Duolingo, Inc. (DUOL) · Quarterly Report (10-Q) SEC Filing

Part I Financial Information Item 1. Financial Statements (Unaudited) 5 DUOLINGO, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except par value amounts) December 31, 2025 ASSETS Current assets Cash and cash equivalents$1,180,887 $1,036,389 Short-term investments132,979 104,078 Accounts receivable130,979 162,827 Deferred cost of revenues102,689 102,663 Income tax receivable2,707 14,067 Prepaid expenses and other current assets20,873 16,582 Total current assets1,571,114 1,436,606 Operating lease right-of-use assets74,830 80,380 Long-term investments102,693 135,098 Intangible assets, net27,598 28,309 Property and equipment, net42,619 36,297 Goodwill35,335 35,335 Restricted cash2,735 2,735 Deferred tax assets, net206,039 227,339 Other assets10,990 10,083 Total assets$2,073,953 $1,992,182 LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities Deferred revenues$505,102 $496,205 Accounts payable16,196 7,998 Income tax payable1,106 1,257 Accrued expenses and other current liabilities55,429 45,688 Total current liabilities577,833 551,148 Long-term obligation under operating leases86,136 93,779 Deferred tax liabilities, net242 249 664,211 645,176 Commitments and contingencies (Note 9) Stockholders equity Class A common stock, $0.0001 par value; 2,000,000 shares authorized as of June 30, 2026 and December 31, 2025; 40,337 issued and 40,325 outstanding at June 30, 2026 and 40,368 issued and outstanding at December 31, 2025, respectively Class B common stock, $0.0001 par value; 30,000 shares authorized as of June 30, 2026 and December 31, 2025; 6,399 and 6,260 issued and outstanding at June 30, 2026 and December 31, 2025, respectively 5 5 Treasury stock, at cost; 12 and 0 shares as of June 30, 2026 and December 31, 2025, respectively. (1,425) Additional paid-in capital1,046,326 1,058,783 364,836 288,218 Total stockholders equity1,409,742 1,347,006 Total liabilities and stockholders' equity$2,073,953 $1,992,182 See accompanying notes to the Unaudited Condensed Consolidated Financial Statements. 6 DUOLINGO, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Amounts in thousands, except per share amounts) Six Months Ended June 30, 2026202520262025$298,454 $252,265 $590,421 $483,008 81,714 69,684 160,585 136,331 216,740 182,581 429,836 346,677 92,195 73,670 175,169 144,060 40,007 29,563 79,256 56,225 50,593 45,985 96,939 89,435 182,795 149,218 351,364 289,720 33,945 33,363 78,472 56,957 (410)1,660 (1,196)2,661 33,535 35,023 77,276 59,618 11,831 11,427 23,642 21,842 45,366 46,450 100,918 81,460 12,208 1,669 24,300 1,544 $33,158 $44,781 $76,618 $79,916 $0.71 $0.98 $1.64 $1.76 $0.66 $0.91 $1.53 $1.64 Treasury StockAmountSharesAmountAdditional Paid-In CapitalTotal BALANCE April 1, 2025 45,416 $ 4 $ $ 984,534 (90,712) $ 893,826 Stock-based compensation expense 34,592 34,592 162 3,832 3,832 Release of restricted stock units 209 Net income 44,781 BALANCE June 30, 2025 45,787 $ 4 $ $ 1,022,958 (45,931) $ 977,031 BALANCE April 1, 2026 46,889 $ 5 (46) $ (4,499) $ 1,064,580 331,678 $ 1,391,764 Stock-based compensation expense 38,210 38,210 Release of performance stock units 180 Taxes paid related to net-share settlement of share-based compensation awards (87) (9,358) (9,358) Stock options exercised 33 416 416 Release of restricted stock units 188 Repurchases of common stock (433)(44,448) (44,448) Retirement of treasury stock(467) 467 47,522 (47,522) Net income 33,158 BALANCE June 30, 2026 46,736 $ 5 (12) $ (1,425) $ 1,046,326 364,836 $ 1,409,742 See accompanying notes to the Unaudited Condensed Consolidated Financial Statements. 8 DUOLINGO, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (Amounts in thousands) Treasury StockAmountSharesAmountAdditional Paid-In CapitalTotal 44,936 $4 $ $950,393 (125,847)$824,550 Stock-based compensation expense 65,610 65,610 438 6,955 6,955 Release of restricted stock units413 Net income 79,916 BALANCE June 30, 2025 45,787 $ 4 $ $ 1,022,958 (45,931) $ 977,031 46,628 $5 $ $1,058,783 288,218 $1,347,006 Stock-based compensation expense 72,857 72,857 Release of performance stock units360 Taxes paid related to net-share settlements of share-based compensation awards(171) (18,799)(18,799) Stock options exercised223 2,338 2,338 Release of restricted stock units379 Repurchases of common stock (695)(70,278) (70,278) Retirement of treasury stock(683) 683 68,853 (68,853) Net income 76,618 BALANCE June 30, 202646,736 $5 (12)$(1,425)$1,046,326 364,836 $1,409,742 See accompanying notes to the Unaudited Condensed Consolidated Financial Statements. 9 DUOLINGO, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) 20262025$76,618 $79,916 21,293 72,857 65,610 8,438 7,030 (642)(1,017)578 8,897 58,293 31,848 16,004 (26)(13,632)7,069 (4,536)6,188 593 7,159 (10,350)(1,246)(1,605)239,031 196,306 (75,438)(48,321)79,584 42,470 (5,587)(4,463)(7,028)(2,507)(8,469)(12,821)2,338 6,955 (69,603) (18,799) (86,064)6,955 144,498 190,440 1,039,124 788,526 $1,183,622 $978,966 20262025$768 $11,720 $2,012 $827 $6,809 $6,809 $1,918 $36,025 $675 $ (In thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair ValueCash EquivalentsShort-Term InvestmentsLong-Term Investments Cash$ $ $ $184,869 $184,869 $ $ Level 1 Commercial paper$8,417 $ $(18)$8,399 $ $8,417 $ Money market funds996,018 996,018 996,018 Subtotal$1,004,435 $ $(18)$1,004,417 $996,018 $8,417 $ Level 2 Asset-backed securities$22,141 $2 $(30)$22,113 $ $4 $22,136 160,121 17 (407)159,731 104,609 55,513 U.S. Treasury securities43,593 2 (200)43,395 19,949 23,644 Subtotal$225,855 $21 $(637)$225,239 $ $124,562 $101,293 Level 3 Investment in SAFE$ $ $ $1,400 $ $ $1,400 Subtotal$ $ $ $1,400 $ $ $1,400 Total$1,230,290 $21 $(655)$1,415,925 $1,180,887 $132,979 $102,693 15 As of December 31, 2025 (In thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair ValueCash EquivalentsShort-Term InvestmentsLong-Term Investments Cash$ $ $ $155,840 $155,840 $ $ Level 1 Commercial paper$4,318 $ $ $4,318 $1,993 $2,324 $ Money market funds878,556 878,556 878,556 Subtotal$882,874 $ $ $882,874 $880,549 $2,324 $ Level 2 Asset-backed securities$26,794 $44 $ $26,838 $ $347 $26,447 182,417 237 (19)182,635 93,997 88,420 U.S. Treasury securities26,241 154 26,395 7,410 18,831 Subtotal$235,452 $435 $(19)$235,868 $ $101,754 $133,698 Level 3 Investment in SAFE$ $ $ $1,400 $ $ $1,400 Subtotal$ $ $ $1,400 $ $ $1,400 Total$1,118,326 $435 $(19)$1,275,982 $1,036,389 $104,078 $135,098 As of June 30, 2026 and December 31, 2025, all of the Company s short-term investments have contractual maturities of one year or less and all of the Company s long-term investments have contractual maturities between one and five years. The Company has elected to present accrued interest within Prepaid expenses and other current assets in the Unaudited Condensed Consolidated Balance Sheets. Accrued interest was $2,091 and $2,099 as of June 30, 2026 and December 31, 2025, respectively. Changes in market interest rates, credit risk of borrowers and overall market liquidity, among other factors, may cause the short-term and long-term debt investments to fall below their amortized cost basis, resulting in unrealized losses. For those debt securities in an unrealized loss position as of June 30, 2026, the Company does not intend to sell, nor is it more likely than not that it will be required to sell, such securities before recovering the amortized cost basis. No allowance for credit losses was recognized in the financial statements for held-to-maturity debt securities for the periods ended June 30, 2026 and 2025. 