Duolingo, Inc. (DUOL) Q4 2024 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call indicates strong financial performance with significant revenue and DAU growth, despite some challenges like AI cost impact on margins and foreign exchange risks. The Q&A reveals positive sentiment with better-than-expected promo performance and broad-based DAU growth. Despite uncertainties in Max penetration and pricing strategy, the overall outlook is optimistic, particularly with expected EBITDA margin expansion and strong product adoption. The market strategy and financial health ratings are adjusted positively based on these insights.

Key Financial Performance

Total Bookings $X million, up 42% year-over-year. Driven by strong Duolingo Max adoption and demand for the Family Plan.

Revenue $X million, up 39% year-over-year. Reflects the strength of the business model and execution.

Adjusted EBITDA Margin 25.7%, expanded by about 8 points year-over-year. Result of strong bookings and effective cost management.

Daily Active Users (DAUs) 40 million, growing 51% year-over-year. Increased user engagement and conversion to subscribers.

Family Plan Subscribers 23% of total subscribers, showing higher retention and lifetime value compared to individual plans.

Adjusted EBITDA Margin for Q1 2025 25%, includes a time shift of marketing expense and reflects planned marketing campaigns.

Expected Adjusted EBITDA Margin for 2025 27.5%, expected to expand by nearly 200 basis points year-over-year, driven by operational leverage.

Gross Margin Impact from Duolingo Max Temporary 170 basis point year-over-year impact, primarily due to AI costs associated with Max.

Incremental Margin for 2025 Expected to be between 30% and 35%, reflecting growth and profitability balance.

Fully Diluted Share Count 49.5 million at the end of 2024, with expected dilution of around 1% for 2025.

You have reached the limit. Sign up to access full content

Get started

Operating Highlights

Duolingo Max: Duolingo Max subscriptions saw stronger-than-expected growth, driven by upgrades from current super subscribers and momentum in the Family Plan.

Video Call feature: The GenAI-powered Video Call feature has significantly increased user engagement and is now available to the majority of daily active users.

Family Plan: The Family Plan now constitutes 23% of total subscribers and shows higher retention and lifetime value compared to individual plans.

Global Market Expansion: Duolingo is prioritizing the promotion of Duolingo Max to learners worldwide, aiming to increase user engagement and subscription growth.

Content Scaling: The company is leveraging generative AI to expand content across language, math, and music courses, which are showing strong early adoption.

User Growth: Daily active users reached 40 million, a 51% year-over-year increase.

Bookings Growth: Total bookings grew by 42% year-over-year in Q4 2024.

Revenue Growth: Revenue increased by 39% year-over-year in Q4 2024.

Investment in AI: Duolingo is investing in AI and automation to enhance the Video Call experience and scale content delivery.

Profitability Strategy: The company aims for a more moderate pace of profit growth while still expanding adjusted EBITDA margin by nearly 200 basis points to 27.5% in 2025.

You have reached the limit. Sign up to access full content

Get started

Risk or Challenges

Foreign Exchange Risk: Over half of Duolingo's bookings come from outside the U.S., meaning fluctuations in foreign exchange rates can significantly impact total bookings. A 2% change in the dollar's value against other currencies can result in a $10 million headwind or tailwind for full year bookings.

AI Cost Management: The introduction of Duolingo Max, particularly its Video Call feature, incurs marginal AI costs that could temporarily lower gross margins by 170 basis points year-over-year. The first half of 2025 is expected to see a 300 basis point impact on margins as the company prioritizes product innovation.

Profitability and Growth Balance: Duolingo is focusing on balancing strong top-line growth with measured progress toward long-term profitability targets. This may lead to a more moderate pace of profit growth compared to previous years.

Hiring and Operational Costs: While Duolingo plans to hire at similar levels to the previous year, the timing of these hires may impact operational costs and efficiency in the first half of 2025.

Market Competition: The competitive landscape in the language learning market remains a challenge, necessitating continuous innovation and user engagement strategies to maintain and grow market share.

You have reached the limit. Sign up to access full content

Get started

Guidance & Outlook

User Growth: Since IPO, added 30 million daily active users and over 80 million monthly active users.

Adjusted EBITDA Margin: Achieved a 25.7% adjusted EBITDA margin in 2024.

Duolingo Max: Duolingo Max subscriptions have seen strong growth, representing about 5% of total subscribers.

Family Plan: Family Plan now makes up 23% of total subscribers, showing higher retention and LTV.

AI and Content Scaling: Leveraging generative AI to improve Video Call experience and scale content across language, math, and music courses.

