Financial Data and Key Metrics Changes - The company reported a 40% year-over-year growth in Daily Active Users (DAUs) for Q2, which is a decrease from the 60% growth in the same quarter last year [10][11] - The company raised its full-year guidance due to record profitability and strong top-line growth [5] Business Line Data and Key Metrics Changes - The percentage of subscribers using the Max subscription increased from 5% to 8% over the past few quarters, indicating growth in this segment [20][21] - The Super subscription is performing better than expected, contributing to the slower growth of Max [21] Market Data and Key Metrics Changes - The Chinese market is identified as the fastest-growing market for the company, with successful partnerships, such as with Luckin Coffee, enhancing brand visibility [15][16] - The company has not yet launched its Max feature in China due to regulatory constraints [16][17] Company Strategy and Development Direction - The company is investing in new areas such as chess, math, and music, which are expected to drive long-term growth [5] - The company plans to start spending on marketing in the U.S. to counteract slower growth rates compared to other markets [120][122] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a temporary slowdown in DAU growth due to social media sentiment issues but expressed confidence in future recovery [12][96] - The company is optimistic about the impact of new features like the energy system, which has shown positive effects on user engagement and revenue [66][78] Other Important Information - The company is testing a web purchase flow to bypass the App Store, which could significantly increase profit margins [25][27] - The energy system has replaced the previous hearts mechanic, leading to increased daily active users and time spent on the app [66][78] Q&A Session Summary Question: Can you break down the primary drivers behind DAU growth moderation? - Management noted that DAU growth was 40%, slightly lower than expected due to negative social media sentiment, which has since improved [10][12] Question: Can you provide an update on the Max subscription? - The Max subscription has grown to 8% of total subscribers, but its growth was slower than expected due to challenges for beginner users [20][21][22] Question: What are the early learnings from the energy system? - The energy system has increased DAUs and revenue by rewarding users for correct answers rather than penalizing mistakes [66][78] Question: How is the company addressing engagement issues in the U.S.? - Management plans to start spending on marketing in the U.S. to improve engagement, as historical growth has been strong without marketing efforts [120][122] Question: What is the outlook for the Duolingo English Test? - The company expects lower demand for the Duolingo English Test due to macro trends affecting international student applications [95][96] Question: How is the video call feature performing? - The video call feature is seeing increased engagement, particularly among English learners, and improvements are being made to enhance user experience [90][108]

Financial Data and Key Metrics Changes - The company expects a full-year gross margin decline of approximately 150 basis points year-over-year, with Q1 showing a better-than-expected decline of 200 basis points compared to the anticipated 300 basis points [10] - The average revenue per user is around $6, indicating a strong value proposition in the global market [20] Business Line Data and Key Metrics Changes - The company added 48 new language courses, significantly increasing content production speed due to AI, which previously took about twelve years to add the first hundred courses [31][32] - Duolingo Max now accounts for about 7% of subscribers, showing strong growth and retention rates [29] Market Data and Key Metrics Changes - Daily active users (DAUs) grew by 49% year-over-year, indicating robust growth across all regions, with mature markets growing the fastest [36][38] - The company has a total of 30 million active users, with significant room for growth as the global language learning market is estimated at 2 billion people [38] Company Strategy and Development Direction - The company aims to expand beyond language learning into subjects like math, music, and chess, with a focus on creating content that is beneficial for users and society [77] - AI is central to the company's strategy, enabling faster content creation and feature development, which is expected to enhance user engagement and retention [21][110] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the roadmap for 2025, noting no significant changes in trends due to macroeconomic factors [18][20] - The company is committed to being AI-first, focusing on automating processes and developing new features to enhance user experience [112][114] Other Important Information - The company plans to lower subscription prices in certain markets, such as India, to increase adoption [55] - Marketing efforts will continue to leverage social media for viral content, which has proven effective in user acquisition [94] Q&A Session Summary Question: Can you discuss the cadence of gross margin for the year? - The company expects a 150 basis point decline for the full year, with Q1 showing a better performance than anticipated [10] Question: What are the expectations for new language modules? - The company is excited about the addition of chess and other subjects, which are expected to increase user engagement [12][13] Question: Are there any macroeconomic impacts observed? - Management has not seen any significant changes in trends due to macroeconomic factors, maintaining confidence in growth [18][20] Question: How is the company leveraging generative AI? - AI is being used to create content more efficiently, allowing for rapid development of new features and courses [21][110] Question: What is the strategy for pricing and packaging? - The company is testing various pricing strategies and may adjust features across different subscription tiers [100][102] Question: How does the company view the competition in the AI space? - The company believes it is ahead of competitors in leveraging AI for language learning and content creation [111] Question: What is the outlook for subscriber conversion rates? - The company sees positive incrementality from Duolingo Max, contributing to overall platform lifetime value [127]