Duolingo(US:DUOL) Tianfeng Securities·2024-08-14 14:10Investment 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]