A Tutor In Your Pocket

Duolingo (DUOL) Initiation

Duolingo co-founder and CEO Luis von Ahn: “Since launch, we’ve wanted to have a computer teach you a language. Another human can teach you a language very well, but it’s expensive… We’re very well-suited [for AI]. We need to make a computer as good as a human teacher… We watch tens of millions of people learn a language every day… In the next few years, we are going to have an app that will teach you as well as a one-on-one tutor.”

Duolingo’s mission is bold yet clear: “To develop the best education in the world and make it universally available”. Today, the scope of that education is primarily focused on language learning, delivered through short, bite sized lessons on their mobile app; beyond language learning, the company has expanded its course material to other subjects like chess, math, and music.

Over the past 15 years, the company made significant progress towards its long-term objective: as of Q1 FY26, Duolingo had nearly 140 million monthly active users (MAUs), up ~5x from pre-pandemic levels. This user base is inclusive of ~12.5 million paid subscribers, with that sub count up ~14x since Q4 FY19 (MAU penetration roughly tripled over that same period, to ~9%).

But one key issue, which helps to explain the nearly 80% stock price decline from the May 2025 highs, has been the material deceleration in DAU, paid sub, and bookings growth. As detailed in the Q4 FY25 letter, management believes the appropriate reaction for the long-term is to take a hit on FY26 bookings and earnings growth in order to accelerate top of funnel growth, with a goal of roughly doubling DAU counts over the next three years to ~100 million in FY28. (Note that MAU disclosures, which were previously reported on page one of the quarterly letter, have been relegated to the footnotes.)