Duolingo, Inc.

Previous wording

Our flagship app has organically become the world’s most popular way to learn languages and the top-grossing Education app in the App Stores, offering courses in over 40 languages to over 130 million monthly active users for the three months ended March 31, 2025. 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.

Current wording

Our flagship app has organically become the world’s most popular way to learn languages and the top-grossing Education app in the App Stores, offering courses in over 40 languages to nearly 130 million monthly active users for the three months ended June 30, 2025. 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.

Previous wording

We had approximately 130.2 million and 97.6 million MAUs for the three months ended March 31, 2025 and 2024, respectively, representing an increase of 33% from the prior year period. We grew MAUs through product initiatives designed to make the app more social and engaging, through marketing, and through improving our courses, all of which we believe helped us attract new users, retain existing users, and reengage the millions of former users who return to our Duolingo App.

Current wording

We had approximately 128.3 million and 103.6 million MAUs for the three months ended June 30, 2025 and 2024, respectively, representing an increase of 24% from the prior year period. We grew MAUs through product initiatives designed to make the app more social and engaging, through marketing, and through improving our courses, all of which we believe helped us attract new users, retain existing users, and reengage the millions of former users who return to our Duolingo App.

Previous wording

We had approximately 46.6 million and 31.4 million DAUs for the three months ended March 31, 2025 and 2024, respectively, representing an increase of 49% from the prior year period. The DAU / MAU ratio, which we believe is an indicator of user engagement, increased to 35.8% from 32.1% a year ago. We grew DAUs through many of the same marketing and product initiatives as we grew MAUs, such as making the product more fun and engaging.

Current wording

We had approximately 47.7 million and 34.1 million DAUs for the three months ended June 30, 2025 and 2024, respectively, representing an increase of 40% from the prior year period. The DAU / MAU ratio, which we believe is an indicator of user engagement, increased to 37.2% from 32.9% a year ago. We grew DAUs through many of the same marketing and product initiatives as we grew MAUs, such as making the product more fun and engaging.

Previous wording

As of March 31, 2025 and 2024, we had approximately 10.3 million and 7.4 million paid subscribers, respectively, representing an increase of 40% from the prior year period. We grew paid subscribers through product initiatives designed to make Duolingo subscription offerings more appealing, which we believe helped us attract new subscribers and retain existing subscribers.

Current wording

As of June 30, 2025 and 2024, we had approximately 10.9 million and 8.0 million paid subscribers, respectively, representing an increase of 37% from the prior year period. We grew paid subscribers through product initiatives designed to make Duolingo subscription offerings more appealing, which we believe helped us attract new subscribers and retain existing subscribers.

Previous wording

For the three months ended March 31, 2025 and 2024, we generated $232.2 million and $161.5 million of subscription bookings, respectively, representing an increase of $70.7 million, or 44% from the prior year period. We grew subscription bookings by selling more first-time and renewal subscriptions.

Current wording

For the three months ended June 30, 2025 and 2024 we generated $227.3 million and $156.5 million of subscription bookings, respectively, representing an increase of 45% from the prior year period. For the six months ended June 30, 2025 and 2024, we generated $459.4 million and $318.0 million of subscription bookings, respectively, representing an increase of 45% from the prior year period. We grew subscription bookings by selling more first-time and renewal subscriptions.

Previous wording

For the three months ended March 31, 2025 and 2024, we generated $271.6 million and $197.5 million total bookings, respectively, representing an increase of $74.2 million, or 38% from the prior year period. We grew total bookings primarily through growth in subscription bookings as noted above.

Current wording

For the three months ended June 30, 2025 and 2024 we generated $268.0 million and $190.1 million of total bookings, respectively, representing an increase of 41% from the prior year period. For the six months ended June 30, 2025 and 2024, we generated $539.7 million and $387.5 million total bookings, respectively, representing an increase of 39% from the prior year period. We grew total bookings primarily through growth in subscription bookings as noted above.

Previous wording

We use certain non-GAAP financial measures to supplement our Unaudited Condensed Consolidated Financial Statements, which are presented in accordance with GAAP. These non-GAAP financial measures include Adjusted EBITDA, free cash flow and constant currency. 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.