4. REVENUE Disaggregation of Revenue In accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, the Company disaggregates revenue from contracts with customers into revenue streams, which most closely depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. 16 Six Months Ended June 30, 2026202520262025$258,035 $210,678 $508,943 $401,665 21,052 20,603 41,666 38,485 10,109 10,088 21,426 22,074 8,002 10,390 16,448 19,832 1,256 506 1,938 952 $298,454 $252,265 $590,421 $483,008 20262025$496,205 $372,884 (354,694)(262,611)551,689 496,605 (188,098)(175,701)$505,102 $431,177 June 30, 2026December 31, 2025 Leasehold improvements$52,732 $44,773 Furniture, fixtures and equipment14,136 13,095 Total property and equipment66,868 57,868 Less: accumulated depreciation(24,249)(21,571) Total property and equipment, net$42,619 $36,297 Depreciation expense is included within the following financial statement line items within the Company s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. Six Months Ended June 30, (In thousands)2026202520262025$859 $869 $1,705 $1,625 104 106 205 201 399 364 808 766 $1,362 $1,339 $2,718 $2,592 June 30, 2026December 31, 2025 Capitalized software $49,858 $44,849 Acquired intangible assets9,310 9,310 Other indefinite-lived intangible assets252 252 Total intangible assets 59,420 54,411 Less: accumulated amortization(31,822)(26,102) Intangible assets, net$27,598 $28,309 The Company capitalized $5,587 and $4,328 of software development costs, with the majority of the costs being employee wages, during the six months ended June 30, 2026 and 2025, respectively. The Company recorded an impairment of capitalized software of $578 for the three and six months ended June 30, 2026, which represents an impairment to write off the capitalization of an internal-use software project prior to being launched to the user base. No impairment was recognized during the three and six months ended June 30, 2025. Amortization expense is included within the following financial statement line items within the Company s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. Six Months Ended June 30, (In thousands)2026202520262025$2,824 $1,957 $5,598 $4,168 61 144 122 270 $2,885 $2,101 $5,720 $4,438 Six Months Ended June 30,2026202520262025$45,366 $46,450 $100,918 $81,460 12,208 1,669 $24,300 $1,544 26.9 %3.6 %24.1 %1.9 %Number of optionsWeighted- average exercise priceWeighted- average remaining contractual life (years)Aggregate intrinsic value Options outstanding at January 1, 2026 859 $18.38 3.77$135,938 Granted (1) Exercised(223)10.53 Options outstanding at June 30, 2026 636 $21.09 3.68$60,408 Options exercisable at June 30, 2026 636 $21.09 3.68$60,408 ________________ (1) There were no stock options granted during the three and six months ended June 30, 2026. (2) There was a nominal amount of forfeitures and expirations during the three and six months ended June 30, 2026. The total intrinsic value of options exercised was approximately $21,623 and $160,618 for the periods ended June 30, 2026, and 2025, respectively. A summary of RSU activity as of June 30, 2026 is as follows: (In thousands, except prices)Restricted stock unitsWeighted- average grant date fair value per share Outstanding at January 1, 2026 1,406 $242.94 Granted1,941 111.19 Released(379)182.37 Forfeited(151)238.45 Outstanding at June 30, 2026 2,817 $160.55 As of June 30, 2026, there was no unrecognized stock-based compensation expense related to stock options granted under the plans. The amount of unrecognized stock-based compensation expense for RSUs as of June 30, 2026 was $412,023 with a weighted-average period of approximately three years. There were 9,307 shares available for issuance under the Company s 2021 Incentive Award Plan and 1,604 shares available for issuance under the Company s 2021 Employee Stock Purchase Plan, in each case, at June 30, 2026. Performance-based RSUs In June 2021, the Company granted performance-based RSUs to its founders ( Founder Awards ) that vest based on continued service and the achievement of specified stock price targets. As of June 30, 2026, certain performance conditions have been achieved, while others remain subject to future stock price performance. Stock-based compensation expense is recognized over the derived service period using an accelerated attribution method, subject to continued service. In 2026, the Company modified the service condition applicable to the final two tranches of the Founder Awards held by one of its founders. The modification was accounted for as a Type III modification under ASC 718. As a result of the revised service condition, the Company reversed $8,217 of stock-based compensation expense previously recognized under the original derived service periods. The modified awards have a total compensation cost of approximately $9,960, based on the modified fair value 19 determined using a Monte Carlo simulation model, representing an increase of $1,743, over the original grant-date fair value. The total compensation cost will be recognized over the revised derived service periods, which extend through September 30, 2029. As a result of the modification, the Company recognized a stock-based compensation benefit of $6,982 and $5,766 related to the Founder Awards during the three and six months ended June 30, 2026, respectively. The Company recognized stock-based compensation expense of $3,963 and $8,077 for the three and six months ended June 30, 2025, respectively. As of June 30, 2026, unrecognized stock-based compensation expense related to the Founder Awards was $12,240. Stock-Based Compensation Total stock-based compensation expense was $38,210 and $72,857 for the three and six months ended June 30, 2026 and $34,592 and $65,610 for the three and six months ended June 30, 2025, respectively. Stock-based compensation expense is included in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income as shown in the following table: Six Months Ended June 30, (In thousands)2026202520262025$31 $24 $54 $44 26,861 20,481 49,384 38,294 2,008 1,593 3,804 3,024 9,310 12,494 19,615 24,248 $38,210 $34,592 $72,857 $65,610 Six Months Ended June 30, (In thousands, except per share data)2026202520262025$33,158 $44,781 $76,618 $79,916 46,695 45,610 46,744 45,380 720 720 519 1,032 519 1,032 2,817 1,638 2,817 1,638 50,031 49,000 50,080 48,770 $0.71 $0.98 $1.64 $1.76 $0.66 $0.91 $1.53 $1.64 2026202558.7 47.7 12.7 10.9 Six Months Ended June 30, (In thousands)2026202520262025 Operating Metrics Subscription bookings$250,316 $227,259 $518,381 $459,443 Total bookings$289,054 $268,020 $597,538 $539,668 Non-GAAP Financial Measures Net income (GAAP)$33,158 $44,781 $76,618 $79,916 Adjusted EBITDA$77,315 $78,680 $160,747 $141,484 Net cash provided by operating activities (GAAP) $88,260 $90,675 $239,031 $196,306 Free cash