Financial Data and Key Metrics - Daily Active Users (DAU) grew by 54% year-over-year, building on last year's 60%+ growth [6][9] - Bookings and revenue grew 38% and 40% year-over-year, respectively, despite tougher comparisons [9] - Adjusted EBITDA margin for Q3 was 24.7%, with full-year guidance raised to 25.5% at the midpoint [9][13] - Family Plan subscriptions grew to 21% of total subscriptions, up from 18% at the end of last year [6] - Duolingo Max, the highest subscription tier, now includes an AI-powered video call feature and is available to roughly 50% of DAU, with plans to expand to 60-70% by year-end [10][11] Business Line Performance - Duolingo Max is driving significant growth, with early signs of strong demand for the video call feature, particularly among English learners [11][33] - The company is investing heavily in generative AI and automation to improve product efficiency and speed up feature launches [7][8] - The company is seeing a mix of new subscribers directly opting for Max and existing Super subscribers upgrading to Max [49] Market Performance - Growth is broad-based across all regions, with no single country growing significantly slower than others [39][40] - The company is expanding its international presence by adding country marketing managers in France, Korea, Italy, and Turkey [40][105] - Android users, who typically monetize less than iPhone users, are showing strong interest in Max, particularly for English learning [32][33] Strategic Direction and Industry Competition - The company is focusing on expanding its English learning offerings, particularly for intermediate and advanced learners, which represents a significant market opportunity [24][25] - Duolingo is leveraging generative AI to enhance product features, such as the video call with Lily, and to automate internal processes like content creation [8][56] - The company is also exploring opportunities in other subjects like math and music, which are expected to contribute more to growth in the coming years [44] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about continued strong DAU growth, driven by word-of-mouth and product improvements [28][84] - The company expects to see sustained revenue growth above 25% in various DAU environments, supported by multiple growth levers [86][87] - Management highlighted the importance of the freemium model and the company's ability to collect large amounts of data to improve engagement and teaching effectiveness [130][131] Other Important Information - The company is experimenting with pricing and promotional strategies, particularly around the New Year's promotion, which is expected to impact Q4 performance [12][101] - The company is seeing strong engagement with the video call feature, particularly among English learners and more advanced users [96][97] - The company is also focusing on resurrected users, who now make up more than half of the top-of-funnel growth [75][76] Q&A Summary Question: What are the key drivers for reaching 20 million subscribers? [16] - The company plans to continue growing its user base through product engagement and social marketing, with a focus on converting more users to paid subscriptions [17][18] - Duolingo Max is expected to play a significant role, particularly in geographies where English learners are interested in practicing conversation [20] Question: How is the company progressing with intermediate English learning? [22] - The company has made significant progress in developing intermediate and advanced English content and improving user placement within the app [25][26] - Growth in this segment is expected to be driven by word-of-mouth, with marketing efforts focused on influencers and user-generated content [28][37] Question: How is the uptake of new features on Android? [30] - Android users typically monetize less than iPhone users, but the company is seeing strong interest in Max features, particularly among English learners [32][33] Question: What is the marketing strategy for intermediate English learning? [34] - The company is leveraging influencers and user-generated content to promote its intermediate and advanced English courses [35][37] Question: How is the company managing macro risks? [43] - The company believes there is significant runway for growth in the language learning market, with 2 billion people globally learning languages and only 100 million monthly active users on Duolingo [44] Question: How is the company balancing scaling and reinvestment? [46] - The company is focused on scaling profitability while continuing to invest in R&D, with incremental margins above the long-term target of 30-35% [46] Question: What is the conversion cycle for Max subscribers? [47] - The company is seeing a mix of new subscribers directly opting for Max and existing Super subscribers upgrading to Max, with early signs of strong demand for the video call feature [49][50] Question: What are the building blocks of DAU growth for 2025? [52] - The company expects to see continued growth in both penetrated markets like the US and in English learning, driven by word-of-mouth and product improvements [53] Question: How is Max impacting margins? [55] - Max is accretive to gross profit dollars but has a lower gross margin percentage due to higher costs associated with generative AI and the video call feature [59][60] Question: What is the pace of product testing? [63] - The company is running more tests per quarter, with a success rate of around 50%, and expects to continue seeing improvements in engagement and monetization [64][65] Question: How is the family plan performing? [72] - The family plan has grown to 21% of subscriptions, driven by increased visibility and minor feature improvements [73][74] Question: How is the company addressing resurrected users? [75] - Resurrected users now make up more than half of the top-of-funnel growth, and the company is focusing on improving the experience for users returning after a hiatus [76][77] Question: How is subscriber retention trending? [78] - Overall retention has remained stable, with no significant changes in retention trends for Super or Max subscribers [79] Question: How should investors think about the relationship between DAU and revenue growth? [82] - The company expects strong DAU growth to continue, driven by word-of-mouth and product improvements, with revenue growth expected to remain above 25% [84][86] Question: How is Duolingo Max performing compared to Super? [91] - Max is currently positioned as a premium offering focused on conversation practice, while Super is focused on convenience features [93] Question: What is the early data on the video call feature? [95] - The video call feature is showing strong engagement, particularly among English learners and more advanced users, with plans to make the experience more realistic and engaging [96][97] Question: How is the company approaching the New Year's promotion? [100] - The company is running experiments around the New Year's promotion, with the impact already incorporated into Q4 guidance [101] Question: How is international growth tracking? [103] - The company is seeing strong growth in international markets, with recent additions of marketing managers in France and Korea, and plans to expand to Italy and Turkey [105][106] Question: How is the US market performing? [110] - The US market is growing at a similar rate to the global average, with no significant disparity between regions [112] Question: What is the traction for Max? [111] - The company is seeing strong traction for Max, particularly with the introduction of the video call feature, which has made it easier to market the product [113] Question: How is ARPU trending? [111] - ARPU has trended towards 0% year-over-year, with expectations for it to remain flat or increase slightly, driven by the mix of Super, Family, and Max plans [114][115] Question: How is Max adoption split between English and non-English learners? [119] - Max adoption is currently higher in wealthier countries, but the company expects this to shift as the product becomes available in more English-learning countries [120][121] Question: What is the long-term view on Max's paying ratio? [127] - The company does not yet know where Max's paying ratio will settle, but it expects it to vary by country and relative pricing [128] Question: How does Duolingo differentiate itself from competitors? [127] - The company differentiates itself through its freemium model, strong engagement features, and large-scale data collection, which allows for more effective teaching and marketing [129][130]

