Duolingo Shares Fall Despite Faster User Growth Than Bookings in Q2

NEW YORK, August 6, 2026, 05:08 EDT

Shares of Duolingo, Inc. NASDAQ:DUOL were down 9.3%, set at $122.68 as of 04:59 EDT. The company’s second-quarter revenue exceeded expectations, but its third-quarter revenue forecast disappointed investors. Premarket trading on the Nasdaq had begun, while normal trading will open at 09:30 EDT.

Investors paid attention to a growing divide. The number of daily users increased by 23%, but total bookings advanced just 8%. Daily usage is accelerating at a faster pace than bookings.

Shares finished Wednesday at $135.32. From July 30 to Wednesday, the closing price increased by 1.3%. The week ahead will reveal if modest premarket selling can persist once regular-session liquidity returns.

Early indicators on Thursday suggest an implied gap tied to a drop of around $590 million in quoted equity value, based on 46.7 million shares outstanding as of the end of June. This represents nearly 59 times the $10 million annual adjusted EBITDA guidance increase. Premarket trading showed a volume of just 7,762 shares.

Q2 performance summary

Metric	Q2 2026	Q2 2025	Change
Daily active users	58.7 million	47.7 million	+23%
Monthly active users	140.6 million	128.3 million	+10%
Paid subscribers	12.7 million	10.9 million	+17%
Total bookings	$289.1 million	$268.0 million	+8%
Revenue	$298.5 million	$252.3 million	+18%
Net income	$33.2 million	$44.8 million	−26%
Adjusted EBITDA	$77.3 million	$78.7 million	−2%
Adjusted EBITDA margin	25.9%	31.2%	−530 bps
Gross margin	72.6%	72.4%	+20 bps

The quarter surpassed several key metrics. Revenue was $2.9 million above the average analyst estimate. Adjusted EBITDA topped Duolingo’s May outlook by 8.9%. However, paid subscriber numbers came in just below consensus forecasts.

The clearer indicator appears in monetization yield. The intensity of daily users increased by 4.6 percentage points from a year earlier. However, overall bookings per average daily user declined around 12%.

Monetization compared to engagement

Directional indicator	Q2 2026	Q2 2025	Change
Daily users as percentage of monthly base	41.7%	37.2%	+4.6 points
Paying subscribers as portion of monthly users	9.0%	8.5%	+0.5 points
Total bookings per average daily user	$4.93	$5.62	−12.3%
Bookings from subscriptions per paying subscriber	$19.71	$20.85	−5.5%

Figures are based on company data. Paid subscriber counts reflect period-end values, while active-user numbers represent quarterly averages. These ratios differ from company-reported conversion or revenue-per-user metrics.

Chief Financial Officer Gillian Munson addressed the decision, stating, “We’re enabling our teams to do more to grow DAU and not be as primarily focused on monetization in this moment.” The leadership maintains its goal of reaching 100 million daily active users. Reuters

Retention data backs up the outlook. Current-user retention hit an all-time high of 84%, increasing by roughly one point. Duolingo forecasts daily-user growth to exceed 20% for the rest of the year. June’s Streak Revival campaign brought back 15.4 million learners, with almost 8 million not having an active streak.

The immediate challenge is third-quarter revenue. Duolingo forecast around $302 million, coming in 0.7% under analyst expectations. The company’s full-year revenue outlook increased by just $2 million since May.

Guidance Contrast

Metric	Latest outlook	May outlook or consensus	Difference
Q3 revenue	$302 million	$304 million consensus	−$2 million
Full-year bookings	$1.285 billion	$1.280 billion	+$5 million
Full-year revenue	$1.207 billion	$1.205 billion	+$2 million
Full-year adjusted EBITDA	$320 million	$310 million	+$10 million
Full-year EBITDA margin	26.5%	25.7%	+80 bps

Profit outlook saw further movement. Adjusted EBITDA for the full year climbed 3.2%, with the margin increasing by 80 basis points. Second quarter gross margin hit 72.6% as AI-related expenses declined. Munson stated that some less sophisticated features are currently powered by open-source models.

After publication, the pre-open recommendations snapshot reflected caution, listing four positives, 19 Holds, and three negatives.

Analyst ratings

Recommendation	Current	One month earlier
Buy	3	3
Overweight	1	1
Hold	19	20
Underweight	2	1
Sell	1	1
Consensus	Hold	Hold

The typical price target was $120, with the mean at $114.20. Each was under the $122.68 indicated price. Adjustments after results could swiftly alter those figures.

Risks: The Streak Revival effect was short-lived, which may result in some engagement gains diminishing. Stock-based compensation is projected to reach nearly 15% of revenue, with dilution of 3.5%-4.0% expected prior to share repurchases. A 1% fluctuation in the dollar impacts second-half bookings by around $4 million.

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Further analysis

Editorial insight

What caused Duolingo shares to decline after exceeding Q2 expectations?

Duolingo projected Q3 revenue at $302 million, missing the $304 million expected by analysts. The stock dropped over 10% in after-hours trading following Wednesday's results. Second-quarter revenue reached $298.5 million, surpassing the $295.6 million consensus view. Investors prioritized the deceleration in growth over the positive Q2 result.

Is the pace of user growth picking up sufficiently to back the long-term strategy?

Daily active users increased by 23% to 58.7 million, rising two percentage points from the previous quarter. The retention rate for existing users climbed to 84%, approximately one point higher than a year ago. June's unique Streak Revival event reignited 15.4 million user streaks, with almost 8 million participants having no active streak previously. The company forecasts over 20% growth for the rest of the year, though long-term sustainability has yet to be demonstrated.

Is monetization likely to match the level of engagement?

Bookings rose 8% to $289.1 million, compared with a 23% increase in daily active users. The number of paid subscribers climbed 17% to reach 12.7 million by the end of the quarter. For the full year, guidance projects bookings growth of 10.9% and revenue growth of 16.3%. Duolingo is prioritizing user engagement rather than accelerating monetization in the short term.

Is margin performance stable as the company emphasizes growth?

Adjusted EBITDA declined by 2% to $77.3 million, with margin decreasing by 530 basis points. Gross margin climbed to 72.6%, surpassing management’s approximate 71% forecast. Reduced AI expenses along with a gradual feature release contributed to results. Duolingo lifted its 2026 adjusted EBITDA outlook to $320 million, projecting a 26.5% margin.

Can share buybacks counteract stock-based dilution?

Duolingo bought back 708,000 shares at a total cost of $71.9 million as of August 1. The company still has about $328 million left on the $400 million buyback program. Management forecasts dilution of between 3.5% and 4.0% prior to repurchases, even though stock-based compensation equals nearly 15% of revenue. Cash and short-term investments reached approximately $1.3 billion at the end of the quarter.