Group 1 - The article introduces a subscription service, Beyond the Wall Investing, which provides access to high-quality equity research reports, potentially saving users thousands of dollars annually [1] - The author has experience using the Duolingo app and is now covering its stock for the first time, indicating a personal connection to the subject matter [1] - Oakoff Investments is highlighted as a personal portfolio manager and quantitative research analyst, focusing on balancing growth and value through proprietary Wall Street information [1] Group 2 - The investing group led by Oakoff Investments offers features such as a fundamentals-based portfolio, weekly analysis from institutional investors, and alerts for short-term trade ideas based on technical signals [1]

Core Viewpoint - Duolingo (DUOL) shares experienced a decline of up to 20% in extended trading due to a fourth-quarter forecast for bookings that fell short of estimates, despite a strong overall quarterly earnings performance [1] Summary by Relevant Sections - **Earnings Performance** - The company reported a solid overall quarterly earnings beat, indicating strong performance in other financial metrics [1] - **Bookings Forecast** - Duolingo anticipates bookings to be in the range of $329.5 million to $335.5 million, which is below market expectations [1]

Group 1 - The core viewpoint of the article is that Duolingo (DUOL.US) experienced a significant drop of over 19% in after-hours trading, closing at $210, despite reporting strong third-quarter earnings that exceeded analyst expectations [1] - Duolingo reported third-quarter revenue of $271.7 million, representing a year-over-year growth of 41%, surpassing the analyst forecast of $260.3 million [1] - The company achieved earnings per share of $5.95, which also exceeded the expected $5.19 [1] Group 2 - The number of paying users increased by 34%, reaching 11.5 million during the quarter [1] - For the fourth quarter, Duolingo expects bookings to be between $329.5 million and $335.5 million, which is below the market expectation of $343.6 million [1] - The growth rate of daily active users is anticipated to slow down compared to the 36% growth in the third quarter, although stable trends in September and October suggest a year-over-year growth rate of around 30% will be maintained [1]

Core Insights - Duolingo, a language and chess learning app provider, has been on the watchlist for several months and recently reported Q3 2025 financials, leading to a stock dip of more than 10% [1] Financial Performance - The company reported its Q3 2025 financial results, which were significant enough to impact stock performance [1] Market Sentiment - The stock's recent performance indicates a cautious sentiment among investors, as evidenced by the notable dip following the earnings report [1]

Core Insights - Duolingo, Inc. reported quarterly earnings of $0.95 per share, exceeding the Zacks Consensus Estimate of $0.72 per share, and showing a significant increase from $0.49 per share a year ago, resulting in an earnings surprise of +31.94% [1] - The company achieved revenues of $271.71 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 4.30% and up from $192.59 million year-over-year [2] - Duolingo has outperformed consensus EPS estimates three times over the last four quarters and has topped revenue estimates four times in the same period [2] Earnings Outlook - The sustainability of Duolingo's stock price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.80 on revenues of $274.92 million, while for the current fiscal year, the estimate is $3.16 on revenues of $1.02 billion [7] Industry Context - The Technology Services industry, to which Duolingo belongs, is currently ranked in the top 39% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

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Core Insights - The article discusses the expertise of Dmytro, a finance and investment writer based in London, highlighting his experience in various financial sectors including crypto and forex [1]. Group 1 - Dmytro is the founder of multiple platforms such as Solvid, Pridicto, and Coinprompter, indicating a strong entrepreneurial background in finance [1]. - His work has been published in reputable financial outlets like Nasdaq, InvestorPlace, and U.S. News, showcasing his credibility and influence in the industry [1]. - Dmytro is also a retail investor with open positions in notable companies including NuBank, Duolingo, Disney, Verizon, and HSBC, reflecting his active engagement in the market [1].

Financial Data and Key Metrics Changes - The company reported a strong Q3 with bookings expected to reach nearly $1,200 million for the year, reflecting a 33% growth and an adjusted EBITDA margin of 29% [4][80] - Daily active users (DAUs) grew by 36% year-over-year in Q3, with September and October showing around 30% year-over-year growth [11][12] Business Line Data and Key Metrics Changes - The chess course is the fastest-growing course, surpassing both math and music in user engagement and retention [30] - The company is focusing on enhancing teaching efficacy, which is expected to drive user growth over time [15][16] Market Data and Key Metrics Changes - The company has seen significant user growth in Asia, aided by partnerships such as the one with Luckin [10] - The retention rate for chess users is slightly higher than that of language learners, indicating strong engagement [30] Company Strategy and Development Direction - The company is prioritizing long-term investments in AI to fundamentally transform education and improve teaching efficacy [5][14] - There is a strategic shift towards user growth over immediate monetization, with a focus on enhancing the freemium experience [36][88] Management's Comments on Operating Environment and Future Outlook - Management believes that the current moment presents a unique opportunity for growth in the education sector, driven by advancements in AI [41][42] - The company is optimistic about future initiatives, including improved video calls and expanded content for existing courses [22][23] Other Important Information - The company is not currently focused on optimizing costs, as the priority is to enhance user experience and engagement [73] - AI costs have decreased, allowing the company to invest in innovation while maintaining profitability [82] Q&A Session Summary Question: What are the underlying drivers of DAU growth into Q4? - The company reported a 36% year-over-year growth for Q3, with positive impacts from partnerships and product improvements, although some social media strategies temporarily affected growth [8][11] Question: Can you elaborate on the decision to shift investments towards long-term growth? - The company sees a significant opportunity in AI and education, leading to a strategic focus on teaching efficacy and user growth, which may have a lag in monetization [12][16] Question: How is the new chess course performing? - The chess course is growing rapidly, with higher retention rates compared to language courses, and player versus player features are being rolled out [30][31] Question: What is the impact of price increases on user growth? - The company is testing various pricing strategies, including potential discounts, while focusing on user growth over immediate monetization [86][90] Question: How is the company addressing advanced English learners? - The company has made significant improvements in teaching English, with a steady increase in advanced English learners, particularly in fast-growing regions like Asia [118][120] Question: What is the status of the family plan? - The family plan has grown to about 29% of subscribers and is expected to continue growing, especially during promotional periods [122]

