Duolingo (NASDAQ: DUOL) Securities Class Action: AI, Monetization, DAU Growth and December 7, 2026 Lead Plaintiff Deadline

The complaint alleges that Duolingo pursued increasingly aggressive monetization of its language-learning app while simultaneously expanding its reliance on rapidly generated artificial-intelligence content.

According to the complaint, Duolingo introduced more:

• advertising;
• subscription upselling;
• premium gating; and
• added user friction,

while lower-quality AI-generated content allegedly weakened parts of the learning experience. At the same time, defendants continued to describe Duolingo's growth as sustainable and emphasized strong Daily Active User growth, product improvements, premium-subscription adoption, and AI-driven content expansion.

This is best understood not simply as an 'AI lawsuit,' but as a disclosure case about the interaction of AI, monetization, user friction, and slowing DAU growth. These allegations have not been proven.

Daily Active Users, or DAUs, measure how many people engage with Duolingo each day. CEO Luis von Ahn has described DAU growth as one of Duolingo's most important metrics and has acknowledged that even very small frustrations can cause users to leave the app.

The complaint tracks year-over-year DAU growth declining through the class period:

• approximately 49% in Q1 2025;
• approximately 40% in Q2 2025;
• approximately 36% in Q3 2025; and
• approximately 30% in Q4 2025,

before Duolingo projected only approximately 20% DAU growth for 2026. Plaintiff alleges that management knew from its extensive user data and experimentation that increasing friction in the free product threatened future DAU growth. DAU therefore provides the clearest factual thread running through the entire case.

Duolingo describes itself as intensely data-driven. The complaint alleges that the company runs thousands of A/B tests — in which different groups of users receive different versions of product features, subscription prompts, advertisements, and learning experiences — and that users complete more than one billion exercises daily, producing enormous quantities of behavioral data.

According to the complaint, this testing infrastructure gave senior management detailed, contemporaneous information about how product changes affected:

• user engagement;
• retention;
• subscription conversion;
• monetization;
• reactions to new features; and
• the effects of additional friction.

Plaintiff therefore alleges that defendants had real-time data showing the negative effects of certain monetization strategies even as they continued to describe the business positively. This experimentation infrastructure is also central to the derivative and corporate-governance questions discussed below.

On April 28, 2025, CEO Luis von Ahn announced that Duolingo would become an 'AI-first' company. The strategy included using AI to accelerate content creation, gradually reducing reliance on contractors for work that could be automated, and incorporating AI use into certain hiring and performance decisions.

An important legal distinction: the securities complaint does not allege that using AI itself violated the securities laws. Instead, plaintiff alleges that Duolingo's rapid AI-content expansion contributed to product-quality deterioration, and that management understood those effects through internal data while continuing to characterize product quality and growth positively.

Duolingo, for its part, has consistently defended AI as a tool that lets it create dramatically more educational content far faster than traditional methods — the complaint itself quotes management describing AI as helping Duolingo 'teach better.' This page therefore does not state that Duolingo's AI content was objectively poor. It describes the plaintiff's allegation that rapidly generated AI content reduced quality in some areas and negatively affected user experience, alongside Duolingo's position that AI allowed it to expand and improve educational content at unprecedented speed.

Duolingo Max is the company's premium subscription tier. It includes AI-powered functions such as interactive conversations, role-play, video calls, and the AI character Lily. The complaint alleges that Duolingo increasingly pushed free and Super Duolingo users toward Max as part of its monetization strategy, and that Max also increased the company's generative-AI costs.

Plaintiff further alleges that some AI-powered content and features generated increasing user complaints about quality. Duolingo has continued to emphasize AI as an important component of improving and expanding its educational product.

Energy is Duolingo's usage-limiting system for free users. It replaced Duolingo's prior 'Hearts' system — under which free users lost hearts for incorrect answers — with a system in which ordinary usage itself consumes Energy.

Duolingo told investors that Energy was designed to be more motivating and that company testing showed favorable effects on DAUs, time spent learning, and subscriber conversion.

The complaint alleges a different purpose and effect — that Energy deliberately created friction that limited free use and encouraged users to purchase subscriptions, and that management knew from testing and historical experience that added friction could also drive users away. This difference between the company's description of Energy and the plaintiff's allegation is central to the case.

