Duolingo, Inc. (DUOL) SEC Filings & Earnings Calls

Inadvertent disclosure of preliminary data may create market confusion or volatility; company disclaims reliability.

“Company has not completed its normal review and validation of its preliminary internal data, and this information should not be read as indicative of the Company's expected results for Q3 2026 or any future period.” · word for word

Rising operating expenses outpacing revenue growth

“The decrease in net income for the three months ended June 30, 2026, as compared to the comparative prior period was primarily due to operating expenses increasing slightly faster than revenue during the period.” · word for word

IAP revenue decline

“In-App Purchases $8,002 $10,390 $(2,388) (23)%”

Decline in net income and free cash flow YoY due to investment spend.

“Net income down 26% YoY; FCF down 9% YoY.”

FX headwind: over half of bookings from outside US; every 1% change in dollar impacts H2 bookings by ~$4M.

“Over half of our bookings come from outside the US, and we estimate that every 1% change in the dollar versus our currency basket equates to about a $4 million impact on our H2 bookings.” · word for word

Foreign Exchange Risk

“Other (expense) income, net was $0.8 million during the three months ended March 31, 2026, mainly from the impact from changes in foreign currency rates compared to $1.0 million of income during the three months ended March 31, 2025.” · word for word

Execution risk on medium-term DAU target of 100M by 2028; early stage of strategic shift.

“Medium-term goal to reach 100 million DAUs in 2028. 'It’s still too early to see the impact in our metrics.'”

Dependence on AI tools for content creation; potential quality or scalability issues.

“Investing in AI tools that fundamentally change how quickly we can create content.” · word for word

Key person dependency on co-founders

“Luis von Ahn and Severin Hacker are co-founders and hold significant voting power (40.0% and 35.8% of voting power respectively).”

Concentrated voting control

“All executive officers and directors as a group hold 76.0% of voting power.” · word for word

Platform Dependency

“In the twelve months ended December 31, 2025, we derived 62% of our revenue and 61% of our total bookings from the Apple App Store, and 20% of our revenue and 21% of our total bookings from the Google Play Store.” · word for word

User Growth / Engagement Risk

“If we fail to keep existing users or add new users, or if our users decrease their level of engagement with our products or do not convert to or remain paying users, our revenue, financial results and business may be significantly harmed.” · word for word

Competition Risk

“The online language learning industry is highly competitive, with low switching costs and a consistent stream of new products and entrants.” · word for word

Brand / Reputation Risk

“In April 2025, the Company publicly released a memo regarding the use of AI in its operations, which may have contributed to unfavorable publicity, adverse impacts on the Company’s brand and social media presence, and a deceleration in user growth.” · word for word

DAU growth deceleration expected in 2026 to ~20% from historical >40%

“Expected 2026 DAU growth about 20%”

Strategic shift may pressure near-term bookings and profitability

“Investing >$50M foregone bookings from friction reduction”

CFO transition could introduce short-term uncertainty, but orderly succession with internal candidate mitigates risk.

“CFO transition with advisory role for outgoing CFO to ensure seamless transition.”

Generative AI Cost Pressure

“Total gross margin decreased to 72.5% from 72.9% during the three months ended September 30, 2025 and 2024, respectively, primarily due to decreases in subscription and advertising gross margins related to an increase in generative AI costs associated with expansion of our Duolingo Max subscription tier and increased hosting costs.” · word for word

Dependence on third-party platforms for distribution and revenue collection

“Risk factor: reliance on third-party platforms to store and distribute our products and collect revenue”

Competition in online language learning industry

“Risk factor: competition in the online language learning industry”