Duolingo (DUOL) closed 2025 on a strong note, surpassing 50 million daily active users (DAUs) and generating over $1 billion in bookings alongside more than $300 million in adjusted EBITDA for the first time. This performance underscores the company’s commitment to leveraging AI as a critical component of its growth strategy.
In the fourth quarter of 2025, Duolingo reported a 90-basis-point year-over-year increase in gross margin. This improvement was driven by high-tier subscriptions such as Duolingo Max, which employs Generative AI for immersive language practice. The company possesses one of the largest datasets globally, enabling enhanced personalization and diversification into verticals such as math, chess, and music. This strategic positioning has facilitated the launch of an impressive 148 courses within a single year.
Duolingo is prioritizing user growth over immediate profit maximization. CEO Luis von Ahn Arellano indicated that the company anticipates a 20% year-over-year growth in DAUs throughout 2026, aiming for a milestone of 100 million DAUs by 2028. The primary focus remains on improving teaching quality, which is expected to lay the groundwork for this ambitious target.
For 2026, management forecasts revenue growth between 10-12%, a notable slowdown compared to the 39% year-over-year surge in 2025. Similarly, adjusted EBITDA is expected to reach 25%, down from 29.5% reported in the previous year. This deceleration raises concerns regarding the company’s ability to fully capitalize on its AI and data capabilities, yet the announcement of a $400 million share repurchase program reflects a commitment to long-term growth strategies.
The increasing demand for high-quality digital learning platforms necessitates that Duolingo effectively utilize AI and its proprietary data to maintain a competitive edge in the ed-tech sector, positioning itself as a transformative leader in the field.
In terms of stock performance, Duolingo has experienced a significant decline, with shares plummeting 65.7% over the past year, contrasting starkly with the industry’s average growth of 19.5%. Competitors such as AirSculpt Technologies (AIRS) and Vontier (VNT) have also seen mixed results, with AIRS down 45.5% while VNT has risen 17.9%.
Duolingo trades at a forward price-to-sales ratio of 3.66X, which is considerably higher than AirSculpt’s 0.7X and Vontier’s 1.73X. The contrasting valuations speak to the differing market sentiment toward these companies. In terms of investment ratings, Duolingo carries a Value Score of D, while AirSculpt and Vontier hold scores of B and A, respectively.
Recent consensus estimates for Duolingo’s earnings in 2026 and 2027 have dropped by 24.9% and 31.9%, respectively, over the past two months. This trend has led to the stock acquiring a Zacks Rank of #5, indicating a “Strong Sell” position among analysts.
As the landscape of digital learning continues to evolve, Duolingo’s strategic focus on user acquisition and quality improvement may prove critical. The company’s future trajectory will depend not only on its ability to adapt to market demands but also on its success in leveraging technology to enhance educational outcomes. Stakeholders will be closely monitoring how these factors play out in the coming years.
See also
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AI’s Growing Influence in Higher Education: Balancing Innovation and Critical Thinking
AI in English Language Education: 6 Principles for Ethical Use and Human-Centered Solutions
Ghana’s Ministry of Education Launches AI Curriculum, Training 68,000 Teachers by 2025
57% of Special Educators Use AI for IEPs, Raising Legal and Ethical Concerns
