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DUOL, Duolingo Inc.

Software asset-light

We Are Duolingo is a technology company founded by two engineers, Luis von Ahn and Severin Hacker.

And today, the technology necessary to enable this is in the hands of billions of people, in the form of a smartphone.

At Duolingo, we build products native to the smartphone—bite-sized, on-demand and engaging—to make learning accessible and effective, opening doors for everyone alike.

Latest annual: FY2025 10-K

DUOL · Duolingo Inc.

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$1.0B

+38.7% YoY · 45% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $1.1B 5-yr avg $587M

Gross margin 73% 5-yr avg 73%

Operating margin 14.2% 5-yr avg −4.5%

ROIC 62% 5-yr avg 44%

Owner-earnings margin 38% 5-yr avg 23%

Free cash flow margin 38% 5-yr avg 23%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What it is: Revenue is led by Subscription (84%) and Advertising (8%), with 2 more lines behind.
What moves the needle: Operating margin has reached 13% at its best but run negative through the cycle (median −10%) on a 72% gross margin — so the question is which reading is truer: whether the median was pulled below zero by one-off charges, by the cycle, or by spending it is still growing into, and whether it settles back at a profit. Stock-based pay runs about 15% of sales, a real and recurring claim on owners that the GAAP margin understates. Read this kind of business on retention and the cost of growth. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.

Every line is arithmetic on the company's filings, shown in full in the sections below.

Where the money comes from

read the 10-K →

Subscription is 84% of revenue, with Advertising the other meaningful line at 8%.

Revenue by product line, FY2025

Subscription84%$873M
Advertising8%$80M
English Test4%$42M
IAPs4%$40M
Other0%$2M

By geographyInternational62%United States38%

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2020–2025

realized figures from each filing · older years to the left

2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
							Income statement
$162M	$251M	$369M	$531M	$748M	$1.0B	$1.1B	RevenueRevenue
72%	72%	73%	73%	73%	72%	73%	Gross marginGross mgn
27%	31%	32%	25%	21%	18%	17%	SG&A / revenueSG&A/rev
33%	41%	41%	37%	31%	30%	29%	R&D / revenueR&D/rev
($16M)	($60M)	($65M)	($13M)	$63M	$136M	$157M	Operating incomeOp. inc.
−9.9%	−23.9%	−17.6%	−2.5%	8.4%	13.1%	14.2%	Operating marginOp. mgn
($16M)	($60M)	($60M)	$16M	$89M	$414M	$422M	Net incomeNet inc.
							Cash flow & returns
$18M	$9M	$54M	$154M	$286M	$388M	$433M	Operating cash flowOp. cash
$2M	$3M	$5M	$7M	$11M	$14M	$15M	DepreciationDeprec.
$14M	$26M	$35M	$35M	$76M	($178M)	($145M)	Working capital & otherWC & other
$3M	$4M	$6M	$3M	$12M	$18M	$17M	CapexCapex
2.1%	1.4%	1.5%	0.6%	1.6%	1.7%	1.5%	Capex / revenueCapex/rev
$15M	$6M	$48M	$150M	$273M	$373M	$416M	Owner earningsOwner earn.
9.6%	2.6%	13.0%	28.3%	36.5%	36.0%	37.9%	Owner earnings marginOE mgn
$14M	$6M	$48M	$150M	$273M	$370M	$416M	Free cash flowFCF
8.9%	2.2%	13.0%	28.3%	36.5%	35.6%	37.9%	Free cash flow marginFCF mgn
$0	$0	$4M	$0	$7M	$33M	$33M	AcquisitionsAcquis.
$0	$868K	$0	$0	—	—	—	BuybacksBuybacks
—	-12%	-11%	2%	11%	31%	30%	Return on equityROE
—	−12%	−11%	2%	11%	31%	30%	Retained to equityRetained/eq
							Balance sheet
$120M	$554M	$608M	$748M	$786M	$1.0B	$1.1B	Cash & investmentsCash+inv
$20M	$33M	$47M	$89M	$129M	$163M	$125M	ReceivablesReceiv.
$2M	$8M	$1M	$2M	$6M	$8M	$7M	Accounts payablePayables
$18M	$25M	$46M	$87M	$123M	$155M	$118M	Operating working capitalOper. WC
$158M	$619M	$697M	$898M	$1.1B	$1.4B	$1.5B	Current assetsCur. assets
$66M	$119M	$182M	$277M	$422M	$551M	$574M	Current liabilitiesCur. liab.
2.4×	5.2×	3.8×	3.2×	2.6×	2.6×	2.6×	Current ratioCurr. ratio
—	$0	$4M	$4M	$11M	$35M	$35M	GoodwillGoodwill
$176M	$661M	$747M	$954M	$1.3B	$2.0B	$2.1B	Total assetsAssets
($120M)	($554M)	($608M)	($748M)	($786M)	($1.0B)	($1.1B)	Net debt / (cash)Net debt
($81M)	$513M	$542M	$656M	$825M	$1.3B	$1.4B	Shareholders’ equityEquity
10.5%	16.3%	20.0%	17.9%	14.8%	13.2%	12.8%	Stock comp / revenueSBC/rev
							Per share
12.7M	23.4M	39.5M	46.5M	47.1M	48.3M	49.0M	Shares out (diluted)Shares
$12.70	$10.70	$9.36	$11.42	$15.88	$21.48	$22.43	Revenue / shareRev/sh
$-1.24	$-2.57	$-1.51	$0.35	$1.88	$8.57	$8.62	EPS (diluted)EPS
$1.21	$0.27	$1.22	$3.23	$5.80	$7.73	$8.49	Owner earnings / shareOE/sh
$1.13	$0.24	$1.22	$3.23	$5.80	$7.65	$8.49	Free cash flow / shareFCF/sh
$0.27	$0.15	$0.14	$0.07	$0.26	$0.37	$0.35	Cap. spending / shareCapex/sh
$-6.34	$21.89	$13.73	$14.09	$17.51	$27.88	$28.41	Book value / shareBVPS

