Financial PerformanceGross margin deleveraged 50 basis points quarter-over-quarter as AI costs began to layer in due to the release of Duolingo's AI chatbot, Lily.
Growth ConcernsDAU growth slowed to +54% Y/Y, from +59% Y/Y in 2Q24, as MAU growth decelerated.
Valuation IssuesThe stock trades at high multiples of 27x and 19x based on 2026 and 2027 'Blue Sky' EBITDA projections, indicating possible overvaluation.