DUOL

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How DUOL rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

61%

of sentences unchanged

Added

140

new sentences

Dropped

193

sentences removed

Length

−1,708

words, now 25,711

New in FY2025

If people do not perceive our products to be useful, effective, reliable, or trustworthy, we may not be able to attract or keep users or otherwise maintain or increase the frequency and duration of their engagement or the percentage of users that are converted into or remain paying subscribers.
Any number of factors can negatively affect user stickiness, growth, engagement and conversion, including if: • users increasingly engage with other competitive products or services instead of our own; • user behavior on any of our products changes, including decreases in the frequency and duration of use of our products and services; • users feel that their experience is diminished as a result of the decisions we make with respect to the frequency, prominence, format, size and quality of internal or external ads that we display; • users lose confidence in our ability to teach language or there is a decrease in user stickiness as a result of users no longer being interested in pursuing online language learning or reaching a point where they feel our product cannot advance their language ability; • users are no longer willing to pay for subscriptions or in-app purchases (“IAPs”) or we are unable to increase the price of our subscriptions or IAPs; • users have difficulty installing, updating or otherwise accessing our products on mobile devices as a result of actions by us or third parties that we rely on to distribute our products and deliver our services; • we fail to introduce new features, products or services that users find engaging or that are well received, or if we introduce new products or services, or make changes to existing products and services, that are not favorably received or that we are not able to monetize; • initiatives designed to attract and keep users and increase engagement are unsuccessful or discontinued, whether as a result of actions by us, third parties or otherwise; • third-party initiatives that may enable greater use of our products, including low-cost or discounted data plans, are discontinued; • we adopt terms, policies or procedures related to areas such as user data or advertising that are perceived negatively by our users or the general public; • users become concerned about our user data practices or other matters related to privacy, security and the sharing of user data; • we fail to combat inappropriate or abusive activity on our platform; • we fail to provide adequate customer service to users, marketers or other partners; • we fail to protect our brand image or reputation; • we, our partners, or companies in our industry are the subject of adverse media reports or other negative publicity, including as a result of our or their user data practices; • technical or other problems prevent us from delivering our products in a rapid and reliable manner or otherwise affect the user experience, such as unplanned site outages due to our failure or the failure of third-party systems we rely on, security breaches, distributed denial-of-service attacks or failure to prevent or limit spam or similar content; • there is decreased engagement with our products as a result of internet shutdowns or other actions by governments that affect the accessibility of our products in any of our markets; • there is decreased engagement with our products, or failure to accept our terms of service, as part of changes that we have implemented, or may implement, in the future in connection with regulations, regulatory actions or otherwise; • there is decreased engagement with our products as a result of changes in prevailing social, cultural or political preferences in the markets where we operate; or • there are changes mandated by legislation, regulatory authorities or litigation that adversely affect our products or users.
Any decrease in user stickiness, growth or engagement may have a material and adverse impact on our revenue, business, financial condition and results of operations.
It is possible that a new product could gain rapid scale at the expense of existing brands through harnessing a new technology (such as generative artificial intelligence “GenAI”)), or a new or existing distribution channel, creating a new or different approach to connecting people or some other means.
We compete for learners’ time, attention, and spend not only with other online and app-based language learning platforms, but also with offline forms of language learning.
Because of the extensibility of the Duolingo platform beyond language learning and the Company’s Chess, Math, and Music courses, we also compete with language learning assessment providers and literacy platforms and other kinds of online learning platforms and may compete with additional types of learning platforms in the future.
Current and potential competitors, both domestically and internationally, may have greater financial, technical, sales, marketing and other resources than we do, as well as in some cases, lower costs.
These advantages could enable these competitors to offer products that are more appealing to users and potential users than our products, to respond more quickly or cost-effectively than us to new or changing opportunities, new or emerging technologies or changes in customer requirements and preferences, or to offer lower prices than ours or to offer free language-learning products or services.
There are a number of free online language-learning opportunities to learn grammar, pronunciation, vocabulary (including specialties in areas such as medicine and business), reading and conversation by means of podcasts and mobile applications, audio courses and lessons, videos, games, chatbots, stories, news, digital textbooks, and through other means, which compete with our products.
As translation services and products, such as wearable devices that provide translation, improve and become more widely available and used, people may generally become less interested in language learning.
If we cannot successfully attract users of these products and services and convert a sufficient portion of these users into paying users, our business could be adversely affected.
