This article first appeared on GuruFocus.
Duolingo (NASDAQ:DUOL), the language-learning app, fell 9.58% premarket after reporting second-quarter bookings of $289.1 million, up just 8% from a year earlier. Revenue rose 18% to $298.5 million, past the $295.6 million analyst estimate, and daily active users grew 23% to 58.7 million, an accelerationfrom the first quarter.
Net income fell 26% to $33.2 million, adjusted EBITDA slipped to $77.3 million from $78.7 million, and the margin dropped to 25.9% from 31.2%. Free cash flow margin fell to 26.3% from 34.2%. Duolingo has said the compression is a deliberate choice to spend on user growth, and it raised its full-year adjusted EBITDA margin outlook to about 26.5% on better gross margin.
Bookings are the number worth watching, since they lead subscription revenue. Growth slowed partly on a tough comparison against last year's Energy rollout and a price increase. Guidance points to more of the same. Duolingo sees third-quarter revenue growth of about 11% and bookings growth near 9%, while reaffirming its full-year targets. One bright spot came in June, when a Streak Revival event revived streaks for 15.4 million users.