Duolingo, Inc.DUOL
Duolingo, Inc. Stock Compensation Disclosure
STOCK-BASED COMPENSATION
Prior to the IPO, the Company granted options to purchase shares of the Company’s common stock and restricted stock units (“RSU”) in respect of shares of the Company’s common stock to employees, directors and consultants under the Company’s 2011 Equity Incentive Plan. In connection with the IPO, the Company adopted the 2021 Incentive Award Plan (“2021 Plan”) and the 2021 Employee Stock Purchase Plan (“ESPP”), both of which became effective on July 26, 2021. The 2021 Plan and ESPP include an annual share increase provision through January 1, 2031, subject to limits and Board discretion. On January 1, 2026, the number of Class A shares available under the 2021 Plan was increased by 2,331 shares of common stock. No offerings have commenced under the ESPP, and in February 2025, the Board waived all future automatic share increases under the ESPP.
The Company’s stock options generally vest over four years based on continued service to the Company and its subsidiaries. Each option has a term of ten years. Any stock options granted under the 2021 Plan must generally have an exercise price of not less than the estimated fair market value of the underlying Class A common stock at the date of the grant, but as of December 31, 2025 no options had been granted under the 2021 Plan.
A summary of stock option activity as of December 31, 2025 is as follows:
| (In thousands, except prices and years) | Number of options | Weighted- average exercise price | Weighted- average remaining contractual life (years) | Aggregate intrinsic value | |||||||||||||||||||
| Options outstanding at January 1, 2025 | 1,523 | $ | 18.73 | 4.67 | $ | 465,985 | |||||||||||||||||
| Granted (1) | — | — | |||||||||||||||||||||
| Exercised | (664) | 19.06 | |||||||||||||||||||||
| Forfeited and expired (2) | — | — | |||||||||||||||||||||
Options outstanding at December 31, 2025 | 859 | $ | 18.38 | 3.77 | $ | 135,938 | |||||||||||||||||
Options exercisable at December 31, 2025 | 859 | $ | 18.38 | $ | 135,938 | ||||||||||||||||||
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(1) There were no stock options granted during the year ended December 31, 2025.
(2) There was a nominal amount of forfeitures and expirations during the year ended December 31, 2025.
The total intrinsic value of options exercised was approximately $213,805, $365,484 and $192,456 for the periods ended December 31, 2025, 2024 and 2023, respectively.
The Company began to grant RSUs in November 2020. The fair value of RSUs is estimated based on the fair value of our Class A common stock on the date of grant. Each RSU vests based upon the satisfaction of length of service. The Company measures and recognizes stock-based compensation expense for all stock-based awards based on the estimated fair value of the award.
A summary of RSU activity as of December 31, 2025 is as follows:
| (In thousands, except prices) | Restricted stock units | Weighted- average grant date fair value per share | |||||||||
Outstanding at January 1, 2025 | 1,802 | $ | 143.96 | ||||||||
| Granted | 598 | 391.09 | |||||||||
| Released | (836) | 140.38 | |||||||||
| Forfeited | (158) | 217.11 | |||||||||
Outstanding at December 31, 2025 | 1,406 | $ | 242.94 | ||||||||
As of December 31, 2025, there was no unrecognized stock-based compensation expense related to stock options granted under the plans. The amount of unrecognized stock-based compensation expense for RSUs as of December 31, 2025 was $311,428 with a weighted-average period of approximately three years.
There were 10,926 shares available for grant at December 31, 2025.
In June 2021, the Company granted an aggregate of 1,800 performance-based restricted stock units (“Founder Awards”) to its founders. The Founder Awards vest upon the satisfaction of both a service-based condition and a performance-based condition. The service condition vests 25% annually beginning on the initial public offering anniversary, July 30, 2021, subject to continued service. The performance-based condition is satisfied upon achievement of specified stock price hurdles over a ten year performance period from the grant date. Awards are generally settled one year after vesting. As of December 31, 2025, certain performance conditions associated with the Founder Awards have been achieved, while others remain subject to future stock price performance.
The fair value of the Founder Awards was estimated on the grant date using a Monte Carlo simulation model, which incorporates assumptions related to stock price volatility, expected term, risk-free interest rates, and other factors. Stock-based compensation expense related to the Founder Awards is recognized over the derived service period using the accelerated attribution method and is recorded regardless of whether the stock price hurdles are ultimately achieved, provided the service condition continues to be satisfied.
The Company recognized $11,059, $19,799 and $26,622 of stock-based compensation expense related to the Founder Awards for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, $5,877 of unrecognized stock-based compensation expense remains.
Total stock-based compensation expense was $137,437, $110,477 and $95,221 for the years ended December 31, 2025, 2024 and 2023, respectively.
Stock-based compensation expense is included in the Consolidated Statements of Operations and Comprehensive Income as shown in the following table:
| Year Ended December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Cost of revenues | $ | 96 | $ | 68 | $ | 55 | |||||||||||
| Research and development | 84,874 | 60,076 | 45,119 | ||||||||||||||
| Sales and marketing | 6,358 | 4,912 | 3,908 | ||||||||||||||
| General and administrative | 46,109 | 45,421 | 46,139 | ||||||||||||||
| Total | $ | 137,437 | $ | 110,477 | $ | 95,221 | |||||||||||
Nominal amounts of stock-based compensation expense is capitalized into intangible assets for the years ended December 31, 2025, 2024 and 2023.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.