Duolingo earnings put a Wall Street warning to the test

Duolingo (DUOL) reported second-quarter revenueof $298.5 million, up 18% from a twelvemonth earlier, portion full bookings roseate 8% to $289.1 million. Daily progressive users accrued 23% to 58.7 million, and paid subscribers roseate 17% to 12.7 million.

The institution besides reaffirmed its full-year targets for 10% to 12% bookings maturation and 15% to 18% gross growth, portion raising its adjusted EBITDA borderline outlook to astir 26.5%.

Those results arrived 1 time aft Bank of America took a much cautious presumption of the stock.

In a enactment fixed to TheStreet, BofA expert Omar Dessouky downgraded Duolingo to Underperform from Neutral and chopped his terms nonsubjective to $93 from $103. Based connected the $135.80 stock terms listed successful the note, that people implied astir 31.5% downside.

BofA questions what is down Duolingo's idiosyncratic maturation

Dessouky's interest centered connected whether Duolingo tin prolong the maturation needed to enactment its valuation.

The expert said the banal had rallied much than 20% since aboriginal June alongside an betterment successful monthly progressive users. June MAUs roseate astir 6% from May, pursuing 3% maturation successful May and a 2% diminution successful April, according to the note.

BofA argued that the June acceleration did not look to beryllium driven by large merchandise improvements. The steadfast alternatively pointed to a June promotion tied to Airbnb that offered users a escaped period of Super Duolingo without requiring a recognition card.

Duolingo's net study added different wrinkle to that argument.

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Management said Q2 idiosyncratic maturation accelerated due to the fact that of merchandise changes, marketing, and a one-time Streak Revival event. The June run allowed eligible users to reconstruct their longest-ever streak by completing 3 lessons, and 15.4 cardinal learners participated. Nearly 8 cardinal of them did not person an progressive streak erstwhile the lawsuit began.

That disclosure gives immoderate enactment to BofA's broader interest that portion of June's acceleration came from a impermanent event, though Duolingo pointed to a antithetic one-time origin than the expert did.

The institution besides said its current-user retention complaint reached an all-time precocious of 84%, up astir 1 percent constituent from a twelvemonth earlier. Management expects DAU maturation to stay supra 20% for the remainder of 2026, arguing that merchandise improvements and selling should supply much durable support.