Duolingo 2025 Q1 Earnings Strong Performance as Net Income Surges 30%

Duolingo (DUOL) reported its fiscal 2025 Q1 earnings on May 01st, 2025. Duolingo exceeded expectations with a robust 30.3% net income increase, reaching a new fiscal Q1 record. The company's guidance remained in line, anticipating a gross margin decline but projecting recovery by year-end, supported by AI-driven efficiency gains. This optimistic outlook aligns with its steady revenue growth and strategic expansions.

Revenue

The total revenue of Duolingo increased by 37.7% to $230.74 million in 2025 Q1, up from $167.55 million in 2024 Q1.

Earnings/Net Income

Duolingo's EPS rose 23.8% to $0.78 in 2025 Q1 from $0.63 in 2024 Q1, marking continued earnings growth. Meanwhile, the company's profitability strengthened with net income of $35.13 million in 2025 Q1, marking 30.3% growth from $26.96 million in 2024 Q1. This performance indicates a positive trend in earnings.

Post-Earnings Price Action Review

The impact of Duolingo's earnings report on stock price exhibited mixed results. The revenue win rates showed a 43.75% success in both 3-day and 10-day windows, but a stronger 68.75% over 30 days, suggesting better medium-term gains post-earnings. Similarly, net income and EPS win rates also reflected a 43.75% success over 10 days and 68.75% over 30 days. This pattern indicates that Duolingo's stock generally performs well in the medium-term following earnings disclosures. However, the lower 3-day win rates for revenue and net income highlight potential immediate volatility after earnings releases. Investors may find more stable returns over longer periods post-earnings.

CEO Commentary

Luis von Ahn, Co-Founder and Chief Executive Officer, expressed optimism regarding Duolingo’s performance, highlighting a 49% year-over-year growth in daily active users and strong retention rates for the Max subscription service, which now accounts for 7% of subscribers. He emphasized that the company is leveraging generative AI to enhance content creation and improve user engagement across language learning and new subjects like chess and math. Von Ahn noted that while language learning remains the core business, the company is expanding its offerings to include subjects with significant demand. He remains enthusiastic about future growth, citing the potential of new features to attract users.

Guidance

Duolingo anticipates a gross margin decline of approximately 150 basis points year-over-year, with expectations of sequential improvement in the latter half of 2025. The company expects to finish the year with gross margins returning to prior levels, aided by efficiency gains from AI. Additionally, Duolingo maintains confidence in its 2025 revenue guidance, projecting a revenue of approximately $230.7 million, with an EPS target of $0.78.

Additional News

Recently, Duolingo has been active in expanding its educational offerings. On May 1, 2025, Duolingo announced the launch of 148 new AI-driven language courses, significantly expanding its course library. This marks the largest expansion in the company’s history, doubling the number of available courses. Additionally, Duolingo has faced some backlash due to its plan to replace contractors with AI, a move that has sparked discussions among users. Meanwhile, on April 3, 2025, Duolingo opened Duo’s Treehouse, a bilingual learning space in Pittsburgh, as part of its ‘Early Learners First’ program, highlighting its commitment to social impact and community engagement.