Duolingo (DUOL) Stock Forecast & Price Target

Duolingo Inc. demonstrated robust financial performance, with an adjusted EBITDA of $80 million, a significant increase of $32.5 million year-over-year, driven by revenue outperformance. The company reported a 41% year-over-year growth in total revenues, highlighting its strong market presence and effective monetization strategies, including an increased number of paid subscribers reaching 11.5 million, which exceeded consensus estimates. Additionally, Duolingo's daily active users (DAUs) showed a year-over-year growth of approximately 30%, indicating enhanced user engagement that could lead to sustained revenue growth and an optimistic outlook for the upcoming quarters.

Duolingo Inc. reported a slight decrease in gross margins, falling to 72.5% from 72.9% a year earlier, indicating potential challenges in subscriber penetration rates among monthly active users. The company's guidance for 4Q25 reflects lower expected bookings and adjusted EBITDA, with bookings projected at $329.5mm - $335.5mm and adjusted EBITDA at $75.4mm - $78.8mm, both below consensus estimates. Additionally, the increase in generative AI and hosting costs is contributing to a year-over-year decline, while the company faces risks from discretionary spending headwinds due to its direct-to-consumer exposure.