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Duolingo Shares Drop 18% After Soft 2026 Outlook Despite Q4 Beat

Duolingo Inc. (NASDAQ: DUOL) reported fourth-quarter results that exceeded analyst estimates but issued weaker-than-expected guidance for 2026, sending shares down 18% intra-day Friday as the company shifts focus toward user growth over short-term profitability. The language-learning platform posted adjusted earnings per share of $0.84, slightly above the analyst estimate of $0.83. Revenue climbed 35% year over year to $282.9 million, surpassing the $275.74 million consensus estimate. However, first-quarter revenue guidance of $288.5 million fell below the $291.8 million consensus forecast. Full-year revenue guidance of $1.20 billion to $1.22 billion trailed analyst expectations of $1.26 billion. The midpoint of $1.21 billion implies approximately 17% growth, below prior growth rates. Daily active users increased 30% year over year to 52.7 million, while paid subscribers grew 28% to 12.2 million. Chief Executive Luis von Ahn acknowledged that DAU growth slowed throughout 2025 and projected approximately 20% DAU growth in 2026, down from growth exceeding 40% in earlier periods. Duolingo expects bookings growth of around 11% in 2026, compared with nearly 20% under its prior strategy. Adjusted EBITDA margin is projected to decline to approximately 25% from 29.5% in 2025, reflecting the company’s decision to move its Video Call feature from the premium Max tier to the standard Super Duolingo subscription and to reduce friction for free users. Management estimated that it is reinvesting more than $50 million in foregone bookings into improving the free user experience.