Duolingo (DUOL) Q3 2026 earnings summary

Executive summary

• Q3 revenue rose 14% YoY to $309.0M; DAUs grew 29% to 64.9M and paid subscribers increased 14% to 13.1M.

• Bookings, revenue and profitability exceeded expectations; DAU growth accelerated in 8 of the 10 largest markets and across regions and subjects.

• Product improvements, especially stronger retention, drove user growth; strategy is gradually emphasizing monetization while protecting the free experience.

Financial highlights

• Q3 total bookings rose 12% to $316.1M; subscription bookings increased 16% to $278.4M, with double-digit growth in most regions.

• Operating income fell 31% to $24.2M as expenses grew faster than revenue; Q3 R&D expense rose 30% to $107.7M and S&M expense rose 20% to $42.2M.

• Q3 net income was $27.2M versus $292.2M a year earlier, when a $222.7M one-time tax benefit followed deferred-tax valuation-allowance releases.

• Adjusted EBITDA was $78.7M versus $80.0M; free cash flow was $75.3M versus $77.4M. Nine-month Adjusted EBITDA and free cash flow rose to $239.5M and $301.8M, respectively.

• Q3 expenses included an $11M bonus accrual tied to user-growth targets; paid marketing was profitable, and record gross margin benefited from lower-than-expected AI costs.

Outlook and guidance

• Q4 guidance: bookings growth of 13% YoY, revenue growth of 14%, Adjusted EBITDA of $84M and margin of 26.1%; bookings are expected slightly ahead of prior guidance.

• FY 2026 guidance: bookings growth of 12% YoY, revenue growth of 18% and Adjusted EBITDA margin of 26.5%.

• Q4 DAU growth is expected to remain similar to Q3; gross margin is expected to decline slightly sequentially as Video Call reaches all paid subscribers, with operating expenses likely to grow faster than revenue.

• Full 2027 outlook is planned for February; priorities include user growth and additional monetization testing while preserving the free experience.

• Cash, cash equivalents, short-term investments and operating cash flow were expected to cover working capital, capital expenditures and potential repurchases for at least 12 months.