Form type: 10-Q
Period end: 2026-03-31
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | |
|---|---|---|
| Revenue | 291,967,000 | 230,743,000 |
| Total Revenue | ||
| Cost of revenue | 78,871,000 | 66,647,000 |
| Total COGS | ||
| Gross Profit | ||
| General and administrative | 46,346,000 | 43,450,000 |
| Income tax expense (benefit) | 12,092,000 | -125,000 |
| Interest income, operating | -11,811,000 | -10,415,000 |
| Other income (expense), net | 786,000 | -1,001,000 |
| Research and development | 82,974,000 | 70,390,000 |
| Selling and marketing | 39,249,000 | 26,662,000 |
| Total Expenses | ||
| Net Income | ||
| Basic earnings per share |
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Assets | ||
| Accounts receivable | 125,086,000 | 162,827,000 |
| Cash and cash equivalents | 1,138,561,000 | 1,036,389,000 |
| Deferred contract costs | 104,513,000 | 102,663,000 |
| Deferred tax assets | 217,837,000 | 227,339,000 |
| Goodwill and intangibles | 63,662,000 | 63,644,000 |
| Long-term investments | 140,211,000 | 135,098,000 |
| Operating lease right-of-use assets | 79,944,000 | 80,380,000 |
| Other assets (derived) | 5,092,000 | 14,067,000 |
| Other noncurrent assets | 10,680,000 | 10,083,000 |
| Prepaid expenses and other current assets | 19,658,000 | 16,582,000 |
| Property, plant and equipment | 36,966,000 | 36,297,000 |
| Restricted cash and equivalents | 2,735,000 | 2,735,000 |
| Short-term investments | 113,049,000 | 104,078,000 |
| Total Assets | ||
| Liabilities | ||
| Accounts payable | 7,486,000 | 7,998,000 |
| Accrued liabilities | 49,558,000 | 45,688,000 |
| Deferred revenue | 513,256,000 | 496,205,000 |
| Deferred tax liabilities | 243,000 | 249,000 |
| Operating lease liabilities, noncurrent | 91,873,000 | 93,779,000 |
| Taxes payable | 3,814,000 | 1,257,000 |
| Total Liabilities | ||
| Equity | ||
| Stockholders equity | 1,391,764,000 | 1,347,006,000 |
| Total Equity | ||
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | |
|---|---|---|
| Operating activities | ||
| Net income | 43,460,000 | 35,135,000 |
| Depreciation and amortization | 4,191,000 | 3,590,000 |
| Stock-based compensation | 34,647,000 | 31,018,000 |
| Changes in operating assets and liabilities, net | 68,473,000 | 35,888,000 |
| Net cash from operating activities | ||
| Investing activities | ||
| Investing activities, net | -16,749,000 | -10,549,000 |
| Net cash from investing activities | - | - |
| Financing activities | ||
| Financing activities, net | -31,850,000 | 3,123,000 |
| Net cash from financing activities | - | |
| Net change in cash | ||
| Cash at beginning of period | 788,526,000 | |
| Cash at end of period | 886,731,000 | |
| Amount | |
|---|---|
| Balance at beginning of period | 1,347,006,000 |
| Net income | 43,460,000 |
| Other equity movements | 1,298,000 |
| Balance at end of period | 1,391,764,000 |
Duolingo, Inc. is a public reporting company classified under Services-Prepackaged Software. The accompanying condensed financial statements as of and for the three months ended March 31, 2026 are unaudited and have been prepared from the Company's connected books and records, and, in the opinion of management, include all adjustments necessary for a fair statement of the interim results; the results for the interim period are not necessarily indicative of the results to be expected for the full fiscal year. These notes reflect the Company's financial position and results as of and for the period ended March 31, 2026.
