We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
DOCU vs DUOL: Which Software Growth Stock is the Better Buy?
Read MoreHide Full Article
Key Takeaways
DocuSign's IAM platform deepens ties with Microsoft and Salesforce to streamline digital agreements.
DOCU posted $801M in Q2 revenues, up 9% year over year, with $218M in free cash flow at a 27% margin.
While DUOL shows strong AI-driven growth, DOCU's valuation and profitability make it the better buy.
Both Duolingo (DUOL - Free Report) and DocuSign (DOCU - Free Report) are technology-driven companies operating on software-as-a-service (SaaS) models with subscription-based revenue streams.
Duolingo dominates the ed-tech and language-learning space with its gamified platform, engaging global users seeking accessible and personalized learning experiences. DocuSign, on the other hand, leads the digital agreements and workflow automation market, helping businesses streamline document management securely and efficiently.
While Duolingo benefits from rising demand for digital education, DocuSign continues to gain traction amid the ongoing shift toward paperless and remote operations. Both companies exemplify the scalability and recurring revenue strength typical of SaaS leaders, catering to distinct yet rapidly expanding technology segments.
The Case for DUOL
One of the strongest positives for Duolingo lies in how it is turning artificial intelligence and proprietary learner data into a competitive edge. Unlike many companies where AI remains a vague promise, Duolingo is embedding it directly into its product roadmap and financials. By using its massive learner dataset, the company can rapidly build and launch new verticals, such as music and chess, with a level of accuracy and personalization that competitors cannot easily replicate.
The efficiency of AI has also translated into cost advantages. In the most recent quarter, Duolingo raised its full-year outlook partly because AI-related expenses came in lower than anticipated. Gross margin rose sequentially by 130 basis points to 72.4%, a clear sign that innovation is not eroding profitability. Even more impressive is how quickly AI is accelerating content expansion. The company rolled out 148 new language courses in April, marking its largest expansion ever. To put this in perspective, it took over a decade to build the first 100 courses, but AI-driven efficiencies enabled nearly 150 in less than a year. This ability to scale course content rapidly translates into stronger user engagement, deeper brand trust and ultimately, sustainable growth in bookings.
Another positive for Duolingo is the way it is building a multi-pronged revenue model that extends far beyond language learning subscriptions. The company has been successfully steering more users toward premium tiers, driving a 6% year-over-year increase in subscription ARPU through mix-shift rather than simple price hikes, a healthier form of monetization.
Optionality beyond languages is proving real. The launch of the Chess course, which quickly surpassed one million daily active users on iOS, demonstrates that Duolingo’s teaching model can scale into entirely new subjects. Early traction in Music and other categories only strengthens this case. Importantly, each new subject not only expands the addressable market but also increases user retention by giving learners more reasons to engage daily.
Financial guidance reflects this momentum with management projecting $1.011 to $1.019 billion in FY 2025 revenues and adjusted EBITDA margins approaching 29%. With about 36% revenue growth expected at the midpoint, Duolingo is balancing innovation with profitability, creating a compelling long-term investment profile.
The Case for DOCU
Docusign continues to enhance its Intelligent Agreement Management (IAM) platform, strengthening its integration capabilities with enterprise powerhouses like Microsoft (MSFT - Free Report) and Salesforce (CRM - Free Report) . These collaborations are not just cosmetic; they are core to the company's mission of optimizing agreement workflows and delivzering AI-driven insights that improve the end-user experience.
By embedding itself more deeply into tools already familiar to business clients — such as Microsoft 365 and Salesforce’s CRM suite — Docusign enables seamless agreement management within platforms that enterprises use daily. This integration simplifies contract processes, accelerates decision-making, and creates a unified ecosystem where legal, sales and procurement teams can collaborate efficiently.
The IAM platform’s growing synergy also highlights Docusign’s commitment to positioning itself as more than an e-signature solution; it's becoming a comprehensive digital agreement hub. Whether a user is drafting a contract within Microsoft Word or managing client pipelines in Salesforce, DocuSign’s IAM helps ensure that documents move swiftly through automated, intelligent workflows. These platform partnerships also deepen customer reliance on DOCU’s services, anchoring it within critical enterprise infrastructure. As more businesses seek to modernize agreement processes, DocuSign’s integrations with Microsoft and Salesforce are proving instrumental in extending reach, improving retention and reinforcing its competitive edge in the SaaS landscape.
