Duolingo (NASDAQ: DUOL) grows Q2 revenue and details $400M buyback
Duolingo, Inc. reported revenue of $298,454 thousand for the quarter ended June 30, 2026, up 18% from $252,265 thousand a year earlier. Net income was $33,158 thousand, down from $44,781 thousand, as operating expenses grew faster than revenue and the income tax provision increased to $12,208 thousand.
Engagement remained strong, with 58.7 million daily active users and 12.7 million paid subscribers, up 23% and 17% year over year. Gross margin was about 73%, supported by lower per-unit third‑party AI costs. Subscription revenue rose 22% to $258,035 thousand, while in‑app purchase revenue declined.
For the first half of 2026, Duolingo generated $239,031 thousand in net cash from operating activities and free cash flow of $226,416 thousand. Cash and cash equivalents were $1,180,887 thousand and short‑term investments $132,979 thousand at June 30, 2026. The company repurchased roughly 695 thousand Class A shares for $70,278 thousand, with $329,722 thousand remaining under its $400,000 thousand authorization.
Positive
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Filing Explained
Outstanding equity awards remain potential future share issuance, while a proposed $5 million settlement charge is accrued but not completed.
This unaudited Form 10-Q is the company’s quarterly report for the period ended
At
The filing also says certain founder-award performance conditions have been achieved while others remain subject to future stock-price performance and continued service; a modified service condition extends the revised derived service periods through
During the quarter, the company accrued approximately
Key Figures
Q2 2026 Revenue: $298,454 thousand
Q2 2026 Net Income: $33,158 thousand
Daily Active Users: 58.7 million
+5 more
8 metrics
Q2 2026 Revenue
$298,454 thousand
Total revenues for the three months ended June 30, 2026
Q2 2026 Net Income
$33,158 thousand
Net income for the three months ended June 30, 2026
Daily Active Users
58.7 million
DAUs for the three months ended June 30, 2026
Paid Subscribers
12.7 million
Paid subscribers at June 30, 2026
Net Cash from Operations
$239,031 thousand
Net cash provided by operating activities for six months ended June 30, 2026
Free Cash Flow
$226,416 thousand
Free cash flow for six months ended June 30, 2026
Share Repurchases H1 2026
$70,278 thousand
Cost of Class A common stock repurchased in the six months ended June 30, 2026
Cash and Cash Equivalents
$1,180,887 thousand
Cash and cash equivalents balance at June 30, 2026
Key Terms
Adjusted EBITDA, free cash flow, deferred revenues, performance-based RSUs, +1 more
5 terms
Adjusted EBITDA financial
"Adjusted EBITDA is defined as net income excluding interest income"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
free cash flow financial
"Free cash flow is defined as net cash provided by operating activities"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
deferred revenues financial
"Deferred revenue consists of payments received in advance of revenue recognition"
Deferred revenues are cash a company has received up front for goods or services it has not yet delivered; the company records this as a promise to fulfill an obligation later rather than as current earned sales. Investors care because deferred revenues show how much future work a firm must complete before that cash counts as profit, similar to buying a prepaid subscription or gift card that the seller still needs to honor.
performance-based RSUs financial
"the Company granted performance-based RSUs to its founders"
Performance-based restricted stock units (RSUs) are promises to deliver company shares to employees only if the business meets specific goals, such as revenue, profit, stock-price targets, or strategic milestones. For investors, they matter because they change future share supply and align management incentives with company results—like a salesperson whose bonus only pays out when sales targets are hit—so they can affect earnings, dilution, and confidence in leadership.
foreign-derived intangible income deduction financial
"partially offset by research and development tax credits and the foreign-derived intangible income deduction"
Earnings Snapshot
Revenue: $298,454 thousand
Three months ended June 30, 2026
Revenue
$298,454 thousand
up 18% year over year
Net income
$33,158 thousand
down 26% year over year
Diluted EPS
$0.66
down from $0.91 a year earlier
Adjusted EBITDA
$77,315 thousand
down from $78,680 thousand a year earlier
Daily active users
58.7 million
up 23% year over year
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FAQ
How did Duolingo (DUOL) perform financially in Q2 2026?
Duolingo generated $298,454 thousand in revenue in Q2 2026, up 18% year over year, and net income of $33,158 thousand. Diluted EPS was $0.66 versus $0.91 a year earlier, mainly due to higher operating expenses and a larger income tax provision.
What were Duolingo (DUOL)'s key user metrics in Q2 2026?
Duolingo reported 58.7 million daily active users and 140.6 million monthly active users for Q2 2026. Paid subscribers reached 12.7 million, up 17% year over year, reflecting continued user growth and successful conversion to paid offerings.
How is Duolingo (DUOL) generating its revenue mix in Q2 2026?
Q2 2026 revenue was led by $258,035 thousand of subscription revenue, up 22% year over year. Advertising contributed $21,052 thousand, Duolingo English Test $10,109 thousand, in‑app purchases $8,002 thousand, and other revenue $1,256 thousand, with in‑app purchases declining versus 2025.
Which non-GAAP metrics does Duolingo (DUOL) highlight for Q2 2026?
Duolingo highlights Adjusted EBITDA and free cash flow. Adjusted EBITDA was $77,315 thousand in Q2 2026 versus $78,680 thousand a year earlier. Free cash flow was $78,630 thousand, compared with $86,324 thousand in Q2 2025, reflecting working‑capital movements and higher capital investment.
What is Duolingo (DUOL)'s liquidity position and share repurchase activity?
As of June 30, 2026, Duolingo held $1,180,887 thousand in cash and cash equivalents and $132,979 thousand in short‑term investments. In the first half of 2026 it repurchased about 694,630 Class A shares for $70,278 thousand, with $329,722 thousand remaining under a $400,000 thousand authorization.
How did Duolingo (DUOL)'s costs and margins evolve in Q2 2026?
Total gross margin was about 72.6% in Q2 2026, slightly above the prior‑year period. Research and development, sales and marketing, and general and administrative expenses rose 25%, 35%, and 10% respectively, driven by headcount growth, higher advertising spend, and increased software and AI costs.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2026
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ___ to ___
Commission file number 001-40653
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(412 ) 567-6602
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant’s Principal Executive Offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
The | ||||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of August 4, 2026, 40,387,012 shares of the registrant's Class A common stock were outstanding, and 6,399,257 shares of the registrant's Class B common stock were outstanding.
Table of Contents Page
Special Note Regarding Forward-Looking Statements | 2 | ||||
Special Note Regarding Key Operating Metrics | 4 | ||||
Part I Financial Information | 5 | ||||
Item 1. Financial Statements (Unaudited) | 5 | ||||
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 22 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 35 | ||||
Item 4. Controls and Procedures | 36 | ||||
Part II Other Information | 37 | ||||
Item 1. Legal Proceedings | 37 | ||||
Item 1A. Risk Factors | 37 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 37 | ||||
Item 3. Defaults Upon Senior Securities | 37 | ||||
Item 4. Mine Safety Disclosures | 37 | ||||
Item 5. Other Information | 37 | ||||
Item 6. Exhibits | 39 | ||||
Signatures | 40 | ||||
1
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q including without limitation, statements regarding our business model and strategic plans, including the introduction of new products, and our implementation thereof; statements regarding our expectations, beliefs, plans, objectives, prospects, assumptions, future events or expected performance, including our ability to compete in our industry; the sufficiency of our cash, cash equivalents and investments; and the plans and objectives of management for future operations and capital expenditures are forward-looking statements.
Without limiting the generality of the foregoing, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “goal,” “objective,” “seeks,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Such forward-looking statements are neither promises nor guarantees, but involve a number of known and unknown risks, uncertainties and assumptions that may cause our actual results, performance or achievements to differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to:
•our ability to retain and grow our users and sustain their engagement with our products;
•competition in the online language learning industry;
•our ability to maintain profitability;
•the impact on our income as a result of the release of valuation allowances on deferred tax assets;
•our expectations regarding fluctuations in our effective tax rate, including changes to valuation allowances, and the adequacy of our reserves;
•our ability to manage our growth and operate at such scale;
•the success of our investments;
•our ability to accurately predict our quarterly operating results and other operating metrics;
•our ability to accurately measure our user metrics and other operating metrics;
•our reliance on third-party platforms to store and distribute our products and collect revenue;
•the success of our development, implementation and use of artificial intelligence and machine learning technologies;
•our reliance on third-party hosting, cloud computing providers and Artificial Intelligence (“AI”) vendors;
•our ability to compete for advertisements;
•acceptance by educational organizations of technology-based education;
•changes in our business and macroeconomic conditions;
2
•the accuracy of market research published about the Company by third-party data scraping services;
•those identified in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q; and
•those identified in Part I, Item 1A. “Risk Factors” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “Annual Report on Form 10-K”).
We caution you that the foregoing list does not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations, estimates, forecasts, and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q and, although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. We cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. Moreover, we operate in a very competitive and rapidly changing environment. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements. You should not place undue reliance on our forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. While we may elect to update such forward-looking statements at some point in the future, unless required by applicable law, we disclaim any obligation to do so, even if subsequent events cause our views to change.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this Quarterly Report on Form 10-Q by these cautionary statements.
Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to “Duolingo,” the “Company”, “we,” “our,” “us,” or similar terms refer to Duolingo, Inc. and its subsidiaries.
3
Special Note Regarding Key Operating Metrics
We manage our business by tracking several operating metrics, including daily active users (DAUs), paid subscribers, subscription bookings, and total bookings. We believe each of these operating metrics provides useful information to investors and others. For information concerning these metrics as measured by us, see Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Operating Metrics and Non-GAAP Financial Measures.”
While these metrics are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring how our platform is used. These metrics are determined by using internal data gathered on an analytics platform that we developed and operate and have not been validated by an independent third party. This platform tracks user account and session activity. If we fail to maintain an effective analytics platform, our metrics calculations may be inaccurate.