flow $78,630 $86,324 $226,416 $189,336 _______________ (1) We primarily evaluate user engagement using DAUs, with MAUs as a supplementary metric. MAUs were 140.6 million and 128.3 million for the three months ended June 30, 2026 and 2025, respectively. Operating Metrics Daily active users (DAUs). DAUs are defined as unique users who engage with our Duolingo App or the learning section of our website each calendar day. DAUs are reported for a measurement period by taking the average of the DAUs for each day in that measurement period. The measurement period for DAUs is the three months ended June 30, 2026 and the same period in the prior year where applicable, and the 23 analysis of results is based on those periods. DAUs are a measure of the consistent engagement of our global user community on Duolingo. We had approximately 58.7 million and 47.7 million DAUs for the three months ended June 30, 2026 and 2025, respectively, representing an increase of 23% from the prior year period, driven largely by an increase in retention of current users. We grew DAUs through a combination of product initiatives and marketing. Product improvements, such as making the app more social and engaging, helped attract new users, retain existing users, and reengage former users, while marketing expanded our reach. Paid Subscribers. Paid subscribers are defined as users who pay for access to any Duolingo subscription offering and had an active subscription as of the end of the measurement period. Each unique user account is treated as a single paid subscriber regardless of whether such user purchases multiple subscriptions, and the count of paid subscribers does not include users who are currently on a free trial or who are non-paying members of a family plan. As of June 30, 2026 and 2025, we had approximately 12.7 million and 10.9 million paid subscribers, respectively, representing an increase of 17% from the prior year period. We grew paid subscribers through product initiatives designed to make our subscription offerings more appealing, which helped attract new subscribers and retain existing subscribers. Subscription Bookings and Total Bookings. Subscription bookings represent the amounts we receive from a purchase of any Duolingo subscription offering. Total bookings include subscription bookings, income from advertising networks for advertisements served to our users, purchases of the Duolingo English Test, and in-app purchases of virtual goods ("IAPs"). We believe bookings provide an indication of trends in our operating results, including cash flows, that are not necessarily reflected in our revenues because we recognize subscription revenues ratably over the lifetime of a subscription, the majority of which are twelve months in duration. For the three months ended June 30, 2026 and 2025, we generated $250.3 million and $227.3 million of subscription bookings, respectively, representing an increase of $23.1 million or 10%, driven by growth in volume and price of subscriptions sold. For the six months ended June 30, 2026 and 2025, we generated $518.4 million and $459.4 million of subscription bookings, respectively, representing an increase of $58.9 million or 13%, driven by growth in volume and price of subscriptions sold. For the three months ended June 30, 2026 and 2025, we generated $289.1 million and $268.0 million total bookings, respectively, representing an increase of $21.0 million or 8% from the prior year period. For the six months ended June 30, 2026 and 2025, we generated $597.5 million and $539.7 million total bookings, respectively, representing an increase of $57.9 million or 11% from the prior year period. We grew total bookings primarily through growth in subscription bookings. Monthly active users (MAUs). MAUs are defined as unique users who engage with our Duolingo App or the learning section of our website each month. MAUs are reported for a measurement period by taking the average of the MAUs for each calendar month in that measurement period. The measurement period for MAUs is the three months ended June 30, 2026 and the same period in the prior year where 24 applicable, and the analysis of results is based on those periods. MAUs are a supplemental measure and help illustrate the size of our global active user community on Duolingo. We had approximately 140.6 million and 128.3 million MAUs for the three months ended June 30, 2026 and 2025, respectively, representing an increase of 10% from the prior year period. We grew MAUs through the same product and marketing initiatives as DAUs. Non-GAAP Financial Measures We use certain non-GAAP financial measures to supplement our reported financial results, which are presented in accordance with GAAP. These non-GAAP financial measures include Adjusted EBITDA, free cash flow and constant-currency measures. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. By excluding certain items that may not be indicative of our recurring core operating results, we believe that Adjusted EBITDA, free cash flow and constant-currency provide meaningful supplemental information regarding our performance. The effect of currency exchange rates on our business is an important factor in understanding period-to-period comparisons. We use non-GAAP constant-currency measures and non-GAAP percentage change in constant-currency measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Accordingly, we believe these non-GAAP financial measures are useful to investors and others because they allow for additional information with respect to financial measures used by management in its financial and operational decision-making and they may be used by our institutional investors and the analyst community to help them analyze the health of our business. However, there are a number of limitations related to the use of non-GAAP financial measures, and these non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures. Adjusted EBITDA. Adjusted EBITDA is defined as net income excluding interest income, income taxes, depreciation and amortization, stock-based compensation expenses related to equity awards, including employer payroll taxes related to equity transactions, acquisition transaction and integration costs, acquisition earn-out costs, and impairment of capitalized software. Adjusted EBITDA is used by management to evaluate the financial performance of our business and we present Adjusted EBITDA because we believe it is helpful in highlighting trends in our operating results and that it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. The following 25 table presents a reconciliation of our net income, the most directly comparable financial measure presented in accordance with GAAP, to Adjusted EBITDA. Three Months Ended June 30,Six Months Ended June 30, (In thousands) 2026202520262025 Net income $33,158 $44,781 $76,618 $79,916 Add (deduct): Interest income(11,831)(11,427)(23,642)(21,842) Provision for income taxes 12,208 1,669 24,300 1,544 Depreciation and amortization4,247 3,440 8,438 7,030 Stock-based compensation expenses related to equity awards (1)38,606 39,527 73,761 74,046 Acquisition transaction and integration costs (2) 590 590 Acquisition earn-out