DUOL
Duolingo, INC
NASDAQ
10-Q: Duolingo Reports Strong User Growth and Increased Profitability in Q3 2024
Sentiment:
Quarterly Report
6 November 2024 6:29 PM
Duolingo's Q3 2024 results show significant growth in users, paid subscribers, and profitability, driven by product enhancements and effective marketing strategies.
Better than expected
The company's net income, adjusted EBITDA, and free cash flow all significantly exceeded the prior year's results, indicating better than expected financial performance.
The company's user growth metrics, including MAUs, DAUs, and paid subscribers, all showed substantial year-over-year increases, indicating better than expected user engagement and adoption.
Summary
- Duolingo's Q3 2024 saw a substantial increase in monthly active users (MAUs) to 113.1 million, a 36% increase year-over-year.
- Daily active users (DAUs) also grew significantly to 37.2 million, a 54% increase year-over-year.
- The company's paid subscriber base reached 8.6 million, a 47% increase compared to the same period last year.
- Subscription bookings totaled $176.3 million, a 45% increase year-over-year, while total bookings reached $211.5 million, a 38% increase.
- Net income for the quarter was $23.4 million, a significant improvement from $2.8 million in the same quarter of the previous year.
- Adjusted EBITDA for the quarter was $47.5 million, compared to $22.5 million in the prior year.
- Free cash flow also increased to $52.7 million, up from $33.5 million in the same period last year.
- The company's revenue for the quarter was $192.6 million, a 40% increase year-over-year.
- For the nine months ended September 30, 2024, total revenue was $538.5 million, a 42% increase year-over-year.
Sentiment
Score: 9
Explanation: The document presents a very positive outlook with strong growth across all key metrics, significant improvements in profitability, and a clear path for future growth. The risks are well-managed and the company's strategic direction is sound.
Positives
- The company experienced strong growth in both user engagement and paid subscriptions.
- Duolingo's profitability has significantly improved year-over-year.
- The company's free cash flow has increased substantially.
- Revenue growth was strong across both subscription and other revenue streams.
- The company's user engagement metrics, such as DAU/MAU ratio, have improved.
Negatives
- Gross margin decreased slightly to 72.9% for the quarter, down from 73.7% in the same period last year.
- The company's operating expenses, particularly research and development, continue to increase, although they are decreasing as a percentage of revenue.
Risks
- The company faces intense competition in the online language learning industry.
- Changes in third-party platform policies or fees could negatively impact the business.
- Reliance on third-party hosting and cloud computing providers poses a risk.
- Security breaches or data privacy violations could harm the company's reputation and financial results.
- Fluctuations in foreign currency exchange rates could impact financial results.
- The company's dual-class stock structure concentrates voting control, limiting the influence of other stockholders.
- The company's reliance on third-party platforms for distribution and payment processing creates a dependency risk.
- The company's use of AI and machine learning technologies is subject to regulatory and ethical risks.
Future Outlook
The company believes that its existing cash and cash equivalents, short-term investments, and cash flow from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. The company also expects to continue to invest in its infrastructure and customer support to expand its platform capabilities.
Management Comments
- Management regularly reviews key operating metrics and non-GAAP financial measures to evaluate the business, measure performance, identify trends, prepare financial projections, and make business decisions.
- Management believes that bookings provide an indication of trends in operating results, including cash flows, that are not necessarily reflected in revenues because subscription revenues are recognized ratably over the lifetime of a subscription.
- Management uses non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons.
Industry Context
Duolingo's strong performance reflects the growing demand for online language learning solutions. The company's focus on user engagement and product innovation positions it well in a competitive market. The increasing adoption of technology-based education and the growing global interest in language learning are tailwinds for the company.
Comparison to Industry Standards
- Duolingo's growth in MAUs and DAUs significantly outpaces many competitors in the online education space, indicating strong user engagement and market penetration.
- The company's subscription growth rate of 47% year-over-year is impressive compared to industry averages, suggesting effective monetization strategies.
- Duolingo's adjusted EBITDA margin of 24.7% for the quarter is a strong indicator of profitability and operational efficiency, outperforming many peers in the edtech sector.
- Compared to companies like Babbel and Rosetta Stone, Duolingo's freemium model and gamified approach appear to be driving higher user engagement and conversion rates.
- While companies like Coursera and edX focus on broader educational content, Duolingo's specialization in language learning gives it a competitive edge in that specific niche.
- Duolingo's reliance on mobile app stores for distribution and payment processing is similar to many other app-based businesses, but the company's scale and brand recognition provide a stronger position.
- The company's investment in AI and machine learning is in line with industry trends, but the specific application of these technologies to language learning is a differentiator.
Stakeholder Impact
- Shareholders will benefit from the company's strong financial performance and growth prospects.
- Employees will benefit from the company's continued growth and success.
- Customers will benefit from the company's ongoing investment in product development and user experience.
- Suppliers and partners will benefit from the company's continued growth and expansion.
Next Steps
- The company will continue to invest in its infrastructure and customer support.
- The company will continue to develop and implement new products and features.
- The company will continue to monitor and adapt to changes in the regulatory environment.
Key Dates
- August 18, 2011: Duolingo, Inc. was formed.
- June 19, 2012: The Duolingo App was launched to the general public.
- July 26, 2021: Duolingo adopted the 2021 Incentive Award Plan and the 2021 Employee Stock Purchase Plan.
- January 1, 2024: The number of Class A shares available under the 2021 Plan was increased by 2,126 shares of common stock.
- January 8, 2024: The term of the Sub-Sublease for office space in New York commenced.
