Duolingo reported Q3 2025 revenue of $271.7 million, a 41% year‑over‑year increase that beat consensus estimates of $260.5 million. The lift was driven by a 41% rise in subscription revenue to $191.3 million and a 33% jump in total bookings to $281.9 million, reflecting strong demand for its premium tiers and new AI‑powered features. The company’s net income surged to $292.2 million, or $5.95 per share, up from $23.4 million ($0.49 per share) in Q3 2024, largely due to a one‑time tax benefit of $222.7 million and disciplined operating costs.
The subscription segment continued to dominate growth, with the AI‑powered Duolingo Max tier contributing a higher margin mix that helped offset the modest decline in advertising revenue. Bookings growth, while robust, slowed slightly from the 36% increase in Q3 2024, indicating a deceleration in the pace of new user acquisition. Nevertheless, the company’s total bookings of $281.9 million surpassed the $260.5 million consensus estimate, underscoring the resilience of its monetization strategy.
Duolingo’s adjusted EBITDA reached $80.0 million, a record for the company and an expansion of the margin to 29.5% from 24.5% in the prior year. The margin growth was driven by the higher‑margin AI tier and improved operational leverage, while the company maintained a steady cost base despite increased investment in content and technology. The one‑time tax benefit also contributed to the strong profitability picture.
Management raised its full‑year revenue guidance to $1.0275 billion–$1.0315 billion and its bookings guidance to $329.5 million–$335.5 million, a modest upward revision from the previous outlook. The guidance reflects confidence in continued demand for AI‑enhanced learning experiences, but the company also cautioned that Q4 bookings would be lower than analyst expectations, signaling a strategic shift toward long‑term user growth over short‑term monetization. CEO Luis von Ahn emphasized that the company is “investing a lot more in long‑term things” to build a sustainable competitive advantage.
Investors reacted negatively to the earnings release, largely because the Q4 bookings guidance fell short of consensus estimates and the company’s stated focus on long‑term growth appeared to temper near‑term revenue momentum. The market’s concern centered on the perceived trade‑off between aggressive AI investment and immediate monetization, despite the strong Q3 performance and record profitability.
In context, Duolingo’s Q3 2025 results represent a significant acceleration from Q3 2024, where revenue was $192.6 million and net income $23.4 million. The company’s ability to generate a $5.95 EPS beat of $5.23 over the $0.72 consensus demonstrates the effectiveness of its cost controls and AI‑driven product enhancements. Looking forward, the company’s guidance signals confidence in sustaining growth, but the strategic pivot and Q4 bookings outlook will likely shape investor expectations for the remainder of the year.
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