Duolingo (DUOL) Stock Forecast & Price Target

Duolingo Inc reported a remarkable adjusted EBITDA of $80 million, representing an increase of $32.5 million year-over-year, largely driven by revenue growth that surpassed expectations. The company also demonstrated considerable strength in its subscriber base, with paid subscribers reaching 11.5 million, surpassing consensus estimates and indicating effective conversion from free to paid users. Additionally, total revenues rose by 41% year-over-year, highlighting the strong performance and engagement of its user base throughout the quarter.

Duolingo's gross margins have declined to 72.5%, down from 72.9% a year ago, indicating a potential decrease in subscriber penetration among monthly active users (MAUs). The company's guidance for 4Q25 shows bookings and adjusted EBITDA projected below consensus estimates, reflecting an adjusted forecast for lower growth in the upcoming fiscal year as a result of increased operating costs, particularly in generative AI and hosting. Additionally, Duolingo's direct-to-consumer model poses risks from discretionary spending, which may further impact revenue generation moving forward.