Duolingo(US:DUOL) The Motley Fool·2025-10-24 08:55Core Viewpoint - Duolingo's stock has experienced a significant pullback, declining 42% from its peak, presenting a potential buying opportunity as the company continues to show strong growth driven by AI features [2][18]. Company Performance - Duolingo's revenue for Q2 2025 was $252.3 million, reflecting a 41% year-over-year growth, which accelerated from 38% growth in Q1 [9][10]. - The company generated a net income of $44.8 million in Q2, marking an 84% increase compared to the previous year [12]. - Duolingo's management raised its 2025 revenue guidance to over $1 billion, indicating strong future growth potential [11]. User Engagement - The platform had 128 million monthly active users in Q2 2025, a 24% increase from the previous year [6]. - Duolingo had 10.9 million paying subscribers in Q2, up 37% year-over-year, with the Max subscription tier representing 8% of the total subscriber base [6][8]. AI Integration - Duolingo is enhancing its platform with AI features, such as Roleplay and Explain My Answer, aimed at improving user engagement and learning outcomes [7]. - The Max subscription tier is designed to create a digital learning experience comparable to human tutoring, which is a key focus for the company's long-term strategy [8]. Valuation Metrics - Duolingo's price-to-sales (P/S) ratio has decreased to 17.1 from over 30, making it more reasonable given its growth [13]. - The price-to-earnings (P/E) ratio remains high at 130, but is expected to drop to a forward P/E of 37 based on projected earnings growth [15][16].