Staff Reporter
Duolingo (DUOL), the leading digital language education platform, is enjoying a remarkable 54% gain in 2025, far surpassing the S&P 500. With no tariffs affecting its subscriptions, the company continues to expand rapidly.
Recently, Duolingo raised its full-year revenue forecast. The question now is whether the stock can maintain its upward trajectory or if it’s too late to invest.
User Growth on the Rise
Duolingo’s mobile app offers an engaging learning experience for anyone with a smartphone. As of the end of Q1, the platform boasted 130.2 million monthly active users, marking a 33% increase from the previous year. Notably, user growth has accelerated from 32% in Q4.
The app generates revenue in two main ways: through ads for free users and paid subscriptions that unlock premium features. The company reported a record 10.3 million paying subscribers at the end of Q1, a 40% year-over-year increase. This growth in subscribers suggests users are finding real value in the premium offerings.
The Role of AI
Artificial intelligence (AI) is a key factor driving this value. Duolingo’s top subscription tier, Max, includes three innovative AI features:
- Roleplay: An AI chatbot that helps users practice conversation skills.
- Explain My Answer: Personalized feedback based on user mistakes.
- Video Call: A digital avatar named Lily assists users in practicing their speaking skills, providing a personalized experience.
Launched in 2023, the Max subscription already accounted for 7% of Duolingo’s subscriber base by the end of Q1, up from 5% just three months prior.
Revenue Forecast Raised
In Q1, Duolingo generated $230.7 million in revenue, a 38% increase year-over-year, exceeding management’s expectations. This strong performance led to an upward revision of the 2025 revenue forecast to as much as $996 million.
The company’s profitability is also on the rise. Operating expenses were $140.5 million, up 32% year-over-year, but slower growth in costs compared to revenue resulted in a 30% increase in net income, reaching $35.1 million.
Duolingo’s marketing strategy relies on organic social media campaigns, minimizing user acquisition costs. This allows more funds to be allocated toward research and development, fueling further monetization.
Is It Too Late to Buy?
Duolingo’s business is thriving, and its digital subscriptions remain unaffected by tariffs. Operating in 194 countries, the company has a diversified revenue base that could shield it from global trade tensions. However, its stock’s significant gains—54% this year and 151% over the past 12 months—have led to a high valuation.
Currently, Duolingo trades at a price-to-sales (P/S) ratio of 29.5, close to its highest since going public in 2021, and an 87% premium over its average P/S ratio of 15.8. The price-to-earnings (P/E) ratio stands at 248, compared to the S&P 500’s 22.5.
Despite this high valuation, Duolingo’s rapid growth makes its future earnings potential more appealing. Wall Street estimates earnings of $6.05 per share in 2025 and $7.93 per share in 2026, resulting in forward P/E ratios of 83 and 63, respectively.
Overall, the stock remains expensive even on a forward basis, making it less attractive for short-term investors. However, long-term investors willing to hold for five years or more may find significant opportunities as AI and the Max subscription evolve.
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