Duolingo(US:DUOL) Tianfeng Securities·2025-03-13 07:20Investment Rating - The report gives a "Buy" rating for the stock, expecting a relative return of over 20% within six months [10]. Core Insights - Duolingo's Q4 revenue reached $210 million, a 39% year-over-year increase, slightly exceeding Bloomberg consensus estimates [1]. - The net profit for Q4 was $13.9 million, up from $12.1 million year-over-year, but below Bloomberg consensus expectations of $23.7 million [1]. - The total bookings amounted to $272 million, a 42% year-over-year increase, surpassing Bloomberg estimates [1]. - The company is focusing on increasing the adoption of family plans and Duolingo Max to drive average revenue per user (ARPU) growth [2]. Summary by Sections Financial Performance - Q4 revenue: $210 million, up 39% YoY, slightly above expectations [1] - Q4 net profit: $13.9 million, up from $12.1 million YoY, below expectations [1] - Operating cash flow: $83.3 million, up from $49.2 million YoY [1] - Q1 revenue guidance: $221-224 million, a YoY growth of 31.6%-33.4% [3] User Metrics - Q1 daily active users (DAU): 40.5 million, a 51% YoY increase [2] - Q1 monthly active users (MAU): 117 million, a 32% YoY increase [2] - Paid users: 9.5 million, a 43% YoY increase [2] Product Development - Duolingo Max currently covers a majority of DAU, accounting for about 5% of total subscribers [3] - The introduction of video call features has improved user engagement [3] - The company is investing in AI to enhance user experience and expand course content [3] Future Outlook - The company expects significant growth in bookings from Duolingo Max by 2025, despite initial AI cost pressures on gross margins [3] - Long-term growth is supported by the efficiency revolution driven by AI in content production [4]