Title

Earning Preview: Duolingo, Inc.: this quarter’s revenue is expected to increase by 34.35%, and institutional views are bullish

Abstract

Duolingo, Inc. will release its fiscal fourth-quarter results on February 26, 2026 Post Market, with investors looking for how product investment and user-growth prioritization translate into quarterly revenue, margins, and EPS, amid a recent mix of upward rating actions and cautious commentary on bookings.

Market Forecast

Market forecasts point to Duolingo, Inc. delivering fourth-quarter revenue of $275.97 million, implying 34.35% year-over-year growth, with estimated adjusted EPS of $0.83, up 71.62% year over year, and estimated EBIT of $61.34 million, up 254.04% year over year; explicit gross margin or net margin forecasts for the quarter are not provided. Revenue expectations imply continued momentum from the company’s subscription-led model, while the earnings profile reflects operating leverage from scale and product engagement; consensus embeds sustained demand despite management’s increased emphasis on user growth and learning quality.

Subscriptions remain the centerpiece, supported by last quarter’s $229.49 million contribution and a robust annual growth backdrop, and the outlook ties elevated engagement to durable conversion and retention. The most promising incremental lever centers on non-subscription contributions captured in “Other” ($42.22 million last quarter) alongside premium upsell initiatives, with growth expected to track improvements in daily active user cohorts and ongoing product innovation; while segment-specific YoY rates aren’t broken out, the company’s 34.35% forecast revenue growth frames management’s near-term ambition.

Last Quarter Review

Duolingo, Inc.’s prior quarter delivered revenue of $271.71 million, a 41.08% year-over-year increase, with a gross profit margin of 72.47%, GAAP net profit attributable to the parent company of $292.00 million, a net profit margin of 107.54%, and adjusted EPS of $5.95, up 1,114.29% year over year. A key financial highlight was the significant earnings outperformance versus the prior year, coinciding with a sharp year-over-year expansion in EBIT and EPS that amplified bottom-line growth beyond revenue gains.

Main business highlights showed subscriptions contributing $229.49 million and accounting for the vast majority of revenue, with total company revenue up 41.08% year over year, indicating that core monetization benefits remained healthy into the print.

Current Quarter Outlook

Subscriptions: the core engine of revenue and profitability this quarter

The subscription business is positioned to carry the revenue line again, with the consensus calling for $275.97 million in total revenue and a 34.35% year-over-year increase that is consistent with continued conversion and retention at scale. Over recent quarters the company has expanded product depth and stickiness in its paid tiers, which supports a more resilient recurring revenue base. In the near term, engagement trends and daily active user cohorts will be pivotal: higher time-on-task and lesson completion rates typically correlate with trial starts, paid conversions, and lower monthly churn. Against this backdrop, the income statement should benefit from recurring revenue visibility, while the P&L mix provides leverage, as suggested by the 71.62% estimated EPS growth. The absence of explicit margin guidance in external forecasts means gross and net margin prints will be monitored as a clean gauge of incremental efficiency and the cadence of reinvestment for product, content, and AI features.

Given management’s stated priority on user growth and learning quality, the quarter could see some near-term trade-offs in yield if tests steer the product experience toward engagement rather than immediate monetization. Even so, subscription health often lags engagement by a short period as cohorts mature; because of that, a strong fourth-quarter revenue path can coexist with evolving monetization experiments. Investor attention should gravitate toward an updated view of conversion funnels across geographies, the mix of Super and higher-tier offerings, and early signals that premium features are broadening the pay pool. Any commentary on retention improvements and upsell efficacy will feed into how the market extrapolates the 34.35% revenue growth estimate into subsequent periods.

Premium features, non-language subjects, and “Other” revenue: the incremental growth vector

The company’s “Other” line totaled $42.22 million last quarter and houses non-subscription contributions that can scale with user engagement and content breadth. As product teams roll out improvements in premium features and expand into non-language subjects such as Music, Math, and Chess, the value proposition broadens beyond traditional language learning and can lift both ad engagement and in-app purchase attach rates. While explicit YoY growth for this line is not broken out, external commentary emphasizes the interplay between daily active user growth and bookings trajectory; this suggests that an engaged, growing user base can provide a larger surface area for monetization through ads, tests, and premium functionality.