DOCU solidified its leadership in the e-signature market with a strong second-quarter fiscal 2026 performance. It recorded $801 million in total revenues, a 9% year-over-year increase. Impressively, $784 million of that came from subscriptions, highlighting the stability of its SaaS model. Subscription growth, driven in part by Microsoft and Salesforce-aligned services, reflects how enterprises are deepening their usage of Docusign across contract lifecycles. Net revenue retention improved to 101%, suggesting that customers are spending more on the platform. Billings grew 13%, which was more indicative of extended renewal cycles than weakening demand.
What stands out is DocuSign’s profitability and capital discipline. The company generated $218 million in free cash flow in the second quarter, translating to a healthy 27% margin. As integrations continue to enhance customer value, the company has also committed to shareholder returns, expanding its buyback authorization. These strategic moves suggest that DOCU is not only focused on growth but also on delivering sustained value. With Microsoft and Salesforce reinforcing its relevance across enterprises, and strong free cash flows backing that momentum, Docusign remains well-positioned to maintain its dominance while evolving into a broader digital agreement ecosystem.
How Do Zacks Estimates Compare for DOCU & DUOL?
The Zacks Consensus Estimate for DOCU’s fiscal 2026 sales and EPS indicates year-over-year growth of 7% and 4%, respectively. EPS estimates have been trending upwards over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DUOL’s 2025 sales and EPS indicates year-over-year growth of 36% and 68%, respectively. EPS estimates have remained unchanged over the past 60 days.
Image Source: Zacks Investment Research
DOCU’s Valuation More Attractive Than DUOL
While DocuSign appears attractively valued with a forward 12-month P/E of 18X versus its median of 64.82X, suggesting that the stock could be undervalued relative to its historical range, Duolingo is trading at a forward 12-month P/E of 72.7X, below its 12-month median of 109.35X.
DOCU is a Strong Buy
Between the two, DOCU emerges as the stronger buy. While both companies boast solid growth and innovative SaaS models, DOCU offers a more compelling investment case due to its attractive valuation, consistent profitability, and deep enterprise integrations with Microsoft and Salesforce. Its Intelligent Agreement Management platform is driving durable recurring revenue and stronger customer retention. Meanwhile, Duolingo’s high-growth trajectory is impressive but priced at a premium. With DOCU’s expanding margins, steady cash flow, and ongoing transition into a full-scale digital agreement ecosystem, it represents a more balanced blend of growth, stability and value, making it the better buy now.
Image: Bigstock
DOCU vs DUOL: Which Software Growth Stock is the Better Buy?
Key Takeaways
Both Duolingo (DUOL - Free Report) and DocuSign (DOCU - Free Report) are technology-driven companies operating on software-as-a-service (SaaS) models with subscription-based revenue streams.
Duolingo dominates the ed-tech and language-learning space with its gamified platform, engaging global users seeking accessible and personalized learning experiences. DocuSign, on the other hand, leads the digital agreements and workflow automation market, helping businesses streamline document management securely and efficiently.
While Duolingo benefits from rising demand for digital education, DocuSign continues to gain traction amid the ongoing shift toward paperless and remote operations. Both companies exemplify the scalability and recurring revenue strength typical of SaaS leaders, catering to distinct yet rapidly expanding technology segments.
The Case for DUOL
One of the strongest positives for Duolingo lies in how it is turning artificial intelligence and proprietary learner data into a competitive edge. Unlike many companies where AI remains a vague promise, Duolingo is embedding it directly into its product roadmap and financials. By using its massive learner dataset, the company can rapidly build and launch new verticals, such as music and chess, with a level of accuracy and personalization that competitors cannot easily replicate.
The efficiency of AI has also translated into cost advantages. In the most recent quarter, Duolingo raised its full-year outlook partly because AI-related expenses came in lower than anticipated. Gross margin rose sequentially by 130 basis points to 72.4%, a clear sign that innovation is not eroding profitability. Even more impressive is how quickly AI is accelerating content expansion. The company rolled out 148 new language courses in April, marking its largest expansion ever. To put this in perspective, it took over a decade to build the first 100 courses, but AI-driven efficiencies enabled nearly 150 in less than a year. This ability to scale course content rapidly translates into stronger user engagement, deeper brand trust and ultimately, sustainable growth in bookings.
Another positive for Duolingo is the way it is building a multi-pronged revenue model that extends far beyond language learning subscriptions. The company has been successfully steering more users toward premium tiers, driving a 6% year-over-year increase in subscription ARPU through mix-shift rather than simple price hikes, a healthier form of monetization.