We believe that these metrics are reasonable estimates of our user base for the applicable period of measurement, and that the methodologies we employ and update from time-to-time to create these metrics are reasonable bases to identify trends in user behavior. Because we update the methodologies we employ to create metrics, our operating metrics may not be comparable to those in prior periods. See “Risk Factors—Our user metrics and other operating metrics are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may negatively affect our reputation and our business” included in the Annual Report on Form 10-K. Other companies, including companies in our industry, may calculate these metrics differently.
4
Part I Financial Information
Item 1. Financial Statements (Unaudited)
5
DUOLINGO, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value amounts)
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
| June 30, 2026 | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Short-term investments | |||||||||||
| Accounts receivable | |||||||||||
| Deferred cost of revenues | |||||||||||
| Income tax receivable | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Long-term investments | |||||||||||
| Intangible assets, net | |||||||||||
| Property and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Restricted cash | |||||||||||
| Deferred tax assets, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Deferred revenues | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Income tax payable | |||||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term obligation under operating leases | |||||||||||
| Deferred tax liabilities, net | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 9) | |||||||||||
| Stockholders’ equity | |||||||||||
Class A common stock, $ Class B common stock, $ | |||||||||||
Treasury stock, at cost; | ( | ||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
6
DUOLINGO, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands, except per share amounts)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands, except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
| Cost of revenues | ||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||
| Sales and marketing | ||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||||
| Income from operations | ||||||||||||||||||||||||||
| Other (expense) income, net | ( | ( | ||||||||||||||||||||||||
| Income before interest income and income taxes | ||||||||||||||||||||||||||
| Interest income | ||||||||||||||||||||||||||
| Income before income taxes | ||||||||||||||||||||||||||
| Provision for income taxes | ||||||||||||||||||||||||||
| Net income and comprehensive income | $ | $ | $ | $ | ||||||||||||||||||||||
| Net income per share attributable to Class A and Class B common stockholders, basic | $ | $ | $ | $ | ||||||||||||||||||||||
| Net income per share attributable to Class A and Class B common stockholders, diluted | $ | $ | $ | $ | ||||||||||||||||||||||
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
7
DUOLINGO, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
(Amounts in thousands)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
THREE MONTHS ENDED JUNE 30, 2026 AND 2025
(Amounts in thousands)
| Common Stock | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Additional Paid-In Capital | (Accumulated Deficit) Retained Earnings | Total | |||||||||||||||||||||||||||||||||||||||||
BALANCE—April 1, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Stock options exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Release of restricted stock units | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
BALANCE—June 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||
BALANCE—April 1, 2026 | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Release of performance stock units | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Taxes paid related to net-share settlement of share-based compensation awards | ( | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
Stock options exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Release of restricted stock units | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | — | — | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Retirement of treasury stock | ( | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
BALANCE—June 30, 2026 | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
8
DUOLINGO, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(Amounts in thousands)
(Amounts in thousands)
| Common Stock | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Additional Paid-In Capital | (Accumulated Deficit) Retained Earnings | Total | |||||||||||||||||||||||||||||||||||||||||
| BALANCE—January 1, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock options exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Release of restricted stock units | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
BALANCE—June 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||
| BALANCE—January 1, 2026 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Release of performance stock units | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Taxes paid related to net-share settlements of share-based compensation awards | ( | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Stock options exercised | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Release of restricted stock units | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | — | — | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Retirement of treasury stock | ( | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| BALANCE—June 30, 2026 | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
9
DUOLINGO, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
| Six Months Ended June 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||
| Net income | $ | $ | |||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
| Deferred income taxes | |||||||||||||||||
| Stock-based compensation expense | |||||||||||||||||
| Depreciation and amortization | |||||||||||||||||
| Accretion on marketable securities, net | ( | ( | |||||||||||||||
| Impairment of capitalized software | |||||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||
| Deferred revenue | |||||||||||||||||
| Accounts receivable | |||||||||||||||||
| Deferred cost of revenues | ( | ( | |||||||||||||||
| Prepaid expenses and other current assets | ( | ||||||||||||||||
| Accounts payable | |||||||||||||||||
| Accrued expenses and other current liabilities | ( | ||||||||||||||||
| Noncurrent assets and liabilities | ( | ( | |||||||||||||||
| Net cash provided by operating activities | |||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||
| Purchases of investments | ( | ( | |||||||||||||||
| Maturities and paydowns of investments | |||||||||||||||||
| Capitalized software expense and purchases of intangible assets | ( | ( | |||||||||||||||
| Purchase of property and equipment | ( | ( | |||||||||||||||
| Net cash used for investing activities | ( | ( | |||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||
| Proceeds from exercise of stock options | |||||||||||||||||
| Repurchase of common stock | ( | ||||||||||||||||
| Taxes paid related to net-share settlement of share-based compensation awards | ( | ||||||||||||||||
| Net cash (used for) provided by financing activities | ( | ||||||||||||||||
| Net increase in cash, cash equivalents and restricted cash | |||||||||||||||||
| Cash, cash equivalents and restricted cash - Beginning of period | |||||||||||||||||
| Cash, cash equivalents and restricted cash - End of period | $ | $ | |||||||||||||||
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
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DUOLINGO, INC. AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
(Amounts in thousands)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
(Amounts in thousands)
| Six Months Ended June 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| Supplemental disclosure of cash flow information: | |||||||||||||||||
| Cash paid for income taxes | $ | $ | |||||||||||||||
| Supplemental disclosure of noncash investing activities: | |||||||||||||||||
| Property and equipment included in Current liabilities | $ | $ | |||||||||||||||
| Landlord incentive included in Other assets | $ | $ | |||||||||||||||
| Right of use assets obtained in exchange for new operating lease liabilities | $ | $ | |||||||||||||||
| Supplemental disclosure of noncash financing activities: | |||||||||||||||||
| Repurchases of common stock included in Current liabilities | $ | $ | |||||||||||||||
See accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
11
DUOLINGO, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
Duolingo, Inc. (the “Company” or “Duolingo”) was formed on August 18, 2011, and the Duolingo App was launched to the general public on June 19, 2012. The Company’s headquarters are located in Pittsburgh, Pennsylvania.
Duolingo is a mobile learning platform, as well as a digital English language proficiency assessment exam. The Company has a freemium business model: the app and the website are accessible free of charge, although Duolingo also offers premium services for a subscription fee. As of the date of this filing, Duolingo offers over 250 total language courses, including Spanish, English, French, German, Italian, Portuguese, Japanese and Chinese. We have locations in the U.S., China, Germany, and the United Kingdom.
The Unaudited Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. In our opinion, all adjustments considered necessary for a fair presentation of the financial statements have been included, and all adjustments are of a normal and recurring nature. We applied the accounting policies consistently with those used in the preparation of the Annual Report on Form 10-K in preparing these Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes for the fiscal year ended December 31, 2025 included in the Annual Report on Form 10-K and filed with the SEC.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Principles—The Unaudited Condensed Consolidated Financial Statements and accompanying notes are prepared in accordance with GAAP.
Use of Estimates—The preparation of Unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Unaudited Condensed Consolidated Financial Statements and accompanying notes. Significant estimates and assumptions reflected in the Unaudited Condensed Consolidated Financial Statements include, but are not limited to, useful lives of property and equipment, valuation of deferred tax assets and liabilities, stock-based compensation, operating lease right-of-use assets and liabilities, capitalization of internally developed software and associated useful lives, contingent liabilities, and valuation of goodwill and intangible assets from acquisitions. Actual results may differ materially from such estimates. Management believes that the estimates, and judgments upon which they rely, are
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reasonable based upon information available to them at the time that these estimates and judgments are made. To the extent that there are material differences between these estimates and actual results, the Company’s Unaudited Condensed Consolidated Financial Statements will be affected.
Advertising Costs—Advertising costs were approximately $28,199 and $56,341 for the three and six months ended June 30, 2026, and $19,649 and $37,184 for the three and six months ended June 30, 2025, respectively, and are included within Sales and marketing in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.
Income Taxes—The Company’s provision for income taxes is computed by using an estimate of the annual effective tax rate, adjusted for discrete items taken into account in the relevant period, if any. Each quarter, the annual effective income tax rate is recomputed and if there are material changes in the estimate, a cumulative adjustment is made.
Concentration of Credit Risk—The Company’s concentration of credit risk relates to financial institutions holding the Company’s cash and cash equivalents and platforms with significant accounts receivable balances and revenue transactions.
The majority of revenue comes through the subscriptions and advertising streams, and payments are made to Duolingo through service providers. Three service providers, Apple, Google, and Stripe, accounted for 65.5 %, 15.7 %, and 11.7 %, respectively, of total Accounts receivable as of June 30, 2026 and 62.5 %, 22.7 % and 11.4 %, respectively, of total Accounts receivable as of December 31, 2025.
Segment—The Company operates as a single operating segment and derives revenues from customers through time-based subscriptions, in-app advertising placement by third parties, the Duolingo English Test, and in-app purchases of virtual goods (“IAPs”). The Chief Executive Officer, as the chief operating decision maker, evaluates the Company’s performance and allocates resources based on consolidated net income, as presented in the income statement, supplemented by disaggregated revenue details. Significant segment expenses are those that are presented on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. The measure of segment assets is reported on the balance sheet as total consolidated assets. Accordingly, the Company has determined that it has a single reportable segment and operating segment structure, and operates as one
Allowance for Credit Losses—The Company evaluates its cash equivalents, accounts receivable and held-to-maturity marketable securities financial assets for expected credit losses. Expected credit losses represent the portion of the amortized cost basis of a financial asset that an entity does not expect to collect. An allowance for expected credit losses is meant to reflect a risk of loss even if remote, irrespective of the expectation of collection from a particular issuer or debt security. The Company has not historically experienced any credit losses on any of its financial assets.