Current wording

We use certain non-GAAP financial measures to supplement our Unaudited Condensed Consolidated Financial Statements, 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.

Previous wording

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, and acquisition earn-out costs. 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 table presents a reconciliation of our net income, the most directly comparable financial measure presented in accordance with GAAP, to Adjusted EBITDA.

Current wording

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, transaction costs related to acquisitions and acquisition earn-out costs. 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 table presents a reconciliation of our net income, the most directly comparable financial measure presented in accordance with GAAP, to Adjusted EBITDA.

Previous wording

(1)In addition to stock-based compensation expense of $31.0 million and $25.0 million for the three months ended March 31, 2025 and 2024, respectively, this includes costs incurred related to taxes paid on equity transactions as follows:

Current wording

(1)In addition to stock-based compensation expense of $34.6 million and $26.7 million for the three months ended June 30, 2025 and 2024, respectively, and $65.6 million and $51.7 million for the six months ended June 30, 2025 and 2024, respectively, this includes costs incurred related to taxes paid on equity transactions as follows:

Previous wording

(2)Represents costs incurred related to the earn-out payments on an acquisition, which is included within General and administrative expense within our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.

Current wording

(3)Represents costs incurred related to the earn-out payments on an acquisition, which is included within General and administrative expense within our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.

Previous wording

For the three months ended March 31, 2025 and 2024, we generated net income of $35.1 million and $27.0 million, respectively, representing an increase of $8.2 million. The increase in net income as compared to the comparative period was primarily due to our growth in revenue, offset by an increase in stock-based compensation expenses related to equity awards.

Current wording

For the three months ended June 30, 2025 and 2024, we generated net income of $44.8 million and $24.4 million, respectively. For the six months ended June 30, 2025 and 2024 we generated net income of $79.9 million and $51.3 million, respectively. The increase in net income as compared to the comparative periods was primarily due to our growth in revenue, offset by an increase in operating expenses driven primarily by headcount growth.

Previous wording

For the three months ended March 31, 2025 and 2024, we generated $105.6 million and $83.5 million of net cash provided by operating activities, respectively, representing an increase of $22.1 million. The increases were primarily due to higher net income adjusted for non-cash items and changes in working capital, including an increase in deferred revenue.

Current wording

For the three months ended June 30, 2025 and 2024 we generated $90.7 million and $62.4 million of net cash provided by operating activities, respectively, which was mainly due to our generation of positive net income as discussed under the heading Adjusted EBITDA above. For the six months ended June 30, 2025 and 2024, we generated $196.3 million and $145.9 million of net cash provided by operating activities, respectively. The increase as compared to the comparative period was primarily due to higher net income adjusted for non-cash items and changes in working capital, including an increase in deferred revenue.

Previous wording

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, as well as from Duo’s Taquería.

Current wording

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. Duo’s Taquería also generates a small portion of our revenue.

Previous wording

We intend to continue to invest additional resources in our infrastructure to expand the capabilities of our platform and ensure that our users are realizing the full benefit of our products. The level, timing, and relative investment in these areas could affect our cost of revenues in the future.

Current wording

We intend to continue to invest additional resources in our infrastructure to expand the capabilities of our platform and allow our users to realize the full benefit of our products. The level, timing, and relative investment in these areas could affect our cost of revenues in the future.

Previous wording

Research and Development. We invest heavily in research and development to create new products and product features that help us grow our user base, engage our users, monetize our users, and teach our users. This, in turn, drives additional growth in, and better 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 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 small 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 benefits of our research and development investments may be difficult to forecast.

Current wording

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 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.

Previous wording

The benefit for income taxes represents 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 rates will vary depending on the relative proportion of foreign to domestic income, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws.

Current wording

The provision for income taxes represents 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 rates will vary depending on the relative proportion of foreign to domestic income, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws.

