Financial Data and Key Metrics Changes - The company reported a strong Q3 with bookings expected to reach nearly $1,200 million for the year, reflecting a 33% growth and an adjusted EBITDA margin of 29% [4][80] - Daily active users (DAUs) grew by 36% year-over-year in Q3, with September and October showing around 30% year-over-year growth [11][12] Business Line Data and Key Metrics Changes - The chess course is the fastest-growing course, surpassing both math and music in user engagement and retention [30] - The company is focusing on enhancing teaching efficacy, which is expected to drive user growth over time [15][16] Market Data and Key Metrics Changes - The company has seen significant user growth in Asia, aided by partnerships such as the one with Luckin [10] - The retention rate for chess users is slightly higher than that of language learners, indicating strong engagement [30] Company Strategy and Development Direction - The company is prioritizing long-term investments in AI to fundamentally transform education and improve teaching efficacy [5][14] - There is a strategic shift towards user growth over immediate monetization, with a focus on enhancing the freemium experience [36][88] Management's Comments on Operating Environment and Future Outlook - Management believes that the current moment presents a unique opportunity for growth in the education sector, driven by advancements in AI [41][42] - The company is optimistic about future initiatives, including improved video calls and expanded content for existing courses [22][23] Other Important Information - The company is not currently focused on optimizing costs, as the priority is to enhance user experience and engagement [73] - AI costs have decreased, allowing the company to invest in innovation while maintaining profitability [82] Q&A Session Summary Question: What are the underlying drivers of DAU growth into Q4? - The company reported a 36% year-over-year growth for Q3, with positive impacts from partnerships and product improvements, although some social media strategies temporarily affected growth [8][11] Question: Can you elaborate on the decision to shift investments towards long-term growth? - The company sees a significant opportunity in AI and education, leading to a strategic focus on teaching efficacy and user growth, which may have a lag in monetization [12][16] Question: How is the new chess course performing? - The chess course is growing rapidly, with higher retention rates compared to language courses, and player versus player features are being rolled out [30][31] Question: What is the impact of price increases on user growth? - The company is testing various pricing strategies, including potential discounts, while focusing on user growth over immediate monetization [86][90] Question: How is the company addressing advanced English learners? - The company has made significant improvements in teaching English, with a steady increase in advanced English learners, particularly in fast-growing regions like Asia [118][120] Question: What is the status of the family plan? - The family plan has grown to about 29% of subscribers and is expected to continue growing, especially during promotional periods [122]