costs (3)349 100 694 200 578 578 Adjusted EBITDA$77,315 $78,680 $160,747 $141,484 ________________ (1)In addition to stock-based compensation expense of $38.2 million and $34.6 million for the three months ended June 30, 2026 and 2025, respectively, and $72.9 million and $65.6 million for the six months ended June 30, 2026 and 2025, respectively, this includes costs incurred related to taxes paid on equity transactions as follows: Three Months Ended June 30,Six Months Ended June 30, (In thousands)2026202520262025 Research and development $252 $1,605 $568 $2,764 Sales and marketing 13 8528 157 General and administrative 131 3,245 308 5,515 Total $396 $4,935 $904 $8,436 (2)Represents costs incurred related to acquisitions, which are included in General and administration expense within our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. (3)Represents costs incurred related to the earn-out payments on acquisitions, which is included within General and administrative expense within our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. (4)Represents impairment of capitalized software, which is included within Research and development expense within our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. For the three months ended June 30, 2026 and 2025, we generated net income of $33.2 million and $44.8 million, respectively representing a decrease of $11.6 million. For the six months ended June 30, 2026 and 2025, we generated net income of $76.6 million and $79.9 million, respectively, representing a decrease of $3.3 million. The decrease in net income for the three months ended June 30, 2026, as compared to the comparative prior period was primarily due to operating expenses increasing slightly faster than revenue during the period. The increase in net income for the six months ended June 30, 2026, as compared to the comparative prior period was primarily due to revenue growth and gross margin expansion during the period. For the three months ended June 30, 2026 and 2025, we generated Adjusted EBITDA of $77.3 million and $78.7 million, respectively, representing a decrease of $1.4 million. For the six months ended June 30, 2026 and 2025, we generated Adjusted EBITDA of $160.7 million and $141.5 million, respectively, 26 representing an increase of $19.3 million. Adjusted EBITDA changed as compared to the comparative periods for the reasons noted above in net income. Free Cash Flow. Free cash flow is defined as net cash provided by operating activities, less capitalized software development costs and purchases of property and equipment. We believe that free cash flow is a measure of liquidity that provides useful information to our management, investors and others in understanding and evaluating the strength of our liquidity and future ability to generate cash that can be used for strategic opportunities or investing in our business. Free cash flow has certain limitations in that it does not represent our residual cash flow for discretionary expenditures and our non-discretionary commitments. The following table presents a reconciliation of net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP, to free cash flow: Three Months Ended June 30,Six Months Ended June 30, (In thousands) 2026202520262025 Net cash provided by operating activities$88,260 $90,675 $239,031 $196,306 Less: Capitalized software development costs and purchases of intangible assets(2,734)(3,153)(5,587)(4,463) Less: Purchases of property and equipment(6,896)(1,198)(7,028)(2,507) Free cash flow$78,630 $86,324 $226,416 $189,336 For the three months ended June 30, 2026 and 2025, we generated $88.3 million and $90.7 million of net cash provided by operating activities, respectively, representing a decrease of $2.4 million. The decrease was primarily due to changes in working capital during the period. For the six months ended June 30, 2026 and 2025, we generated $239.0 million and $196.3 million of net cash provided by operating activities, respectively, representing an increase of $42.7 million. The increase was primarily due to higher operating income and changes in working capital. For the three months ended June 30, 2026 and 2025, we generated $78.6 million and $86.3 million of free cash flow, respectively, representing a decrease of $7.7 million. Free cash flow decreased in line with operating cash flow, reflecting the same underlying drivers of cash provided by operating activities and by higher capital investments as we expand our office footprints. For the six months ended June 30, 2026 and 2025, we generated $226.4 million and $189.3 million of free cash flow, respectively, representing an increase of $37.1 million. Free cash flow increased in line with operating cash flow, reflecting the same underlying drivers of cash provided by operating activities, partially offset by higher capital investments. Constant-Currency. The effect of currency exchange rates on our business is an important factor in understanding period-to-period comparisons. We use non-GAAP percentage change in constant-currency revenues and bookings, which exclude the impact of fluctuations in foreign currency exchange rates, for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe this information is useful to investors to facilitate comparisons and better identify trends in our business. The impact of changes in foreign currency may vary significantly from period to period, and such changes generally are outside of the control of our management. We calculate constant-currency revenues by translating current period foreign currency revenues using prior-year exchange rates applied consistently over the full revenue recognition period. We calculate constant-currency bookings by using current period foreign currency bookings and translating them to constant currency using prior-year comparable period exchange rates. The constant-currency percentage change for revenues and bookings is calculated by dividing the difference between the constant-currency amount and the prior-year comparable period amount by the prior-year comparable period amount. 27 The following table provides the changes in bookings and revenues on a reported basis and constant-currency basis: Three Months Ended June 30,Six Months Ended June 30, (in thousands)20262025% ChangeConstant-Currency Change %20262025% ChangeConstant-Currency Change % Revenue Subscription$258,035 $210,678 22%21%$508,943 $401,665 27%24% Total revenues$298,454 $252,265 18%17%$590,421 $483,008 22%19% Bookings Subscription $250,316 $227,259 10%9%$518,381 $459,443 13%10% Total Bookings$289,054 $268,020 8%6%$597,538 $539,668 11%8% Components of Our Results of Operations Revenue We generate revenues primarily from the sale of subscriptions. The term-length of our subscription agreements are primarily monthly or annual, with the family plan offered as an annual subscription. We also generate revenue from advertising, the in-app sale of virtual goods, and the Duolingo English Test. We may run experiments that result in a different mix of revenue from these levers in the future. Cost of Revenues Cost of revenues predominantly consists of third-party payment processing fees charged by various distribution