Duolingo, Inc. DUOL is scheduled to report its third-quarter 2024 results on Nov. 6, after the bell.

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The Zacks Consensus Estimate for DUOL’s bottom line in the to-be-reported quarter stands at 36 cents per share, indicating a 500% year-over-year improvement. The consensus estimate for revenues is pegged at $188.7 million, indicating a 37.1% increase from the year-ago reported figure. There has been no change in analyst estimates or revisions lately.

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DUOL’s earnings surprise history has been impressive. Earnings surpassed the Zacks Consensus Estimate in the four trailing quarters, the average surprise being 92.1%.

Q3 Earnings Beat Seems Unlikely

Our proven model doesn’t conclusively predict an earnings beat for DUOL this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

DUOL has an Earnings ESP of 0.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Strong Active User and Subscriber Growth Expected

We expect that an increase in the Subscription revenues will drive year-over-year improvement in the company’s top line in the to-be-reported quarter. The consensus estimate for Subscription revenues is pegged at $153.9 million, indicating 45.3% year-over-year growth.

The top line is likely to have reaped the benefits of the increase in daily and monthly average users and the surge in the number of subscribers. Daily and monthly active users are expected to increase 55.9% and 22.5% year over year, respectively. Paid subscribers are anticipated to grow 45.5% year over year.

DUOL is Rallying

The stock has gained 28% year to date, underperforming the industry's 32.7% rally but outperforming the 20.5% rise in the Zacks S&P 500 composite.

This starkly contrasts its closest competitors, Coursera COUR and Chegg CHGG, which have seen declines of 64% and 85.3%, respectively, over the same period.

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Product Excellence, Subscriber Conversion Key to Investment

Duolingo's success relies on product excellence and innovation in language learning. The platform offers interactive lessons in multiple languages, using gamified techniques to engage users through exercises, quizzes and challenges. Its user-friendly interface makes learning enjoyable and accessible globally. The company's strategy focuses on effective teaching, expanding its user base, and converting users into subscribers.

In 2024, Duolingo optimized its subscription offerings, such as the family plan and Duolingo Max. This emphasis on excellence drives growth through word-of-mouth. In the second quarter of 2024, Duolingo saw a 41% revenue increase, with net income rising to $24.4 million from a year-ago tally of $3.7 million.

Add DUOL This Earnings Season

Duolingo’s product excellence, monetization efforts, and expanding user and subscriber base contribute to its potential for sustained success. The company’s solid financial health, coupled with strong top and bottom-line growth prospects, make it an attractive investment opportunity.

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