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With respect to cash equivalents and accounts receivable, given consideration of their short maturity, lack of historical losses and the current environment, the Company concluded there is generally no expected credit losses for these financial assets. With respect to held-to-maturity marketable securities which are comprised of debt securities, the Company evaluates expected credit losses on a pooled basis based on issuer-type which have similar credit risk characteristics. There is no
Related Parties—The Company incurred expenses with a vendor which certain members of the Company’s Board of Directors and executive officers serve as members of the vendor’s board of directors of approximately $207 and $426 during the three and six months ended June 30, 2026, respectively, and $165 and $329 during the three and six months ended June 30, 2025, respectively. As of June 30, 2026 and December 31, 2025, no
Recent Accounting Pronouncements
Recently Issued Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendment requires new financial statement disclosures to provide disaggregated information for certain types of expenses, including employee compensation, depreciation, and amortization in commonly presented expense captions such as cost of revenue, sales and marketing, and general and administrative expenses. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the disclosure requirements related to the new standard.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments in this update remove all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40. The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Company is in the process of evaluating the effect that the adoption of this standard may have on its consolidated financial statements.
Recently Adopted Accounting Pronouncements
There are no recently adopted accounting pronouncements.
3. FAIR VALUE
The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1—Observable inputs such as quoted prices in active markets for identical investments that the Company has the ability to access.
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Level 2—Inputs include:
•Quoted prices for identical or similar assets or liabilities in active markets;
•Quoted prices for identical or similar assets or liabilities in inactive markets;
•Inputs, other than quoted prices in active markets, which are observable either directly or indirectly;
•Inputs that are derived principally from, or corroborated by, observable market data by correlation or other means.
Level 3—Unobservable inputs in which there is little or no market activity for the asset or liability, which require the reporting entity to develop its own estimates and assumptions relating to the pricing of the asset or liability including assumptions regarding risk.
The following table presents amortized cost, gross unrealized gains and losses, and fair value by major security type and balance sheet classification as of June 30, 2026 and December 31, 2025:
As of June 30, 2026 | |||||||||||||||||||||||||||||||||||||||||
| (In thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash Equivalents | Short-Term Investments | Long-Term Investments | ||||||||||||||||||||||||||||||||||
| Cash | $ | — | $ | — | $ | — | $ | $ | $ | — | $ | — | |||||||||||||||||||||||||||||
| Level 1 | |||||||||||||||||||||||||||||||||||||||||
| Commercial paper | $ | $ | $ | ( | $ | $ | $ | $ | — | ||||||||||||||||||||||||||||||||
| Money market funds | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Subtotal | $ | $ | $ | ( | $ | $ | $ | $ | — | ||||||||||||||||||||||||||||||||
| Level 2 | |||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | $ | $ | $ | ( | $ | $ | — | $ | $ | ||||||||||||||||||||||||||||||||
| Corporate debt securities | ( | — | |||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities | ( | — | |||||||||||||||||||||||||||||||||||||||
| Subtotal | $ | $ | $ | ( | $ | $ | — | $ | $ | ||||||||||||||||||||||||||||||||
| Level 3 | |||||||||||||||||||||||||||||||||||||||||
| Investment in SAFE | $ | — | $ | — | $ | — | $ | $ | — | $ | — | $ | |||||||||||||||||||||||||||||
| Subtotal | $ | — | $ | — | $ | — | $ | $ | — | $ | — | $ | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
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As of December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| (In thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash Equivalents | Short-Term Investments | Long-Term Investments | ||||||||||||||||||||||||||||||||||
| Cash | $ | — | $ | — | $ | — | $ | $ | $ | — | $ | — | |||||||||||||||||||||||||||||
| Level 1 | |||||||||||||||||||||||||||||||||||||||||
| Commercial paper | $ | $ | $ | $ | $ | $ | $ | — | |||||||||||||||||||||||||||||||||
| Money market funds | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Subtotal | $ | $ | $ | $ | $ | $ | $ | — | |||||||||||||||||||||||||||||||||
| Level 2 | |||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | $ | $ | $ | $ | $ | — | $ | $ | |||||||||||||||||||||||||||||||||
| Corporate debt securities | ( | — | |||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities | — | ||||||||||||||||||||||||||||||||||||||||
| Subtotal | $ | $ | $ | ( | $ | $ | — | $ | $ | ||||||||||||||||||||||||||||||||
| Level 3 | |||||||||||||||||||||||||||||||||||||||||
| Investment in SAFE | $ | — | $ | — | $ | — | $ | $ | — | $ | — | $ | |||||||||||||||||||||||||||||
| Subtotal | $ | — | $ | — | $ | — | $ | $ | — | $ | — | $ | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
As of June 30, 2026 and December 31, 2025, all of the Company’s short-term investments have contractual maturities of one year or less and all of the Company’s long-term investments have contractual maturities between one and five years 2,091 and $2,099 as of June 30, 2026 and December 31, 2025, respectively.
Changes in market interest rates, credit risk of borrowers and overall market liquidity, among other factors, may cause the short-term and long-term debt investments to fall below their amortized cost basis, resulting in unrealized losses. For those debt securities in an unrealized loss position as of June 30, 2026, the Company does not intend to sell, nor is it more likely than not that it will be required to sell, such securities before recovering the amortized cost basis. No
4. REVENUE
Disaggregation of Revenue
In accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, the Company disaggregates revenue from contracts with customers into revenue streams, which most closely depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
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| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
Subscription | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Advertising | ||||||||||||||||||||||||||||||||
Duolingo English Test | ||||||||||||||||||||||||||||||||
IAPs | ||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Three service providers, Apple, Google, and Stripe processed 59.6 %, 23.2 %, and 11.9 %, and 59.9 %, 23.1 %, and 11.7 %, respectively, of total revenues for the three and six months ended June 30, 2026, respectively. Two service providers Apple and Google processed 61.6 % and 23.9 %, and three service providers, Apple, Google, and Stripe processed 61.3 %, 23.6 % and 10.4 %, respectively, of total revenues for the three and six months ended June 30, 2025, respectively.
Deferred revenue consists of payments received in advance of revenue recognition, and is mostly related to time-based subscriptions, which will be recognized into revenue over the course of the upcoming year (recognized over 12 months or less). Additionally, the Duolingo English Test has deferred revenue related to tests that have been purchased, but will not be recognized until the tests have been proctored. Changes in deferred revenues were as follows:
| Six Months Ended June 30, | |||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | |||||||||||||||||||||
| Beginning balance—January 1 | $ | $ | |||||||||||||||||||||
| Amount from beginning balance recognized into revenue | ( | ( | |||||||||||||||||||||
| Deferral of revenue | |||||||||||||||||||||||
| Amount recognized from current period deferrals | ( | ( | |||||||||||||||||||||
| Ending balance—June 30 | $ | $ | |||||||||||||||||||||
5. PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consists of the following:
| (In thousands) | June 30, 2026 | December 31, 2025 | |||||||||
| Leasehold improvements | $ | $ | |||||||||
| Furniture, fixtures and equipment | |||||||||||
| Total property and equipment | |||||||||||
| Less: accumulated depreciation | ( | ( | |||||||||
| Total property and equipment, net | $ | $ | |||||||||
Depreciation expense is included within the following financial statement line items within the Company’s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Research and development | $ | $ | $ | $ | |||||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||||||||
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6. INTANGIBLE ASSETS
Intangible assets, net, consist of the following:
| (In thousands) | June 30, 2026 | December 31, 2025 | |||||||||
Capitalized software | $ | $ | |||||||||
| Acquired intangible assets | |||||||||||
| Other indefinite-lived intangible assets | |||||||||||
Total intangible assets | |||||||||||
| Less: accumulated amortization | ( | ( | |||||||||
| Intangible assets, net | $ | $ | |||||||||
The Company capitalized $5,587 and $4,328 of software development costs, with the majority of the costs being employee wages, during the six months ended June 30, 2026 and 2025, respectively. The Company recorded an impairment of capitalized software of $578 No Amortization expense is included within the following financial statement line items within the Company’s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Cost of revenues | $ | $ | $ | $ | |||||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||||||||
7. INCOME TAXES
Year-to-date income tax expense or benefit is the product of the most current projected annual effective tax rate (“PAETR”) and the actual year-to-date pretax income, adjusted for any discrete items. The income tax expense or benefit for a particular quarter is the difference between the year-to-date calculation of income tax expense or benefit and the year-to-date calculation for the prior year period. Items unrelated to current period ordinary income or loss are recognized entirely in the period identified as a discrete item of tax.
The Company’s PAETR exceeds the U.S. federal statutory rate of 21.0% during the three and six months ended June 30, 2026 primarily due to certain non-deductible expenses and state and local income taxes, partially offset by research and development tax credits and the foreign-derived intangible income deduction. In the prior year period, the variance was primarily driven by a discrete tax benefit from excess tax benefits on stock-based compensation, when the Company maintained a valuation allowance.
The Company’s income before taxes, income tax provision or benefit and effective tax rates were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
(In thousands, except percentages) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Income before income taxes | $ | $ | $ | $ | |||||||||||||||||||||||||
| Provision for income taxes | $ | $ | |||||||||||||||||||||||||||
| Effective tax rate | % | % | % | % | |||||||||||||||||||||||||
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8. STOCKHOLDERS’ EQUITY
A summary of stock option activity as of June 30, 2026 is as follows:
| (In thousands, except prices and years) | Number of options | Weighted- average exercise price | Weighted- average remaining contractual life (years) | Aggregate intrinsic value | |||||||||||||||||||
Options outstanding at January 1, 2026 | $ | $ | |||||||||||||||||||||
| Granted (1) | |||||||||||||||||||||||
| Exercised | ( | ||||||||||||||||||||||
| Forfeited and expired (2) | |||||||||||||||||||||||
Options outstanding at June 30, 2026 | $ | $ | |||||||||||||||||||||
Options exercisable at June 30, 2026 | $ | $ | |||||||||||||||||||||
________________
(1) There were no
(2) There was a nominal amount of forfeitures and expirations during the three and six months ended June 30, 2026.