channels in addition to hosting fees and third-party AI costs. To a much lesser extent, cost of revenues includes customer support costs, such as contractor fees, wages and stock-based compensation for certain employees working in customer support. It also includes the amortization of revenue generating capitalized software, and depreciation of certain property and equipment. We intend to continue to invest in the development and enhancement of our products to expand their capabilities and allow our users to realize the full benefit of our offerings. The level, timing, and relative investment in these areas could affect our cost of revenues in the future. Gross Profit and Gross Margin Gross profit represents revenues less cost of revenues. Gross margin is gross profit expressed as a percentage of revenues. Our gross profit may fluctuate from period to period as our revenues fluctuate, and also as a result of the timing and amount of investments we make in items related to cost of revenues. Operating Expenses Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, and stock-based compensation expense. Operating expenses also include overhead costs for facilities, including depreciation expense. Research and Development. We invest heavily in research and development to create new products and product features that are intended to help us grow our user base, engage our users, monetize our users, and teach our users. This, in turn, can impact the growth in, and lifetime value of, our paid subscribers, as well as increased advertising revenue from impressions from our free users. Expenses are primarily made up of costs incurred for the development of new and improved products and features 28 in our applications during the preliminary product development stage. Such expenses include employee-related compensation, including stock-based compensation, of engineers, designers, and product managers, in addition to materials, travel and direct costs associated with the design, required testing of our platform and depreciation of certain property and equipment. We expect engineers, designers, and product managers to represent a significant portion of our employees for the foreseeable future. We typically capitalize a portion of research and development costs once the product has reached application development phase, mostly consisting of wages, each period into capitalized software when the work is specific to launching a new product, or making major upgrades to our existing products or platforms. We regularly test product improvements with our users. Many of these tests start by making small changes in the product that affect small numbers of users. As the tests evolve, they can require increasing investment and can impact more users. This process of constant testing is how we implement many of our new products and improvements to our platform and, in total, require large investments and involve substantial time and risks to develop and launch. Some of these products and product improvements may not be well received or may take a long time for users to adopt. As a result, the impact resulting from our research and development investments may be difficult to forecast. Sales and Marketing. Sales and marketing expenses are expensed as incurred and consists primarily of new user acquisition, brand marketing, digital and social media content, and employee-related compensation, including stock-based compensation, for personnel engaged in sales and marketing functions, amortization of non-revenue generating capitalized software used to promote Duolingo and depreciation of certain property and equipment. General and Administrative. General and administrative expenses primarily consist of employee-related compensation, including stock-based compensation, for management and administrative functions, including our finance and accounting, legal, and people teams. General and administrative expenses also include certain professional services fees, general corporate and director and officer insurance, our facilities costs, public company costs to comply with the rules and regulations of the Securities and Exchange Commission ( SEC ) and the Listing Rules of the Nasdaq Global Select Market, and other general overhead costs that support our operations. Interest Income Interest income consists of income earned on our cash and money market funds included in cash and cash equivalents and income earned and net accretion on our marketable securities. Other (expense) income, net Other (expense) income, net consists primarily of foreign currency exchange gains and losses. Income taxes Income taxes represent the tax impact associated with our operations under the tax laws of the jurisdictions in which we operate. In addition to the U.S., we also operate in foreign jurisdictions that have different statutory rates. Our effective tax rate may vary based on the relative proportion of foreign to domestic income, the tax effects of stock-based compensation (which can fluctuate with our stock price), and changes in tax laws. 29 Results of Operations Comparison of the three and six months ended June 30, 2026 and 2025 The following table sets forth our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income data, including year-over-year change, for the periods indicated: Three Months Ended June 30,Six Months Ended June 30, (In thousands)20262025% Change20262025% Change Revenues$298,454 $252,265 18%$590,421 $483,008 22% Cost of revenues (1) (2)81,714 69,684 17160,585 136,331 18 Gross profit216,740 182,581 19429,836 346,677 24 Operating expenses: Research and development (1) (2)92,195 73,670 25175,169 144,060 22 Sales and marketing (1) (2)40,007 29,563 3579,256 56,225 41 General and administrative (1) (2)50,593 45,985 1096,939 89,435 8 Total operating expenses182,795 149,218 23351,364 289,720 21 Income from operations33,945 33,363 278,472 56,957 38 Other (expense) income, net(410)1,660 nm(1,196)2,661 nm Income before interest income and income taxes33,535 35,023 (4)77,276 59,618 30 Interest income11,831 11,427 423,642 21,842 8 Income before income taxes45,366 46,450 (2)100,918 81,460 24 Provision for income taxes12,208 1,669 >10024,300 1,544 >100 Net income and comprehensive income$33,158 $44,781 (26)%$76,618 $79,916 (4)% ________________ (1)Includes stock-based compensation expenses as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands)2026202520262025 Cost of revenues $31 $24 $54 $44 Research and development 26,861 20,481 49,384 38,294 Sales and marketing 2,008 1,593 3,804 3,024 General and administrative 9,310 12,494 19,615 24,248 Total $38,210 $34,592 $72,857 $65,610 (2)Includes amortization of capitalized software and depreciation of property and equipment as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands)2026202520262025 Cost of revenues (a) $2,824 $1,957 $5,598 $4,168 Research and development859 869 1,705 1,625 Sales and marketing (a) 165 250 327 471 General and administrative 399 364 808 766 Total $4,247 $3,440 $8,438 $7,030 ________________ (a) Amortization of capitalized software is recorded to Cost of revenue and Sales and marketing for revenue and non-revenue generating capitalized software, respectively. 