PITTSBURGH, Aug. 15, 2024 (GLOBE NEWSWIRE) -- Duolingo, the world's leading mobile learning platform, today announced a partnership with Sony Music that brings popular songs to its Music course. This new feature is designed to make learning music more fun and engaging by incorporating well-known songs into the curriculum. More than 60 recordings from Sony Music artists, like Dove Cameron, Hozier, Meghan Trainor, Whitney Houston, and more, are now available so learners can study the foundations of music and ...

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Duolingo, Inc. (DUOL), and emphasizes the importance of using these recommendations in conjunction with other analytical tools like the Zacks Rank for making informed investment decisions [1][3]. Brokerage Recommendations - Duolingo has an average brokerage recommendation (ABR) of 1.87, indicating a consensus between Strong Buy and Buy, with 60% of recommendations being Strong Buy and 6.7% being Buy [2]. - Despite the positive ABR, the article cautions against making investment decisions solely based on this metric, as studies show limited success of brokerage recommendations in predicting stock price increases [3][4]. Analyst Bias - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, often issuing five "Strong Buy" recommendations for every "Strong Sell" [4][8]. - This bias can mislead investors, as the interests of brokerage firms may not align with those of retail investors [5][8]. Zacks Rank vs. ABR - The Zacks Rank is presented as a more reliable indicator of a stock's near-term price performance, based on earnings estimate revisions, and is classified into five groups from Strong Buy to Strong Sell [6][9]. - Unlike the ABR, which is based solely on brokerage recommendations, the Zacks Rank incorporates quantitative models and is updated more frequently to reflect current business trends [7][10]. Earnings Estimates for Duolingo - The Zacks Consensus Estimate for Duolingo has increased by 7.6% over the past month to $1.87, indicating growing analyst optimism regarding the company's earnings prospects [11]. - This increase in consensus estimates, along with other factors, has led to a Zacks Rank of 1 (Strong Buy) for Duolingo, suggesting a favorable outlook for the stock [12].

Alistair Berg Duolingo (NASDAQ:DUOL) is the global leader in language learning. I ignored this company after its IPO in 2021 and rediscovered it earlier this year after I decided to learn Spanish. A positive experience as a Duolingo student led me to research the company as an investment. I view Duolingo as a strong growth stock pick at ~190/share - which is ~31x trailing free cash flow (FCF) - and I continue to build a position myself. Below, I make my case for investing in Duolingo stock by considering th ...

Investment Rating - The report recommends a "Buy" rating for Duolingo, indicating an expected relative return of over 20% within the next six months [7]. Core Insights - Duolingo's Q2 2024 revenue reached $178 million, a year-on-year increase of 41%, slightly above Bloomberg's consensus estimate of $177 million. Gross profit was $131 million, also exceeding expectations, with a gross margin of 73.45% [1]. - Adjusted EBITDA for the quarter was $48 million, a significant year-on-year increase of 130%, surpassing the consensus estimate of $39 million. The adjusted EBITDA margin was 27.0%, exceeding the expected 21.65% [1]. - Daily Active Users (DAU) and Monthly Active Users (MAU) saw rapid growth, with DAU reaching 34.1 million (up 59% year-on-year) and MAU at 104 million (up 40% year-on-year). The DAU to MAU ratio reached a historical high of 33% [1]. - The launch of Duolingo Max, a premium service tier, is expected to enhance user engagement, covering 15% of DAU and set to expand further by the end of the year [1]. - The company raised its revenue guidance for Q3 to $187-190 million and adjusted EBITDA to $40-43 million, with an EBITDA margin of 21.5-22.5%. The full-year revenue forecast was adjusted to $731-738 million, and adjusted EBITDA to $176-185 million, with an EBITDA margin of 24-25% [1]. Summary by Sections Financial Performance - Q2 2024 revenue: $178 million, +41% YoY [1] - Gross profit: $131 million, gross margin: 73.45% [1] - Adjusted EBITDA: $48 million, +130% YoY, EBITDA margin: 27.0% [1] User Growth - DAU: 34.1 million, +59% YoY [1] - MAU: 104 million, +40% YoY [1] - DAU/MAU ratio: 33%, historical high [1] Product Development - Duolingo Max launched in 27 countries, covering 15% of DAU [1] - Future AI features expected to enhance user experience [2]

