---
title: "Duolingo 2Q25 Preview: Beat, but DAU declined"
type: "Topics"
locale: "zh-CN"
url: "https://longbridge.com/zh-CN/topics/32070081.md"
description: "Subscription model$Duolingo(DUOL.US) mainly has three tiers: free, super (individual, family), and MAX. In the first quarter, the price for new subscribers to the Super annual plan was increased, with the average monthly fee in the U.S. rising from $6.99 to $7.99 per month, while most markets saw a 10%-15% increase. DUOL maintained strong pricing power. Duolingo Max is the premium subscription tier launched by Duolingo, based on GPT-4 technology..."
datetime: "2025-07-22T04:17:38.000Z"
locales:
  - [en](https://longbridge.com/en/topics/32070081.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/32070081.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/32070081.md)
author: "[贝塔投研](https://longbridge.com/zh-CN/profiles/18677634.md)"
---

> 支持的语言: [English](https://longbridge.com/en/topics/32070081.md) | [繁體中文](https://longbridge.com/zh-HK/topics/32070081.md)


# Duolingo 2Q25 Preview: Beat, but DAU declined

# **Subscription Model**

$Duolingo(DUOL.US)主要有三个模式，分别是：免费、super（个人、家庭）、MAX。

![图片](https://pub.pbkrs.com/uploads/2025/b1b925716b3d4b9bf2fab7c617c53599?x-oss-process=style/lg)

In the first quarter, the price for new subscribers to the Super annual plan was increased. The annual fee in the US region rose from an average of $6.99 per month to $7.99 per month, while in most markets it was increased by 10%-15%. DUOL maintained a high pricing power in this regard.

Duolingo Max is a high-end subscription tier launched by Duolingo, based on GPT-4 technology, providing users with an AI-driven personalized language learning experience. It is currently available in the US, UK, Ireland, Canada, Australia, and New Zealand, supporting Spanish and French course tutoring for English speakers on iOS, with plans to expand further.

# **Financial Performance**

First quarter revenue was $231 million (+yoy38%), exceeding the expected $223 million; gross margin was 71.1%, down 1.9 percentage points from 73.0% in the same period in 2024, mainly due to the increased generative AI costs brought by the expansion of the Duolingo Max premium subscription tier, leading to a decline in subscription gross margin. Adjusted EBITDA was $62.8 million, a significant increase from $44 million in the same period last year; adjusted EBITDA profit margin was 27.2%, compared to 26.3% last year; net profit was $35.1 million, significantly higher than $27 million in the same period last year. Earnings per share (EPS) was $0.72 USD, higher than the expected $0.52 USD. After the news was announced, Duolingo's stock price rose nearly 10% in after-hours trading.

# **User Subscription**

Q1's “dead DUO” marketing campaign set a record for the fastest DAU growth, with a year-on-year increase of 49% to 46.6 million, and monthly active users (MAUs) reached 130 million, a year-on-year increase of 33%. Paid subscribers increased by 40% year-on-year, reaching 10.3 million. Users' willingness to pay for AI continued to rise, with Max subscribers accounting for 7% of total subscribers in the first quarter. Notably, the DAU/MAU ratio increased to 35.8%, up 3.7 percentage points from the same period last year, reflecting a dual improvement in user stickiness and activity.

![图片](https://pub.pbkrs.com/uploads/2025/9115388b5f83f69091c86a6ddbfabe87?x-oss-process=style/lg)

In the first quarter, with only $26.66 million in marketing expenses (including marketing staff salaries, etc.), Duolingo attracted 15.2 million daily active users, with an average customer acquisition cost of only $1.75, demonstrating high marketing conversion efficiency.

In the first quarter of 2025, Max subscribers accounted for 7% of total subscribers. The company continues to test different pricing strategies in various countries, with Max pricing being higher in some countries. As AI costs are optimized and prices decrease, it is expected that prices will be lowered in the coming months. The 3D video call feature is being tested among some users, offering stronger interactivity, allowing users to discuss pets with Lily, which is expected to enhance user engagement, word-of-mouth effects, and retention rates. The company expects that as AI cost optimization progresses, video call and Max feature optimization advances as planned, and API call prices decrease, profit margins are expected to expand in the second half of the year.

The company's CEO pointed out in the earnings call that this growth is due to the dual-wheel strategy of “global content ecosystem + localized operations.” For example, the “Chinese learning craze” plan launched for the US market led to a 216% year-on-year surge in the number of Chinese learners in the US; while in emerging markets such as India and Brazil, Duolingo has increased the paid subscription conversion rate by 15% through cooperation with local payment platforms.

In the first quarter, Duolingo utilized generative AI technology to add 148 language courses for speakers of different native languages, covering niche needs such as Portuguese speakers learning Korean and Japanese speakers learning German. This number is close to the total course development volume of the company over the past 12 years, with a tenfold increase in production efficiency.

# **Guidance**

Duolingo raised its 2Q and full-year performance guidance. It is expected that second-quarter revenue in 2025 will be between $238.5 million and $241.5 million, corresponding to a year-on-year growth of 33.7%-35.4%; the median booking is $245 million. The company raised its full-year revenue guidance for 2025 to $987 million to $996 million, considering the growth in 1Q and 2Q, which may imply that revenue growth in the second half of the year will slow to about 28.6%-30.2%.

![图片](https://pub.pbkrs.com/uploads/2025/d1ada9ccdebcbd1aa51b661f3a3cb587?x-oss-process=style/lg)

For the second quarter's gross margin, the company expects a decline of about 50 basis points compared to the first quarter, and the company is confident that gross margins will improve in the second half of the year. For the fiscal year 2025 gross margin, the company provided guidance better than the previous quarter, expecting a decline of 1.5%.