30 The following table sets forth the components of our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income for each of the periods presented as a percentage of revenue: Three Months Ended June 30,Six Months Ended June 30, 2026202520262025 Revenues100 %100 %100 %100 % Cost of revenues27 28 27 28 Gross profit73 72 73 72 Operating expenses: Research and development31 29 30 30 Sales and marketing13 12 13 12 General and administrative17 18 16 19 Total operating expenses61 59 60 60 Income from operations11 13 13 12 Other (expense) income, net 1 1 Income before interest income and income taxes11 14 13 12 Interest income4 5 4 5 Income before income taxes15 18 17 17 Provision for income taxes4 1 4 Net income and comprehensive income11 %18 %13 %17 % Revenues Revenues increased by $46.2 million, or 18% to $298.5 million during the three months ended June 30, 2026, from revenues of $252.3 million during the three months ended June 30, 2025. Revenues increased by $107.4 million, or 22%, to $590.4 million during the six months ended June 30, 2026, from revenues of $483.0 million during the six months ended June 30, 2025. The following table provides the changes in revenues by product type: Three Months Ended June 30,Six Months Ended June 30, (in thousands)20262025Change% Change20262025Change% Change Subscription$258,035$210,678$47,35722%$508,943$401,665$107,27827% Other Advertising21,05220,603449241,66638,4853,1818 Duolingo English Test10,10910,08821 21,42622,074(648)(3) In-App Purchases8,00210,390(2,388)(23)16,44819,832(3,384)(17) Other1,256506750>1001,938952986>100 Total Other$40,419$41,587$(1,168)(3)%$81,478$81,343$135 % Total revenues$298,454$252,265$46,18918%$590,421$483,008$107,41322% The main drivers of the increases were: Subscription revenue increased $47.4 million, or 22%, to $258.0 million during the three months ended June 30, 2026, and subscription revenue increased $107.3 million, or 27%, to $508.9 million during the six months ended June 30, 2026, primarily due to growth in the average number of paid subscribers, and to a lesser extent, an increase in average revenue per user. 31 Other revenue decreased $1.2 million, or 3%, to $40.4 million during the three months ended June 30, 2026, and other revenue increased $0.1 million to $81.5 million during the six months ended June 30, 2026. The decrease in the three months ended June 30, 2026 was primarily due to decreased IAP revenue. The increase in the six months ended June 30, 2026 was primarily driven by higher advertising revenue and, to a lesser extent, higher revenue from partnerships, partially offset by lower IAP revenue. Cost of Revenues and Gross Margin. Total gross margin increased to 72.6% from 72.4% during the three months ended June 30, 2026 and 2025, and total gross margin increased to 72.8% from 71.8% during the six months ended June 30, 2026 and 2025. The increase was primarily attributable to an increase in subscription gross margin, reflecting continued reductions in per-unit third-party AI costs. The following table provides the change in cost of revenues, along with related gross margins: Three Months Ended June 30,Six Months Ended June 30, 20262025Change20262025Change (In thousands, except gross margin)CostsGross MarginCostsGross MarginCostsGross MarginCostsGross MarginCostsGross MarginCostsGross Margin Total cost of revenues$81,714 72.6 %$69,684 72.4 %$12,030 0.2 %$160,585 72.8 %$136,331 71.8 %$24,254 1.0% Operating Expenses Research and Development. Research and development expense increased by $18.5 million, or 25%, to $92.2 million during the three months ended June 30, 2026 from $73.7 million during the three months ended June 30, 2025. The increase was primarily due to higher net personnel costs of $13.8 million, driven primarily by growth in headcount, including increased stock-based compensation expenses related to equity awards of $5.0 million, and increased software and third-party AI costs of $3.3 million. Research and development expense increased by $31.1 million, or 22%, to $175.2 million during the six months ended June 30, 2026 from $144.1 million during the six months ended June 30, 2025. The increase was primarily due to higher net personnel costs of $23.6 million, driven primarily by the growth in headcount, including increased stock-based compensation expenses related to equity awards of $8.9 million, and increased software and third-party AI costs of $5.5 million. Sales and Marketing. Sales and marketing expense increased by $10.4 million, or 35%, to $40.0 million during the three months ended June 30, 2026 from $29.6 million during the three months ended June 30, 2025. This increase was mainly due to increased advertising costs of $8.6 million. Sales and marketing expense increased by $23.0 million, or 41%, to $79.3 million during the six months ended June 30, 2026 from $56.2 million during the six months ended June 30, 2025. This increase was mainly due to increased advertising costs of $19.2 million. General and Administrative. General and administrative expense increased by $4.6 million, or 10%, to $50.6 million during the three months ended June 30, 2026, from $46.0 million during the three months ended June 30, 2025. This increase was primarily due to higher legal and accounting fees of $5.4 million and higher facilities and office expenses of $1.2 million, partially offset by a $3.7 million decrease in personnel costs. The decrease in personnel costs was primarily due to a $3.2 million decrease in stock-based compensation expense, including the impact of a PSU award modification described within Part I, Item 1 Financial Statements Note 8, Stockholders Equity , and lower employer taxes related to stock-based compensation, partially offset by higher gross wages resulting from increased average headcount. 32 General and administrative expense increased by $7.5 million, or 8%, to $96.9 million during the six months ended June 30, 2026, from $89.4 million during the six months ended June 30, 2025. This increase was primarily due to higher legal and accounting fees of $5.8 million, higher facilities and office expenses of $4.0 million, partially offset by a decrease in personnel costs of $4.8 million. The decrease in personnel costs was driven by the same factors described above for the three-month period, including lower stock-based compensation expense and employer taxes related to stock-based compensation, partially offset by higher gross wages resulting from increased average headcount. Interest Income Interest income increased by $0.4 million, or 4%, to $11.8 million during the three months ended June 30, 2026 from $11.4 million during the three months ended June 30, 2025. Interest income increased by $1.8 million, or 8%, to $23.6 million during the six months ended June 30, 2026, from $21.8 million during the six months ended June 30, 2025. Both period increases were due to higher average interest-bearing balances partially offset by lower interest rates. Other (expense) income, net Other (expense) income, net was $0.4 million of expense during the three months ended June 30, 2026 and $1.7 million of income during the three months ended June 30, 2025, respectively, and $1.2 