--- title: "Duolingo's $11.4 million of staff bonuses ride on daily users a lawsuit says were cracking; they grew 29%" description: "Daily users grew 29% to 64.9 million, a second straight quarter of acceleration, in Duolingo's first report since a securities suit built on its own A/B tests alleged that paywall friction was eroding engagement. Revenue grew 14%, and an $11.4 million staff bonus now rides on Q4." publisher: "The Inference" section: "Applications" published: 2026-11-04T00:15:21.892Z modified: 2026-11-04T00:15:21.892Z canonical: https://theinference.org/article/duolingo-s-11-4-million-of-staff-bonuses-ride-on-daily-users-a-lawsuit-says-were-cracking-they-grew-29 language: en keywords: "Duolingo, Earnings, Lawsuits, Consumer Internet" --- # Duolingo's $11.4 million of staff bonuses ride on daily users a lawsuit says were cracking; they grew 29% > Daily users grew 29% to 64.9 million, a second straight quarter of acceleration, in Duolingo's first report since a securities suit built on its own A/B tests alleged that paywall friction was eroding engagement. Revenue grew 14%, and an $11.4 million staff bonus now rides on Q4. ## A bonus that pays only on fourth-quarter users [Duolingo](https://theinference.org/markets/companies/duolingo)'s third-quarter accounts carry $11.4 million for a company-wide bonus payable only if fourth-quarter daily-active-user growth reaches 25%, a cost management says it had previously kept out of its outlook [1]. That is payroll money staked on the number [a securities class action](https://www.financialcontent.com/article/accwirecq-2026-10-23-duol-shareholder-alert-investors-with-losses-may-seek-to-lead-the-class-action-in-duolingo-inc-securities-lawsuit-contact-levi-and-korsinsky) says was quietly cracking. The suit, filed in October by shareholder-rights firm Levi & Korsinsky, leans on Duolingo's own A/B tests, the split-run experiments that show one app change to two user groups at once. Plaintiffs say those tests showed unskippable ads and the Energy paywall draining free learners while executives called user growth the priority [2][3]. [The Inference walked through the tests on October 12](https://theinference.org/article/duolingo-s-own-a-b-tests-are-the-witness-in-a-securities-suit-over-its-growth-story). ## The user line held and rose The first hard reading since the suit landed above the bar. Daily users rose 29% year over year to 64.9 million, a second straight quarter of acceleration, from 23% in Q2 and 21% in Q1, with growth in every region and every subject [1][4]. Co-founder and chief executive Luis von Ahn called it proof the pivot to "teaching better and user growth" is working [5]. The bonus itself turns on Q4, not tonight [5]. Revenue of $309 million grew 14%, ahead of the $303 million consensus, and earnings of 58 cents a share cleared a 56-cent estimate [6]. The 12% some earnings roundups printed is the letter's bookings growth, bookings being cash collected up front and recognized as revenue over a subscription's life [1]. The stock, down 5.4% at the close, jumped 11.9% after hours [6]. ## One quarter cannot reach the suit [The class period, the window of stock purchases the case covers](https://www.morningstar.com/news/pr-newswire/20261015ny72317/suewallst-reminds-shareholders-of-a-lead-plaintiff-deadline-of-december-7-2026-in-duolingo-inc-lawsuit-duol), closed on February 26, 2026 [3]. Inside it, user growth slid from 49% early in 2025 to 36% in November and a preliminary 30% in January [4][7], disclosures that cut the stock 61% [2]. The complaint names von Ahn and former chief financial officer [Matthew Skaruppa](https://theinference.org/markets/people/matthew-skaruppa), who resigned January 8 [2]. And the rebound was bought by abandoning the conduct under attack: in February, management surrendered more than $50 million of planned 2026 bookings to strip friction out of the free app [4]. On the plaintiffs' theory, a recovery purchased by removing the paywalls corroborates the tests rather than refuting them. ## Users grew at twice the speed of money What the quarter does test is the exchange rate. Users grew 29%, operating expenses 24%, paid subscribers and revenue 14% each, and bookings 12%; adjusted EBITDA margin fell to 25.5% from 29.5% a year earlier [1]. The plaintiffs now have an accelerating line to explain; the