The total intrinsic value of options exercised was approximately $21,623 and $160,618 for the periods ended June 30, 2026, and 2025, respectively.
A summary of RSU activity as of June 30, 2026 is as follows:
| (In thousands, except prices) | Restricted stock units | Weighted- average grant date fair value per share | |||||||||
Outstanding at January 1, 2026 | $ | ||||||||||
| Granted | |||||||||||
| Released | ( | ||||||||||
| Forfeited | ( | ||||||||||
Outstanding at June 30, 2026 | $ | ||||||||||
As of June 30, 2026, there was no unrecognized stock-based compensation expense related to stock options granted under the plans. The amount of unrecognized stock-based compensation expense for RSUs as of June 30, 2026 was $412,023 with a weighted-average period of approximately three years .
There were 9,307 shares available for issuance under the Company’s 2021 Incentive Award Plan and 1,604 shares available for issuance under the Company’s 2021 Employee Stock Purchase Plan, in each case, at June 30, 2026.
Performance-based RSUs
In June 2021, the Company granted performance-based RSUs to its founders (“Founder Awards”) that vest based on continued service and the achievement of specified stock price targets. As of June 30, 2026, certain performance conditions have been achieved, while others remain subject to future stock price performance. Stock-based compensation expense is recognized over the derived service period using an accelerated attribution method, subject to continued service.
In 2026, the Company modified the service condition applicable to the final two tranches of the Founder Awards held by one of its founders. The modification was accounted for as a Type III modification under ASC 718. As a result of the revised service condition, the Company reversed $8,217 of stock-based compensation expense previously recognized under the original derived service periods. The modified awards have a total compensation cost of approximately $9,960 , based on the modified fair value
19
determined using a Monte Carlo simulation model, representing an increase of $1,743 , over the original grant-date fair value. The total compensation cost will be recognized over the revised derived service periods, which extend through September 30, 2029.
As a result of the modification, the Company recognized a stock-based compensation benefit of $6,982 and $5,766 related to the Founder Awards during the three and six months ended June 30, 2026, respectively. The Company recognized stock-based compensation expense of $3,963 and $8,077 for the three and six months ended June 30, 2025, respectively. As of June 30, 2026, unrecognized stock-based compensation expense related to the Founder Awards was $12,240 .
Stock-Based Compensation
Total stock-based compensation expense was $38,210 and $72,857 for the three and six months ended June 30, 2026 and $34,592 and $65,610 for the three and six months ended June 30, 2025, respectively.
Stock-based compensation expense is included in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income as shown in the following table:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Cost of revenues | $ | $ | $ | $ | ||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||
| Sales and marketing | ||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
Nominal amounts of stock-based compensation expense is capitalized into intangible assets for the three and six months ended June 30, 2026 and 2025.
Common Stock Repurchases
In February 2026, Duolingo’s Board of Directors authorized a share repurchase program of up to $400,000 . During the three and six months ended June 30, 2026, the Company repurchased a total of 432 and 695 shares, respectively, of the Company’s Class A common stock through open market purchases at an average per share price of $102.80 and $101.15 , respectively, for a total repurchase price of $44,448 and $70,278 , respectively. During the three and six months ended June 30, 2026, 467 and 683 of these shares were retired, respectively. The cost of the remaining 12 shares is recorded as treasury stock in the Unaudited Condensed Consolidated Balance Sheets as of June 30, 2026. As of June 30, 2026, $329,722 of the total amount authorized to be repurchased remained available.
9. COMMITMENTS AND CONTINGENCIES
Legal Proceedings— From time to time, the Company may become involved in various legal proceedings in the ordinary course of its business and may be subject to third-party infringement claims. Legal costs incurred in connection with the resolution of claims and lawsuits are generally expensed as incurred and are included in General and administration expense within our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. The Company establishes reserves for the outcome of litigation where losses are deemed probable and reasonably estimable. The Company’s assessment of the current exposure could change in the event of the discovery of additional facts with respect to legal matters pending against the Company or determinations by judges, juries, administrative agencies or other finders of fact that are not in accordance with the Company’s evaluation of claims. Actual liabilities may exceed the amounts reserved, and there can be no assurance that final
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resolution of these matters will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows. During the three months ended June 30, 2026, the Company accrued approximately $5 million for certain proposed legal settlement charges, representing the Company's expected amount of the total settlement obligation, with the remainder expected to be funded by insurance. This amount is not material to the Company's financial condition, results of operations or cash flows.
10. EMPLOYEE BENEFIT PLAN
The Company sponsors a profit sharing plan with an Internal Revenue Code Section 401(k) feature, the Duolingo Retirement Trust (the “Plan”), for eligible employees. The Plan, effective January 1, 2021, provides for Company safe harbor matching contributions of 100 % of the first 4 % of the employees’ elective deferrals and 50 % of the next 2 %, with vesting starting upon the first day of employment. The Company also has the option to make discretionary matching or profit sharing contributions. The Company made safe harbor matching contributions of approximately $2,476 and $4,689 during the three and six months ended June 30, 2026, and $2,060 and $4,029 during the three and six months ended June 30, 2025, respectively. The Company did no
11. EARNINGS PER SHARE
Basic net income per share attributable to common stockholders is calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase. Diluted net income per share is calculated by giving effect to all potentially dilutive common stock equivalents.
The rights of Class A and Class B common stock are identical, except with respect to voting and conversion. As a result, undistributed earnings are allocated on a proportional basis and net income per share is the same for both classes.
The computation of basic and diluted earnings per share attributable to common shareholders is as follows:
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| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| (In thousands, except per share data) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||
| Net income attributable to Class A and Class B common stockholders | $ | $ | $ | $ | ||||||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||||
| Weighted-average shares in computing net income per share attributable to Class A and Class B common stockholders, basic | ||||||||||||||||||||||||||
| Effect of dilutive securities | ||||||||||||||||||||||||||
| Founder awards where performance has been met | ||||||||||||||||||||||||||
| Dilutive effect of stock options outstanding (1) | ||||||||||||||||||||||||||
| RSUs outstanding | ||||||||||||||||||||||||||
| Denominator for dilutive net income per common share - weighted-average shares | ||||||||||||||||||||||||||
| Basic income per common share | $ | $ | $ | $ | ||||||||||||||||||||||
| Diluted income per common share | $ | $ | $ | $ | ||||||||||||||||||||||
(1) The Company had 0.6 million options outstanding as of June 30, 2026. The estimated dilutive effect is calculated as the number of shares expected to be issued upon vesting or exercise, adjusted for the strike price proceeds that are received by the Company and assumed to be used to repurchase shares of Duolingo common stock.
12. SUBSEQUENT EVENTS
None.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K and in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K. The following discussion contains forward-looking statements, such as those relating to our plans, objectives, expectations, intentions, and beliefs, that involve risks, uncertainties and assumptions. Our actual results could differ materially from these forward-looking statements as a result of many factors, including those discussed in “Special Note Regarding Forward-Looking Statements,” and included elsewhere in this Quarterly Report on Form 10-Q, and in Part I, Item 1A. “Risk Factors,” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any periods in the future.
Amounts reported in millions are rounded based on the amounts in thousands. As a result, the sum of the components reported in millions may not equal the total amount reported in millions due to rounding. In addition, percentages presented are calculated from the underlying numbers in thousands and may not add to their respective totals due to rounding.
Overview
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Our flagship app has become the world’s most popular way to learn languages and the top-grossing Education app in the App Stores, offering over 250 total language courses to over 58 million daily active users for the three months ended June 30, 2026. We believe that we have become the preeminent online destination for language learning due to our beautifully designed products, exceptional user engagement, and demonstrated learning efficacy.
Key Operating Metrics and Non-GAAP Financial Measures
We regularly review a number of key operating metrics and non-GAAP financial measures to evaluate our business, measure our performance, identify trends, prepare financial projections and make business decisions. The measures set forth below should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Daily active users (DAUs), along with paid subscribers, subscription bookings and total bookings, are operating metrics that help inform management about the underlying growth in users of our platform, and are a measure of our monetization efforts. To calculate the year-over-year change in DAUs for a given period, we subtract the average for the same period in the previous year from the average for the same period in the current year and divide the result by the average for the same period in the previous year. Other companies, including companies in our industry, may calculate these measures differently or not at all, which reduces their usefulness as comparative measures.
| Three Months Ended June 30, | |||||||||||||||||||||||
(In millions) | 2026 | 2025 | |||||||||||||||||||||
| Operating Metrics | |||||||||||||||||||||||
Daily active users (DAUs) (1) | 58.7 | 47.7 | |||||||||||||||||||||
| Paid subscribers (at period end) | 12.7 | 10.9 | |||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Operating Metrics | |||||||||||||||||||||||
| Subscription bookings | $ | 250,316 | $ | 227,259 | $ | 518,381 | $ | 459,443 | |||||||||||||||
| Total bookings | $ | 289,054 | $ | 268,020 | $ | 597,538 | $ | 539,668 | |||||||||||||||
| Non-GAAP Financial Measures | |||||||||||||||||||||||
| Net income (GAAP) | $ | 33,158 | $ | 44,781 | $ | 76,618 | $ | 79,916 | |||||||||||||||
| Adjusted EBITDA | $ | 77,315 | $ | 78,680 | $ | 160,747 | $ | 141,484 | |||||||||||||||
Net cash provided by operating activities (GAAP) | $ | 88,260 | $ | 90,675 | $ | 239,031 | $ | 196,306 | |||||||||||||||
Free cash flow | $ | 78,630 | $ | 86,324 | $ | 226,416 | $ | 189,336 | |||||||||||||||
_______________
(1) We primarily evaluate user engagement using DAUs, with MAUs as a supplementary metric. MAUs were 140.6 million and 128.3 million for the three months ended June 30, 2026 and 2025, respectively.
