Duolingo Stock Skyrockets as Accelerating User Growth and Raised Revenue Forecast Revive Investor Confidence

Shares of Duolingo Inc. jumped nearly 28% on Wednesday after the language-learning app reported faster user growth for a second straight quarter, topped revenue forecasts and raised its full-year sales outlook, sparking a sharp rebound in a stock that had lost about half its value over the past year.

Duolingo shares rose $35.70 to $163.70 in Wednesday trading, with nearly 895,000 shares traded. The gain lifted the company's market value to about $7.6 billion, though the stock remains roughly 51% lower than a year ago.

The surge followed a weak regular session on Tuesday. Shares had closed 5.37% lower before the company released results after the bell, then rose about 12% in after-hours trading.

User growth accelerates

Daily active users were the headline. DAUs grew 29% from a year earlier, up from 23% in the prior quarter, marking a second straight quarter of acceleration.

Co-founder and Chief Executive Luis von Ahn credited the company's strategy. "We had a great Q3, with DAU growth accelerating to 29% year over year, and all of our key financial metrics coming in ahead of expectations," said von Ahn.

The growth was broad-based. Management said year-over-year DAU growth accelerated in eight of its 10 largest countries.

Revenue beats, earnings dip below forecast

Revenue rose 14% to $309 million for the quarter ended Sept. 30, beating the analyst consensus of $303.04 million. Adjusted earnings of 54 cents per share, however, fell short of the 57-cent estimate.

Bookings improved as well. Bookings increased 12% to $316.1 million, accelerating four percentage points from the prior quarter, with subscription bookings up 16%, six points faster than in the second quarter.

The company said bookings, revenue and adjusted EBITDA all came in ahead of its most recent guidance.

Operating costs rose partly because of an incentive tied to user growth. GAAP operating expenses increased 24% and included an $11.4 million accrual for a company-wide performance bonus tied to hitting a fourth-quarter DAU growth goal of 25% or more.

Guidance raised

Duolingo lifted its revenue outlook for the year. The company now expects 2026 revenue of $1.221 billion, up from about $1.207 billion and above Wall Street's estimate of about $1.208 billion.

Executives said the momentum should continue. Management said it expects fourth-quarter DAU growth similar to the third quarter and fourth-quarter bookings slightly ahead of previous guidance.

Shifting toward monetization

After a year focused on rebuilding user growth, Duolingo signaled it would gradually lean more into revenue. Executives said they are not yet providing 2027 guidance but feel good about bookings growth and are starting to concentrate more on monetization now that DAU growth has reaccelerated.

Von Ahn said the company will keep making the app more fun and effective while gradually putting more focus on growing bookings in ways that preserve the quality of its free experience.

Analysts on the call pressed on one gap. A major discussion point was the difference between DAU growth and paid subscriber growth. Paid subscribers came in slightly below expectations.

Strong balance sheet

Duolingo ended the quarter with ample cash. Cash and short-term investments rose to $1.4 billion. Through Oct. 30, the company had repurchased 781,439 shares for $82 million under a $400 million program announced in February, offsetting all dilution from 2024 and 2025.

The results mark a turning point for a company whose shares slumped as investors worried about slowing user growth. Wednesday's rally suggests investors see the strategy of investing in the product paying off, with the next test being whether faster user growth translates into stronger subscription revenue in 2027.