One-glance verdict
Undervalued
$519.03 our estimate vs market $141.90
Wall Street consensus: $134.29 (-74.1% lower than our fair-value estimate)
73% below our estimate, below the bear case
Fundamentals snapshot
Duolingo, Inc.
DUOL · NMS · Technology · Software - Application
Current price
$141.90
52-week range
$87.89 - $353.00
Market cap
$6.61B
Balance sheet
Healthy
3.00x Stretched
Net cash $1.23B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 10.4% last year.
- Reward Returns 34.4% on equity, ahead of 80% of its peers.
- Risk Forward P/E (18.6x) is higher than trailing (16.8x) - earnings are expected to drop.
- Risk Insider ownership is only 1.5% (peer median: 3.5%).
What this company does
Duolingo, Inc.
Duolingo is the company behind the popular language-learning app that uses game-like lessons to teach languages like Spanish and French. While the app is free, the company makes most of its money from users who pay for subscriptions to remove ads and unlock extra features. This business model creates recurring revenue (income the company can reliably expect to receive on a regular basis), which can be a sign of a stable and predictable business.
How the company got here
Duolingo was founded in 2011 by a professor, Luis von Ahn, and his graduate student, Severin Hacker, at Carnegie Mellon University. Their goal was to make education, specifically language learning, free and accessible to everyone in the world. The app officially launched in 2012, standing out with its game-like lessons that made learning feel fun. It quickly became popular, was named Apple's App of the Year in 2013, and has since grown into a publicly traded company with millions of users.
What it actually does
Duolingo is a company that creates educational apps you can use on your phone or computer. Its most famous product is a language-learning app that teaches languages like Spanish, French, and Japanese through short, game-like exercises. The app encourages you to practice a little bit every day by tracking your progress and rewarding you with points. Recently, the company has also started offering courses in other subjects like Math, Music, and Chess.
Subscriptions
This is Duolingo's main source of income (the money it makes from sales), bringing in over 80% of its total revenue. While the basic app is free, users can choose to pay for a subscription, often called Super Duolingo or Duolingo Max. Paying removes ads and unlocks extra features, like unlimited tries at lessons and the ability to practice mistakes. A higher-priced 'Max' tier also offers advanced features powered by artificial intelligence (AI), such as personalized feedback.
Advertising
For the millions of people who use the app for free, Duolingo shows advertisements between lessons. This is the second-largest part of its business, though it's much smaller than subscriptions. Companies pay Duolingo to show these ads to its large audience of learners. This advertising income helps the company afford to offer a free version of its learning app to everyone.
Duolingo English Test
The company offers a paid online test that certifies a person's ability to speak and understand English. This is a convenient and affordable alternative to traditional in-person proficiency exams. Thousands of universities and institutions around the world accept the Duolingo English Test as proof of English skill for admissions. People pay a fee each time they take the test, creating another stream of income for the company.
In-App Purchases
This is a smaller part of Duolingo's business where users can make one-time purchases for virtual items inside the app. These items, sometimes bought with a virtual currency called "Gems," can include things that help with the game-like features, such as restoring a learning "streak" (a count of consecutive days of practice). This allows users who don't want a full subscription to still pay for small advantages.
What management is betting on now
Duolingo's main focus is on growing the number of people who use its app every day, with a goal of reaching 100 million daily active users. To do this, they are working to make the free version of the app better and more engaging to attract and keep more users. The company is also heavily investing in artificial intelligence (AI) to create new learning features and produce educational content more quickly. Finally, Duolingo is expanding beyond just languages into new subjects like Math and Music to become a broader learning platform.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$53.09M
FY2024 Q4
$81.38M
FY2025 Q1
$104.32M
FY2025 Q2
$89.48M
FY2025 Q3
$79.38M
FY2025 Q4
$96.55M
FY2026 Q1
$150.64M
FY2026 Q2
$81.36M
Revenue
$298.45M
Net income
$33.16M
Diluted EPS
0.66
Operating cash flow
$88.26M
Free cash flow
$81.36M
Fetching…
Sources
Revenue
$291.97M
Net income
$43.46M
Diluted EPS
0.89
Operating cash flow
$150.77M
Free cash flow
$150.64M
Fetching…
Sources
Revenue
$282.87M
Net income
$41.95M
Diluted EPS
0.99
Operating cash flow
$107.28M
Free cash flow
$96.55M
Fetching…
Sources
Revenue
$271.71M
Net income
$292.19M
Diluted EPS
5.95
Operating cash flow
$84.24M
Free cash flow
$79.38M
Fetching…
Sources
Revenue
$252.26M
Net income
$44.78M
Diluted EPS
0.91
Operating cash flow
$90.67M
Free cash flow
$89.48M
Fetching…
Sources
Revenue
$230.74M
Net income
$35.13M
Diluted EPS
0.72
Operating cash flow
$105.63M
Free cash flow
$104.32M
Fetching…
Sources
Revenue
$209.55M
Net income
$13.91M
Diluted EPS
0.31
Operating cash flow
$83.34M
Free cash flow
$81.38M
Fetching…
Sources
Revenue
$192.59M
Net income
$23.36M
Diluted EPS
0.49
Operating cash flow
$56.27M
Free cash flow
$53.09M
Fetching…
Sources
Is it cheap or expensive?
Fair value $519.03 vs current price $141.90
Wall Street consensus is the average analyst price target: $134.29 (-74.1% lower than our fair-value estimate).
Our most-likely fair value is $519.03 a share — about 265.8% above today's price of $141.90, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $1.2B - more cash than debt. Interest coverage 3.0x.
Net debt
$-1.23B
Interest coverage
3.00x
Duolingo, Inc.'s profit covers its interest bill about 3.0 times over. which is stronger than most peers shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
DUOL
BASELINE
Duolingo, Inc.
Total debt $86.14M Interest coverage 3.00x This is the baseline the peer rows are being compared against.
Total debt $50.72M Interest coverage -194.67x -100% vs DUOL This peer has almost no interest-payment cushion compared with DUOL.
Total debt $545.98M Interest coverage 38.27x +1,177% vs DUOL Carries about 12.8x more debt cushion than DUOL.
What you should know
The case for and against DUOL
3 Rewards
2 Risks
Rewards
-
Revenue grew 10.4% last year.
-
Returns 34.4% on equity, ahead of 80% of its peers.
-
Free cash flow was positive in 6/10 years.
Risks
-
Forward P/E (18.6x) is higher than trailing (16.8x) - earnings are expected to drop.
-
Insider ownership is only 1.5% (peer median: 3.5%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
16.77x
Forward P/E
18.58x
P/B
4.70x
P/S
5.77x
EV/EBITDA
30.23x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
72.7%
Operating margin
11.7%
Net margin
35.9%
ROE
34.4%
ROA
5.6%
Health
Liquidity and balance-sheet strength
Debt / equity
0.06x
Current ratio
2.72x
Quick ratio
2.51x
Total debt
$86.14M
Total cash
$1.31B
Growth
How the business has been compounding
Revenue TTM
$1.15B
Revenue 5Y CAGR
42.6%
EPS TTM
8.46
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$430.55M
Free CF TTM
$369.73M
FCF margin
32.3%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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