Duolingo (DUOL) stock Q3 earnings 2025

Duolingo‘s shares fell 25% on lighter-than-expected guidance The language learning platform focused on user growth rather than short-term monetization.

Shares experienced their biggest one-day decline in history.

“We’ve made a slight change in the way we invest in the last quarter and we’re investing a lot more in long-term things because we see this as a huge opportunity in front of us,” CEO and co-founder Luis von Ahn told CNBC’s Jon Fortt.

For the current quarter, Duolingo expects bookings to range between $329.5 million and $335.5 million; That falls short of FactSet’s estimate of $344.3 million. Adjusted EBITDA is estimated to range between $75.4 million and $78.8 million, versus the expected $80.5 million.

Duolingo increased its paid subscribers to 11.5 million, surpassing the 11.38 million StreetAccount expected. However, the number of daily and monthly active users reached 50.5 million and 135.3 million, respectively. Analysts participating in the StreetAccount survey had predicted 51.2 million daily and 137.4 million monthly users.

Over the past few months, Duolingo has implemented a number of new AI tools, including an interactive video calling feature, to attract more paying subscribers. The company also launched more language courses In record time with the help of artificial intelligence.

“There are experiments pitting monetization against user growth, and part of my job has always been to arbitrate between the two,” von Ahn told CNBC.

He said that over the last few months the company has “really shifted that exchange to be more geared towards user growth.”

Duolingo’s revenues rose 41% in the quarter to $272 million, beating the $260 million estimate of analysts surveyed by LSEG. Total bookings increased 33% over last year to approximately $282 million, exceeding forecasts.

Net income rose to $292.2 million, or $5.95 per share, from $23.4 million, or 49 cents per share, in the same period last year. the company said Net income was helped by a one-time tax revenue benefit of $222.7 million.

Duolingo also raised its full-year revenue target to between $1.0275 billion and $1.0315 billion. This was up from its previous guidance of $1.01 billion to $1.02 billion.

KeyBanc analyst Justin Patterson downgraded the stock sector from overweight as the company’s focus on long-term product initiatives weighs on near-term growth and valuation.

He wrote that it could take “several quarters” for “meaningful financial benefits” from these initiatives to be realized.