Financial Data and Key Metrics Changes - In 2025, the company added 1.4 million net new digital subscribers, bringing the total to 12.8 million, with a goal of reaching 15 million subscribers [10][18] - Total digital revenues exceeded $2 billion for the first time, with adjusted operating profit (AOP) growing over 20% and margins expanding to 19.5% [10][19] - Digital subscription revenues grew 14% year-over-year, while total subscription revenues increased approximately 9% [22][25] - AOP grew by approximately 21% year-over-year to $550 million, with AOP margin expanding by approximately 190 basis points [19][24] Business Line Data and Key Metrics Changes - Digital advertising revenues increased by 25%, contributing to total advertising revenue growth of 16% [11][22] - Licensing, affiliate, and other revenues grew by 5.5% to $100 million, primarily due to higher licensing revenues [24] - The company reported a digital-only average revenue per user (ARPU) of $9.72, reflecting a positive trend in pricing strategies [21][60] Market Data and Key Metrics Changes - The company experienced strong engagement across its portfolio, which contributed to significant growth in digital advertising [10][11] - The advertising market showed improved demand, allowing the company to secure larger deals with existing marketers and attract new ones [30][77] Company Strategy and Development Direction - The company aims to leverage its world-class journalism and lifestyle products to engage a larger audience, with a focus on video content as a key growth area [12][14] - The strategic priorities for 2026 include enhancing journalism formats, expanding product offerings, and navigating technological changes to increase value for audiences [15][26] - The company plans to continue investing in high-quality journalism and digital product experiences while maintaining operational efficiency [25][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in the media landscape, including a polarized environment and competition from powerful platforms, but expressed confidence in the company's strategic positioning [11][12] - The outlook for 2026 includes expectations for continued subscriber growth, revenue growth, AOP growth, margin expansion, and strong free cash flow generation [15][26] Other Important Information - The company returned approximately $275 million to shareholders in 2025, including $165 million in share repurchases and $110 million in dividends [19][20] - The quarterly dividend was increased from $0.18 to $0.23, aligning with the company's capital allocation strategy [20][38] Q&A Session Summary Question: Digital ad growth breakdown - Management noted that digital ad growth was driven by increased supply, improved engagement, and a stronger demand environment [28][30] Question: Cost guidance for Q1 - Management explained that the cost guidance reflects ongoing investments in video and other strategic areas, while maintaining a focus on revenue growth outpacing cost growth [32][33] Question: Capital allocation strategy - The company reiterated its commitment to returning at least 50% of free cash flow to shareholders while prioritizing organic investments in its subscription strategy [37][38] Question: Password sharing approach - Management discussed the Family Plan as a way to encourage engagement and revenue growth, viewing it as a positive strategy rather than a punitive measure [40][41] Question: Video journalism initiative - The company sees video as a significant long-term opportunity and is ramping up production to establish itself as a preferred brand for news consumption [46][48] Question: Single product growth and conversion potential - Management expressed confidence in the ability to convert engaged single product users into more valuable bundle subscriptions, highlighting the interconnectedness of their product offerings [81][82] Question: Contract negotiations with NewsGuild - Management indicated confidence in navigating contract negotiations with unions, emphasizing a history of productive relationships [87]

Financial Data and Key Metrics Changes - In Q4 2024, total bookings grew by 42% year-over-year, while revenue increased by 39% year-over-year [18][19] - The adjusted EBITDA margin expanded by about 8 percentage points for the full year, reaching 25.7% in 2024 [7][19] - The company expects bookings to grow by 25% year-over-year in 2025, with subscription bookings projected to grow around 31% [20][21] Business Line Data and Key Metrics Changes - Duolingo Max subscriptions contributed significantly to Q4 performance, with Max now representing about 5% of total subscribers [10][19] - The Family Plan accounted for 23% of total subscribers, showing higher retention and lifetime value compared to individual plans [11] - Daily active users (DAUs) reached 40 million, growing 51% year-over-year [9][51] Market Data and Key Metrics Changes - The growth rate of DAUs was broad-based across regions, with Latin America growing at approximately 80% year-over-year [52][53] - The company noted that growth in mature markets is not correlated with saturation, indicating ongoing opportunities for expansion [52][128] Company Strategy and Development Direction - The company aims to drive subscription bookings by increasing user growth, improving subscriber conversion, and promoting Duolingo Max [12] - Generative AI will be leveraged to enhance the Video Call experience and scale content across language, math, and music courses [13][14] - The focus remains on balancing top-line growth with long-term profitability targets, with a more moderate pace of profit growth expected compared to previous years [17][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum going into 2025, driven by strong adoption of Duolingo Max and the Family Plan [19] - The company anticipates a temporary impact on gross margin due to AI costs associated with Max, but expects margins to improve in the second half of 2025 [23][24] - Management highlighted the importance of ongoing marketing efforts and user engagement strategies to sustain growth [88][130] Other Important Information - The company ended 2024 with a fully diluted share count of 49.5 million and expects dilution of around 1% in 2025 [29] - Duolingo's mascot, Duo, returned after a marketing campaign that engaged users globally, reflecting the company's innovative approach to user engagement [30] Q&A Session Summary Question: Can you help us understand which cohorts are exhibiting the strongest growth by language or geo? - Management noted that Japan has a higher share of Max subscribers than Super subscribers, with strong adoption from both new subscribers and upgrades from existing Super subscribers [34][35] Question: Should we think about the AI investments this year as mainly Duo Max and Voice Calls? - Management clarified that AI investments are focused on automating internal processes and enhancing features like Video Call, with a significant increase in content generation capabilities [40][41] Question: Can you give us a sense of DAU growth and how international markets are performing? - Management reported 51% year-over-year DAU growth, with all regions experiencing growth, particularly Latin America [51][52] Question: How do you see user growth coming from next? - Management indicated that Asia represents a significant opportunity for growth, with ongoing marketing efforts to penetrate less developed markets [128][130] Question: How did Max perform during the promotional period? - Management stated that Max and the Family Plan both outperformed expectations during the promotional period, contributing to strong user growth [136] Question: What is the expected impact of AI costs on gross margins? - Management expects a temporary impact on gross margins due to AI costs but anticipates improvements as efficiencies are realized [23][55]