Duolingo’s second quarter results were met with a strong positive market reaction, reflecting investor confidence in the company’s expanding user base and product mix. Management attributed this quarter’s robust performance to the continued adoption of subscription tiers, notably Super and Max, as well as successful engagement initiatives like the Energy pacing mechanic. CEO Luis von Ahn highlighted strong growth across core markets, with particular momentum in Asia, and credited brand partnerships and product updates for driving both daily active user growth and higher user retention.
Is now the time to buy DUOL? Find out in our full research report (it’s free).
Duolingo (DUOL) Q2 CY2025 Highlights:
- Revenue: $252.3 million vs analyst estimates of $240.8 million (41.5% year-on-year growth, 4.8% beat)
- Adjusted EPS: $1.70 vs analyst estimates of $1.29 (31.9% beat)
- Adjusted EBITDA: $78.68 million vs analyst estimates of $61.07 million (31.2% margin, 28.8% beat)
- The company lifted its revenue guidance for the full year to $1.02 billion at the midpoint from $991.5 million, a 2.4% increase
- EBITDA guidance for the full year is $291.8 million at the midpoint, above analyst estimates of $281.2 million
- Operating Margin: 13.2%, up from 10.5% in the same quarter last year
- Monthly Active Users: 128.3 million, up 24.7 million year on year
- Market Capitalization: $14.8 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Duolingo’s Q2 Earnings Call
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Nathan Feather (Morgan Stanley) asked about the moderation in daily active user (DAU) growth and China’s momentum. CEO Luis von Ahn explained that U.S. social media backlash temporarily slowed DAU growth, while China’s partnership with Luckin Coffee boosted engagement.
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Alex Sklar (Raymond James) inquired about the conversion rates for Max and Super subscriptions. Von Ahn detailed that Super grew faster due to broader appeal, while Max’s growth was limited by the complexity of Video Call for beginners, prompting upcoming feature tweaks.
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Ralph Schackart (William Blair) questioned the significance of Chess, Math, and Music in future growth. Von Ahn emphasized Chess’s rapid adoption among iPhone users and noted that, while revenues are not yet material, these subjects expand Duolingo’s addressable market.
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Chris Kuntarich (UBS) asked about retention trends for Max renewals and the drivers of gross margin performance. CFO Matt Skaruppa said Max’s early renewal signals are positive but still maturing, and margin expansion was supported by AI cost reductions and favorable ad pricing.
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Wyatt Swanson (D.A. Davidson) raised concerns about user feedback on the Energy system. Von Ahn acknowledged some negative sentiment among high-usage free users but stressed that the new mechanic increased engagement, conversion, and median time spent in the app.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be watching (1) the full rollout and user response to the Energy pacing system, (2) improvements to the Max subscription, especially the launch of bilingual Video Call and expansion into new languages and markets, and (3) the impact of incremental U.S. marketing on user growth. Additional focus will be on the progress of new subject areas and further AI-driven cost efficiencies.
Duolingo currently trades at $322.03, down from $344.25 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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