Investment Rating and Target Price - The report initiates coverage on Duolingo with an "Overweight" rating and a target price of $200.27, based on a 30x 2025E PE multiple [2][5][7] - The target price implies a 6.9% upside from the closing price of $187.38 as of August 9, 2024 [8] Core Investment Thesis - Duolingo is a global leader in gamified mobile learning with over 500 million cumulative users and nearly 100 million MAUs as of Q1 2024 [2][10] - The company has successfully combined gaming elements with language learning, achieving high user retention rates comparable to top casual games [3][35] - Duolingo's subscription-based model provides more stable revenue streams compared to traditional casual games that rely heavily on advertising [4][42] Growth Drivers - Emerging markets present significant growth opportunities, with current penetration rates below 0.4% in countries like China and India [39] - The family plan offering has shown strong traction, with subscription share increasing from 18% to 20% between late 2023 and Q2 2024 [19] - New product launches, including Duolingo Math and Duolingo Music, are expanding the company's addressable market [15] Financial Performance and Projections - Revenue is expected to grow from $739.9 million in 2024E to $1.15 billion in 2026E, representing a 3-year CAGR of 25.1% [6][47] - Non-GAAP net income is projected to increase from $213.2 million in 2024E to $385.2 million in 2026E [5][49] - The company achieved positive GAAP net income for the first time in 2023, with profitability expected to improve further due to scale effects [22][23] Competitive Advantages - Duolingo's gamification strategy has resulted in user retention rates approaching those of top casual games, significantly higher than traditional education platforms [35][36] - The company's AI-powered personalization engine, Birdbrain, and integration of GPT-4 features in Duolingo Max enhance user experience and engagement [41] - Duolingo benefits from low customer acquisition costs (CPI < $0.5) compared to the casual gaming industry average of $1.79 [45] Valuation and Peer Comparison - The 30x 2025E PE multiple reflects Duolingo's higher growth potential compared to peers in both education and gaming sectors [51] - Comparable companies in education (e.g., Coursera, New Oriental) and gaming (e.g., EA, Nintendo) trade at an average 25E PE of 20.39x [51][53] - The valuation considers Duolingo's unique position at the intersection of education and gaming, with significant room for monetization improvement [5][51]

Investment Rating - The report does not provide a specific investment rating for the company [3][5][8]. Core Insights - The company achieved a record high in Monthly Active Users (MAU), surpassing 100 million for the first time, reaching 104 million in Q2 2024, with a year-on-year growth of 40% [8]. - Daily Active Users (DAU) reached 34.1 million, reflecting a 59% year-on-year increase, indicating enhanced user engagement [8]. - The number of paying users increased to 8 million, a 52% year-on-year growth, with a payment rate of 8.6%, up by 0.7 percentage points, suggesting significant future growth potential in paid subscriptions [8]. - The company reported Q2 2024 net revenue of $178 million, a 41% year-on-year increase, with subscription revenue contributing $144 million, up 51% [5][8]. - Operating cash flow for Q2 2024 was $62.4 million, a 68% increase year-on-year, demonstrating strong cash generation capabilities [5][8]. - The adjusted EBITDA for Q2 2024 was $48.1 million, with an adjusted EBITDA margin of 27%, reflecting a 10.5 percentage point improvement year-on-year [5][8]. Financial Performance Summary - The company’s revenue growth trajectory is robust, with projected cash revenue for Q3 2024 estimated between $194.5 million and $197.5 million, representing a year-on-year growth of 27-29% [9]. - For the full year 2024, cash revenue is expected to be between $820.5 million and $827.5 million, with a year-on-year growth of 32-33% [9]. - The adjusted EBITDA for 2024 is projected to be between $175.5 million and $184.6 million, indicating an 87-97% year-on-year increase [9]. - The company effectively managed its expense ratios, with R&D, sales, and administrative expenses decreasing by 6.9, 2.7, and 4.7 percentage points respectively in Q2 2024 [5][8].