Previous wording

Comparison of the three months ended March 31, 2025 and 2024

Current wording

Comparison of the three and six months ended June 30, 2025 and 2024

Previous wording

Revenues increased by $63.2 million, or 38%, to $230.7 million during the three months ended March 31, 2025, from revenues of $167.6 million during the three months ended March 31, 2024. The main drivers of the increase were:

Current wording

Revenues increased by $73.9 million, or 41%, to $252.3 million during the three months ended June 30, 2025, from revenues of $178.3 million during the three months ended June 30, 2024. Revenues increased $137.1 million, or 40%, to $483.0 million during the six months ended June 30, 2025, from revenues of $345.9 million during the six months ended June 30, 2024. The main drivers of the increases were:

Previous wording

•Subscription revenue increased by $59.3 million, or 45%, to $191.0 million during the three months ended March 31, 2025, primarily due to an increase in the average number of paid subscribers during the period;

Current wording

•Subscription revenue increased by $66.8 million, or 46%, to $210.7 million during the three months ended June 30, 2025 and $126.1 million, or 46%, to $401.7 million during the six months ended June 30, 2025, primarily due to an increase in the average number of paid subscribers during each period;

Previous wording

•Other revenue increased by $3.9 million, or 11%, to $39.8 million during the three months ended March 31, 2025, primarily driven by increased advertising revenue resulting from the increase in DAUs, which resulted in increased advertisements served, offset by decreases in average revenue per DAU.

Current wording

•Other revenue increased by $7.2 million, or 21%, to $41.6 million during the three months ended June 30, 2025 and $11.1 million, or 16%, to $81.3 million during the six months ended June 30, 2025, primarily due to increased advertising revenue, resulting from an increase in DAUs, which resulted in increased advertisements served.

Previous wording

Cost of Revenues and Gross Margin. Total gross margin decreased to 71.1% from 73.0% during the three months ended March 31, 2025 and 2024. This was mainly due to lower subscription gross margin as a result of increased generative AI costs year over year related to expansion of the Duolingo Max subscription tier.

Current wording

Cost of Revenues and Gross Margin. Total gross margin decreased to 72.4% from 73.4% during the three months ended June 30, 2025 and 2024, and to 71.8% from 73.2% during the six months ended June 30, 2025 and 2024. The decrease in both periods was primarily due to lower subscription gross margin, driven by increased generative AI costs year over year related to the expansion of the Duolingo Max subscription tier.

Previous wording

Research and Development. Research and development expense increased by $19.5 million, or 38%, to $70.4 million during the three months ended March 31, 2025 from $50.9 million during the three months ended March 31, 2024. The increase was mainly due to:

Current wording

Research and Development. Research and development expense increased by $18.5 million, or 34%, to $73.7 million during the three months ended June 30, 2025 from $55.1 million during the three months ended June 30, 2024. The increase was mainly due to:

Previous wording

•Increased net personnel costs of $16.7 million, driven primarily by the growth in headcount. Total gross personnel costs increased by $14.6 million, including increased stock-based compensation expense of $5.4 million. Additionally, there was an increase of $2.1 million due to a reduction in wages recorded as capitalized software as compared to the prior year;

Current wording

•Increased net personnel costs of $31.7 million, driven primarily by the growth in headcount. Total gross personnel costs increased by $29.9 million, including increased stock-based compensation expense of $13.0 million. Additionally, there was an increase of $1.8 million due to a reduction in wages recorded as capitalized software as compared to the same period in the prior year;

Previous wording

•Increased travel and other costs of $0.6 million.

Current wording

•Increased contractor, travel and other costs of $2.1 million.

Previous wording

Sales and Marketing. Sales and marketing expense increased by $6.7 million, or 34%, to $26.7 million during the three months ended March 31, 2025 from $19.9 million during the three months ended March 31, 2024.

Current wording

Sales and Marketing. Sales and marketing expense increased by $9.4 million, or 47%, to $29.6 million during the three months ended June 30, 2025 from $20.2 million during the three months ended June 30, 2024

Previous wording

•Increased direct marketing and other expenses of $4.8 million; and

Current wording

•Increased direct marketing and other expenses of $7.4 million; and

Previous wording

•Increased personnel costs of $1.9 million driven primarily by the growth in headcount, including increased stock-based compensation expense of $0.4 million.

Current wording

•Increased personnel costs of $2.0 million driven primarily by the growth in headcount, including increased stock-based compensation expense of $0.5 million.