Revenue for the three months ended March 31, 2026 was $291,967,000, an increase of 26.5% from $230,743,000 in the prior-year period. Deferred revenue was $513,256,000 at period end, compared to $415,023,000 in the prior period, an increase of 23.7%, and deferred contract costs were $104,513,000, compared to $89,564,000 in the prior period. The Company had approximately 56.5 million and 46.6 million DAUs for the three months ended March 31, 2026 and 2025, respectively, representing an increase of 21% from the prior year period, driven largely by an increase in retention of current users. Net income was $43,460,000 for the three months ended March 31, 2026, compared to $35,135,000 in the prior-year period. Basic earnings per share was $0.93, based on weighted-average basic shares outstanding of 40,618,000.
Total liabilities were $666,230,000 as of March 31, 2026. Noncurrent operating lease liabilities were $91,873,000 at period end, compared to $54,533,000 in the prior period, an increase of 68.5%, and the related operating lease right-of-use assets were $79,944,000, compared to $46,369,000 in the prior period, an increase of 72.4%. Other liability balances included accounts payable of $7,486,000, accrued liabilities of $49,558,000, and taxes payable of $3,814,000 as of March 31, 2026.
Total stockholders' equity was $1,391,764,000 as of March 31, 2026, compared to $893,826,000 in the prior period, an increase of 55.7%. The increase in stockholders' equity reflects, in part, the net income generated during the period, as net income was $43,460,000 for the three months ended March 31, 2026. As of March 31, 2026, the Company held cash and cash equivalents of $1,138,561,000, restricted cash and equivalents of $2,735,000, short-term investments of $113,049,000, and long-term investments of $140,211,000.
| Current | Prior | |
|---|---|---|
| Operating lease liabilities, noncurrent | 91,873,000 | 93,779,000 |
| Total debt | 91,873,000 | 93,779,000 |
| Current | Prior | |
|---|---|---|
| Property, plant and equipment | 36,966,000 | 36,297,000 |
| Total property and equipment | 36,966,000 | 36,297,000 |
| Current | Prior | |
|---|---|---|
| Stockholders equity | 1,391,764,000 | 1,347,006,000 |
| Total stockholders' equity | 1,391,764,000 | 1,347,006,000 |
Duolingo, Inc. is a public reporting company classified under Services-Prepackaged Software. Revenue for the three months ended March 31, 2026 was $291,967,000, an increase of 26.5% from $230,743,000 in the comparable prior-year period. The growth in revenue was accompanied by an increase in deferred revenue to $513,256,000 from $415,023,000, an increase of 23.7%, and an increase in accounts receivable to $125,086,000 from $114,183,000, an increase of 9.5%. Cost of revenue increased 18.3% to $78,871,000 from $66,647,000, a rate of increase below the growth in revenue. Deferred contract costs increased 16.7% to $104,513,000 from $89,564,000, consistent with the expansion of our revenue base.
Research and development expense increased 17.9% to $82,974,000 from $70,390,000, reflecting continued investment in our products, while selling and marketing expense increased 47.2% to $39,249,000 from $26,662,000, and general and administrative expense increased 6.7% to $46,346,000 from $43,450,000. Interest income, representing income earned during the period, increased to $11,811,000 from $10,415,000 in the prior-year period. Other income (expense), net reflected a net expense of $786,000 in the current period, compared to net income of $1,001,000 in the prior-year period. Income tax expense was $12,092,000, compared to a benefit of $125,000 in the prior-year period. As a result, net income was $43,460,000 for the three months ended March 31, 2026, compared to $35,135,000 in the prior-year period. Basic earnings per share was $0.93, based on weighted-average basic shares outstanding of 40,618,000.
As of March 31, 2026, we held cash and cash equivalents of $1,138,561,000, short-term investments of $113,049,000, and long-term investments of $140,211,000, compared with $883,996,000, $115,284,000, and $83,342,000, respectively, as of the prior period. Cash and cash equivalents increased 28.8% over the prior period, while long-term investments increased 68.2% and short-term investments decreased 1.9%. We also held restricted cash and equivalents of $2,735,000, unchanged from the prior period. Our primary exposure to market risk is interest rate risk on our cash, cash equivalents, and short-term investments, and because these balances are invested in interest-bearing instruments, changes in prevailing interest rates affect the amount of interest income we earn and the fair value of our investment portfolio. During the period, we recognized interest income of $11,811,000, compared with $10,415,000 in the prior period, an increase of approximately 13.4%. Total stockholders' equity increased 55.7% to $1,391,764,000 from $893,826,000. Based on our current cash, cash equivalents, and investment balances, together with cash expected to be generated from operations, management believes our existing resources are sufficient to fund our operations and capital requirements for at least the next twelve months.