Financial Performance - Total revenues for Q3 2025 reached $271.7 million, a 41.1% increase from $192.6 million in Q3 2024[17] - Gross profit for Q3 2025 was $196.9 million, up 40.2% from $140.4 million in Q3 2024[17] - Net income for Q3 2025 was $292.2 million, significantly higher than $23.4 million in Q3 2024[17] - Net income for the nine months ended September 30, 2025, was $372,111, a significant increase from $74,667 in 2024, representing a growth of 398%[26] - Adjusted EBITDA for the three months ended September 30, 2025, was $80.0 million, up from $47.5 million in the prior year[110] - Net income for the three months ended September 30, 2025, was $292.2 million, compared to $23.4 million in 2024, representing a significant increase[150] User Metrics - Monthly active users (MAUs) and daily active users (DAUs) are key operating metrics tracked, although specific numbers were not disclosed[12] - As of September 30, 2025, the Company reported 135.3 million monthly active users (MAUs), a 20% increase from 113.1 million MAUs in the same period of 2024[108][113] - Daily active users (DAUs) reached approximately 50.5 million, representing a 36% increase from 37.2 million DAUs in the prior year[110][115] - The number of paid subscribers increased to 11.5 million, up 34% from 8.6 million in the same period of 2024[110][118] Revenue Breakdown - Subscription revenue for the nine months ended September 30, 2025, was $631,156,000, up 45.7% from $433,214,000 in 2024[65] - Subscription revenue for the three months ended September 30, 2025, was $229.5 million, a 46% increase from $157.6 million in the same period of 2024[137] - Other revenue, primarily from advertising, increased by $7.2 million, or 21%, to $42.2 million during the three months ended September 30, 2025[155] Expenses and Costs - Research and development expenses for Q3 2025 were $82.7 million, a 31.6% increase from $62.9 million in Q3 2024[17] - Total operating expenses increased by $34.9 million, or 28%, to $161.8 million for the three months ended September 30, 2025, compared to $126.8 million in 2024[150] - Sales and marketing expenses rose by $9.5 million, or 37%, to $35.1 million for the three months ended September 30, 2025, compared to $25.6 million for the same period in 2024[161] - General and administrative expenses increased by $5.6 million, or 15%, to $44.0 million for the three months ended September 30, 2025, from $38.4 million in the prior year[161] Cash Flow and Assets - Net cash provided by operating activities increased to $280,545 for the nine months ended September 30, 2025, compared to $202,169 in 2024, reflecting a growth of 39%[26] - Cash paid for income taxes rose to $11,722 in 2025 from $6,797 in 2024, indicating a 73% increase[28] - Cash, cash equivalents, and restricted cash at the end of the period reached $1,014,277 in 2025, up from $857,144 in 2024, indicating an increase of 18%[26] - The company had $1,011.5 million in cash and cash equivalents and $109.9 million in short-term investments as of September 30, 2025[168] Deferred Revenue - Deferred revenues increased to $441.7 million as of September 30, 2025, up from $372.9 million at the end of 2024[15] - Deferred revenue as of September 30, 2025, was $441,728,000, an increase from $310,603,000 at the end of September 2024[68] - Deferred revenues amounted to $441.7 million as of September 30, 2025, expected to be recognized as revenue in the next 12 months[173] Acquisitions and Investments - The company made acquisitions totaling $33,100 in 2025, compared to $6,595 in 2024, representing a substantial increase of 402%[26] - The company completed an acquisition in July 2025 for a total consideration of $34,500,000, with $33,100,000 allocated to intangible assets and goodwill[62] - The company incurred $1,285,000 in acquisition costs related to due diligence and valuation during 2025[62] Stock-Based Compensation - Stock-based compensation expense rose to $101,175 in 2025 from $80,690 in 2024, reflecting a 25% increase[26] - Total stock-based compensation expense for the three months ended September 30, 2025, was $35.6 million, compared to $29.0 million in the same period of 2024[97] - The Company had approximately $338.6 million of unrecognized stock-based compensation expense related to RSUs as of September 30, 2025[92] Future Outlook - The company plans to continue investing in infrastructure to enhance platform capabilities, which may impact future cost of revenues[140] - The company expects continued investment in research and development to drive user engagement and monetization, impacting future growth[144]

Core Insights - Duolingo Inc surpassed Wall Street expectations for third-quarter revenue and increased its annual revenue forecast, driven by a rise in paying subscribers for its AI-powered language-learning app [1] Financial Performance - The company reported third-quarter revenue that exceeded analyst estimates, indicating strong demand for its services [1] - Duolingo raised its annual revenue forecast, reflecting confidence in continued growth and subscriber acquisition [1] Subscriber Growth - The increase in paying subscribers is a key factor contributing to the company's positive financial performance [1]