Duolingo, Inc.DUOL

Duolingo, Inc. Earnings Per Share Disclosure

10-KFiled Feb 27, 20262 min read
EARNINGS PER SHARE
Basic and diluted net income per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities.
Basic net income per share attributable to common stockholders is calculated by dividing the net income by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase. The diluted net income per share attributable to common stockholders is calculated by giving effect to all potential dilutive common stock equivalents outstanding for the period. The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to 20 votes per share. Each share of Class B common stock is convertible into a share of Class A common stock voluntarily at any time by the holder, and automatically upon certain events. The Class A common stock has no conversion rights. As the liquidation and dividend rights are identical for Class A and Class B common stock, the undistributed earnings are allocated on a proportional basis and the resulting net income per share attributable to common stockholders will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis.
Year Ended December 31,
(In thousands, except per share data)202520242023
Numerator:
Net income attributable to Class A and Class B common stockholders$414,065 $88,574 $16,067 
Denominator:
Weighted-average shares in computing net income per share attributable to Class A and Class B common stockholders, basic45,773 43,504 41,451 
Effect of dilutive securities
Founder awards where performance has been met360 360 270 
Dilutive effect of stock options outstanding (1)769 1,435 2,774 
RSUs outstanding1,406 1,802 2,027 
Denominator for dilutive net income per common share - weighted-average shares48,308 47,101 46,522 
Basic income per common share$9.05 $2.04 $0.39 
Diluted income per common share$8.57 $1.88 $0.35 
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(1) The Company had 0.9 million options outstanding as of December 31, 2025. The estimated dilutive effect is calculated as the number of shares expected to be issued upon vesting or exercise, adjusted for the strike price proceeds that are received by the Company and assumed to be used to repurchase shares of Duolingo common stock.

Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2024Feb 28, 2025
2023Feb 29, 2024
2022Mar 1, 2023
2021Mar 4, 2022

About Earnings Per Share Disclosures

The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.

Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.

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