Duolingo (DUOL) investor relations material

Executive summary

• Achieved 27% year-over-year revenue growth to $292.0 million for Q1 2026, with double-digit bookings and DAUs up 21% to 56.5 million, driven by strategic priorities and product enhancements including expanded speaking practice and AI-driven features.

• Net income rose 24% to $43.5 million, with Adjusted EBITDA up 33% to $83.4 million, reflecting improved operating leverage.

• Major product enhancements included new spoken tokens, Speaking Adventures, Flashcards, and advanced course content covering professional proficiency (B2 CEFR) in the top nine languages.

• Progress made on integrating speaking as a core learning feature and building long-term engagement and loyalty.

• Gross margin expanded to 73.0% from 71.1% in the prior year period.

Financial highlights

• Q1 adjusted EBITDA reached $83.4 million, about 29% of revenue, with operating income nearly doubling to $44.5 million.

• Subscription revenue increased 31% to $250.9 million, and total bookings rose 14% to $308.5 million.

• Free cash flow rose 43% to $147.8 million, with cash and cash equivalents at $1.14 billion as of March 31, 2026.

• Gross margin expanded in Q1 and is expected to be approximately 71% in Q2, trending down to 69% by year-end due to increased AI-powered features.

• Entered Q2 with over $1 billion in cash, no debt, and projected over $350 million in free cash flow for the year.

Outlook and guidance

• Full-year 2026 guidance: bookings growth of 10.5%, revenue growth of 16.1%, and adjusted EBITDA margin of 25.7%.

• Q2 bookings growth expected at 6% due to tough comps, with acceleration in the second half; Q2 revenue growth projected at 17%.

• Adjusted EBITDA margin guidance: ~24% in Q2, flat to slightly down in Q3, rising to 27% in Q4.

• Management expects continued growth in paid subscribers and bookings, supported by ongoing product innovation and marketing investments.

• Early stages of executing the 2026 plan, focusing on long-term business durability and expansion.