Language-learning app Duolingo (NASDAQ:DUOL) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 41.1% year on year to $271.7 million. The company expects next quarter’s revenue to be around $275 million, close to analysts’ estimates. Its GAAP profit of $5.95 per share was significantly above analysts’ consensus estimates.
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Duolingo (DUOL) Q3 CY2025 Highlights:
- Revenue: $271.7 million vs analyst estimates of $260.6 million (41.1% year-on-year growth, 4.3% beat)
- EPS (GAAP): $5.95 vs analyst estimates of $0.76 (significant beat)
- Adjusted EBITDA: $80.05 million vs analyst estimates of $72.27 million (29.5% margin, 10.8% beat)
- Revenue Guidance for Q4 CY2025 is $275 million at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for the full year is $298.6 million at the midpoint, above analyst estimates of $294 million
- Operating Margin: 12.9%, up from 7% in the same quarter last year
- Free Cash Flow Margin: 28.5%, down from 34.2% in the previous quarter
- Monthly Active Users: 135.3 million, up 22.2 million year on year
- Market Capitalization: $12.01 billion
Company Overview
Founded by a Carnegie Mellon computer science professor and his Ph.D. student, Duolingo (NASDAQ:DUOL) is a mobile app helping people learn new languages.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Duolingo’s 41.7% annualized revenue growth over the last three years was incredible. Its growth surpassed the average consumer internet company and shows its offerings resonate with customers, a great starting point for our analysis.
This quarter, Duolingo reported magnificent year-on-year revenue growth of 41.1%, and its $271.7 million of revenue beat Wall Street’s estimates by 4.3%. Company management is currently guiding for a 31.2% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 26% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is healthy and indicates the market is forecasting success for its products and services.
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Monthly Active Users
User Growth
As a subscription-based app, Duolingo generates revenue growth by expanding both its subscriber base and the amount each subscriber spends over time.
Over the last two years, Duolingo’s monthly active users, a key performance metric for the company, increased by 33.1% annually to 135.3 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction. 
In Q3, Duolingo added 22.2 million monthly active users, leading to 19.6% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t accelerating user growth just yet.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track because it measures how much the average user spends. ARPU is also a key indicator of how valuable its users are (and can be over time).
Duolingo’s ARPU growth has been strong over the last two years, averaging 6.4%. Its ability to increase monetization while quickly growing its monthly active users reflects the strength of its platform, as its users continue to spend more each year. 
This quarter, Duolingo’s ARPU clocked in at $2.01. It grew by 17.9% year on year, slower than its user growth.
Key Takeaways from Duolingo’s Q3 Results
We were impressed by how significantly Duolingo blew past analysts’ EBITDA expectations this quarter. We were also glad its full-year EBITDA guidance exceeded Wall Street’s estimates. On the other hand, its EBITDA guidance for next quarter missed. This weighing on shares, and the stock traded down 19.1% to $211.46 immediately following the results.
So do we think Duolingo is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.