The diluted share count moved ×1.84 into 2021 — shares issued, not a split the totals corroborate — and the per-share figures carry the counts as filed.

The diluted share count moved ×1.68 into 2022 — shares issued, not a split the totals corroborate — and the per-share figures carry the counts as filed.

Per-share growththe realized rate an owner's share compounded

	5-yr	5-yr
Revenue / share	+11.1%/yr	+11.1%/yr
Owner earnings / share	+44.8%/yr	+44.8%/yr
Capital spending / share	+7.2%/yr	+7.2%/yr

The record, charted

FY2020–2025

Each measure over its full record; the current point and the worst year marked.

Share count

48Mpeak FY2025

Gross margin

72%low FY2020

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$373Mowner earningsvs.$414Mnet incomelow FY2021

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetained

Each year's operating cash, by what management did with it: the mix, and how it drifts.

FY2020FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business earned $373M of owner earnings, the operating cash left after the $14M it takes just to hold its position. It put $4M more into growth; free cash flow, after that spending, was $370M.

Reported net income$414M

Owner earnings$373M · 36% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$414M	$89M	$16M	($60M)	($60M)
Depreciation & amortizationnon-cash charge added back	+$14M	+$11M	+$7M	+$5M	+$3M
Stock-based compensationreal costnon-cash, but a real cost	+$137M	+$110M	+$95M	+$74M	+$41M
Working capital & othertiming of cash in and out, other non-cash items	−$178M	+$76M	+$35M	+$35M	+$26M
Cash from operations	$388M	$286M	$154M	$54M	$9M
Maintenance capital expenditurethe spending needed just to hold position and volume	−$14M	−$12M	−$3M	−$6M	−$3M
Owner earnings	$373M	$273M	$150M	$48M	$6M
Growth capital expenditurediscretionary; spent to get bigger, not to stand still	−$4M	—	—	—	−$860K
Free cash flow	$370M	$273M	$150M	$48M	$6M
Owner-earnings marginowner earnings ÷ revenue	36%	37%	28%	13%	3%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the maintenance capital it must spend to hold its position (here about $14M, roughly its depreciation, the rate its assets wear out). The other $4M of its capital spending is growth it chose, not upkeep it owed; charged only with the maintenance it must do, the business earns well more than the year's free cash flow shows. The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $137M), owner earnings is nearer $236M.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? —

No meaningful interest burden

Little or no interest expense reported

What this means
Little or no interest expense reported, the business isn't leaning on lenders to operate.
How heavy is the debt, net of cash? +$1.0B

Net cash, debt-free

Cash $1.0B − debt $0

What this means
Cash and short-term investments exceed every dollar of debt by $1.0B, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? 47d

Tight

DSO 57 + DIO 0 − DPO 10 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash. (Little or no inventory, a services / asset-light model, so the inventory leg is ~0.)