We are exposed to market risks in the ordinary course of our business, and our primary market risk exposure is interest rate risk on our cash, cash equivalents, and short-term investments. As of March 31, 2026, we held cash and cash equivalents of $1,138,561,000, short-term investments of $113,049,000, and long-term investments of $140,211,000. Our cash and cash equivalents increased from $883,996,000 in the prior period, an increase of 28.8%, while short-term investments declined 1.9% from $115,284,000 and long-term investments increased 68.2% from $83,342,000. These holdings are maintained primarily for working capital and general corporate purposes, and fluctuations in market interest rates affect the interest income we earn on these balances. For the period, we generated interest income of $11,811,000, compared to $10,415,000 in the prior period, an increase of 13.4%. A hypothetical change in market interest rates would affect the fair value of our investment portfolio and the amount of interest income earned in future periods; however, due to the nature of our holdings, we do not believe such a change would have a material effect on our financial condition or results of operations. [COMPLETE: quantified sensitivity analysis of a hypothetical interest rate change on the investment portfolio]
With respect to other market risks, we do not have material foreign currency or commodity price exposure. We will continue to monitor our exposure to market risks and may take steps to mitigate such risks in the future if we determine that our exposures have become material.
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2026. Based on that evaluation, management concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
The conclusion language set forth above is presented in draft form and must be reviewed and formally adopted by management before this report is filed with the Securities and Exchange Commission. Management should confirm that the evaluation described herein accurately reflects the procedures actually performed and the conclusions actually reached as of the end of the period prior to filing.
We are involved in various legal proceedings arising in the ordinary course of business from time to time. The outcomes of such matters are inherently uncertain, and we assess these matters on an ongoing basis. Management does not currently believe that any pending matter, individually or in the aggregate, is material to our financial statements.
Based on management's current assessment, we do not expect the resolution of any legal proceedings presently pending against us to have a material effect on our consolidated financial statements. We will continue to monitor developments in these matters and will make disclosures in future filings as circumstances warrant.
The Company is involved in legal proceedings arising in the ordinary course of business from time to time. Management does not currently believe any pending matter is material to the financial statements; however, litigation is inherently uncertain, and an adverse outcome in any such matter could harm the Company's business or financial condition. In addition, any future failure to maintain effective disclosure controls and procedures could impair the reliability of the Company's financial reporting, even though management evaluated disclosure controls and procedures as of the end of the period and concluded they were effective at the reasonable assurance level, and no changes materially affected internal control over financial reporting during the quarter.
The Company's primary market risk exposure is interest rate risk on cash, cash equivalents, and short-term investments. Cash and cash equivalents of $1,138,561,000, short-term investments of $113,049,000, and long-term investments of $140,211,000 support the Company's capital position, and changes in prevailing interest rates could affect the income generated by, and the fair value of, these holdings. The Company does not have material foreign currency or commodity price exposure.
The Company's results of operations may fluctuate from period to period, and interim results should not be relied upon as indicative of future performance. For the period ended March 31, 2026, the Company recognized revenue of $291,967,000 and net income of $43,460,000, and the results of operations for the interim period are not necessarily indicative of the results to be expected for the full fiscal year. Investors should consider these factors, together with the risk factors described in the Company's Annual Report on Form 10-K, in evaluating an investment in the Company. [COMPLETE: description of any material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K]
During the three months ended March 31, 2026, the following information is provided pursuant to Item 408(a) of Regulation S-K regarding the adoption or termination of Rule 10b5-1 trading arrangements by directors and officers of Duolingo, Inc. [COMPLETE: Rule 10b5-1 trading arrangement adoptions and terminations from the D&O questionnaires]