- March 1, 2024: The term of the lease for office space in Seattle began.
- May 20, 2024: The term of the lease for office space in Beijing began.
- September 30, 2024: End of the reporting period for this quarterly report.
- November 5, 2024: Date of share information provided in the report.
- November 6, 2024: Date of the report.
Keywords
language learning, online education, mobile app, subscriptions, user growth, profitability, EBITDA, free cash flow, Duolingo English Test, AI, machine learning
DUOL
Duolingo, INC
NASDAQ
Sector: TBD
Filings with Classifications
Better than expected
1 May 2025 10:40 PM
Quarterly Report
- The company's MAUs, DAUs, paid subscribers, subscription bookings, total bookings, revenue, net income, adjusted EBITDA, and free cash flow all increased year-over-year.
Better than expected
1 May 2025 4:02 PM
Earnings Release
- Bookings growth exceeded prior guidance.
- Profitability for Q1 was above expectations.
- The company is raising the midpoint of its full-year bookings guidance to 29% YoY growth.
- The company is raising the midpoint of its full-year Adjusted EBITDA margin to 28% YoY growth.
Better than expected
25 April 2025 4:04 PM
Proxy Statement
- Duolingo's financial results for 2024, including bookings, revenue, net income, and adjusted EBITDA, exceeded expectations and prior-year performance.
Better than expected
27 February 2025 11:27 PM
Annual Results
- The company's net income increased significantly from $16.1 million in 2023 to $88.6 million in 2024.
- Adjusted EBITDA nearly doubled from $93.7 million in 2023 to $191.9 million in 2024.
- The company's monthly active users (MAUs) reached 116.7 million for the three months ended December 31, 2024, a 32% increase year-over-year.
- Daily active users (DAUs) increased by 51% to 40.5 million for the same period.
- Paid subscribers grew to 9.5 million as of December 31, 2024, a 43% increase from the previous year.
- Subscription bookings for 2024 totaled $730.7 million, a 47% increase year-over-year.
- Total bookings for 2024 reached $870.6 million, a 40% increase year-over-year.
Better than expected
27 February 2025 4:05 PM
Earnings Release
- The company's results were better than expected due to higher than anticipated growth in DAUs and paid subscribers.
- The company's results were better than expected due to strong performance of Duolingo Max.
- The company's results were better than expected due to effective marketing campaigns.
Better than expected
6 November 2024 6:29 PM
Quarterly Report
- The company's net income, adjusted EBITDA, and free cash flow all significantly exceeded the prior year's results, indicating better than expected financial performance.
- The company's user growth metrics, including MAUs, DAUs, and paid subscribers, all showed substantial year-over-year increases, indicating better than expected user engagement and adoption.
Better than expected
6 November 2024 4:04 PM
Quarterly Report
- Duolingo's results exceeded expectations across key metrics, including DAU growth, revenue, and profitability.
- The company's net income increased significantly, and adjusted EBITDA margin improved substantially.
- Duolingo also raised its full-year guidance, indicating confidence in continued strong performance.
Better than expected
7 August 2024 6:30 PM
Quarterly Report
- The company's net income, adjusted EBITDA, and free cash flow all significantly exceeded the prior year's results, indicating better than expected financial performance.
- The company's user growth metrics, including MAUs, DAUs, and paid subscribers, all showed substantial year-over-year increases, indicating better than expected user engagement and adoption.
Better than expected
7 August 2024 4:02 PM
Quarterly Report
- The company's results were better than expected due to significant growth in MAUs, DAUs, subscribers, revenue, and net income.
- The adjusted EBITDA and free cash flow also exceeded expectations, indicating improved profitability and cash generation.
Better than expected
9 May 2024 9:32 PM
Quarterly Report
- Duolingo's Q1 results exceeded expectations with significant growth in users, subscribers, revenue, and profitability.
- The company's net income of $27.0 million was a substantial improvement from a net loss in the prior year quarter.
- The company raised its full-year guidance for bookings, revenue, and profitability, indicating confidence in future performance.
Better than expected
8 May 2024 7:27 PM
Quarterly Report
- The company's net income of $27.0 million is a significant improvement from a net loss in the same quarter last year.
- Adjusted EBITDA was $44.0 million, a substantial increase from $15.1 million in the prior year.
- Free cash flow increased to $79.6 million, up from $28.8 million in the same period last year.
Better than expected
8 May 2024 4:03 PM
Quarterly Report
- Duolingo's Q1 2024 results significantly exceeded expectations with a 45% revenue growth, a net income of $27.0 million compared to a loss last year, and a substantial increase in adjusted EBITDA.
- The company's user growth metrics, including a 54% increase in DAUs and a 35% increase in MAUs, were also better than anticipated.
- The raised full-year guidance for bookings, revenue, and profitability further indicates that the company's performance is better than expected.
Better than expected
28 February 2024 6:14 PM
Annual Results
- The company's net income of $16.1 million is a significant improvement from a net loss of $59.6 million in the previous year.
- Adjusted EBITDA increased to $93.7 million, compared to $15.5 million in the previous year.
- Free cash flow increased to $144.3 million, compared to $46.2 million in the previous year.
Better than expected
28 February 2024 4:03 PM
Quarterly Report
- Duolingo's Q4 and full year results significantly exceeded expectations with record bookings, revenue, and profitability.
- The company's user growth, particularly the 65% increase in DAUs, was much higher than anticipated.
- The turnaround to net income from a net loss in the previous year was a positive surprise.
- The adjusted EBITDA and free cash flow figures were substantially better than expected.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.