Duolingo (DUOL) AI Stock Analysis

• Market Cap: $14.96B
• Dividend Yield: N/A
• Average Volume (3M): 1.89M
• Price to Earnings (P/E): 135.6
• Beta (1Y): 1.68
• Revenue Growth: 39.51%
• EPS Growth: 68.53%
• Country: US
• Employees: 830
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.91
• Shares Outstanding: 39,694,546
• 10 Day Avg. Volume: 1,814,153
• 30 Day Avg. Volume: 1,889,861
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.28
• Enterprise Value/Revenue: 21.57
• Enterprise Value/Gross Profit: 29.93
• Enterprise Value/Ebitda: 194.83
• 1Y Price Target: $431.81
• Price Target Upside: 32.30% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 20

• Rating: 73 Outperform
• Price Target: $334.00 ▲(2.33% Upside)

Duolingo's strong financial performance and positive earnings call sentiment are the primary drivers of its stock score. However, technical indicators suggest potential bearish momentum, and the high P/E ratio indicates overvaluation concerns. The company's strategic focus on growth and expansion, particularly in China, supports its long-term potential, but investors should be cautious of valuation risks.

Positive Factors

Revenue Growth

Consistent revenue growth reflects strong market demand and effective monetization strategies, supporting long-term business expansion.

Product Expansion

Expanding product offerings and integrations enhance user engagement and open new revenue streams, strengthening market position.

Strong Cash Generation

Robust cash generation supports future growth initiatives and provides financial flexibility for strategic investments.

Negative Factors

Challenges with Max Subscription Growth

Slower subscription growth could limit revenue potential and indicates challenges in user adoption of premium features.

Social Media Backlash Impact

Social media backlash impacting user growth highlights potential reputational risks that could affect long-term user engagement.

Duolingo English Test Decline

Decline in test demand may reduce revenue from certification services, impacting diversification efforts in the education sector.

Duolingo Business Overview & Revenue Model

Company Description

Duolingo (DUOL) is a leading language-learning platform that leverages technology to provide accessible and engaging language education to users worldwide. Founded in 2011, the company operates in the education technology sector, offering a wide range of language courses through its mobile app and website. Duolingo's core products include interactive lessons, gamified learning experiences, and various language proficiency assessments, making language learning fun and effective for millions of users.

How the Company Makes Money

Duolingo generates revenue primarily through its freemium model, where users can access basic language learning features for free, while premium features are available through a subscription service known as Duolingo Plus. This subscription offers an ad-free experience, offline access, and additional learning tools. Additionally, Duolingo earns revenue through advertising displayed to free-tier users, as well as partnerships with educational institutions and businesses that leverage Duolingo's platform for language training and assessment. The company also explores monetization through language certification services, which provide recognized proof of language proficiency to users.

Duolingo Financial Statement Overview

Summary

Duolingo demonstrates strong financial performance with robust revenue growth and profitability improvements. The balance sheet is solid with low leverage, and cash flow metrics indicate healthy cash generation. While operational efficiency can be enhanced, the overall financial health supports continued growth and stability in the competitive software application industry.

Income Statement

Duolingo has shown impressive revenue growth with a TTM increase of 9.11%, indicating strong market demand. The gross profit margin remains robust at 72.05%, reflecting efficient cost management. Net profit margin improved to 13.24%, showcasing enhanced profitability. However, the EBIT margin of 9.95% suggests room for operational efficiency improvements.

Balance Sheet

The company maintains a healthy debt-to-equity ratio of 0.096, indicating low leverage and financial stability. Return on equity is strong at 13.32%, reflecting effective use of shareholder funds. The equity ratio stands at 63.34%, suggesting a solid capital structure. However, the total assets have decreased, which may need monitoring.

Cash Flow

Duolingo's free cash flow growth rate of 12.32% is a positive indicator of financial health. The operating cash flow to net income ratio of 0.71 shows strong cash generation relative to earnings. The free cash flow to net income ratio of 0.97 indicates efficient cash conversion. Overall, cash flow metrics are strong, supporting future growth initiatives.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	885.15M	748.02M	531.11M	369.50M	250.77M	161.70M
Gross Profit	637.72M	544.38M	389.00M	270.06M	181.59M	115.71M
EBITDA	97.98M	73.45M	-6.16M	-60.33M	-57.28M	-13.76M
Net Income	117.18M	88.57M	16.07M	-59.57M	-60.13M	-15.78M
Balance Sheet
Total Assets	1.54B	2.40B	1.85B	1.44B	1.28B	175.74M
Cash, Cash Equivalents and Short-Term Investments	1.10B	877.64M	747.61M	608.18M	553.92M	120.49M
Total Debt	93.84M	54.66M	25.04M	28.41M	32.46M	9.24M
Total Liabilities	565.53M	1.58B	1.20B	902.45M	767.53M	256.43M
Stockholders Equity	977.03M	824.55M	655.50M	542.08M	513.06M	-80.69M
Cash Flow
Free Cash Flow	325.95M	273.40M	139.93M	43.53M	2.96M	13.69M
Operating Cash Flow	335.92M	285.51M	153.61M	53.66M	9.17M	17.71M
Investing Cash Flow	-216.47M	-217.33M	-13.58M	-14.17M	-6.21M	-4.01M
Financing Cash Flow	-31.45M	-30.00M	2.13M	14.78M	430.47M	46.95M

Duolingo Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 326.39
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DUOL, the sentiment is Positive. The current price of 326.39 is above the 20-day moving average (MA) of 291.88, above the 50-day MA of 323.12, and below the 200-day MA of 369.69, indicating a neutral trend. The MACD of -4.04 indicates Negative momentum. The RSI at 57.51 is Neutral, neither overbought nor oversold. The STOCH value of 86.91 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DUOL.

Duolingo Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
YOU	82 Outperform	4.87B	19.63	145.77%	2.10%	19.85%	135.66%
CWAN	74 Outperform	5.29B	11.44	20.64%	―	36.68%	―
DUOL	73 Outperform	$14.96B	135.64	13.44%	―	39.51%	68.53%
MNDY	68 Neutral	10.49B	278.72	3.35%	―	30.24%	-6.69%
FRSH	67 Neutral	3.64B	-68.72	-5.58%	―	19.78%	47.51%
GTLB	61 Neutral	7.92B	-1,412.80	-0.82%	―	28.97%	98.96%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Duolingo Corporate Events

Duolingo Holds 2025 Annual Stockholders Meeting

On June 11, 2025, Duolingo, Inc. held its 2025 Annual Meeting of Stockholders, where approximately 97.64% of the company’s voting power was represented. During the meeting, three Class I directors were elected, and the appointment of Deloitte & Touche LLP as the independent registered public accounting firm was ratified. Additionally, the compensation of the company’s named executive officers was approved on an advisory basis.