Pittsburgh—May 4, 2026, 18:01 EDT
Duolingo tumbled in after-hours trading Monday, dropping as much as 14% at one point, according to Investing.com and StockStory, with Reuters noting an 11% slide. The language-learning app beat Q1 forecasts, but what grabbed the market’s attention was the slowdown in bookings and a warning about higher AI costs coming up this year.
This report gives investors their first unvarnished look at Duolingo’s 2026 strategy shift: more focus on keeping users engaged, improving speaking features, and building out the core product—while dialing back on nudging free users to pay upfront. That shift is key, since Wall Street has started to weigh Duolingo less on quarterly numbers and more on whether its freemium approach—a no-cost app with optional upgrades—can actually convert those heavy users into paid subscribers.
Bookings—covering cash from subscriptions, ads, tests and in-app purchases before it’s formally recognized as revenue—jumped 14% in the quarter to $308.5 million. Still, Duolingo’s outlook called for bookings growth of just 5.8% in the second quarter and 10.5% for the full year. The slower pace weighed on the stock, despite sales coming in ahead of expectations.
Revenue jumped 27% to $292.0 million, topping the $288.5 million estimate from LSEG. Paid subscribers hit 12.5 million, up 21%. Daily active users—or average daily users on the app—also increased 21% to 56.5 million.
The company projects full-year revenue at $1.205 billion, with adjusted EBITDA pegged at $310 million. That metric, which excludes taxes, depreciation, and stock-based pay, landed above analyst expectations — as did earnings per share. StockStory flagged that both Q2 and full-year bookings guidance came up short of consensus, despite those beats.
Chief Executive Luis von Ahn said in the company’s release that “In Q1, we made progress on the strategy we laid out last quarter,” highlighting recent speaking features and fresh content. Von Ahn also noted Duolingo remains “still early” in its 2026 plan, with the focus staying on building long-term engagement and loyalty. Duolingo, Inc.
Gillian Munson, the company’s Chief Financial Officer, didn’t mince words. “We are making long-term bets, and the returns on the investments we’re making are going to be 2027 and beyond,” she told Reuters. Reuters
Duolingo is making speaking practice central, rolling out Video Call for Super subscribers and adding more exercises where users answer by speaking. The company credited AI tools for enabling it to publish 20,500 course units in the first quarter—well above the 7,100 per quarter pace seen in 2025.
Product quality is taking center stage as Duolingo angles for learner attention, up against Babbel, Rosetta Stone, and Busuu. Mordor Intelligence, a market-research firm, calls out those three, plus Duolingo and EF Education First, as top names in the online language-learning sector.
There’s a downside, too. Duolingo is projecting gross margin will slip to roughly 69% in Q4 as more AI features roll out—down from 73% in Q1. The company also flagged that its user numbers are internal estimates, and not necessarily measured like competitors’ stats.
Duolingo wrapped up the quarter sitting on $1.1 billion in cash and cash equivalents. Buybacks? The company snapped up about $50.6 million worth of its own shares—around 514,000—by May 1, tapping into its ongoing $400 million repurchase plan. Free cash flow landed at $147.8 million, putting the margin at 50.6%.
Duolingo has set a tough target: 100 million daily active users by 2028. Investors, though, are looking for proof on a shorter timeline—specifically, they want to see engagement translating back into bookings. The next test comes in the second quarter, where management is guiding for 5.8% bookings growth and a slimmer margin. That’s the next data point for this debate.