Duolingo's overall Q2 2025 results were strong: revenue grew approximately 41%, paid subscribers increased, and the company raised its full-year guidance.

DAU growth, however, slowed from approximately 49% in Q1 to approximately 40% in Q2. On the earnings call, von Ahn largely attributed that deceleration to negative reaction following his AI-first announcement and a subsequent reduction in Duolingo's social-media activity, and indicated the effect was 'in the past.'

Plaintiff alleges that the slowdown instead reflected broader problems involving monetization, added friction, Energy, advertising, subscription gating, and AI-related product quality — not only social-media backlash.

On November 5, 2025, Duolingo reported Q3 results showing DAU growth had slowed again to approximately 36%. The company also announced a strategic shift toward 'teaching better,' user growth, and longer-term product quality, and away from maximizing short-term monetization. According to the complaint, DUOL declined approximately 25% — about $66.28 per share — to close at $193.74 on November 6.

Balance is important here. Duolingo still reported strong overall results, surpassing 50 million DAUs, with approximately 36% DAU growth, approximately 41% revenue growth, and substantial profitability. The company described the change as taking a longer-term view. The lawsuit does not allege that Duolingo had stopped growing; plaintiff's theory is that the need to reverse course on monetization and invest more heavily in user experience allegedly revealed that prior growth strategies were less sustainable than investors had been led to believe.

There is also a loss-causation nuance. Management attributed part of the Q3 DAU slowdown to a reduction in its 'unhinged' social-media posting while responding to community feedback, later resuming more aggressive social-media activity. Defendants may therefore argue that social-media changes, normal growth deceleration, and strategic investment decisions — rather than previously concealed user-friction problems — caused some of the slower DAU growth. This page does not attempt to resolve that question.

The complaint further alleges that, even after this first decline, former CFO Matthew Skaruppa described the reprioritization as having 'a relatively small financial impact.' Plaintiff alleges that characterization maintained artificial inflation because the ultimate financial effect would prove substantially greater — a point that becomes important to the later disclosures.

Before the market opened on January 12, 2026, Duolingo announced that CFO Matthew Skaruppa would step down and that Gillian Munson — then a board member and Audit Committee chair — would become CFO effective February 23. The company praised Skaruppa's tenure and said he would remain in an advisory role during the transition.

The same announcement provided preliminary Q4 metrics showing DAU growth of approximately 30%, down from 36% in Q3. According to the complaint, DUOL declined approximately 8.45% — about $14.92 per share — to close at $161.74.

Duolingo did not publicly characterize the CFO change as resulting from wrongdoing or the DAU slowdown, and this page does not treat the transition as evidence of misconduct.

After market close on February 26, 2026, Duolingo released Q4 and full-year 2025 results and its 2026 outlook. It confirmed Q4 DAU growth of approximately 30% and projected approximately 20% DAU growth for 2026, along with 2026 bookings growth of approximately 10%–12%, revenue growth of approximately 15%–18%, and an adjusted EBITDA margin of approximately 25%.

The complaint alleges those figures were substantially below investor expectations and revealed that the financial cost of reprioritizing user growth and product quality was much greater than defendants had previously suggested. According to the complaint, DUOL fell from a February 26 close of $117.45 to a February 27 close of $101.00 — a decline of approximately 14%, or $16.45 per share.

Duolingo did not characterize the change as a business failure. The company noted that it had surpassed 50 million daily active users and $1 billion in annual bookings, described 2026 as a 'pivotal moment,' and said it was deliberately prioritizing user growth, teaching better, and improvements to the free-learner experience even though that strategy would moderate near-term financial growth.

During the February 2026 earnings call, von Ahn explained that Duolingo had learned over many years that removing friction from the free-user experience tends to help DAUs grow, while adding friction can quickly increase monetization and subscription conversion. He acknowledged that one quick way to increase monetization had been adding friction to the free-user experience.

Plaintiff treats these statements as important evidence that defendants understood the tradeoff between aggressive monetization and user growth, even as earlier public statements described the company's monetization tools — including Energy — more positively.

No. Duolingo remained a large and growing company. Following the alleged class period, it continued to add users and subscribers: in Q2 2026, Duolingo reported approximately 58.7 million DAUs, approximately 23% year-over-year DAU growth, approximately 12.7 million paid subscribers, and approximately $298.5 million in quarterly revenue, and management said the results supported its decision to prioritize product quality and user growth.