Core Insights - Duolingo, Inc. reported quarterly earnings of $0.49 per share, exceeding the Zacks Consensus Estimate of $0.36 per share, and showing significant growth from $0.06 per share a year ago, resulting in an earnings surprise of 36.11% [1] - The company achieved revenues of $192.59 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 2.08% and increasing from $137.62 million year-over-year [2] - Duolingo has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The sustainability of Duolingo's stock price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.46 on revenues of $201.42 million, and for the current fiscal year, it is $1.87 on revenues of $736.1 million [7] Industry Context - The Technology Services industry, to which Duolingo belongs, is currently ranked in the top 34% of over 250 Zacks industries, indicating a favorable outlook for stocks in this sector [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5][6]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission file number 001-40653 Duolingo, Inc. (Exact name of registrant as specified in its charter) Delaware 45-3055872 (State or other juri ...

| --- | --- | |----------------|-------| | | | | | | | | | | shareholder | | | letter Q3 2024 | | | | | our mission is to develop the best education in the world and make it universally available. DUOLINGO Q3 / FY 2024 2 Q3 Highlights | --- | --- | --- | |--------------------------------------------|-----------------------|---------------------| | User Metrics | Q3 2023 | Q3 2024 | | Daily Active Users | 24.2M | 37.2M | | | | 54% YoY | | Monthly Active Users | 83.1M | 113.1M | | | | 36% YoY | | Paid Subscri ...

