Q2 FY2026
Filed Aug 5, 2026Q2 2026 revenue increased 18% year over year to $298.5M, while DAUs grew 23% to 58.7M and the company raised its full-year Adjusted EBITDA margin outlook to approximately 26.5%.
DAU growth accelerated and revenue grew 18%, while gross margin exceeded the company’s expectation and full-year Adjusted EBITDA margin guidance increased. Bookings growth slowed to 8%, however, and net income, Adjusted EBITDA, operating cash flow, and free cash flow declined year over year.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Daily Active Users (DAUs)other | 58.7M | – | 23% YoY |
| Monthly Active Users (MAUs)other | 140.6 million | – | 10% year-over-year growth |
| Paid subscribers (period end)other | 12.7M | – | 17% YoY |
| Current User Retention Rate (CURR)other | 84% | – | up by about 1% from last year |
| Subscription bookingsother | $250.3M | – | 10% |
| Total bookingsother | $289.1M | – | 8% YoY |
| RevenueGAAP | $298.5M | – | 18% YoY |
| Gross profitGAAP | $216.7 | – | 19% |
| Gross marginGAAP | 72.6% | – | 20 bps |
| Net incomeGAAP | $33.2M | – | (26)% |
| Net income marginGAAP | 11.1% margin | – | – |
| Adjusted EBITDAnon-GAAP | $77.3M | – | (2)% |
| Adjusted EBITDA marginnon-GAAP | 25.9% | – | (530) bps |
| Net cash from operating activitiesGAAP | $88.3M | – | (3)% |
| Net cash from operating activities marginGAAP | 29.6% margin | – | – |
| Free cash flownon-GAAP | $78.6M | – | (9)% |
| Free cash flow marginnon-GAAP | 26.3% | – | (790) bps |
| Fully diluted shares outstandingother | approximately 50.7 million | – | – |
| Streak Revival participantsother | 15.4 million learners | – | – |
| Streak Revival participants with no active streak when the event beganother | nearly 8 million users | – | – |
Q3 2026 and FY 2026 outlook
- Revenue$302 (Q3 2026); $1,207 (FY 2026)
- Gross marginapproximately 71.0% in Q3; approximately 71.6% for the full year
- NoteBookings: $307 (Q3 2026); $1,285 (FY 2026)
- NoteYoY Bookings growth: 8.9% (Q3 2026); 10.9% (FY 2026)
- NoteYoY Revenue growth: 11.1% (Q3 2026); 16.3% (FY 2026)
- NoteAdjusted EBITDA: $76 (Q3 2026); $320 (FY 2026)
- NoteAdjusted EBITDA margin: 25.2% (Q3 2026); 26.5% (FY 2026)
- NoteConstant-currency Q3 2026 year-over-year growth for bookings and revenue: 8.9% and 11.1%, respectively
- NoteConstant-currency full-year 2026 year-over-year growth for bookings and revenue: 9.4% and 14.9%, respectively
- NoteStock-based compensation: around 15.0% of revenue in 2026
Capital returns
- Under the $400 million share repurchase program announced in February, the company repurchased approximately $44.4 million, or approximately 432 thousand shares of stock during Q2.
- Repurchases totaled approximately $71.9 million, or approximately 708 thousand shares, through August 1, 2026.
- The company stated that repurchases through August 1, 2026 represented nearly all of 2024 and 2025 dilution.
What drove it
- DAU growth was attributed to product changes, marketing impact, and the one-time Streak Revival event.
- CURR reached an all-time high of 84%, up by about 1% from last year.
- Most new Super Duolingo subscribers now have access to Video Call, with access for existing Super subscribers expected later in the year.
- Longer free trials yielded good early results and are expected to increase both revenue and DAUs.
- The company cited creator marketing, including influencer-generated content, and progress in performance marketing as contributors to top-of-funnel growth.
- Gross margin performance reflected the measured pace of AI-powered feature expansion and AI cost efficiencies.
Concerns
- Total bookings growth slowed from Q1 due to a tough prior-year comparison given the initial rollout of Energy, a price increase, and advertising outperformance in the year-ago quarter.
- Net income declined (26)% year over year to $33.2M.
- Adjusted EBITDA declined (2)% year over year and Adjusted EBITDA margin declined (530) bps to 25.9%.
- Free cash flow declined (9)% year over year and free cash flow margin declined (790) bps to 26.3%.
- The company stated that this year’s Adjusted EBITDA margin reflects its deliberate choice to invest in user growth.
- Streak Revival was a one-time event.
What to watch
- Whether DAU year-over-year growth remains above the previously guided 20% throughout the rest of the year.
- Q3 bookings growth guidance of approximately 8.9% and full-year bookings growth guidance of approximately 10.9%.
- The rollout of Video Call to existing Super subscribers later in the year.
- The pace of performance-marketing development as a meaningful and efficient driver of long-term growth.
- Gross-margin delivery against guidance of approximately 71.0% in Q3 and approximately 71.6% for the full year.
- The effect of foreign exchange movements, as the company estimates every 1% change in the dollar versus its currency basket equates to about a $4 million impact on H2 bookings.
Balance sheet and cash flow
- The company ended the quarter with approximately $1.3 billion in cash and short-term investments.
- Net cash provided by operating activities was approximately $88.3 million.
- Free cash flow was approximately $78.6 million, representing a 26.3% free cash flow margin.
Analysis
Duolingo reported Q2 2026 revenue of $298.5M, up 18% year over year, alongside total bookings of $289.1M, up 8%. Subscription bookings increased 10% to $250.3M. The company characterized topline results as in line with its expectations, while noting that bookings growth slowed from Q1 because of a difficult year-ago comparison involving the initial rollout of Energy, a price increase, and advertising outperformance in the year-ago quarter.
Management, verbatim
Q2 was a strong quarter.
Luis von Ahn, CEO and Co-Founder
Our financial plan for the year remains on track: we are reaffirming our topline guidance and raising our Adjusted EBITDA outlook, reflecting stronger-than-expected profitability.
Luis von Ahn, CEO and Co-Founder
A better product creates more engaged users, which ultimately helps us build a larger and more durable business.
Luis von Ahn, CEO and Co-Founder
Not in the filing
stated, not guessed- GAAP operating income
- GAAP operating margin
- GAAP diluted earnings per share
- Non-GAAP earnings per share
- Debt balance
- Dividend amount or dividend policy
- Capital expenditures
- Q2 2026 operating expenses
- Q2 2026 tax rate
- Prior-quarter values for reported operating and financial metrics
- Segment revenue disclosures
- Previous-release outlook for comparison with actual Q2 2026 results
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.