# **Marketing & Major Activities This Quarter**

**AI first strategy, significantly increased new course development speed, but caused controversy.** With the help of AI tools, the company launched 148 new courses in the first quarter, increasing production efficiency tenfold. On April 28, the company announced an AI-first strategy, “replacing as many employees as possible with AI.” Many insiders reported that Duolingo laid off most of its employees, and almost all new courses were generated by AI, with human assistance only. When positions such as design, review, and teaching consultants were “optimized,” this move was not cost-effective but rather “technology supremacy.” Although it improved profits in the short term, it may deviate from user pain points in the long term. The excessive involvement of AI and the lack of human input led many users to report that many example sentences were too “abstract” and often incorrect during the learning process.

![图片](https://pub.pbkrs.com/uploads/2025/b2554628ff8977f4a14e4fc67f3dd0d8?x-oss-process=style/lg)

**Marketing genius, optimizing learning mode.** The company's marketing conversion rate is effective, **Q1's dead DUO**, social media's “crazy” marketing, following various hot topics. This quarter in China, **Duolingo and Luckin Coffee's “marriage”** further increased exposure. Due to the high overlap of their core customer groups, the hashtag #LuckinCoffeeCollaborationDuolingo on Xiaohongshu has 7.168 million views and 101,000 discussions.

On July 3, the official website announced that **Duolingo will switch to an energy bar instead of the previous “each mistake = 1 heart” learning mode**, changing from punishment for mistakes to rewards for success. This mode change will promote deeper engagement, as learners can restore energy, take more courses, and gain deeper learning abilities.

![图片](https://pub.pbkrs.com/uploads/2025/ea0a455c43684487f9316d591507fd30?x-oss-process=style/lg)

In addition, since the major cost is channel sharing, such as **Apple tax, Google tax**, etc., Duolingo also mentioned the idea and operation of guiding users to pay and recharge on the web. However, after simple testing, due to the friction cost of switching platforms, it may actually reduce the payment rate, so Duolingo is not in a hurry to promote this for now. Overall, short-term cost optimization is hindered, but the trend of gradual improvement in the medium to long term will not change significantly.

**Significant trend in online learning, Duolingo penetration rate increases.** According to a survey by Evercore ISI, in the US and Germany, APP/website is the main way respondents learn languages. In the US, 64% of respondents said they learn languages online, much higher than 55% in 2024. Similarly, in Germany, 69% of respondents said they learn languages online, significantly higher than other methods. Among them, **58% of online language learners in the US use Duolingo**, significantly higher than its competitor Babbel's 23% with a similar learning mode. **In Germany, the penetration rate is even higher, reaching 63%**, while Babbel is 51%. However, it is worth noting that in these two markets, DUOL still accounts for only about 10% of total language learners, indicating significant potential for supporting advanced users (MAU, Sub) growth in the foreseeable future.

In addition, in terms of satisfaction, 64% of US Duolingo users expressed satisfaction, and 91% of German users were satisfied. The satisfaction of each subscription tier continues to improve.

# **Our View**

Due to the global popularity of the “dead DUO” marketing campaign in 1Q, leading to a high base of MAU and revenue. DUOL's stock price has significantly underperformed the S&P 500 (+7%) since its historical high in May, down 34%, due to the company's controversial AI remarks, market concerns about slower-than-expected user and subscription growth, and increased AI costs dragging down gross margins (although the company claims improvement in the second half).

Sensor Tower data shows **Duolingo's global DAU grew by +39% in the second quarter** (including +37% in June, +40% in May, and +41% in April). **Wall Street expects second-quarter daily active users to grow by 42% year-on-year.** However, based on Sensor Tower data and recent CEO comments on AI and labor in April causing public opinion to ferment, **we believe DAU may grow more steadily****.**

![图片](https://pub.pbkrs.com/uploads/2025/bea9e5cfd188709559e8bceb3fa2d80a?x-oss-process=style/lg)

Based on the company's assumption of 40-45% DAU growth in 2Q, it expects second-quarter bookings to grow by 29% year-on-year, with a median growth of 30% at constant exchange rates. We are cautious about the growth of bookings in the second quarter.

However, considering: 1. Duolingo's penetration rate, willingness to pay, and satisfaction of each subscription tier in major markets such as the US and Europe, and it is still ranked first in the education APP download rankings in 113 countries worldwide. 2. Since 1Q, significantly increased marketing efforts in China (open days, video account travel check-ins, Luckin collaboration), continuously expanding brand influence. 3. Slight price increase for Super subscription, stronger foreign exchange, and increased MAX monetization rate. **We expect 2Q results to achieve a beat and even reach the high end of the guidance, but as mentioned above, DAU estimates will decline.**

# **Valuation**

Duolingo, as a “subscription platform,” relies on the scale effect of users but is limited by the “teaching” ceiling; currently, with slowing growth, the second curve of chess/music/math is weak, making it difficult to return to the previous low base period for valuation premiums. Based on the latest FY25 guidance, using the median PS of 18 in 2024 corresponds to a market value of $18 billion, and using the upper end of the reasonable PS range of 21x in 2024 corresponds to a market value of $21 billion.

JP Morgan lowered the target price to $500 while maintaining an overweight rating; UBS maintained the target price at $500. DA Davidson also adjusted the target price to $500.

_Disclaimer: The content represents the author's independent views and does not represent the position of Beta International Securities. Unauthorized reproduction is prohibited. The content is for reference only and does not constitute actual operation advice. Trading risks are borne by the trader. For the latest and most comprehensive Hong Kong and US stock information, please follow the WeChat public account: Beta Investment Think Tank._

### 相关股票

- [Duolingo (DUOL.US)](https://longbridge.com/zh-CN/quote/DUOL.US.md)