Duolingo (DUOL) investor relations material

Executive summary

• Q2 saw 23% year-over-year DAU growth to 58.7M, with strong user engagement and paid subscribers up 17% to 12.7M, driven by product improvements and campaigns like Streak Revival.

• Revenue grew 18% year-over-year to $298.5M for Q2 2026, with adjusted EBITDA at $77.3M and net income down 26% to $33.2M due to higher operating expenses and tax provision.

• The company continues to prioritize user growth and product quality, aiming for 100 million DAUs by 2028.

Financial highlights

• Q2 2026 revenue: $298.5M (+18% YoY); adjusted EBITDA: $77.3M (25.9% margin); net income: $33.2M (down 26% YoY).

• Gross margin improved to 72.6% in Q2 2026, with full-year guidance near 70% and Q3 guidance at 71%.

• Free cash flow for Q2 was $79M; six-month free cash flow: $226.4M (+20% YoY); operating cash flow for six months: $239M (+22% YoY).

• Cash and equivalents at June 30, 2026: $1.18B; short-term investments: $133M.

• Full-year guidance: bookings growth of ~11%, revenue growth of ~16%, and adjusted EBITDA margin outlook raised to 26.5%.

Outlook and guidance

• Q3 guidance: bookings of ~$307M (9% growth), revenue of $302M (11% growth), gross margin of 71%, and adjusted EBITDA of ~$76M (25.2% margin).

• Management expects continued growth in subscriptions and user engagement, supported by ongoing product innovation and marketing.

• Sufficient liquidity and cash flow to support operations and capital allocation for at least the next 12 months.

• Bonus plan may trigger if Q4 DAU growth reaches 25%, with a potential $10M payout.

• FX headwinds impact bookings guidance by about half a point.