Duolingo Inc. (DUOL) Q2'26 Earnings Review Focus Remains on Strategic Shift While Building Future Monetization Levers

Equity Research 6 August 2026 | 12:45AM EDT

Duolingo Inc. (DUOL) Q2’26 Earnings Review: Focus Remains on Strategic Shift While Building Future Monetization Levers

DUOL 12m Price Target: $114.00 Price: $135.32 Downside: 15.8% NEUTRAL Eric Sheridan In its Q2’26 earnings report, Duolingo (DUOL) mgmt focused on a | Goldman Sachs & Co. LLC few key themes: 1) solid performance with Q2 Bookings, Revenue, & Aarshiya Sachdeva Adj. EBITDA all exceeding guidance & GSe/FactSet Street estimates; | Goldman Sachs & Co. LLC 2) reiterated focus on their long-term strategy of prioritizing user growth, noting an acceleration in Q2 DAU growth and encouraging Emma Huang | Goldman Sachs & Co. LLC engagement trends exiting the quarter and into Q3 (which mgmt attributes to product enhancements, impactful marketing, and its Streak Revival campaign in June); 3) increasing evidence that AI can Key Data _____________________________________ Market cap: $6.9bn serve as both a product differentiator and margin tailwind, with Enterprise value: $5.6bn 3m ADTV: $166.1mn both AI feature expansion and cost efficiencies (i.e. reduction in United States Video Call inference costs) helping drive gross margin Americas Internet M&A Rank: 3 outperformance and a higher full-year profitability outlook; 4) GS Forecast __________________________________ growing monetization optionality through advertising and 12/25 12/26E 12/27E 12/28E

subscription tiering by way of free trials and AI-powered Revenue ($ mn) New Revenue ($ mn) Old 1,037.6 1,037.6 1,207.2 1,199.1 1,355.2 1,347.0 1,541.2 1,531.7 experiences – with mgmt emphasizing that these initiatives will be EBITDA ($ mn) EBIT ($ mn) pursued in a manner that does not compromise user growth; & 5) EPS ($) New commitment to shareholder returns, with ~$44m in stock EPS ($) Old P/E (X) repurchases (~430,000 shares) in Q2. Dividend yield (%) -- -- -- -- Net debt/EBITDA (X) (3.4) (3.9) (4.1) (4.7) In the coming quarters, we think investors will remain focused on a 6/26 9/26E 12/26E 3/27E return to more visible linear operating trends to increase their EPS ($) confidence interval in underwriting the multi-year opportunity. GS Factor Profile ______________________________ Longer-term, we continue to see DUOL as a leader in the global Growth

language learning market with users, engagement, and monetization Financial Returns well above that of its direct competitors (& optionality for scaling Multiple new use cases to broaden out platform appeal). We reiterate our Neutral rating based on risk/reward on the shares from current Integrated

levels and adjust our 12-month price target from $104 to $114 on Percentile 20th 40th 60th 80th 100th the back of updating our forward operating estimates for this earnings report and forward commentary from mgmt. DUOL relative to Americas Coverage DUOL relative to Americas Internet

Source: Company data, Goldman Sachs Research estimates. See disclosures for details.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs Duolingo Inc. (DUOL)

Duolingo Inc. (DUOL) Balance Sheet ($ mn) _______________________________________ NEUTRAL Rating since Aug 8, 2024 12/25 12/26E 12/27E 12/28E Cash & cash equivalents 1,036.4 1,250.6 1,479.2 1,966.9 Accounts receivable Inventory -- -- -- -- Ratios & Valuation __________________________________________ Other current assets /25 12/26E 12/27E 12/28E Total current assets 1,436.6 1,697.9 1,932.1 2,423.4 P/E (X) Net PP&E EV/EBITDA (X) Net intangibles -- -- -- -- EV/sales (X) Total investments 0.0 0.0 0.0 0.0 FCF yield (%) 2.4 6.1 7.0 7.8 Other long-term assets EV/DACF (X) Total assets 1,992.2 2,219.9 2,485.1 3,010.1 CROCI (%) ROE (%) Accounts payable Net debt/EBITDA (X) (3.4) (3.9) (4.1)…