In Q4 2025, Duolingo announced it would let go of $50M in bookings to reach 100 million daily active users (DAUs) by 2028; a strategy Class Central covered in detail last month.
2026 is its “investment year,” and Q1 was the first quarter of execution. So far, the plan seems to be working.
The Expected Results: Low Bookings, High DAUs
Duolingo is running multiple tests to improve the free experience: spoken tokens for speaking practice, Speaking Adventures for real-world conversations, and flashcards for recall.
Another test is increasing the free trial period. The company is experimenting with a 1-month trial period with 3-month trials in the pipeline. My colleagues noticed these changes in their free experience: more trial days, more Energy points, and fewer ads. Dhawal, our founder, recently re-joined the app after a while and found the experience smoother than before.
I noticed that Duolingo cut the number of ads from two per session to one. Plus, the third-party ads were replaced by a Super Duolingo one. The revenue shows it: ad revenue decreased QoQ.
The DAUs have jumped 21% year over year, right on target. Subscription bookings growth slowed to ~15% after years of 40%+ Q1 growth. But the company had flagged this in the Q4 2025 report.
The comparison is a bit misleading. Q1 2025 got a huge boost from the Dead Duo campaign, which had over a billion impressions on social media, making Q1 2026 look worse by comparison.
The Alternate Road to More DAUs & Paid Subscribers
Duolingo is making the free experience smoother. It even created 20,500 course units this quarter, 10 times what it was producing two years ago. Engagement is at its highest since the IPO.
But paid subscriber growth is slowing. Duolingo had been adding around 600,000 to 900,000 paid subscribers per quarter. In Q1 2026, it added just 300,000. The DAU strategy is working, but it’s not converting free users into paying ones at the same rate.
Duolingo has mostly grown through word of mouth, but CEO Luis von Ahn said the company is now investing in performance marketing to attract users who are more likely to pay. It already runs profitable ad campaigns in China, and is now turning to the U.S., where users spend more.
“One of the problems has been being able to acquire a user and actually getting them to subscribe. And that’s the thing that we need to get over. At the moment, in some geographies we have profitable performance marketing, but in many geographies we do not.” — CEO Luis von Ahn
That’s likely why sales and marketing expenses jumped 47% year over year.
What’s Coming in Q2?
Management expects Q2 to be the slowest quarter for bookings, with ~6% growth. Revenue growth is also expected to slow, from 27% in Q1 to ~17% in Q2, as more AI is used to improve the free experience, compressing margins.
Q2 2026 is also competing against Q2 2025, when Duolingo launched Energy and was pushing paid subscriptions, driving 37% growth in paid subscribers plus strong ad revenue.
Despite this, the company’s finances are solid: over $1 billion in cash, no debt, and $350M+ in free cash flow (cash left over after running and reinvesting in the business) expected this year.
The stock dropped ~8% after earnings and is now down ~80% from its May 2025 peak, continuing a streak of post-earnings declines.
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