million of expense during the six months ended June 30, 2026 and $2.7 million of income during the six months ended June 30, 2025. The fluctuations were mainly from the impact from changes in foreign currency rates compared to prior periods. Income taxes The income tax provision was $12.2 million and $24.3 million during the three and six months ended June 30, 2026, respectively, and $1.7 million and $1.5 million during the three and six months ended June 30, 2025, respectively. This increase was primarily due to discrete tax expense related to stock-based compensation activity in the current period compared to benefits in the prior year period. Liquidity and Capital Resources We finance our operations primarily through revenues and the net proceeds we have received from the issuance of equity. As of June 30, 2026, we had $1,181 million in cash and cash equivalents and $133 million of short-term investments. Our cash and cash equivalents primarily consist of bank deposits and money market funds. Our short-term investments consist mainly of corporate debt securities, U.S. Treasury securities and commercial paper. We believe that our existing cash and cash equivalents, short-term investments and cash flow from operations will be sufficient to support working capital and capital expenditure requirements, and any future share repurchases, for at least the next 12 months. Our future capital requirements will depend on many factors, including our subscription growth rate and renewal activity, the timing of cash received from our payment processing platforms, the expansion and efficacy of our sales and marketing investments, the research and development investment related to the introduction of new products and the enhancements to existing products, and the current uncertainty in the global markets impacting, for example, consumer spending, inflation and foreign currency exchange rates. If we cannot meet our future capital requirements, we may be required to seek additional liquidity. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business and financial condition and results of operations. 33 In February 2026, Duolingo s Board of Directors authorized a share repurchase program of up to $400 million. Repurchases under the program may be made from time to time in the open market or through privately negotiated transactions, pursuant to Rule 10b5-1 trading plans or other available means, each in compliance with Rule 10b-18 under the Exchange Act. The actual timing, number and value of shares repurchased is subject to various factors such as market conditions, the Company s capital and liquidity positions, contractual requirements and other considerations. The timing and amount of any repurchases will be determined at the Company s discretion, and the program does not obligate the Company to acquire any particular amount of shares. The program has no expiration date and may be terminated, modified or discontinued at any time. During the six months ended June 30, 2026, the Company repurchased a total of 694,630 shares of the Company s Class A common stock through open market purchases at an average per share price of $101.15 for a total of $70.3 million. A substantial source of our cash from operations comes from deferred revenue, which is included in the liabilities section of our Unaudited Condensed Consolidated Balance Sheet. Deferred revenues consist of the unearned portion of customer billings, primarily related to subscription offerings, which is recognized as revenue in accordance with our revenue recognition policy. As of June 30, 2026, we had deferred revenues of $505.1 million, which is recorded as a current liability and expected to be recognized as revenue in the next 12 months, provided all other revenue recognition criteria have been met. The following table summarizes our cash flows for the periods presented: Six Months Ended June 30, (In thousands)20262025 Net cash provided by operating activities$239,031 $196,306 Net cash used for investing activities(8,469)(12,821) Net cash (used for) provided by financing activities(86,064)6,955 Net increase in cash, cash equivalents and restricted cash$144,498 $190,440 Operating Activities Cash flows from operating activities can fluctuate significantly from period to period due to timing of payments and cash collections. Our largest source of operating cash is cash collection from sales of subscriptions to our users. Our primary uses of cash from operating activities are for personnel expenses, marketing expenses, hosting expenses, and overhead expenses. Cash provided by operating activities increased by $42.7 million, or 22%, to $239.0 million for the six months ended June 30, 2026 from $196.3 million for the six months ended June 30, 2025. This increase was primarily driven by higher operating income and changes in working capital. Investing Activities Cash used for investing activities decreased by $4.4 million to $8.5 million for the six months ended June 30, 2026, from $12.8 million for the six months ended June 30, 2025. This decrease was primarily due to higher net maturities of investments of $10.0 million during the six months ended June 30, 2026, partially offset by a $5.6 million increase in capital expenditures. Financing Activities Cash used for financing activities for the six months ended June 30, 2026 was due to repurchases of common stock of $69.6 million in addition to taxes paid on the net-share settlements of share-based 34 compensation awards of $18.8 million. These amounts were partially offset by proceeds from exercises of stock options of $2.3 million. Cash provided by financing activities for the six months ended June 30, 2025 was due to proceeds from exercises of stock options of $7.0 million. Critical Accounting Estimates Our Unaudited Condensed Consolidated Financial Statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of Unaudited Condensed Consolidated Financial Statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. There have been no material changes to our critical accounting policies and estimates as compared to those described in Management s Discussion and Analysis of Financial Condition and Results of Operations set forth in our Annual Report on Form 10-K. Recent Accounting Pronouncements See Note 1, Description of the Business and Basis of Presentation, and Note 2, Summary of Significant Accounting Policies, in the notes to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements. Item 3. