Duolingo Inc. reported fourth‑quarter 2025 revenue of $282.9 million, a 35% year‑over‑year increase that surpassed the consensus estimate of $275.9 million. Bookings matched revenue at $282.9 million, and earnings per share rose to $0.91, beating the $0.78 estimate by $0.13. Adjusted EBITDA reached $84.35 million, up from $80.0 million in the prior quarter, while operating margin expanded to 15.4% from 6.6% a year earlier, reflecting stronger pricing and disciplined cost control.
The Q4 2025 results build on a strong 2024 performance, where revenue was $209.6 million and EPS $0.31. Compared with Q3 2025, revenue grew from $271.7 million to $282.9 million, and bookings increased from $281.9 million to $282.9 million. Adjusted EBITDA in Q3 2025 was $80.0 million, so the current quarter’s $84.35 million represents a solid quarterly improvement. The company also generated more than $1 billion in bookings for the first time in 2025, underscoring its expanding user base and monetization.
Management lowered its 2026 outlook, guiding for first‑quarter bookings of $288.5 million—below the consensus estimate of $291.2 million—and full‑year bookings of $1.197 billion to $1.221 billion versus the $1.264 billion expected by analysts. Revenue guidance for 2026 is $1.197 billion to $1.221 billion, a 15–18% growth rate that falls short of the 2025 20%+ growth. The company also projected an adjusted EBITDA margin of about 25% in 2026, down from higher levels in 2025, reflecting the impact of AI‑compute costs that compressed gross margin by roughly 40 basis points in Q4 2025.
"We closed 2025 with strong momentum, surpassing 50 million daily active users and generating more than $1 billion in bookings for the first time," said CEO Luis von Ahn. He added, "At the same time, advances in AI are fundamentally reshaping how people learn, and we believe this is a pivotal moment for our company. In 2026, we are deliberately prioritizing user growth and teaching better. We'll focus on improving the free learner experience to grow word of mouth and feed our next user growth engines like chess, math and music, even though that moderates near‑term financial growth. We believe this strategy positions Duolingo to reach 100 million daily active users in the medium‑term and build a significantly larger, more durable business in the long‑term." CFO Gillian Munson described the $400 million share‑repurchase program as "good capital allocation discipline."
The company announced a $400 million share‑repurchase program, signaling confidence in its financial position while continuing to invest heavily in AI features such as the “Video Call with Lily” conversation tool. The guidance shift reflects a strategic pivot toward user growth and AI‑driven product development, even as AI‑compute costs compress margins. The company’s focus on improving the free learner experience is intended to accelerate word‑of‑mouth growth and support the expansion into new subject areas.
Investors reacted negatively, citing the lower 2026 guidance and the strategic pivot toward user growth at the expense of near‑term profitability. The market’s response underscores concerns that the company’s investment in AI and user acquisition may dampen short‑term revenue and margin growth, despite the strong Q4 2025 performance.
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