Optionality beyond languages is proving real. The launch of the Chess course, which quickly surpassed one million daily active users on iOS, demonstrates that Duolingo’s teaching model can scale into entirely new subjects. Early traction in Music and other categories only strengthens this case. Importantly, each new subject not only expands the addressable market but also increases user retention by giving learners more reasons to engage daily.
Financial guidance reflects this momentum with management projecting $1.011 to $1.019 billion in FY 2025 revenues and adjusted EBITDA margins approaching 29%. With about 36% revenue growth expected at the midpoint, Duolingo is balancing innovation with profitability, creating a compelling long-term investment profile.
The Case for DOCU
Docusign continues to enhance its Intelligent Agreement Management (IAM) platform, strengthening its integration capabilities with enterprise powerhouses like Microsoft (MSFT - Free Report) and Salesforce (CRM - Free Report) . These collaborations are not just cosmetic; they are core to the company's mission of optimizing agreement workflows and delivzering AI-driven insights that improve the end-user experience.
By embedding itself more deeply into tools already familiar to business clients — such as Microsoft 365 and Salesforce’s CRM suite — Docusign enables seamless agreement management within platforms that enterprises use daily. This integration simplifies contract processes, accelerates decision-making, and creates a unified ecosystem where legal, sales and procurement teams can collaborate efficiently.
The IAM platform’s growing synergy also highlights Docusign’s commitment to positioning itself as more than an e-signature solution; it's becoming a comprehensive digital agreement hub. Whether a user is drafting a contract within Microsoft Word or managing client pipelines in Salesforce, DocuSign’s IAM helps ensure that documents move swiftly through automated, intelligent workflows. These platform partnerships also deepen customer reliance on DOCU’s services, anchoring it within critical enterprise infrastructure. As more businesses seek to modernize agreement processes, DocuSign’s integrations with Microsoft and Salesforce are proving instrumental in extending reach, improving retention and reinforcing its competitive edge in the SaaS landscape.
DOCU solidified its leadership in the e-signature market with a strong second-quarter fiscal 2026 performance. It recorded $801 million in total revenues, a 9% year-over-year increase. Impressively, $784 million of that came from subscriptions, highlighting the stability of its SaaS model. Subscription growth, driven in part by Microsoft and Salesforce-aligned services, reflects how enterprises are deepening their usage of Docusign across contract lifecycles. Net revenue retention improved to 101%, suggesting that customers are spending more on the platform. Billings grew 13%, which was more indicative of extended renewal cycles than weakening demand.
What stands out is DocuSign’s profitability and capital discipline. The company generated $218 million in free cash flow in the second quarter, translating to a healthy 27% margin. As integrations continue to enhance customer value, the company has also committed to shareholder returns, expanding its buyback authorization. These strategic moves suggest that DOCU is not only focused on growth but also on delivering sustained value. With Microsoft and Salesforce reinforcing its relevance across enterprises, and strong free cash flows backing that momentum, Docusign remains well-positioned to maintain its dominance while evolving into a broader digital agreement ecosystem.
How Do Zacks Estimates Compare for DOCU & DUOL?
The Zacks Consensus Estimate for DOCU’s fiscal 2026 sales and EPS indicates year-over-year growth of 7% and 4%, respectively. EPS estimates have been trending upwards over the past 60 days.
The Zacks Consensus Estimate for DUOL’s 2025 sales and EPS indicates year-over-year growth of 36% and 68%, respectively. EPS estimates have remained unchanged over the past 60 days.
DOCU’s Valuation More Attractive Than DUOL
While DocuSign appears attractively valued with a forward 12-month P/E of 18X versus its median of 64.82X, suggesting that the stock could be undervalued relative to its historical range, Duolingo is trading at a forward 12-month P/E of 72.7X, below its 12-month median of 109.35X.
DOCU is a Strong Buy
Between the two, DOCU emerges as the stronger buy. While both companies boast solid growth and innovative SaaS models, DOCU offers a more compelling investment case due to its attractive valuation, consistent profitability, and deep enterprise integrations with Microsoft and Salesforce. Its Intelligent Agreement Management platform is driving durable recurring revenue and stronger customer retention. Meanwhile, Duolingo’s high-growth trajectory is impressive but priced at a premium. With DOCU’s expanding margins, steady cash flow, and ongoing transition into a full-scale digital agreement ecosystem, it represents a more balanced blend of growth, stability and value, making it the better buy now.
While DOCU carries a Zacks Rank #1 (Strong Buy), DUOL has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.