If other products and services become more engaging and competitive or gain widespread acceptance by the public, demand for our products could decline or we may have to lower our prices, which could adversely impact our revenue and other results.
For example, we launched our Math and Music courses, in the Duolingo App in 2022 and 2023, respectively, however, neither has generated material revenue for us.
More recently, we launched Duolingo Max, which is powered by GenAI technology, and our Chess course.
We may not be able to maintain or increase profitability in the future.
There can be no assurances that we will continue to maintain or increase our profitability.
In addition, our revenue growth may slow or our revenue may decline for a number of possible reasons, including reduced demand for our products or services, increased competition, a decrease in the growth or reduction in size of our overall market, strategic operational decisions in how we prioritize user engagement and long-term growth, or if we fail for any reason to capitalize on our growth opportunities.
If we are unable to maintain or increase profitability in the future, it could materially adversely affect our business, financial condition and results of operations.
Our costs continue to increase, and some of our investments have the effect of reducing our operating margin and profitability.
Errors or inaccuracies in our metrics or data could also result in misinformed business decisions and inefficiencies.
As of December 31, 2025 we paid Apple and Google, as applicable, a meaningful share (generally 15-30%) of the payments we receive from transactions processed through in-app payment systems during the year.
In the twelve months ended December 31, 2025, we derived 62% of our revenue and 61% of our total bookings from the Apple App Store, and 20% of our revenue and 21% of our total bookings from the Google Play Store.
A platform provider may also change its fee structure, impose additional fees associated with access to or use of its platform, alter advertising practices, modify how user data is made available to application developers, limit the use of personal information for advertising or attribution purposes, or restrict how users can share information on or across platforms.
Such changes could materially affect how we market and monetize our products, measure the effectiveness of our advertising, or reach and engage users, and could create a more challenging environment for publishers and advertisers on these platforms.
We have suffered interruptions in service in the past, including when releasing new software versions or bug fixes, and if any such interruption were significant or prolonged it could adversely affect our business, financial condition, results of operations or reputation.
For example, on October 20, 2025, an outage of the us-east-1 region of the AWS platform caused Duolingo to go offline for over 12 hours.
During the year ended December 31, 2025, approximately 7.7% of our total revenues were derived from advertising.
For example, many U.S. states have enacted laws allowing their residents to opt out of the use of their Personal Data for targeted advertising.
The impact of similar potential future operating systems changes or potential future regulation on targeted advertising is highly uncertain.
If we are not able to maintain the value and reputation of our brand, our business and financial results may be harmed.
We believe that the importance of brand recognition will continue to increase, given the growing number of language learning applications and the low barriers to entry for companies offering language learning products and services.
For the years ended December 31, 2025 and 2024, our Sales and marketing expenses were $125.7 million and $90.5 million, respectively.
To continue to reach potential users and grow our businesses, we must identify and devote our overall marketing activities and expenditures to new and evolving advertising channels, such as mobile and online video and social media platforms as well as targeted campaigns in which we communicate directly with potential, former and current users via new virtual means.
Furthermore, these newer advertising channels often change rapidly, including changes in policies and algorithms, and can be subject to disruptions for reasons beyond our control (for example, the potential U.S. governmental restrictions or limitations on the TikTok platform).
While we ask our influencers to comply with the FTC regulations and our guidelines, we do not regularly monitor what our influencers post, and if we were held responsible for the content of their posts, we could be forced to alter our practices, which could have material adverse effect on our business, financial condition, and results of operations.
Any actions we take that are viewed as contrary to that mission, including paid-only features or changes to the offering, that are viewed as undermining its fun or effectiveness may, therefore, harm our brand and reputation.
These effects may be more significant or lasting for us than for other companies that do not have a mission-based brand.
We have made and in the future may make decisions regarding our business and products in accordance with Duolingo’s mission and values that may reduce our short- or medium-term operating results if we believe those decisions will result in longer-term benefits, such as maintaining or improving aggregate user experience in keeping with our mission.
However, this may not result in the long-term value and financial performance we anticipate, either on the time frame we expect or at all, particularly due to the uncertainty and variables inherent in longer-term expectations.
Unfavorable publicity or media reports, including in social media platforms, regarding us, our privacy practices, our social media activities, data security compromises or breaches, product changes, product or service quality or features, litigation or regulatory activity or regarding the actions of our partners, our users, our employees or other companies in our industry, could materially adversely affect our brand image or reputation, regardless of the veracity of such publicity or media reports.

and 100 more.