Financial Performance - Total bookings for Q3 2024 were $211.5 million, a 38% increase YoY, with subscription bookings at $176.3 million, up 45% YoY [3][4] - Paid subscribers reached 8.6 million, a 47% increase YoY, while DAUs grew to 37.2 million, up 54% YoY, and MAUs reached 113.1 million, up 36% YoY [3][4] - Total revenues for Q3 2024 were $192.6 million, a 40% increase YoY, with subscription revenue contributing $157.6 million, up 49% YoY [3][5] - Net income for Q3 2024 was $23.4 million, compared to $2.8 million in the prior year quarter, while Adjusted EBITDA was $47.5 million, up from $22.5 million YoY [3][4] Operational Highlights - The company achieved strong growth in new and returning users, with the highest-ever family plan penetration and significant contributions from Duolingo Max [2][3] - The AI-powered Video Call feature drove adoption of Duolingo Max and increased conversational speaking practice, unlocking new opportunities in the global language learning market [3] - Free cash flow for Q3 2024 was $52.7 million, a 57% increase YoY, while net cash provided by operating activities was $56.3 million, up 49% YoY [3][4] Financial Outlook - For Q4 2024, the company expects total bookings between $244.5 million and $247.5 million, with revenues projected between $202.5 million and $205.5 million [6] - Full-year 2024 guidance includes total bookings of $843.5 million to $846.5 million and revenues of $741.0 million to $744.0 million [6] - Adjusted EBITDA for Q4 2024 is expected to be between $48.6 million and $50.8 million, with a margin of 24.0% to 24.7% [6] Market Position and Strategy - Duolingo is the leading mobile learning platform globally, with its flagship app being the most popular way to learn languages and the top-grossing app in the Education category on Google Play and the Apple App Store [10] - The company continues to invest in technology to provide a fun, engaging, and effective learning experience, while remaining committed to its mission of making the best education universally available [10]

Earnings and Financial Performance - Duolingo is scheduled to report its Q3 2024 results on November 6, 2024 [1] - The Zacks Consensus Estimate for Q3 earnings is 36 cents per share, reflecting a 500% YoY improvement [2] - Revenue consensus estimate is $188.7 million, indicating a 37.1% YoY increase [2] - Subscription revenue is expected to reach $153.9 million, showing 45.3% YoY growth [4] - In Q2 2024, revenue increased by 41% YoY, with net income rising to $24.4 million from $3.7 million [8] User and Subscriber Growth - Daily active users are expected to grow 55.9% YoY, while monthly active users are anticipated to increase 22.5% YoY [5] - Paid subscribers are projected to grow 45.5% YoY [5] - The company's strategy focuses on expanding its user base and converting users into subscribers [7] Stock Performance and Industry Comparison - Duolingo's stock has gained 28% year-to-date, underperforming the industry's 32.7% rally but outperforming the S&P 500's 20.5% rise [6] - Competitors Coursera and Chegg have seen declines of 64% and 85.3%, respectively, over the same period [7] Product and Monetization Strategy - Duolingo's success is driven by product excellence and innovation in language learning, using gamified techniques and a user-friendly interface [7] - The company has optimized subscription offerings, such as the family plan and Duolingo Max, contributing to growth through word-of-mouth [8] - Strong monetization efforts and expanding user base position the company for sustained success [9]

Wall Street analysts forecast that Duolingo, Inc. (DUOL) will report quarterly earnings of $0.36 per share in its upcoming release, pointing to a year-over-year increase of 500%. It is anticipated that revenues will amount to $188.67 million, exhibiting an increase of 37.1% compared to the year-ago quarter.Over the last 30 days, there has been no revision in the consensus EPS estimate for the quarter. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course ...

I recently sold my Duolingo (NASDAQ: DUOL ) stock and consider it a hold at best as it hovers around $300/share. In August , I said the stock was a strong buy. Since then, we're up ~50%. I will explain why I'veAnalyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than fro ...

The most recent trading session ended with Duolingo, Inc. (DUOL) standing at $294.81, reflecting a +1.57% shift from the previouse trading day's closing. This change outpaced the S&P 500's 0.16% gain on the day. Meanwhile, the Dow experienced a drop of 0.37%, and the technology-dominated Nasdaq saw an increase of 0.78%. Shares of the company witnessed a gain of 2.91% over the previous month, beating the performance of the Business Services sector with its gain of 2.81% and the S&P 500's gain of 1.67%. Analy ...

Proven winners like Nvidia have made millionaires in the stock market, but their best days of skyrocketing growth are probably behind them. These two innovators may be the next wave of market-crushing growth stories.Some stocks can give you life-changing returns in the long run.If you had invested $3,500 in Apple (AAPL -0.35%) 20 years ago, you'd have a total return of $1.1 million by now. The rise of smartphones worked wonders for the empire Steve Jobs created.The same $3,500 investment in October 2004 wou ...