Duolingo, Inc. (DUOL Quick QuoteDUOL - Free Report) delivered first-quarter 2026 earnings of 89 cents per share, beating the Zacks Consensus Estimate of 79 cents by 12.7%. Revenues rose 27.0% year over year to $292.0 million and topped the consensus call of $288.5 million by 1.2%.

The quarter showed continued engagement strength, with daily active users increasing 21% year over year to 56.5 million, as management leaned further into product improvements designed to deepen learning outcomes.

DUOL’s Subscriber Growth Supports the Core Model

A growing paid base remained an important support for results. Paid subscribers reached 12.5 million at period end, up 21% from the year-ago quarter, pointing to steady conversion alongside a larger active community. Monthly active users also increased to 137.8 million, reinforcing the scale of the platform.

Management reiterated that it is still early in its 2026 strategic shift, but the company continues to prioritize teaching better while growing its audience. The medium-term goal remains reaching 100 million daily active users in 2028, with product quality positioned as a key lever for retention and word-of-mouth expansion.

Duolingo Deepens Speaking as a Daily Habit

Duolingo put particular emphasis on making speaking a more central part of the learning experience. The company introduced “spoken tokens,” enabling learners to speak answers instead of tapping words, and launched flashcards that push faster recall by having users say words and phrases aloud.

The company also began rolling out “Speaking Adventures,” built around real-world tasks that require learners to speak with Duolingo characters. For paid users, Video Call continued to improve, and management said the feature has helped more than double the average number of words spoken per user over the past year.

DUOL Uses AI to Accelerate Content Creation

Content scaling was another highlight of the quarter. DUOL said it published 20,500 course units in the first quarter alone, reflecting the impact of AI tools that are speeding production and enabling broader updates across many language courses at once.

The company also pointed to expanding depth in its most important offerings. It has launched content up to Duolingo Score 129 (CEFR B2) across courses teaching its nine most-learned languages, positioning the platform as a path to more advanced proficiency. Alongside that expansion, Duolingo said it is improving Chinese, Japanese and Korean courses by simplifying early lessons and easing the learning curve for character systems.

Duolingo’s Bookings Show Monetization Resilience

Bookings growth suggested that monetization held up as the company continues to refine its approach. Total bookings increased 14% year over year to $308.5 million, driven by continued subscriber growth and favorable advertising trends. Subscription bookings rose 15% to $268.1 million.

Revenue composition continued to skew heavily toward subscriptions. Subscription revenue grew 31% year over year to $250.9 million. Advertising revenue increased 15% to $20.6 million, while Duolingo English Test revenues declined 6% to $11.3 million, and in-app purchases decreased 11% to $8.4 million.

DUOL Expands Gross Margin as Costs Improve

Profitability improved as gross margin expanded 190 basis points year over year to 73.0%, which management attributed primarily to continued reductions in per-unit AI costs. Gross profit increased to $213.1 million, up from $164.1 million a year ago.

Operating expenses rose as the company continued investing in long-term growth. Research and development expense increased to $83.0 million, sales and marketing climbed to $39.2 million, and general and administrative expense rose to $46.3 million. Even with higher spending, adjusted EBITDA grew to $83.4 million, representing a 28.6% margin.

Duolingo Updates 2026 Targets and Capital Returns

Duolingo’s cash generation remained strong in the quarter. Net cash provided by operating activities was $150.8 million, and free cash flow totaled $147.8 million, equating to a 50.6% free-cash-flow margin. The company ended the quarter with $1.1 billion in cash and cash equivalents, supporting flexibility for both investment and shareholder returns.

Guidance reinforced management’s view of 2026 as a strategic investment year. For the second quarter of 2026, the company guided revenues of $295.5 million and bookings of $283.5 million, with adjusted EBITDA of $71.0 million (24.0% margin). For full-year 2026, Duolingo expects revenues of $1.205 billion and bookings of $1.28 billion, with adjusted EBITDA of $310 million (25.7% margin). Management also expects gross margin to trend down through the year as AI feature use expands, with a target of roughly 69% by the fourth quarter.

DUOL currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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