DUOL · Duolingo, Inc.

Duolingo's Q1 2026 results demonstrated robust growth across key metrics, with revenue surging 27% year-over-year to $292.0 million, outpacing bookings growth of 14% to $308.5 million due to subscription recognition dynamics. Gross margin expanded 190 basis points to 73.0%, primarily from reduced per-unit AI costs, supporting profitability with net income up 24% to $43.5 million and Adjusted EBITDA rising 33% to $83.4 million at a 28.6% margin. User engagement remained strong, with DAUs increasing 21% to 56.5 million and paid subscribers up 21% to 12.5 million, though growth moderated from prior periods like the 'Dead Duo' campaign impact. CEO Luis von Ahn highlighted progress on strategic initiatives, including making speaking practice core via Video Call expansions, spoken tokens, flashcards, and Speaking Adventures for all users; scaling content to CEFR B2 levels across top languages using AI, publishing 20,500 course units; and adding mastery checks to improve learning outcomes. These enhancements aim to boost retention and support the medium-term goal of 100 million DAUs by 2028. Cash generation was exceptional, with operating cash flow at $150.8 million (51.6% margin) and free cash flow at $147.8 million (50.6% margin), ending the quarter with $1.1 billion in cash. The company repurchased approximately 514,000 shares for $50.6 million under its $400 million program, fully offsetting 2025 dilution and signaling confidence in valuation. Guidance reaffirms the FY2026 plan with 10-12% bookings growth, 15-18% revenue growth, and 25% Adjusted EBITDA margin, with Q2 bookings at 5.8% growth facing tough comps but acceleration expected later. Gross margins are projected to trend down to 69% by Q4 amid AI feature expansion, while stock-based compensation is expected at 15% of revenue and share count up 3.5-4%, excluding buybacks.