This later, post-class-period information is included for balance. It neither proves nor disproves the allegations about what investors should have been told during the earlier class period.

Section 10(b) and Rule 10b-5

The complaint asserts federal securities-fraud claims under Section 10(b) and Rule 10b-5 against Duolingo, Luis von Ahn, and Matthew Skaruppa.

Section 20(a)

The complaint asserts controlling-person claims against von Ahn and Skaruppa.

Forward-Looking Statements

Duolingo's 2026 projections were accompanied by PSLRA cautionary language. This page does not state that the safe harbor does or does not apply. The litigation may address which challenged statements concerned existing conditions and historical data, which were forward-looking projections, and whether any forward-looking statements qualify for PSLRA safe-harbor protection.

The currently alleged class period is May 2, 2025 through February 26, 2026, inclusive. It begins after Duolingo's May 1, 2025 Q1 results, in which the company reported approximately 49% year-over-year DAU growth, more than 10 million paid subscribers, and approximately 38% year-over-year revenue growth, and described its growth as sustainable. Plaintiff alleges those statements were misleading because management allegedly already had data indicating that increased monetization friction and rapidly generated AI content threatened user engagement and DAU growth.

Investors should preserve all brokerage statements and transaction records showing DUOL purchases and sales during the class period.

The current published PSLRA lead plaintiff deadline is December 7, 2026, as identified in the October 7, 2026 notice published by Robbins Geller, counsel on the complaint.

Do I Have to Become Lead Plaintiff?

Generally, no. The lead plaintiff is the court-appointed investor or investor group that actively represents the proposed class and supervises class counsel. Most investors do not become lead plaintiff and remain passive class members.

Lead Plaintiff Deadline ≠ Settlement Claim Deadline

These are different dates. An investor ordinarily does not need to seek lead-plaintiff appointment merely to remain potentially eligible for a later class recovery.

Generally, no. Potential securities-class eligibility typically depends on matters such as when an investor purchased, when the investor sold, the investor's losses, and the applicable damages methodology; selling the stock does not automatically eliminate a securities claim. Continued ownership is a different issue that is more relevant to shareholder derivative claims.

Potentially. Duolingo is a Delaware corporation, and its charter documents generally designate the Delaware Court of Chancery as the exclusive forum for certain derivative, fiduciary-duty, and internal-affairs claims.

Because the alleged conduct continued across the May 2025–February 2026 period, derivative standing should be evaluated against the particular challenged conduct rather than only the May 2 class-period start — an investor who acquired shares after May 2 could have ownership relevant to later alleged acts.

Julie & Holleman LLP is separately investigating whether current Duolingo shareholders may have shareholder derivative or corporate-governance claims arising from the conduct alleged in the securities complaint and any resulting harm to the company. We are particularly interested in current shareholders who owned DUOL when potentially actionable conduct occurred and have continued to hold their shares. Potential areas of investigation may include:

• what internal A/B testing showed about Energy, advertising frequency, and subscription upselling;
• product, engagement, and retention metrics, and when user-friction effects became visible;
• the balance between monetization and user growth, and how internal reporting captured those tradeoffs;
• how AI-generated course quality was monitored before mass rollout;
• disclosure controls, including how statements about Energy and the 'in the past' comment were reviewed; and
• board oversight.

Counsel may evaluate whether a Delaware books-and-records investigation or other appropriate investigative steps are warranted. No determination has been made that viable derivative claims exist.

Julie & Holleman LLP is investigating allegations involving Duolingo, DUOL, Daily Active Users, the AI-first strategy, AI-generated learning content, Duolingo Max, Energy, advertising, subscription upselling, monetization, A/B testing, user friction, bookings, disclosure controls, and corporate governance. We are interested in hearing from:

Investors With Securities Losses

Investors who purchased Duolingo Class A common stock between May 2, 2025 and February 26, 2026 and suffered losses, including investors evaluating whether to seek lead-plaintiff appointment before December 7, 2026.

Current DUOL Shareholders

Shareholders who owned DUOL during potentially actionable conduct and continue to hold their shares, concerning possible derivative or corporate-governance rights.

A shareholder may potentially fall within both groups.