Financial Performance - Total revenues for Q3 2025 reached $271.7 million, a 41.1% increase from $192.6 million in Q3 2024[17] - Gross profit for Q3 2025 was $196.9 million, up 40.2% from $140.4 million in Q3 2024[17] - Net income for Q3 2025 was $292.2 million, significantly higher than $23.4 million in Q3 2024[17] - Net income for the nine months ended September 30, 2025, was $372,111, a significant increase from $74,667 in 2024, representing a growth of 398%[26] - Adjusted EBITDA for the three months ended September 30, 2025, was $80.0 million, up from $47.5 million in the prior year[110] - Net income for the three months ended September 30, 2025, was $292.2 million, compared to $23.4 million in 2024, representing a significant increase[150] User Metrics - Monthly active users (MAUs) and daily active users (DAUs) are key operating metrics tracked, although specific numbers were not disclosed[12] - As of September 30, 2025, the Company reported 135.3 million monthly active users (MAUs), a 20% increase from 113.1 million MAUs in the same period of 2024[108][113] - Daily active users (DAUs) reached approximately 50.5 million, representing a 36% increase from 37.2 million DAUs in the prior year[110][115] - The number of paid subscribers increased to 11.5 million, up 34% from 8.6 million in the same period of 2024[110][118] Revenue Breakdown - Subscription revenue for the nine months ended September 30, 2025, was $631,156,000, up 45.7% from $433,214,000 in 2024[65] - Subscription revenue for the three months ended September 30, 2025, was $229.5 million, a 46% increase from $157.6 million in the same period of 2024[137] - Other revenue, primarily from advertising, increased by $7.2 million, or 21%, to $42.2 million during the three months ended September 30, 2025[155] Expenses and Costs - Research and development expenses for Q3 2025 were $82.7 million, a 31.6% increase from $62.9 million in Q3 2024[17] - Total operating expenses increased by $34.9 million, or 28%, to $161.8 million for the three months ended September 30, 2025, compared to $126.8 million in 2024[150] - Sales and marketing expenses rose by $9.5 million, or 37%, to $35.1 million for the three months ended September 30, 2025, compared to $25.6 million for the same period in 2024[161] - General and administrative expenses increased by $5.6 million, or 15%, to $44.0 million for the three months ended September 30, 2025, from $38.4 million in the prior year[161] Cash Flow and Assets - Net cash provided by operating activities increased to $280,545 for the nine months ended September 30, 2025, compared to $202,169 in 2024, reflecting a growth of 39%[26] - Cash paid for income taxes rose to $11,722 in 2025 from $6,797 in 2024, indicating a 73% increase[28] - Cash, cash equivalents, and restricted cash at the end of the period reached $1,014,277 in 2025, up from $857,144 in 2024, indicating an increase of 18%[26] - The company had $1,011.5 million in cash and cash equivalents and $109.9 million in short-term investments as of September 30, 2025[168] Deferred Revenue - Deferred revenues increased to $441.7 million as of September 30, 2025, up from $372.9 million at the end of 2024[15] - Deferred revenue as of September 30, 2025, was $441,728,000, an increase from $310,603,000 at the end of September 2024[68] - Deferred revenues amounted to $441.7 million as of September 30, 2025, expected to be recognized as revenue in the next 12 months[173] Acquisitions and Investments - The company made acquisitions totaling $33,100 in 2025, compared to $6,595 in 2024, representing a substantial increase of 402%[26] - The company completed an acquisition in July 2025 for a total consideration of $34,500,000, with $33,100,000 allocated to intangible assets and goodwill[62] - The company incurred $1,285,000 in acquisition costs related to due diligence and valuation during 2025[62] Stock-Based Compensation - Stock-based compensation expense rose to $101,175 in 2025 from $80,690 in 2024, reflecting a 25% increase[26] - Total stock-based compensation expense for the three months ended September 30, 2025, was $35.6 million, compared to $29.0 million in the same period of 2024[97] - The Company had approximately $338.6 million of unrecognized stock-based compensation expense related to RSUs as of September 30, 2025[92] Future Outlook - The company plans to continue investing in infrastructure to enhance platform capabilities, which may impact future cost of revenues[140] - The company expects continued investment in research and development to drive user engagement and monetization, impacting future growth[144]

Duolingo raised its revenue guidance for the year as users pay more to chat with AI bots to learn a new language https://t.co/edslMeY5Rn ...

Core Insights - Duolingo Inc surpassed Wall Street expectations for third-quarter revenue and increased its annual revenue forecast, driven by a rise in paying subscribers for its AI-powered language-learning app [1] Financial Performance - The company reported third-quarter revenue that exceeded analyst estimates, indicating strong demand for its services [1] - Duolingo raised its annual revenue forecast, reflecting confidence in continued growth and subscriber acquisition [1] Subscriber Growth - The increase in paying subscribers is a key factor contributing to the company's positive financial performance [1]

shareholder letter Q3 2025 our mission is to develop the best education in the world and make it universally available. DUOLINGO Q3 / FY 2025 2 Q3 Highlights | User Metrics | Q3 2024 | Q3 2025 | | --- | --- | --- | | Daily Active Users | 37.2M | 50.5M | | | | 36% YoY | | Monthly Active Users | 113.1M | 135.3M | | | | 20% YoY | | Paid Subscribers | 8.6M | 11.5M | | at period end | | 34% YoY | | Paid Subscriber Penetration | 8.5% | 9.0% | | as % of LTM MAUs | | | | Financial Metrics | Q3 2024 | Q3 2025 | | -- ...

Core Insights - Duolingo has achieved a significant milestone with over 50 million daily active users, indicating strong engagement and growth potential [2] - The company reported a 40% increase in both daily active users and revenue for the first nine months of 2025 compared to the same period in 2024, while also expanding profitability [2] - Duolingo aims to enhance its product's engagement and effectiveness, believing it is still in the early stages of its growth journey [2] Company Overview - Duolingo is recognized as the leading mobile learning platform globally, with its app being the most popular method for language learning and the top-grossing app in the Education category on both Google Play and the Apple App Store [4] - The company is committed to providing a fun, engaging, and effective learning experience, with a mission to develop the best education in the world and make it universally accessible [4]