Investment Rating - The report does not provide a specific investment rating for the company [16]. Core Insights - The company has achieved significant quarterly performance exceeding expectations, with a notable increase in user engagement and revenue growth [2][12]. - The utilization of new technologies is expected to enhance product experience and user activity, leading to increased willingness to pay and continuous growth [2][12]. - The company is effectively managing costs, resulting in improved profitability metrics [4][9]. Financial Performance Summary - In Q2 2024, the company reported a net revenue of $178 million, representing a year-over-year growth of 41%, with subscription revenue contributing $144 million, up 51% [6][12]. - The operating cash flow for Q2 2024 was $62.4 million, reflecting a 68% increase year-over-year, while cash revenue reached $190 million, a 38% increase [6][12]. - The adjusted EBITDA for Q2 2024 was $48.1 million, with an adjusted EBITDA margin of 27%, marking a 10.5 percentage point increase year-over-year [4][9]. User Metrics Summary - The company's Monthly Active Users (MAU) surpassed 100 million for the first time, reaching 104 million, with Daily Active Users (DAU) at 34.1 million, showing year-over-year growth of 40% and 59% respectively [12]. - The number of paying users increased to 8 million, a 52% year-over-year growth, with a payment rate of 8.6%, up 0.7 percentage points from the previous year [12]. Future Guidance - For Q3 2024, the company anticipates cash revenue between $194.5 million and $197.5 million, and net revenue between $186.7 million and $189.7 million, indicating a year-over-year growth of 36-38% [14]. - The full-year 2024 projections estimate cash revenue of $820.5 million to $827.5 million, and net revenue of $731.3 million to $738.3 million, with expected growth rates of 38-39% [14].

This company integrated artificial intelligence into its core business, and it's already successfully monetizing the technology. Artificial intelligence (AI) is a red-hot theme in the stock market right now, and while there is a ton of hype, many companies are finding tangible and highly valuable use cases for the technology. Duolingo (DUOL 4.69%) is the world's largest digital language education platform, and its business was an incredible success before AI came along. However, the company is using it to c ...

Duolingo (NASDAQ:DUOL) is a company really taking off today. Despite the overall market being up considerably today, investors may look at the 14% surge in DUOL stock this afternoon and wonder what the company is doing to propel so much investor interest. Well, the online language learning company just released its second-quarter earnings to the cheer of investors. On the revenue front, Duolingo brought in $178.3 million, higher than the $177.1 million analysts had penciled in. But it was really the company ...

Core Insights - Duolingo's shares experienced a significant drop of 17.6% in July, attributed to a lack of news and unfavorable market conditions, despite the S&P 500 rising by 1% during the same period [1][2] - The company reported impressive second-quarter financial results on August 7, leading to a rebound in its stock price [3] Financial Performance - Duolingo's monthly active users surpassed 100 million, with revenue increasing by 41% year-over-year to $178 million, driven by a 52% growth in paid subscribers [4] - The company generated nearly $55 million in free cash flow for Q2, compared to $34 million in the same period last year [4] User Engagement and Growth Strategy - User growth and engagement are critical for Duolingo's revenue generation, with high engagement leading to either ad revenue from free users or subscription payments from engaged users [5] - The acquisition of animation studio Hobbes aims to enhance user experience through improved animation, making the platform more visually appealing [6] Future Outlook - Duolingo anticipates full-year revenue between $731.3 million and $738.3 million, indicating a year-over-year growth of approximately 38% to 39% [8] - The company is expected to remain profitable, which is notable for a high-growth company [8] Valuation Considerations - Duolingo's current trading valuation is slightly over 10 times its expected full-year sales, which may be considered pricey, but the strong business fundamentals provide a positive outlook for investors [9]