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk As of June 30, 2026, we had $996.0 million of cash equivalents invested in money market funds and $235.7 million of investments mainly in corporate debt securities, U.S. Treasury securities, asset-backed securities and commercial paper. Our cash and cash equivalents are held for working capital purposes in addition to future investments in our product. We do not enter into investments for trading or speculative purposes. Our investments are exposed to market risk due to a fluctuation in interest rates, which may affect our interest income and the fair market value of our investments. As of June 30, 2026, a hypothetical 10% relative change in interest rates would not have a material impact on our Unaudited Condensed Consolidated Financial Statements. Foreign Currency Exchange Risk Our reporting currency and the functional currency of our wholly owned foreign subsidiaries is the U.S. dollar. Certain of our payment providers translate our payments from local currency into USD at time of settlement, which means that during periods of a strengthening U.S. dollar, our international receipts could be reduced. Our operating expenses are denominated in the currencies of the countries in which our operations are located, which are primarily in the U.S., China, the United Kingdom and Germany. Our consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. In addition, as foreign currency exchange rates fluctuate, the translation of our international receipts into U.S. dollars affects the period-over-period comparability of our operating results and can result in foreign currency exchange gains and losses. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments, 35 although we may choose to do so in the future. A hypothetical 10% increase or decrease in the relative value of the U.S. dollar to other currencies would not have a material effect on our operating results. Inflation Risk Inflationary factors such as increases in costs may adversely affect our results of operations. We do not believe that inflation has had a material effect on our business, financial condition or results of operations to date. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition or results of operations. Item 4. Controls and Procedures Limitations on Effectiveness of Controls and Procedures Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their desired objectives. Management does not expect, however, that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the three months ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 36 Part II Other Information Item 1. Legal Proceedings From time to time we may be involved in claims and proceedings arising in the course of our business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. We are not currently party to any material legal proceedings. For further information, please see Part I, Item 1 Financial Statements Note 9, Commitments and Contingencies, which is incorporated herein. Item 1A. Risk Factors The Company's risk factors are described in Part I, Item 1A, "Risk Factors" of the Annual Report on Form 10-K. These factors could materially adversely affect our business, financial condition, and results of operations, and could cause our actual results to differ materially from our historical results or the results contemplated by any forward-looking statements contained in this Quarterly Report on Form 10-Q. There have been no material changes from the risk factors previously disclosed under the heading Risk Factors in the Annual Report on Form 10-K. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The following table summarizes our share repurchase activity for the three months ended June 30, 2026 Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of the Share Repurchase Program (1) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan (1) (In thousands) April 1 - 30, 2026245,286 $97.81 245,286 $350,173 May 1 - 31, 2026142,465 $108.42 142,465 $334,725 June 1 - 30, 202644,555 $112.27 44,555 $329,722 432,306 432,306 (1) In February 2026, Duolingo s Board of Directors authorized a share repurchase program of up to $400 million. Repurchases under the program may be made from time to time in the open market or through privately negotiated transactions, pursuant to Rule 10b5-1 trading plans or other available means, each in compliance with Rule 10b-18 under the Exchange Act. The actual timing, number and value of shares repurchased is subject to various factors such as market conditions, our capital and liquidity positions, contractual requirements and other considerations. The timing and amount of any repurchases will be determined at our discretion, and the program does not obligate us to acquire any particular amount of shares. The program has no expiration date and may be terminated, modified or discontinued at any time. (2) Average price paid per share excludes broker commissions and other costs of execution. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable. Item 5. Other Information (a) None. (b) 37 (c) Trading Plans During the three months ended June 30, 2026, certain of our directors and officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K as follows: On June 9, 2026, William "Bing" Gordon, a member of our Board of Directors, modified his Rule 10b5-1 sales plan that was originally adopted on December 11, 2025. The modified trading arrangement is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and provides for the sale of up to 40,000 shares of the Company s Class A common stock. The trading arrangement will remain in effect until the earlier of (i) June 30, 2027, (ii) the completion of all authorized transactions, or (iii) termination in accordance with its terms. On June 2, 2026, Dr. Luis von Ahn, Chief Executive Officer and member of the Company s Board of Directors, and the Luis von Ahn Foundation, entered into a 10b5-1 sales plan (the von Ahn 10b5-1 Sales Plan ) intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act, pursuant to which a maximum aggregate amount of up to 626,000 shares of the Company s Class A common stock may be sold, consisting of (i) up to 226,000 shares issuable upon the exercise of vested stock options held by Dr. von Ahn and (ii) up to 400,000 shares held by Dr. von Ahn. Additionally, under the von Ahn 10b5-1 Sales Plan, up to 54,000 shares held by the Luis von Ahn Foundation) may be sold. The von Ahn 10b5-1 Sales Plan will remain in effect until the earlier of (1) September 15, 2027, (2) the date on which all trades set forth in the von Ahn 10b5-1 Sales Plan have been executed, or (3) such time as the von Ahn 10b5-1 Sales Plan is otherwise terminated or expires according to its terms. On June 14, 2026, Stephen Chen, General Counsel, entered into a 10b5-1 sales plan (the Chen 10b5-1 Sales Plan ) intended to satisfy the affirmative defense of Rule 10b5-1(c) of the Exchange Act and providing for (i) the sale of the net number of shares of Class A common stock underlying 12,524 unvested restricted stock units received after giving effect to the number of shares automatically sold to satisfy tax withholding obligations on each applicable vesting date (such total number of shares covered under clause (i) is not determinable) and (ii) the sale of 12,696 shares of Class A common stock. The Chen 10b5-1 Sales Plan will remain in effect until the earlier of (1) August 14, 2027, (2) the date on which all trades set forth in the Chen 10b5-1 Sales Plan have been executed, or (3) such time as the Chen 10b5-1 Sales Plan is otherwise terminated according to its terms. No other officer (as defined in Rule 16a-1(f) under the Exchange Act) or director of the Company adopted, modified or terminated Rule 10b5-1 trading arrangements and/or non-Rule 10b5-1 trading arrangements (each as defined in Item 408 of Regulation S-K) during the three months ended June 30, 2026. 38