Gone since FY2024

If people do not perceive our products to be useful, effective, reliable, and/or trustworthy, we may not be able to attract or keep users or otherwise maintain or increase the frequency and duration of their engagement or the percentage of users that are converted into or remain paying subscribers.
Any number of factors can negatively affect user stickiness, growth, engagement and conversion, including if: • users increasingly engage with other competitive products or services instead of our own; • user behavior on any of our products changes, including decreases in the frequency and duration of use of our products and services; • users feel that their experience is diminished as a result of the decisions we make with respect to the frequency, prominence, format, size and quality of ads that we display; • users become concerned about our user data practices or other matters related to privacy, security and the sharing of user data; • users lose confidence in our ability to teach language or there is a decrease in user stickiness as a result of users no longer being interested in pursuing online language learning or reaching a point where they feel our product cannot advance their language ability; • users are no longer willing to pay for subscriptions or in-app purchases or we are unable to increase the price of our subscriptions or in-app purchases; • users have difficulty installing, updating or otherwise accessing our products on mobile devices as a result of actions by us or third parties that we rely on to distribute our products and deliver our services; • we fail to introduce new features, products or services that users find engaging or that are well received, or if we introduce new products or services, or make changes to existing products and services, that are not favorably received or that we are not able to monetize; • initiatives designed to attract and keep users and increase engagement are unsuccessful or discontinued, whether as a result of actions by us, third parties or otherwise; • third-party initiatives that may enable greater use of our products, including low-cost or discounted data plans, are discontinued; • we adopt terms, policies or procedures related to areas such as user data or advertising that are perceived negatively by our users or the general public; • we fail to combat inappropriate or abusive activity on our platform; • we fail to provide adequate customer service to users, marketers or other partners; • we fail to protect our brand image or reputation; • we, our partners, or companies in our industry are the subject of adverse media reports or other negative publicity, including as a result of our or their user data practices; • technical or other problems prevent us from delivering our products in a rapid and reliable manner or otherwise affect the user experience, such as unplanned site outages due to our failure or the failure of third-party systems we rely on, security breaches, distributed denial-of-service attacks or failure to prevent or limit spam or similar content; • there is decreased engagement with our products as a result of internet shutdowns or other actions by governments that affect the accessibility of our products in any of our markets; • there is decreased engagement with our products, or failure to accept our terms of service, as part of changes that we have implemented, or may implement, in the future in connection with regulations, regulatory actions or otherwise; • there is decreased engagement with our products as a result of changes in prevailing social, cultural or political preferences in the markets where we operate; or • there are changes mandated by legislation, regulatory authorities or litigation that adversely affect our products or users.
Any decrease in user stickiness, growth or engagement is likely to have a material and adverse impact on our revenue, business, financial condition and results of operations.
It is possible that a new product could gain rapid scale at the expense of existing brands through harnessing a new technology (such as generative AI), or a new or existing distribution channel, creating a new or different approach to connecting people or some other means.
We compete for learners’ time, attention, and share of wallet not only with other online and app-based language learning platforms, but also with offline forms of language learning.
Because of the extensibility of the Duolingo platform beyond language learning, we also compete with language learning assessment providers and literacy platforms and may compete with other kinds of online learning platforms in the future.
Many of the current and potential competitors, both domestically and internationally, have substantially greater financial, technical, sales, marketing and other resources than we do, as well as in some cases, lower costs.
These advantages could enable these competitors to offer products that are more appealing to users and potential users than our products, to respond more quickly and/or cost-effectively than us to new or changing opportunities, new or emerging technologies or changes in customer requirements and preferences, or to offer lower prices than ours or to offer free language-learning products or services.
There are a number of free online language-learning opportunities to learn grammar, pronunciation, vocabulary (including specialties in areas such as medicine and business), reading and conversation by means of podcasts and mobile applications, audio courses and lessons, videos, games, stories, news, digital textbooks, and through other means, which compete with our products.
