Language-learning app Duolingo (NASDAQ: DUOL) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 41.5% year on year to $252.3 million. Guidance for next quarter’s revenue was optimistic at $259 million at the midpoint, 2.3% above analysts’ estimates. Its GAAP profit of $0.91 per share was 56.4% above analysts’ consensus estimates.
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Duolingo (DUOL) Q2 CY2025 Highlights:
- Revenue: $252.3 million vs analyst estimates of $240.8 million (41.5% year-on-year growth, 4.8% beat)
- EPS (GAAP): $0.91 vs analyst estimates of $0.58 (56.4% beat)
- Adjusted EBITDA: $78.68 million vs analyst estimates of $61.07 million (31.2% margin, 28.8% beat)
- The company lifted its revenue guidance for the full year to $1.02 billion at the midpoint from $991.5 million, a 2.4% increase
- EBITDA guidance for the full year is $291.8 million at the midpoint, above analyst estimates of $281.2 million
- Operating Margin: 13.2%, up from 10.5% in the same quarter last year
- Free Cash Flow Margin: 34.2%, down from 44.6% in the previous quarter
- Monthly Active Users: 128.3 million, up 24.7 million year on year
- Market Capitalization: $15.47 billion
Company Overview
Founded by a Carnegie Mellon computer science professor and his Ph.D. student, Duolingo (NASDAQ: DUOL) is a mobile app helping people learn new languages.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Duolingo’s 42.5% annualized revenue growth over the last three years was incredible. Its growth surpassed the average consumer internet company and shows its offerings resonate with customers, a great starting point for our analysis.
This quarter, Duolingo reported magnificent year-on-year revenue growth of 41.5%, and its $252.3 million of revenue beat Wall Street’s estimates by 4.8%. Company management is currently guiding for a 34.5% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 27.3% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is commendable and indicates the market is forecasting success for its products and services.
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Monthly Active Users
User Growth
As a subscription-based app, Duolingo generates revenue growth by expanding both its subscriber base and the amount each subscriber spends over time.
Over the last two years, Duolingo’s monthly active users, a key performance metric for the company, increased by 36.5% annually to 128.3 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction. 
In Q2, Duolingo added 24.7 million monthly active users, leading to 23.8% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t accelerating user growth just yet.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track because it measures how much the average user spends. ARPU is also a key indicator of how valuable its users are (and can be over time).
Duolingo’s ARPU growth has been mediocre over the last two years, averaging 3.9%. This isn’t great, but the increase in monthly active users is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Duolingo tries boosting ARPU by taking a more aggressive approach to monetization, it’s unclear whether users can continue growing at the current pace. 
This quarter, Duolingo’s ARPU clocked in at $1.97. It grew by 14.2% year on year, slower than its user growth.
Key Takeaways from Duolingo’s Q2 Results
We were impressed by how significantly Duolingo blew past analysts’ revenue and EBITDA expectations this quarter. We were also glad its full-year revenue guidance was raised and full-year EBITDA guidance trumped Wall Street’s estimates. Overall, we think this was a very good quarter with some key metrics above expectations. The stock traded up 10.8% to $381.36 immediately following the results.
Sure, Duolingo had a solid quarter, but if we look at the bigger picture, is this stock a buy? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