Is it a good business?

Return on invested capital —

Not enough data

Industry peers: median -4%

What this means
The filing data didn't include the inputs for this check.
Owner-earnings margin 13%

Solid through the cycle

6-yr median margin, range 3%–37%; latest $373M = operating cash $388M − maintenance capex $14M

Industry peers: median 15%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 36% of revenue this year, a 13% median across 6 years. Treating stock comp as the real expense it is (less $137M of SBC) leaves $236M.
Are earnings backed by cash? 0.94×

Mostly cash-backed

Cash from ops $388M ÷ net income $414M

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 0%

Reinvests most of it

Dividends + buybacks $0 ÷ Owner Earnings $373M

What this means
Of $373M Owner Earnings, $0 (0%) went back to shareholders, $0 dividends, $0 buybacks. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 1.26×

Expanding

Capex $18M ÷ depreciation $14M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 1 of 4 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Near

Revenue ≥ $2B · $1.0B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Pass

Current ratio ≥ 2× · 2.61×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Earnings stability Miss

A profit every year (6-yr record) · 3 loss years

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · none paid

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth —

Earnings +33% over the record · —

What this means
Earnings were negative early in the record, a growth rate isn't meaningful.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $3.53/share (latest year $8.45), the averaged base the calculator's gate runs on, and book value is $27.50/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2020–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 3 of 6

What this means
Lost money in 3 year(s), look at what happened there before trusting the average.
Operating margin −17% → 6% (3-yr avg ends)

What this means
Through the cycle the operating margin widened — about −17% early to 6% lately, median −10% — pricing power intact or improving.
Owner earnings growth +97%/yr

What this means
Owner earnings grew about 97% a year over the record.
Worst year 2021 · −23.9% op. margin

What this means
Operations went underwater in 2021, understand why before trusting the good years.

Does AI threaten the moat?

Elevated contestability

The product is software or information, the very thing capable AI now produces more cheaply, so the moat is more contestable than the record alone implies.

In its own filing Named as a competitive risk

Its FY2025 10-K names artificial intelligence as a competitive threat.

“Our development, implementation and use of AI and machine learning technologies, including third-party technologies, may not be successful, which may impair our ability to compete effectively, result in reputational harm and have an adverse effect on our business.”

AI has collapsed the cost of building a capable substitute for the very thing this business sells. When a credible alternative can be assembled for a fraction of the incumbent's price, it is pricing power that erodes first, not revenue tomorrow. The live question is whether the moat survives that, not whether it held in the past. Whether that question is answerable at all is yours to decide, against your own circle of competence.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$1.5B

Cash & short-term investments$1.1B
Receivables$125M
Other current assets$242M

Current liabilities$574M

Accounts payable$7M
Other current liabilities$567M

Current ratio2.62×all current assets ÷ what's due · Graham looked for 2×

Quick ratio2.62×stricter: inventory excluded

Cash ratio1.98×strictest: cash alone against what's due

Working capital$932Mthe cushion left after near-term bills

Revenue, latest quarter vs. a year ago+26.5%the freshest read on whether the business is still growing

Current ratio, recent quarters3.3× → 2.6×

Deeper floors

Tangible book value$1.3Bequity stripped of goodwill & intangibles

Net current asset value$840MGraham's net-net: current assets less all liabilities

Debt incl. operating leases$99M$99M of it operating leases

Deferred revenue$513Mcustomer cash collected before delivery; operating float

From the company's latest filing.

How the cash was used, 2020–2025

Over the record, the business generated $907M of operating cash; how management split it reads as a cash builder, a large share of cash simply built up on the balance sheet.

