exam designed for academic and professional admissions.