Duolingo (DUOL) Stock Forecast & Price Target

Duolingo Inc. reported a remarkable increase in adjusted EBITDA, reaching $80.0 million, representing a $32.5 million year-over-year improvement driven by revenue outperformance. The company also experienced robust growth in its subscriber base, achieving 11.5 million paid subscribers, which surpassed consensus estimates and reflected a strong conversion from free to paid services. Additionally, Duolingo's total revenues surged by 41.1% year-over-year, prompting the company to raise its fiscal year 2025 revenue guidance to between $1,027.5 million and $1,031.5 million, indicating a positive financial trajectory.

Duolingo Inc. has experienced a decline in its gross margins, falling from 72.9% to 72.5% year-over-year, signaling potential challenges in maintaining profitability amidst rising operational costs, specifically from generative AI and hosting services. The company's revenue forecasts for 2026 and 2027 have been revised downward by 3% and 7%, respectively, indicating a slowdown in expected bookings growth. Additionally, Duolingo's guidance for 4Q25 reveals bookings and adjusted EBITDA expected to fall below market consensus, further underscoring concerns about the company’s growth trajectory and overall financial performance.