Operating Metrics
Daily active users (DAUs). DAUs are defined as unique users who engage with our Duolingo App or the learning section of our website each calendar day. DAUs are reported for a measurement period by taking the average of the DAUs for each day in that measurement period. The measurement period for DAUs is the three months ended June 30, 2026 and the same period in the prior year where applicable, and the
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analysis of results is based on those periods. DAUs are a measure of the consistent engagement of our global user community on Duolingo.
We had approximately 58.7 million and 47.7 million DAUs for the three months ended June 30, 2026 and 2025, respectively, representing an increase of 23% from the prior year period, driven largely by an increase in retention of current users. We grew DAUs through a combination of product initiatives and marketing. Product improvements, such as making the app more social and engaging, helped attract new users, retain existing users, and reengage former users, while marketing expanded our reach.
Paid Subscribers. Paid subscribers are defined as users who pay for access to any Duolingo subscription offering and had an active subscription as of the end of the measurement period. Each unique user account is treated as a single paid subscriber regardless of whether such user purchases multiple subscriptions, and the count of paid subscribers does not include users who are currently on a free trial or who are non-paying members of a family plan.
As of June 30, 2026 and 2025, we had approximately 12.7 million and 10.9 million paid subscribers, respectively, representing an increase of 17% from the prior year period. We grew paid subscribers through product initiatives designed to make our subscription offerings more appealing, which helped attract new subscribers and retain existing subscribers.
Subscription Bookings and Total Bookings. Subscription bookings represent the amounts we receive from a purchase of any Duolingo subscription offering. Total bookings include subscription bookings, income from advertising networks for advertisements served to our users, purchases of the Duolingo English Test, and in-app purchases of virtual goods ("IAPs"). We believe bookings provide an indication of trends in our operating results, including cash flows, that are not necessarily reflected in our revenues because we recognize subscription revenues ratably over the lifetime of a subscription, the majority of which are twelve months in duration.
For the three months ended June 30, 2026 and 2025, we generated $250.3 million and $227.3 million of subscription bookings, respectively, representing an increase of $23.1 million or 10%, driven by growth in volume and price of subscriptions sold. For the six months ended June 30, 2026 and 2025, we generated $518.4 million and $459.4 million of subscription bookings, respectively, representing an increase of $58.9 million or 13%, driven by growth in volume and price of subscriptions sold.
For the three months ended June 30, 2026 and 2025, we generated $289.1 million and $268.0 million total bookings, respectively, representing an increase of $21.0 million or 8% from the prior year period. For the six months ended June 30, 2026 and 2025, we generated $597.5 million and $539.7 million total bookings, respectively, representing an increase of $57.9 million or 11% from the prior year period. We grew total bookings primarily through growth in subscription bookings.
Monthly active users (MAUs). MAUs are defined as unique users who engage with our Duolingo App or the learning section of our website each month. MAUs are reported for a measurement period by taking the average of the MAUs for each calendar month in that measurement period. The measurement period for MAUs is the three months ended June 30, 2026 and the same period in the prior year where
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applicable, and the analysis of results is based on those periods. MAUs are a supplemental measure and help illustrate the size of our global active user community on Duolingo.
We had approximately 140.6 million and 128.3 million MAUs for the three months ended June 30, 2026 and 2025, respectively, representing an increase of 10% from the prior year period. We grew MAUs through the same product and marketing initiatives as DAUs.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures to supplement our reported financial results, which are presented in accordance with GAAP. These non-GAAP financial measures include Adjusted EBITDA, free cash flow and constant-currency measures. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. By excluding certain items that may not be indicative of our recurring core operating results, we believe that Adjusted EBITDA, free cash flow and constant-currency provide meaningful supplemental information regarding our performance. The effect of currency exchange rates on our business is an important factor in understanding period-to-period comparisons. We use non-GAAP constant-currency measures and non-GAAP percentage change in constant-currency measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Accordingly, we believe these non-GAAP financial measures are useful to investors and others because they allow for additional information with respect to financial measures used by management in its financial and operational decision-making and they may be used by our institutional investors and the analyst community to help them analyze the health of our business. However, there are a number of limitations related to the use of non-GAAP financial measures, and these non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures.
Adjusted EBITDA. Adjusted EBITDA is defined as net income excluding interest income, income taxes, depreciation and amortization, stock-based compensation expenses related to equity awards, including employer payroll taxes related to equity transactions, acquisition transaction and integration costs, acquisition earn-out costs, and impairment of capitalized software. Adjusted EBITDA is used by management to evaluate the financial performance of our business and we present Adjusted EBITDA because we believe it is helpful in highlighting trends in our operating results and that it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. The following
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table presents a reconciliation of our net income, the most directly comparable financial measure presented in accordance with GAAP, to Adjusted EBITDA.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(In thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income | $ | 33,158 | $ | 44,781 | $ | 76,618 | $ | 79,916 | |||||||||||||||
Add (deduct): | |||||||||||||||||||||||
| Interest income | (11,831) | (11,427) | (23,642) | (21,842) | |||||||||||||||||||
| Provision for income taxes | 12,208 | 1,669 | 24,300 | 1,544 | |||||||||||||||||||
| Depreciation and amortization | 4,247 | 3,440 | 8,438 | 7,030 | |||||||||||||||||||
| Stock-based compensation expenses related to equity awards (1) | 38,606 | 39,527 | 73,761 | 74,046 | |||||||||||||||||||
| Acquisition transaction and integration costs (2) | — | 590 | — | 590 | |||||||||||||||||||
| Acquisition earn-out costs (3) | 349 | 100 | 694 | 200 | |||||||||||||||||||
| Impairment of capitalized software (4) | 578 | — | 578 | — | |||||||||||||||||||
| Adjusted EBITDA | $ | 77,315 | $ | 78,680 | $ | 160,747 | $ | 141,484 | |||||||||||||||
(1)In addition to stock-based compensation expense of $38.2 million and $34.6 million for the three months ended June 30, 2026 and 2025, respectively, and $72.9 million and $65.6 million for the six months ended June 30, 2026 and 2025, respectively, this includes costs incurred related to taxes paid on equity transactions as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
Research and development | $ | 252 | $ | 1,605 | $ | 568 | $ | 2,764 | |||||||||||||||
Sales and marketing | 13 | 85 | 28 | 157 | |||||||||||||||||||
General and administrative | 131 | 3,245 | 308 | 5,515 | |||||||||||||||||||
Total | $ | 396 | $ | 4,935 | $ | 904 | $ | 8,436 | |||||||||||||||
(2)Represents costs incurred related to acquisitions, which are included in General and administration expense within our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.
(3)Represents costs incurred related to the earn-out payments on acquisitions, which is included within General and administrative expense within our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.
(4)Represents impairment of capitalized software, which is included within Research and development expense within our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.
For the three months ended June 30, 2026 and 2025, we generated net income of $33.2 million and $44.8 million, respectively representing a decrease of $11.6 million. For the six months ended June 30, 2026 and 2025, we generated net income of $76.6 million and $79.9 million, respectively, representing a decrease of $3.3 million. The decrease in net income for the three months ended June 30, 2026, as compared to the comparative prior period was primarily due to operating expenses increasing slightly faster than revenue during the period. The increase in net income for the six months ended June 30, 2026, as compared to the comparative prior period was primarily due to revenue growth and gross margin expansion during the period.
For the three months ended June 30, 2026 and 2025, we generated Adjusted EBITDA of $77.3 million and $78.7 million, respectively, representing a decrease of $1.4 million. For the six months ended June 30, 2026 and 2025, we generated Adjusted EBITDA of $160.7 million and $141.5 million, respectively,
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representing an increase of $19.3 million. Adjusted EBITDA changed as compared to the comparative periods for the reasons noted above in net income.
Free Cash Flow. Free cash flow is defined as net cash provided by operating activities, less capitalized software development costs and purchases of property and equipment. We believe that free cash flow is a measure of liquidity that provides useful information to our management, investors and others in understanding and evaluating the strength of our liquidity and future ability to generate cash that can be used for strategic opportunities or investing in our business. Free cash flow has certain limitations in that it does not represent our residual cash flow for discretionary expenditures and our non-discretionary commitments. The following table presents a reconciliation of net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP, to free cash flow:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(In thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net cash provided by operating activities | $ | 88,260 | $ | 90,675 | $ | 239,031 | $ | 196,306 | |||||||||||||||
| Less: Capitalized software development costs and purchases of intangible assets | (2,734) | (3,153) | (5,587) | (4,463) | |||||||||||||||||||
| Less: Purchases of property and equipment | (6,896) | (1,198) | (7,028) | (2,507) | |||||||||||||||||||
| Free cash flow | $ | 78,630 | $ | 86,324 | $ | 226,416 | $ | 189,336 | |||||||||||||||
For the three months ended June 30, 2026 and 2025, we generated $88.3 million and $90.7 million of net cash provided by operating activities, respectively, representing a decrease of $2.4 million. The decrease was primarily due to changes in working capital during the period. For the six months ended June 30, 2026 and 2025, we generated $239.0 million and $196.3 million of net cash provided by operating activities, respectively, representing an increase of $42.7 million. The increase was primarily due to higher operating income and changes in working capital.
For the three months ended June 30, 2026 and 2025, we generated $78.6 million and $86.3 million of free cash flow, respectively, representing a decrease of $7.7 million. Free cash flow decreased in line with operating cash flow, reflecting the same underlying drivers of cash provided by operating activities and by higher capital investments as we expand our office footprints. For the six months ended June 30, 2026 and 2025, we generated $226.4 million and $189.3 million of free cash flow, respectively, representing an increase of $37.1 million. Free cash flow increased in line with operating cash flow, reflecting the same underlying drivers of cash provided by operating activities, partially offset by higher capital investments.