Previous wording

General and Administrative. General and administrative expense increased by $8.3 million, or 24%, to $43.5 million during the three months ended March 31, 2025 from $35.1 million during the three months ended March 31, 2024. This increase was mainly due to:

Current wording

General and Administrative. General and administrative expense increased by $9.0 million, or 24%, to $46.0 million during the three months ended June 30, 2025 from $37.0 million during the three months ended June 30, 2024. This increase was mainly due to:

Previous wording

•Increased travel and meals expenses of $1.5 million;

Current wording

•Increased travel and meals expenses of $2.3 million;

Previous wording

The above increases were partially offset by decreases in facility-related and professional costs of $1.2 million.

Current wording

The above increases were partially offset by decreases in facility-related costs of $1.1 million.

Previous wording

Interest income increased by $0.4 million, or 4%, to $10.4 million during the three months ended March 31, 2025, from $10.0 million during the three months ended March 31, 2024. The increase was due to higher average interest-bearing balances offset by slightly lower interest rates.

Current wording

Interest income increased by $0.7 million, or 7%, to $11.4 million during the three months ended June 30, 2025, from $10.7 million during the three months ended June 30, 2024. Interest income increased by $1.1 million, or 5%, to $21.8 million during the six months ended June 30, 2025, from $20.8 million during the six months ended June 30, 2024. Both period increases were due to higher average interest-bearing balances partially offset by slightly lower interest rates.

Previous wording

Other income (expense), net increased by $1.6 million, during the three months ended March 31, 2025, mainly from the impact from changes in foreign currency rates.

Current wording

Other income (expense), net increased by $2.4 million, during the three months ended June 30, 2025, and $4.0 million during the six months ended June 30, 2025, compared to the same respective prior year periods, mainly from the impact from changes in foreign currency rates.

Previous wording

As of March 31, 2025, we had $884.0 million in cash and cash equivalents and $115.3 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, certificates of deposit, and commercial paper.

Current wording

As of June 30, 2025, we had $976.2 million in cash and cash equivalents and $121.7 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, certificates of deposit, and commercial paper.

Previous wording

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 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 activities, 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.

Current wording

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 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 activities, 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.

Previous wording

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 consists of the unearned portion of customer billings, which is recognized as revenue in accordance with our revenue recognition policy. As of March 31, 2025, we had deferred revenues of $415.0 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.

Current wording

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 consists of the unearned portion of customer billings, which is recognized as revenue in accordance with our revenue recognition policy. As of June 30, 2025, we had deferred revenues of $431.2 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.

Previous wording

Cash provided by operating activities increased by $22.1 million, or 26%, to $105.6 million for the three months ended March 31, 2025 from $83.5 million for the three months ended March 31, 2024. This increase was primarily driven by higher net income during the current period, which included increased non-cash stock-based compensation expense. Additionally, growth in deferred revenue contributed to the increase in cash provided by operating activities.

Current wording

Cash provided by operating activities increased by $50.4 million, or 35%, to $196.3 million for the six months ended June 30, 2025 from $145.9 million for the six months ended June 30, 2024. This increase was primarily driven by higher net income during the current period, which included increased non-cash stock-based compensation expense. Additionally, growth in deferred revenue contributed to the increase in cash provided by operating activities.

Previous wording

Cash used for investing activities increased by $5.5 million to $10.5 million for the three months ended March 31, 2025, from $5.0 million for the three months ended March 31, 2024. The increase was primarily driven by purchases of investments of $26.6 million during the current period. This increase was partially offset by maturities of investments of $18.7 million, decreased capitalized software and decreased purchases of property and equipment during the current period.

Current wording

Cash used for investing activities decreased by $0.9 million to $12.8 million for the six months ended June 30, 2025, from $13.7 million for the six months ended June 30, 2024. This decrease was driven by purchases of investments of $48.3 million during the current period, partially offset by maturities of investments of $42.5 million, and decreased capitalized software and decreased purchases of property and equipment during the current period.

Previous wording

Cash provided by financing decreased by $0.6 million to $3.1 million for the three months ended March 31, 2025, from $3.6 million for the three months ended March 31, 2024. Cash provided by financing activities in both periods is due to proceeds from exercises of stock options.

Current wording

Cash provided by financing decreased by $1.6 million to $7.0 million for the six months ended June 30, 2025, from $8.4 million for the six months ended June 30, 2024. Cash provided by financing activities in both periods is due to proceeds from exercises of stock options.