bulls have 14% revenue growth against 29% user growth [1]. *Chart: **Users grew 29% while bookings grew 12% and revenue 14%** Bar chart of Duolingo's third-quarter 2026 year-over-year growth rates: daily users 29%, operating expenses 24%, paid subscribers 14%, revenue 14% and bookings 12%* *Year-over-year growth rates for the third quarter of 2026, as disclosed in the shareholder letter: daily active users, operating expenses, paid subscriber count, revenue, and bookings (cash collected up front, recognized as revenue over a subscription's life). Source: Duolingo Q3 2026 shareholder letter. [1]* *Chart: **User growth bottomed at 21% and climbed back to 29%, above the bonus bar** Line chart of Duolingo's year-over-year daily active user growth from Q3 2025 through Q3 2026, falling from 36% to a low of 21% then re-accelerating to 29%, with a dashed Q4 2026 estimate at 29% and a reference line at 25% marking the bonus threshold* *Year-over-year growth in daily active users, percent, as reported each quarter: Q3 2025 and the preliminary Q4 2025 figure per the complaint's timeline as reported by the New York Post; Q1 2026 per Seeking Alpha; Q2 and Q3 2026 and the Q4 guidance of growth similar to Q3 per the shareholder letter. Sources: shareholder letter, New York Post, Duolingo press release, Yahoo Finance, Seeking Alpha. [1][4][5][6][7]* ## February settles the bonus and the docket The letter guides fourth-quarter user growth "similar to Q3" and [raised full-year adjusted EBITDA guidance to $323 million](https://www.marketscreener.com/news/duolingo-q3-2026-financial-results-shareholder-letter-ce785fdedc88f12c), a 26.5% margin [1]. December 7, the deadline to apply as lead plaintiff, comes first [2][3]. February then settles both questions at once: whether 25% growth holds and the bonus pays, and whether the re-acceleration survives the return of monetization [5]. ## Takeaway First hard test of the suit's claim since it landed: daily users rose 29%, a second straight acceleration, above the 25% Q4 bar that pays an $11.4 million company-wide bonus. But the rebound came from stripping out the monetization the suit attacks, and users still grew at twice the speed of money. ## Sources 1. [MarketScreener, Duolingo: Q3 2026 Financial Results, Shareholder Letter, 3 November 2026](https://www.marketscreener.com/news/duolingo-q3-2026-financial-results-shareholder-letter-ce785fdedc88f12c) 2. [Levi & Korsinsky via FinancialContent (ACCESS Newswire), DUOL Shareholder Alert: Investors With Losses May Seek to Lead the Class Action, 23 October 2026](https://www.financialcontent.com/article/accwirecq-2026-10-23-duol-shareholder-alert-investors-with-losses-may-seek-to-lead-the-class-action-in-duolingo-inc-securities-lawsuit-contact-levi-and-korsinsky) 3. [SueWallSt / Levi & Korsinsky via Morningstar (PR Newswire), Lead Plaintiff Deadline of December 7, 2026 in Duolingo, Inc. Lawsuit, 15 October 2026](https://www.morningstar.com/news/pr-newswire/20261015ny72317/suewallst-reminds-shareholders-of-a-lead-plaintiff-deadline-of-december-7-2026-in-duolingo-inc-lawsuit-duol) 4. [Seeking Alpha, Geneva Investor, Duolingo: The 2027 Bull Case Is Hidden In The Monetization Switch, 26 October 2026](https://seekingalpha.com/article/4957436-duolingo-the-2027-bull-case-is-hidden-in-the-monetization-switch) 5. [Duolingo press release via Yahoo Finance (GlobeNewswire), Duolingo Reports Third Quarter 2026 Results, 3 November 2026](https://finance.yahoo.com/markets/stocks/articles/duolingo-reports-third-quarter-2026-210100884.html) 6. [Yahoo Finance, Earnings live updates: Duolingo stock jumps on user growth, upbeat guidance, 3 November 2026](https://finance.yahoo.com/markets/live/earnings-live-updates-apple-palantir-roku-and-more-212856249.html) 7. [New York Post (via MSN), Duolingo slapped with class-action lawsuit alleging AI efforts, relentless ads hurt user growth, 27 October 2026](https://www.msn.com/en-us/technology/tech-companies/duolingo-slapped-with-class-action-lawsuit-alleging-ai-efforts-relentless-ads-hurt-user-growth/ar-AA2gaRJM) --- Duolingo's $11.4 million of staff bonuses ride on daily users a lawsuit says were cracking; they grew 29% — The Inference. Canonical: https://theinference.org/article/duolingo-s-11-4-million-of-staff-bonuses-ride-on-daily-users-a-lawsuit-says-were-cracking-they-grew-29