Constant-Currency. The effect of currency exchange rates on our business is an important factor in understanding period-to-period comparisons. We use non-GAAP percentage change in constant-currency revenues and bookings, which exclude the impact of fluctuations in foreign currency exchange rates, for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe this information is useful to investors to facilitate comparisons and better identify trends in our business. The impact of changes in foreign currency may vary significantly from period to period, and such changes generally are outside of the control of our management. We calculate constant-currency revenues by translating current period foreign currency revenues using prior-year exchange rates applied consistently over the full revenue recognition period. We calculate constant-currency bookings by using current period foreign currency bookings and translating them to constant currency using prior-year comparable period exchange rates. The constant-currency percentage change for revenues and bookings is calculated by dividing the difference between the constant-currency amount and the prior-year comparable period amount by the prior-year comparable period amount.
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The following table provides the changes in bookings and revenues on a reported basis and constant-currency basis:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | % Change | Constant-Currency Change % | 2026 | 2025 | % Change | Constant-Currency Change % | |||||||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||||||||||
| Subscription | $ | 258,035 | $ | 210,678 | 22% | 21% | $ | 508,943 | $ | 401,665 | 27% | 24% | |||||||||||||||||||||||||||||||||||
| Total revenues | $ | 298,454 | $ | 252,265 | 18% | 17% | $ | 590,421 | $ | 483,008 | 22% | 19% | |||||||||||||||||||||||||||||||||||
| Bookings | |||||||||||||||||||||||||||||||||||||||||||||||
| Subscription | $ | 250,316 | $ | 227,259 | 10% | 9% | $ | 518,381 | $ | 459,443 | 13% | 10% | |||||||||||||||||||||||||||||||||||
| Total Bookings | $ | 289,054 | $ | 268,020 | 8% | 6% | $ | 597,538 | $ | 539,668 | 11% | 8% | |||||||||||||||||||||||||||||||||||
Components of Our Results of Operations
Revenue
We generate revenues primarily from the sale of subscriptions. The term-length of our subscription agreements are primarily monthly or annual, with the family plan offered as an annual subscription. We also generate revenue from advertising, the in-app sale of virtual goods, and the Duolingo English Test. We may run experiments that result in a different mix of revenue from these levers in the future.
Cost of Revenues
Cost of revenues predominantly consists of third-party payment processing fees charged by various distribution channels in addition to hosting fees and third-party AI costs. To a much lesser extent, cost of revenues includes customer support costs, such as contractor fees, wages and stock-based compensation for certain employees working in customer support. It also includes the amortization of revenue generating capitalized software, and depreciation of certain property and equipment.
We intend to continue to invest in the development and enhancement of our products to expand their capabilities and allow our users to realize the full benefit of our offerings. The level, timing, and relative investment in these areas could affect our cost of revenues in the future.
Gross Profit and Gross Margin
Gross profit represents revenues less cost of revenues. Gross margin is gross profit expressed as a percentage of revenues. Our gross profit may fluctuate from period to period as our revenues fluctuate, and also as a result of the timing and amount of investments we make in items related to cost of revenues.
Operating Expenses
Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, and stock-based compensation expense. Operating expenses also include overhead costs for facilities, including depreciation expense.
Research and Development. We invest heavily in research and development to create new products and product features that are intended to help us grow our user base, engage our users, monetize our users, and teach our users. This, in turn, can impact the growth in, and lifetime value of, our paid subscribers, as well as increased advertising revenue from impressions from our free users. Expenses are primarily made up of costs incurred for the development of new and improved products and features
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in our applications during the preliminary product development stage. Such expenses include employee-related compensation, including stock-based compensation, of engineers, designers, and product managers, in addition to materials, travel and direct costs associated with the design, required testing of our platform and depreciation of certain property and equipment. We expect engineers, designers, and product managers to represent a significant portion of our employees for the foreseeable future. We typically capitalize a portion of research and development costs once the product has reached application development phase, mostly consisting of wages, each period into capitalized software when the work is specific to launching a new product, or making major upgrades to our existing products or platforms. We regularly test product improvements with our users. Many of these tests start by making small changes in the product that affect small numbers of users. As the tests evolve, they can require increasing investment and can impact more users. This process of constant testing is how we implement many of our new products and improvements to our platform and, in total, require large investments and involve substantial time and risks to develop and launch. Some of these products and product improvements may not be well received or may take a long time for users to adopt. As a result, the impact resulting from our research and development investments may be difficult to forecast.
Sales and Marketing. Sales and marketing expenses are expensed as incurred and consists primarily of new user acquisition, brand marketing, digital and social media content, and employee-related compensation, including stock-based compensation, for personnel engaged in sales and marketing functions, amortization of non-revenue generating capitalized software used to promote Duolingo and depreciation of certain property and equipment.
General and Administrative. General and administrative expenses primarily consist of employee-related compensation, including stock-based compensation, for management and administrative functions, including our finance and accounting, legal, and people teams. General and administrative expenses also include certain professional services fees, general corporate and director and officer insurance, our facilities costs, public company costs to comply with the rules and regulations of the Securities and Exchange Commission (“SEC”) and the Listing Rules of the Nasdaq Global Select Market, and other general overhead costs that support our operations.
Interest Income
Interest income consists of income earned on our cash and money market funds included in cash and cash equivalents and income earned and net accretion on our marketable securities.
Other (expense) income, net
Other (expense) income, net consists primarily of foreign currency exchange gains and losses.
Income taxes
Income taxes represent the tax impact associated with our operations under the tax laws of the jurisdictions in which we operate. In addition to the U.S., we also operate in foreign jurisdictions that have different statutory rates. Our effective tax rate may vary based on the relative proportion of foreign to domestic income, the tax effects of stock-based compensation (which can fluctuate with our stock price), and changes in tax laws.
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Results of Operations
Comparison of the three and six months ended June 30, 2026 and 2025
The following table sets forth our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income data, including year-over-year change, for the periods indicated:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | % Change | 2026 | 2025 | % Change | |||||||||||||||||||||||||||||
| Revenues | $ | 298,454 | $ | 252,265 | 18% | $ | 590,421 | $ | 483,008 | 22% | |||||||||||||||||||||||||
| Cost of revenues (1) (2) | 81,714 | 69,684 | 17 | 160,585 | 136,331 | 18 | |||||||||||||||||||||||||||||
| Gross profit | 216,740 | 182,581 | 19 | 429,836 | 346,677 | 24 | |||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| Research and development (1) (2) | 92,195 | 73,670 | 25 | 175,169 | 144,060 | 22 | |||||||||||||||||||||||||||||
| Sales and marketing (1) (2) | 40,007 | 29,563 | 35 | 79,256 | 56,225 | 41 | |||||||||||||||||||||||||||||
| General and administrative (1) (2) | 50,593 | 45,985 | 10 | 96,939 | 89,435 | 8 | |||||||||||||||||||||||||||||
| Total operating expenses | 182,795 | 149,218 | 23 | 351,364 | 289,720 | 21 | |||||||||||||||||||||||||||||
| Income from operations | 33,945 | 33,363 | 2 | 78,472 | 56,957 | 38 | |||||||||||||||||||||||||||||
| Other (expense) income, net | (410) | 1,660 | nm | (1,196) | 2,661 | nm | |||||||||||||||||||||||||||||
| Income before interest income and income taxes | 33,535 | 35,023 | (4) | 77,276 | 59,618 | 30 | |||||||||||||||||||||||||||||
| Interest income | 11,831 | 11,427 | 4 | 23,642 | 21,842 | 8 | |||||||||||||||||||||||||||||
| Income before income taxes | 45,366 | 46,450 | (2) | 100,918 | 81,460 | 24 | |||||||||||||||||||||||||||||
| Provision for income taxes | 12,208 | 1,669 | >100 | 24,300 | 1,544 | >100 | |||||||||||||||||||||||||||||
| Net income and comprehensive income | $ | 33,158 | $ | 44,781 | (26)% | $ | 76,618 | $ | 79,916 | (4)% | |||||||||||||||||||||||||
________________
(1)Includes stock-based compensation expenses as follows:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
Cost of revenues | $ | 31 | $ | 24 | $ | 54 | $ | 44 | |||||||||||||||
Research and development | 26,861 | 20,481 | 49,384 | 38,294 | |||||||||||||||||||
Sales and marketing | 2,008 | 1,593 | 3,804 | 3,024 | |||||||||||||||||||
General and administrative | 9,310 | 12,494 | 19,615 | 24,248 | |||||||||||||||||||
Total | $ | 38,210 | $ | 34,592 | $ | 72,857 | $ | 65,610 | |||||||||||||||
(2)Includes amortization of capitalized software and depreciation of property and equipment as follows:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (In thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
Cost of revenues (a) | $ | 2,824 | $ | 1,957 | $ | 5,598 | $ | 4,168 | |||||||||||||||
| Research and development | 859 | 869 | 1,705 | 1,625 | |||||||||||||||||||
Sales and marketing (a) | 165 | 250 | 327 | 471 | |||||||||||||||||||
General and administrative | 399 | 364 | 808 | 766 | |||||||||||||||||||
Total | $ | 4,247 | $ | 3,440 | $ | 8,438 | $ | 7,030 | |||||||||||||||
________________
(a) Amortization of capitalized software is recorded to Cost of revenue and Sales and marketing for revenue and non-revenue generating capitalized software, respectively.