Reinvested$46M · 5%
Buybacks$868K · 0%
Retained (debt / cash)$861M · 95%

Returned to owners$868K
0% of the owner earnings the business produced over the span, $0 as dividends and $868K as buybacks.
Source of fundingOperating cash
Operating cash covered reinvestment and returns; over the span cash and short-term investments rose $1.0B.
Average price paid for buybacks—
Buybacks ran $868K over the span, but the filings don't tag the share count needed to deduce the average price paid.
Net change in share count284.7%
The diluted count rose from 13M to 49M: issuance (stock pay, deals) outran any buybacks, so owners were diluted on net.
Dividend record—
No dividend line was reported in the filing data over the span; the record here neither confirms nor rules out a payout.
Return on what it retained63%
Of the earnings it kept rather than paid out ($382M over the span), annual owner earnings (first three years vs last three) grew $242M, so each retained $1 added about 0.63 of yearly owner earnings. Buffett's test, run on owner earnings instead of market value.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	(1)	$74.4M	$78.0M	$6M
2022	(1)	$765k	−$31.6M	$48M
2023	(1)	$767k	$139.9M	$150M
2024	(1)	$767k	$129.0M	$273M
2025	(1)	$768k	−$44.2M	$373M

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership1.3%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
Stock-based compensation$137M
The slice of the business handed to employees in shares this year, 13% of revenue, equal to 101% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Duolingo Inc. is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2020–2025.

1 of the 4 tests turned up something to look into; the other 3 came back clean.

Look hereDid the share count rise anyway?284.7%
Diluted shares grew 284.7% over 2020–2025, even as the company spent $868K on buybacks. The repurchases were outrun by issuance — to staff, in a raise, or in a deal — and the filing says which; owners' slice still shrank. Read the buyback line beside this one, not on its own.

And these came back clean

Is it less profitable than it was?
Did reported profit become cash?
Did receivables and inventory outpace sales?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2025

read the 10-K →

Which reported numbers are a judgment call?
Management names Income taxes, Stock compensation as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Software

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
MANHManhattan Associates	$1.1B	55%	23.3%	214%	25%
SAILSailPoint Inc.	$1.1B	64%	-28.7%	-4%	-13%
FIGFigma Inc.	$1.1B	88%	-117.1%	-92%	23%
DUOLDuolingo Inc.	$1.0B	73%	-6.2%	44%	21%
ALRMAlarm.com	$1.0B	63%	8.7%	16%	13%
SSentinelOne	$1.0B	66%	-95.4%	-20%	-47%
TENBTenable	$999M	81%	-9.1%	-10%	15%
PRGSProgress Software	$978M	83%	16.2%	9%	29%
Group median	—	69%	-7.7%	2%	18%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Duolingo Inc. has delivered.

Duolingo Inc.’s latest year runs above its own through-cycle margin — the reported figure may flatter a peak. So the tool opens on the through-cycle base, Graham’s averaging cutting both ways; clear the toggle below to read the latest year exactly as reported.

Today’s price $

Through the cycle, Duolingo Inc. earns about $214M on its 20.7% median owner-earnings margin. This year’s 36.0% margin runs above that; the reported figure may flatter a peak you'd be paying on. Normalize, below, values the price on that through-cycle figure rather than the latest year. It comes pre-checked here for that reason, the same rule that already normalizes a trough; clear it to price the year as filed.

Base Normalize · through-cycle ($214M) Net of stock comp (−$141M) Steady-state · maintenance capex ($419M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25+86%/yr

Owner-earnings growth · ’20→’25+100%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $416M on 49M shares outstanding (a weighted basic average, the only count this filer tags); net cash $1.1B. The base opens on the through-cycle figure (the latest year sits above the record’s own median, and Graham’s averaging cuts both ways); clear Normalize to use the year as filed. Net of stock comp treats option pay as the expense it is. Capex ($17M) runs well above depreciation ($15M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $419M, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh DUOL against another business →

The owners of DUOL: the meeting and the votes →

Cite: Owner Scorecard, "Duolingo Inc. (DUOL), the owner's record," https://ownerscorecard.com/c/DUOL, data as of 2026-07-09.

Manual order: ← DUKB its page in the Manual DUOT →

Industry order: ← DT the Software chapter DUOT →