As free online translation services improve and become more widely available and used, people may generally become less interested in language learning.
If we cannot successfully attract users of these free products and convert a sufficient portion of these free users into paying users, our business could be adversely affected.
If free products become more engaging and competitive or gain widespread acceptance by the public, demand for our products could decline or we may have to lower our prices, which could adversely impact our revenue and other results.
For example, in 2022, we launched our Math App, and in 2023 we launched our Music course, and at that time integrated both into the Duolingo App.
However, neither of these has generated material revenue for us.
More recently, we launched Duolingo Max which is powered by generative AI technology.
We have had operating losses in the past and we may not be able to achieve or maintain profitability in the future.
We have recently achieved profitability, which we may be unable to sustain.
Although our revenue has increased each quarter since the first quarter of 2018, there can be no assurances that it will continue to do so or that our margins will not decline over time.
Our revenue growth may slow or our revenue may decline for a number of other possible reasons, including reduced demand for our products or services, increased competition, a decrease in the growth or reduction in size of our overall market, or if we fail for any reason to capitalize on our growth opportunities.
If we are unable to maintain profitability in the future, it could materially adversely affect our business, financial condition and results of operations.
We have grown rapidly in recent years and have limited operating experience at our current scale of operations.
We have expanded our operations rapidly and have limited operating experience at our current size.
From December 31, 2018 to December 31, 2024, our headcount grew from approximately 140 employees to approximately 830 employees.
Because we have a limited history operating our business at its current scale, it is difficult to evaluate our current business and future prospects, including our ability to plan for and model future growth.
Our costs are continuing to grow, and some of our investments have the effect of reducing our operating margin and profitability.
Errors or inaccuracies in our metrics or data could also result in incorrect business decisions and inefficiencies.
As of December 31, 2024 we paid Apple and Google, as applicable, a meaningful share (generally 15-30%) of the payments we receive from transactions processed through in-app payment systems during the year.
In the twelve months ended December 31, 2024, we derived 61% of our revenue and 62% of our total bookings from the Apple App Store, and 20% of our revenue and 20% of our total bookings from the Google Play Store.
A platform provider may also change its fee structure, add fees associated with access to and use of its platform, alter how we are able to advertise on the platform, change how the personal information of its users is made available to application developers on the platform, limit the use of personal information for advertising purposes, or restrict how users can share information with their friends on the platform or across platforms.
In April 2021 Apple released an update of iOS that requires its users, on an app-by-app basis, to explicitly opt-in to the use of identifier-for-advertising, a device identifier assigned by Apple to each of its devices and used by advertisers to attribute app installs to advertising campaigns, target users through user acquisition, and deliver targeted ads.
This led to a reduction in the use of identifiers, and a more challenging environment for publishers and advertisers on iOS devices.
We have suffered interruptions in service in the past, including when releasing new software versions or bug fixes, and if any such interruption were significant and/or prolonged it could adversely affect our business, financial condition, results of operations or reputation.
For example, on December 7, 2021, an outage of the AWS platform caused Duolingo to go offline for over 5 hours.
During the year ended December 31, 2024, approximately 7.3% of our total revenues were derived from advertising.
While the described changes did not result in material adverse impacts to us, the impact of similar potential future operating systems changes or potential future regulation on targeted advertising is highly uncertain.
If we are not able to maintain the value and reputation of our brand, our ability to expand our base of users may be impaired, and our business and financial results may be harmed.
We believe that the importance of brand recognition will continue to increase, given the growing number of language learning applications, or “apps,” and the low barriers to entry for companies offering language learning products and services.
For the year ended December 31, 2024 and 2023, our Sales and marketing expenses were $90.5 million and $75.8 million, respectively.
To continue to reach potential users and grow our businesses, we must identify and devote our overall marketing activities and expenditures new and evolving advertising channels, such as mobile and online video and social media platforms as well as targeted campaigns in which we communicate directly with potential, former and current users via new virtual means.
For example, in 2024, we expanded our activities in channels such as YouTube Shorts.

and 153 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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