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The following table sets forth the components of our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income for each of the periods presented as a percentage of revenue:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenues | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
| Cost of revenues | 27 | 28 | 27 | 28 | |||||||||||||||||||
| Gross profit | 73 | 72 | 73 | 72 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 31 | 29 | 30 | 30 | |||||||||||||||||||
| Sales and marketing | 13 | 12 | 13 | 12 | |||||||||||||||||||
| General and administrative | 17 | 18 | 16 | 19 | |||||||||||||||||||
| Total operating expenses | 61 | 59 | 60 | 60 | |||||||||||||||||||
| Income from operations | 11 | 13 | 13 | 12 | |||||||||||||||||||
| Other (expense) income, net | — | 1 | — | 1 | |||||||||||||||||||
| Income before interest income and income taxes | 11 | 14 | 13 | 12 | |||||||||||||||||||
| Interest income | 4 | 5 | 4 | 5 | |||||||||||||||||||
| Income before income taxes | 15 | 18 | 17 | 17 | |||||||||||||||||||
| Provision for income taxes | 4 | 1 | 4 | — | |||||||||||||||||||
| Net income and comprehensive income | 11 | % | 18 | % | 13 | % | 17 | % | |||||||||||||||
Revenues
Revenues increased by $46.2 million, or 18% to $298.5 million during the three months ended June 30, 2026, from revenues of $252.3 million during the three months ended June 30, 2025. Revenues increased by $107.4 million, or 22%, to $590.4 million during the six months ended June 30, 2026, from revenues of $483.0 million during the six months ended June 30, 2025.
The following table provides the changes in revenues by product type:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | Change | % Change | 2026 | 2025 | Change | % Change | |||||||||||||||||||||||||||||||||||||||
| Subscription | $258,035 | $210,678 | $47,357 | 22% | $508,943 | $401,665 | $107,278 | 27% | |||||||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||||||||||||||
| Advertising | 21,052 | 20,603 | 449 | 2 | 41,666 | 38,485 | 3,181 | 8 | |||||||||||||||||||||||||||||||||||||||
| Duolingo English Test | 10,109 | 10,088 | 21 | — | 21,426 | 22,074 | (648) | (3) | |||||||||||||||||||||||||||||||||||||||
| In-App Purchases | 8,002 | 10,390 | (2,388) | (23) | 16,448 | 19,832 | (3,384) | (17) | |||||||||||||||||||||||||||||||||||||||
| Other | 1,256 | 506 | 750 | >100 | 1,938 | 952 | 986 | >100 | |||||||||||||||||||||||||||||||||||||||
| Total Other | $40,419 | $41,587 | $(1,168) | (3)% | $81,478 | $81,343 | $135 | —% | |||||||||||||||||||||||||||||||||||||||
| Total revenues | $298,454 | $252,265 | $46,189 | 18% | $590,421 | $483,008 | $107,413 | 22% | |||||||||||||||||||||||||||||||||||||||
The main drivers of the increases were:
•Subscription revenue increased $47.4 million, or 22%, to $258.0 million during the three months ended June 30, 2026, and subscription revenue increased $107.3 million, or 27%, to $508.9 million during the six months ended June 30, 2026, primarily due to growth in the average number of paid subscribers, and to a lesser extent, an increase in average revenue per user.
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•Other revenue decreased $1.2 million, or 3%, to $40.4 million during the three months ended June 30, 2026, and other revenue increased $0.1 million to $81.5 million during the six months ended June 30, 2026. The decrease in the three months ended June 30, 2026 was primarily due to decreased IAP revenue. The increase in the six months ended June 30, 2026 was primarily driven by higher advertising revenue and, to a lesser extent, higher revenue from partnerships, partially offset by lower IAP revenue.
Cost of Revenues and Gross Margin. Total gross margin increased to 72.6% from 72.4% during the three months ended June 30, 2026 and 2025, and total gross margin increased to 72.8% from 71.8% during the six months ended June 30, 2026 and 2025. The increase was primarily attributable to an increase in subscription gross margin, reflecting continued reductions in per-unit third-party AI costs.
The following table provides the change in cost of revenues, along with related gross margins:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands, except gross margin) | Costs | Gross Margin | Costs | Gross Margin | Costs | Gross Margin | Costs | Gross Margin | Costs | Gross Margin | Costs | Gross Margin | ||||||||||||||||||||||||||||||||||||||||||||
| Total cost of revenues | $ | 81,714 | 72.6 | % | $ | 69,684 | 72.4 | % | $ | 12,030 | 0.2 | % | $ | 160,585 | 72.8 | % | $ | 136,331 | 71.8 | % | $ | 24,254 | 1.0% | |||||||||||||||||||||||||||||||||
Operating Expenses
Research and Development. Research and development expense increased by $18.5 million, or 25%, to $92.2 million during the three months ended June 30, 2026 from $73.7 million during the three months ended June 30, 2025. The increase was primarily due to higher net personnel costs of $13.8 million, driven primarily by growth in headcount, including increased stock-based compensation expenses related to equity awards of $5.0 million, and increased software and third-party AI costs of $3.3 million.
Research and development expense increased by $31.1 million, or 22%, to $175.2 million during the six months ended June 30, 2026 from $144.1 million during the six months ended June 30, 2025. The increase was primarily due to higher net personnel costs of $23.6 million, driven primarily by the growth in headcount, including increased stock-based compensation expenses related to equity awards of $8.9 million, and increased software and third-party AI costs of $5.5 million.
Sales and Marketing. Sales and marketing expense increased by $10.4 million, or 35%, to $40.0 million during the three months ended June 30, 2026 from $29.6 million during the three months ended June 30, 2025. This increase was mainly due to increased advertising costs of $8.6 million.
Sales and marketing expense increased by $23.0 million, or 41%, to $79.3 million during the six months ended June 30, 2026 from $56.2 million during the six months ended June 30, 2025. This increase was mainly due to increased advertising costs of $19.2 million.
General and Administrative. General and administrative expense increased by $4.6 million, or 10%, to $50.6 million during the three months ended June 30, 2026, from $46.0 million during the three months ended June 30, 2025. This increase was primarily due to higher legal and accounting fees of $5.4 million and higher facilities and office expenses of $1.2 million, partially offset by a $3.7 million decrease in personnel costs. The decrease in personnel costs was primarily due to a $3.2 million decrease in stock-based compensation expense, including the impact of a PSU award modification described within Part I, Item 1 Financial Statements – Note 8, “Stockholders’ Equity”, and lower employer taxes related to stock-based compensation, partially offset by higher gross wages resulting from increased average headcount.
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General and administrative expense increased by $7.5 million, or 8%, to $96.9 million during the six months ended June 30, 2026, from $89.4 million during the six months ended June 30, 2025. This increase was primarily due to higher legal and accounting fees of $5.8 million, higher facilities and office expenses of $4.0 million, partially offset by a decrease in personnel costs of $4.8 million. The decrease in personnel costs was driven by the same factors described above for the three-month period, including lower stock-based compensation expense and employer taxes related to stock-based compensation, partially offset by higher gross wages resulting from increased average headcount.
Interest Income
Interest income increased by $0.4 million, or 4%, to $11.8 million during the three months ended June 30, 2026 from $11.4 million during the three months ended June 30, 2025. Interest income increased by $1.8 million, or 8%, to $23.6 million during the six months ended June 30, 2026, from $21.8 million during the six months ended June 30, 2025. Both period increases were due to higher average interest-bearing balances partially offset by lower interest rates.
Other (expense) income, net
Other (expense) income, net was $0.4 million of expense during the three months ended June 30, 2026 and $1.7 million of income during the three months ended June 30, 2025, respectively, and $1.2 million of expense during the six months ended June 30, 2026 and $2.7 million of income during the six months ended June 30, 2025. The fluctuations were mainly from the impact from changes in foreign currency rates compared to prior periods.
Income taxes
The income tax provision was $12.2 million and $24.3 million during the three and six months ended June 30, 2026, respectively, and $1.7 million and $1.5 million during the three and six months ended June 30, 2025, respectively. This increase was primarily due to discrete tax expense related to stock-based compensation activity in the current period compared to benefits in the prior year period.
Liquidity and Capital Resources
We finance our operations primarily through revenues and the net proceeds we have received from the issuance of equity.
As of June 30, 2026, we had $1,181 million in cash and cash equivalents and $133 million of short-term investments. Our cash and cash equivalents primarily consist of bank deposits and money market funds. Our short-term investments consist mainly of corporate debt securities, U.S. Treasury securities and commercial paper.
We believe that our existing cash and cash equivalents, short-term investments and cash flow from operations will be sufficient to support working capital and capital expenditure requirements, and any future share repurchases, for at least the next 12 months. Our future capital requirements will depend on many factors, including our subscription growth rate and renewal activity, the timing of cash received from our payment processing platforms, the expansion and efficacy of our sales and marketing investments, the research and development investment related to the introduction of new products and the enhancements to existing products, and the current uncertainty in the global markets impacting, for example, consumer spending, inflation and foreign currency exchange rates. If we cannot meet our future capital requirements, we may be required to seek additional liquidity. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business and financial condition and results of operations.
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In February 2026, Duolingo’s Board of Directors authorized a share repurchase program of up to $400 million. Repurchases under the program may be made from time to time in the open market or through privately negotiated transactions, pursuant to Rule 10b5-1 trading plans or other available means, each in compliance with Rule 10b-18 under the Exchange Act. The actual timing, number and value of shares repurchased is subject to various factors such as market conditions, the Company’s capital and liquidity positions, contractual requirements and other considerations. The timing and amount of any repurchases will be determined at the Company’s discretion, and the program does not obligate the Company to acquire any particular amount of shares. The program has no expiration date and may be terminated, modified or discontinued at any time.
During the six months ended June 30, 2026, the Company repurchased a total of 694,630 shares of the Company’s Class A common stock through open market purchases at an average per share price of $101.15 for a total of $70.3 million.
A substantial source of our cash from operations comes from deferred revenue, which is included in the liabilities section of our Unaudited Condensed Consolidated Balance Sheet. Deferred revenues consist of the unearned portion of customer billings, primarily related to subscription offerings, which is recognized as revenue in accordance with our revenue recognition policy. As of June 30, 2026, we had deferred revenues of $505.1 million, which is recorded as a current liability and expected to be recognized as revenue in the next 12 months, provided all other revenue recognition criteria have been met.