Core Insights - Duolingo, Inc. is a language-learning platform that offers interactive courses in over 40 languages, utilizing AI to enhance user experience [1] Company Overview - Duolingo is a technology company focused on language education, providing engaging and interactive lessons [1] Technology and Innovation - The company employs artificial intelligence to personalize the learning experience for users, aiming to improve engagement and effectiveness [1]

Core Insights - Duolingo, Inc. is a language-learning platform that offers interactive courses in over 40 languages, utilizing AI to enhance user experience [1] Company Overview - Duolingo operates as a technology company focused on language education, providing engaging and personalized learning experiences [1] Technology and Innovation - The company leverages artificial intelligence to tailor the learning experience for users, aiming to improve engagement and effectiveness [1]

Earnings Reports & Market Analysis - This week features earnings reports from Palantir, Uber, AMD, Spotify, Shopify, DoorDash, FICO, Texas Roadhouse, and Duolingo [3] - Tom Lee believes the market will continue upwards aggressively, citing historical precedence, negative market sentiment, falling inflation, and record profitability [4][84][85][87][89][90][92] Palantir Analysis - Palantir's revenue growth is accelerating, driven by a strong increase in US customer count from 161 to 485 [8][9][10] - Palantir's free cash flow has increased from less than $200 million in 2022 to $17 billion in the trailing 12 months [10][11] - Palantir's valuation is extremely high, with a forward price to sales ratio of about 90, making it reliant on fast growth [12][13][14][15][17] Company Specific Insights - Shopify is expanding into AI-driven commerce and targeting larger enterprise merchants, with a focus on merchant solutions, payments, and Shop Pay [22][23][24] - Uber's CEO is bullish on autonomous vehicles, but partnerships beyond Waymo are largely on paper, and Tesla could pose a competitive threat [29][30][32][33][35] - Spotify is experiencing continued monthly active user growth, leveraging its refined product, user interface, and network effects to compete with larger competitors, aiming for nearly 700 million active users and embracing video and AI tools [42][43][45][46][47] - AMD is a serious competitor in the AI race, with deals with OpenAI, but trades at a high valuation with a forward price to earnings of 46 and free cash flow yield below 1% [48][49] - Duolingo aims to be the dominant digital learning app, expanding beyond language learning into chess, math, and music, with 477 million daily active users and over 109 million paid users [66][67][68][71][65][66] - Texas Roadhouse is a top-tier restaurant with a good value proposition, but its relatively small size makes it a riskier holding compared to tech companies [78][81][82][83] OpenAI & Amazon - Amazon has announced a $38 billion multi-year partnership with OpenAI to run and scale its AI workloads in Amazon Web Services [96] - Sam Altman's defensive reaction to a question about OpenAI's revenue versus spending commitments was deemed a "fail of the week" [102][103][117]

Core Insights - The article discusses the significant impact of AI on business models, highlighting that over 30 companies have consumed more than 1 trillion tokens each, indicating deep integration of AI into their operations [4][5]. - OpenAI's top 100 clients have generated over $100 million in revenue, with 30 companies alone contributing over $60 million each through token consumption [4][5]. Token Consumption and Business Integration - The consumption of 1 trillion tokens is equivalent to a massive amount of written content, illustrating the extensive use of AI in various business scenarios [4]. - Companies utilizing AI are not necessarily more technologically advanced but show that AI has become an essential infrastructure for their operations [4]. Key Players and Industries - Among the top 30 clients, AI-native startups outnumber traditional mature companies, indicating a shift towards businesses that integrate AI from inception [9]. - Notable companies include Duolingo, Salesforce, and various AI-focused startups like Cognition and Genspark, which are leveraging AI for coding and other applications [7][10]. Vertical and Horizontal Market Trends - The article identifies vertical AI applications in sectors like law and healthcare, with companies like Harvey and Decagon demonstrating rapid revenue growth [15]. - In contrast, mature companies are more likely to modularly integrate AI into existing workflows rather than embedding it deeply from the start [12]. Consumer-Focused AI Applications - Consumer-facing companies in the top 30 include Duolingo and Read AI, which focus on high-frequency usage and clear subscription models [17][18]. - Duolingo has effectively integrated AI to enhance personalized learning experiences, while Read AI provides efficient meeting summaries and knowledge management [17][18]. Challenges for Startups - Many startups face financial pressures due to high costs associated with using OpenAI and other AI models, which can consume a significant portion of their revenue [20]. - There is a growing concern among startups about the potential overlap with OpenAI's offerings, which could threaten their business models [21].