The fourth quarter offers a checkpoint on several small but accumulating revenue levers: ad formats that leave learning flow intact, testing pathways that reinforce skill verification and credentialing, and new features that sustain session streaks and push users to higher-value tiers. Monetization experiments alongside curriculum enhancements also provide a mechanism for diversified growth outside pure subscription dollars. For investors, clarity around the contribution from “Other” helps contextualize how much upside remains beyond subscription ARPU, especially as the company manages a deliberate balance between user growth and near-term yield. Updates on adoption of new subjects and early premium feature usage metrics could help the market judge cross-sell and upsell potential into 2026.

What may move the stock: bookings tone, cohort quality, and reinvestment cadence

With consensus expecting revenue of $275.97 million and EPS of $0.83, stock performance into and after the print is likely to hinge on the relationship between user growth commentary and the bookings outlook. Recent external notes have highlighted that management is increasing its prioritization of engagement and user additions, which could leave initial bookings guidance for the next fiscal period below the sell-side’s earlier trajectory. A reassuring message that cohort quality is improving and that monetization will follow as cohorts mature would likely be taken positively, even if near-term bookings appear conservative.

Another swing factor is the operating expense profile, particularly around content, AI-driven personalization, and product experimentation. The EPS estimate implies solid operating leverage this quarter, but investors will parse whether elevated reinvestment continues into the next fiscal year and how that affects flow-through to margins. Signals about the pace of hiring or the timing of planned launches may recalibrate margin expectations. Finally, commentary on the balance of subscription revenue versus “Other” revenue—and any update on premium tier attach rates—could influence the market’s view of the sustainability of the revenue growth algorithm beyond the quarter.

Analyst Opinions

Across research published between January 1, 2026 and February 19, 2026, opinions skew decisively bullish, with multiple Buy or Overweight ratings and no newly issued Sell ratings in the period. Notably, Bank of America upgraded the shares to Buy in early January, highlighting the entertainment-grade engagement loop of the lesson format and the durability of the gamified playbook across over 150 courses and newer subjects; the firm also underscored the opportunity to sustain top-tier mobile engagement, which for equity holders translates into a long-duration growth profile. Morgan Stanley maintained an Overweight rating while trimming its price target to $245 in early February, pairing a “tactically cautious” stance on fiscal 2026 bookings with a favorable multi-quarter view that user growth emphasis will ultimately serve monetization by upgrading cohort quality; the bank framed expectations for bookings to reset below prior Street levels, yet still advocated an Overweight positioning. Concurrently, Citi reiterated a Buy rating in mid-February and Evercore ISI reaffirmed a Buy, both anchoring on strong monetization mechanics and product velocity; J.P. Morgan also reiterated a Buy, pointing to continued revenue expansion in the model.

The majority view centers on a constructive long-term path, albeit with recognition that management’s near-term prioritization of user growth and learning quality may introduce conservatism into bookings guidance. Bulls argue that high engagement and expanding cohort size should underpin revenue and margin compounding as cohorts mature, which aligns with the consensus fourth-quarter estimates of 34.35% revenue growth, 71.62% EPS growth, and a step-up in EBIT. The emphasis on product investment is seen as accretive to lifetime value, particularly where personalization and adaptive content increase progression and reduce churn. In this lens, any guidance reset is interpreted less as a demand problem and more as a recalibration of pacing between user growth and monetization, with the benefit of durable, diversified monetization levers once cohorts stabilize.

From a stock setup perspective, several institutions appear to frame downside risk near term as linked to bookings commentary and pacing of reinvestment, while upside would come from evidence that user growth is translating into higher premium attach and improving retention for new and existing cohorts. The breadth of Buy and Overweight ratings in early 2026 provides a supportive backdrop into the report date. Given the absence of new bearish calls in the period and the continued reiteration of constructive stances, the ratio of bullish to bearish opinions is effectively 100% bullish within the specified timeframe, and the majority side emphasizes resilience in the subscription model, the compounding nature of cohort-driven monetization, and the options value in non-subscription and premium feature expansion.