The following table summarizes our cash flows for the periods presented:
| Six Months Ended June 30, | |||||||||||
| (In thousands) | 2026 | 2025 | |||||||||
| Net cash provided by operating activities | $ | 239,031 | $ | 196,306 | |||||||
| Net cash used for investing activities | (8,469) | (12,821) | |||||||||
| Net cash (used for) provided by financing activities | (86,064) | 6,955 | |||||||||
| Net increase in cash, cash equivalents and restricted cash | $ | 144,498 | $ | 190,440 | |||||||
Operating Activities
Cash flows from operating activities can fluctuate significantly from period to period due to timing of payments and cash collections. Our largest source of operating cash is cash collection from sales of subscriptions to our users. Our primary uses of cash from operating activities are for personnel expenses, marketing expenses, hosting expenses, and overhead expenses.
Cash provided by operating activities increased by $42.7 million, or 22%, to $239.0 million for the six months ended June 30, 2026 from $196.3 million for the six months ended June 30, 2025. This increase was primarily driven by higher operating income and changes in working capital.
Investing Activities
Cash used for investing activities decreased by $4.4 million to $8.5 million for the six months ended June 30, 2026, from $12.8 million for the six months ended June 30, 2025. This decrease was primarily due to higher net maturities of investments of $10.0 million during the six months ended June 30, 2026, partially offset by a $5.6 million increase in capital expenditures.
Financing Activities
Cash used for financing activities for the six months ended June 30, 2026 was due to repurchases of common stock of $69.6 million in addition to taxes paid on the net-share settlements of share-based
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compensation awards of $18.8 million. These amounts were partially offset by proceeds from exercises of stock options of $2.3 million. Cash provided by financing activities for the six months ended June 30, 2025 was due to proceeds from exercises of stock options of $7.0 million.
Critical Accounting Estimates
Our Unaudited Condensed Consolidated Financial Statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of Unaudited Condensed Consolidated Financial Statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.
There have been no material changes to our critical accounting policies and estimates as compared to those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K.
Recent Accounting Pronouncements
See Note 1, “Description of the Business and Basis of Presentation,” and Note 2, “Summary of Significant Accounting Policies,” in the notes to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
As of June 30, 2026, we had $996.0 million of cash equivalents invested in money market funds and $235.7 million of investments mainly in corporate debt securities, U.S. Treasury securities, asset-backed securities and commercial paper. Our cash and cash equivalents are held for working capital purposes in addition to future investments in our product. We do not enter into investments for trading or speculative purposes. Our investments are exposed to market risk due to a fluctuation in interest rates, which may affect our interest income and the fair market value of our investments. As of June 30, 2026, a hypothetical 10% relative change in interest rates would not have a material impact on our Unaudited Condensed Consolidated Financial Statements.
Foreign Currency Exchange Risk
Our reporting currency and the functional currency of our wholly owned foreign subsidiaries is the U.S. dollar. Certain of our payment providers translate our payments from local currency into USD at time of settlement, which means that during periods of a strengthening U.S. dollar, our international receipts could be reduced. Our operating expenses are denominated in the currencies of the countries in which our operations are located, which are primarily in the U.S., China, the United Kingdom and Germany. Our consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. In addition, as foreign currency exchange rates fluctuate, the translation of our international receipts into U.S. dollars affects the period-over-period comparability of our operating results and can result in foreign currency exchange gains and losses. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments,
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although we may choose to do so in the future. A hypothetical 10% increase or decrease in the relative value of the U.S. dollar to other currencies would not have a material effect on our operating results.
Inflation Risk
Inflationary factors such as increases in costs may adversely affect our results of operations. We do not believe that inflation has had a material effect on our business, financial condition or results of operations to date. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition or results of operations.
Item 4. Controls and Procedures
Limitations on Effectiveness of Controls and Procedures
Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their desired objectives. Management does not expect, however, that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the three months ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II Other Information
Item 1. Legal Proceedings
From time to time we may be involved in claims and proceedings arising in the course of our business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. We are not currently party to any material legal proceedings. For further information, please see Part I, Item 1 Financial Statements – Note 9, “Commitments and Contingencies,” which is incorporated herein.
Item 1A. Risk Factors
The Company's risk factors are described in Part I, Item 1A, "Risk Factors" of the Annual Report on Form 10-K. These factors could materially adversely affect our business, financial condition, and results of operations, and could cause our actual results to differ materially from our historical results or the results contemplated by any forward-looking statements contained in this Quarterly Report on Form 10-Q. There have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in the Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table summarizes our share repurchase activity for the three months ended June 30, 2026
Total Number of Shares Purchased (1) | Average Price Paid Per Share (2) | Total Number of Shares Purchased as Part of the Share Repurchase Program (1) | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan (1) | |||||||||||
| (In thousands) | ||||||||||||||
| April 1 - 30, 2026 | 245,286 | $ | 97.81 | 245,286 | $ | 350,173 | ||||||||
| May 1 - 31, 2026 | 142,465 | $ | 108.42 | 142,465 | $ | 334,725 | ||||||||
| June 1 - 30, 2026 | 44,555 | $ | 112.27 | 44,555 | $ | 329,722 | ||||||||
| 432,306 | 432,306 | |||||||||||||
(1) In February 2026, Duolingo’s Board of Directors authorized a share repurchase program of up to $400 million. Repurchases under the program may be made from time to time in the open market or through privately negotiated transactions, pursuant to Rule 10b5-1 trading plans or other available means, each in compliance with Rule 10b-18 under the Exchange Act. The actual timing, number and value of shares repurchased is subject to various factors such as market conditions, our capital and liquidity positions, contractual requirements and other considerations. The timing and amount of any repurchases will be determined at our discretion, and the program does not obligate us to acquire any particular amount of shares. The program has no expiration date and may be terminated, modified or discontinued at any time.
(2) Average price paid per share excludes broker commissions and other costs of execution.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a) None.
(b)
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(c) Trading Plans
During the three months ended June 30, 2026, certain of our directors and officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K as follows:
On June 9, 2026 William "Bing" Gordon member of our Board of Directors modified his Rule 10b5-1 sales plan 40,000 shares of the Company’s Class A common stock. The trading arrangement will remain in effect until the earlier of (i) June 30, 2027 , (ii) the completion of all authorized transactions, or (iii) termination in accordance with its terms.
On June 2, 2026 , Dr. Luis von Ahn , Chief Executive Officer and member of the Company’s Board of Directors , and the Luis von Ahn Foundation, entered into a 10b5-1 sales plan (the “von Ahn 10b5-1 Sales Plan”) intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act, pursuant to which a maximum aggregate amount of up to 626,000 shares of the Company’s Class A common stock may be sold, consisting of (i) up to 226,000 shares issuable upon the exercise of vested stock options held by Dr. von Ahn and (ii) up to 400,000 shares held by Dr. von Ahn. Additionally, under the von Ahn 10b5-1 Sales Plan, up to 54,000 shares held by the Luis von Ahn Foundation) may be sold. The von Ahn 10b5-1 Sales Plan will remain in effect until the earlier of (1) September 15, 2027 , (2) the date on which all trades set forth in the von Ahn 10b5-1 Sales Plan have been executed, or (3) such time as the von Ahn 10b5-1 Sales Plan is otherwise terminated or expires according to its terms.
On June 14, 2026 , Stephen Chen , General Counsel , entered into a 10b5-1 sales plan (the “Chen 10b5-1 Sales Plan”) intended to satisfy the affirmative defense of Rule 10b5-1(c) of the Exchange Act and providing for (i) the sale of the net number of shares of Class A common stock underlying 12,524 unvested restricted stock units received after giving effect to the number of shares automatically sold to satisfy tax withholding obligations on each applicable vesting date (such total number of shares covered under clause (i) is not determinable) and (ii) the sale of 12,696 shares of Class A common stock. The Chen 10b5-1 Sales Plan will remain in effect until the earlier of (1) August 14, 2027 , (2) the date on which all trades set forth in the Chen 10b5-1 Sales Plan have been executed, or (3) such time as the Chen 10b5-1 Sales Plan is otherwise terminated according to its terms.
No other “officer” (as defined in Rule 16a-1(f) under the Exchange Act) or director of the Company adopted , modified or terminated “Rule 10b5-1 trading arrangements” and/or “non-Rule 10b5-1 trading arrangements” (each as defined in Item 408 of Regulation S-K) during the three months ended June 30, 2026.
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Item 6. Exhibits
| Incorporated by Reference | |||||||||||||||||||||||||||||||||||
| Exhibit Number | Exhibit Description | Form | File No | Date | Exhibit | Filed Herewith | |||||||||||||||||||||||||||||
| 3.1 | Amended and Restated Certificate of Incorporation, as currently in effect | 8-K | 001-40653 | 7/30/2021 | 3.1 | ||||||||||||||||||||||||||||||
| 3.2 | Bylaws, as currently in effect | 8-K | 001-40653 | 12/08/2023 | 3.1 | ||||||||||||||||||||||||||||||
| 10.1 | Amended and Restated Non-Employee Director Compensation Program, effective July 23, 2026 | X | |||||||||||||||||||||||||||||||||
| 31.1 | Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a) | X | |||||||||||||||||||||||||||||||||
| 31.2 | Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a) | X | |||||||||||||||||||||||||||||||||
| 32.1* | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 | X | |||||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document | X | |||||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | X | |||||||||||||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | |||||||||||||||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | |||||||||||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | X | |||||||||||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | |||||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | X | |||||||||||||||||||||||||||||||||
*The certification attached as Exhibit 32.1 that accompanies this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is not deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| DUOLINGO, INC. | ||||||||||||||
Date: August 5, 2026 | By: | /s/ Luis von Ahn | ||||||||||||
Luis von Ahn Chief Executive Officer (Principal Executive Officer) | ||||||||||||||
Date: August 5, 2026 | By: | /s/ Gillian Munson | ||||||||||||
Gillian Munson Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | ||||||||||||||
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