2025 Bookings Growth: Expect bookings to grow 25% year-over-year at the midpoint, or 27% on a constant currency basis.

Q1 Bookings Growth: Expect bookings to grow approximately 28% year-over-year, primarily due to strength in subscription bookings projected to grow about 35%.

Adjusted EBITDA Margin for 2025: Expect to expand adjusted EBITDA margin by nearly 200 basis points to 27.5%.

Q1 Adjusted EBITDA Margin: Guiding to an adjusted EBITDA margin of 25% for Q1.

Dilution Expectation: Expect dilution of around 1% for 2025.

You have reached the limit. Sign up to access full content

Get started

Shareholder Return Plan

Share Count: We ended 2024 with a fully diluted share count of 49.5 million, and for 2025, we expect dilution of around 1%.

You have reached the limit. Sign up to access full content

Get started

Key Q&A

Q:Can you help us understand which cohorts are exhibiting the strongest growth by language or geo?

A:The markets that they come from look similar to Super markets, with Japan having a higher share of Max subscribers. We saw nice adoption from brand-new subscribers and upgrades from existing Super subs.

Q:Should we think about the AI investments this year as mainly Duo Max and Voice Calls or is there some other areas within AI?

A:AI investments are in two parts: automating internal processes to decrease costs and feature experimentation like Video Call. We're focused on developing the best AI features.

Q:Can you give us a sense on DAU growth, just a sense of how broad based that was?

A:We ended the quarter with 51% DAU growth year-over-year, with growth in every region, including mature regions like Latin America.

Q:Can you talk about the performance of Max during the promo period?

A:The overall promo period surpassed our forecast, with Max and the Family plan both performing better than expected.

Q:What do you think of the growth of new users and resurrected users?

A:We are seeing slightly more resurrected users than new users at the top of the funnel, and our marketing campaigns are effective at both bringing in new users and resurrecting old ones.

Q:How do you think about the pace that you might provide some of those savings back to users?

A:We will be testing where to have features based on inference costs, and we may be able to offer some features for free in the future.

Q:What are your expectations for Max penetration by year-end?

A:We know it can get higher than 5%, but we don’t have a specific target for how high it can go.

Q:How has early Max retention relative to Super?

A:Retention for Max looks good so far, but it's early days.

Q:Review of Unclear Management Responses

A:Management avoided giving a direct answer regarding specific targets for Max penetration by year-end and the exact correlation between course units published and business metrics. Additionally, there was vague language around the future pricing strategy for Max in less developed regions.

You have reached the limit. Sign up to access full content

Get started

Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

DUOL Transcript

Duolingo, Inc. (DUOL) Q3 2025 Earnings Call Transcript

Unknown11-5

The earnings call summary shows mixed signals. Financial performance is strong with 33% YoY growth in bookings and a steady adjusted EBITDA margin. However, the lack of specific guidance and focus on long-term growth over immediate profitability could concern investors. The Q&A reveals positive sentiment towards AI-driven initiatives but highlights uncertainty due to vague management responses. Overall, these factors balance each other, leading to a neutral outlook.

Duolingo, Inc. (DUOL) Q1 2025 Earnings Call Transcript

Positive5-2

Duolingo's earnings report shows strong financial performance with a 25% revenue increase and a positive EPS turnaround. The company projects robust future bookings and margin expansion, supported by strategic investments in AI and new product offerings. Despite some risks and competitive pressures, the positive guidance and operational efficiencies suggest a favorable outlook. Additionally, the Q&A reveals management's confidence in their growth roadmap, further supporting a positive sentiment. However, lack of clarity on some specifics and the absence of market cap data suggest a moderate positive impact, leading to a 'Positive' rating.

Duolingo, Inc. (DUOL) Q4 2024 Earnings Call Transcript

Positive2-27

Duolingo, Inc. (DUOL) Q3 2024 Earnings Call Transcript

Positive11-7

The earnings call presents a positive outlook with strong DAU growth, increased revenue and bookings guidance, and improvements in adjusted EBITDA margin. The rollout of Duolingo Max and investments in AI are promising, despite some competitive pressures and regulatory risks. The Q&A section highlights confidence in user engagement and growth strategies. The lack of a share repurchase program is a minor negative, but overall, the positive aspects outweigh the negatives, suggesting a stock price movement in the range of 2% to 8% over the next two weeks.

DUOL Report

Frequently Asked Questions

Where does this earnings call transcript come from?

All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.

How soon is the transcript available after the earnings call ends?

Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.

Is the transcript edited or altered in any way?

No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.

Why do some answers appear as “Unclear” or “Inaudible”?

When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.

Who creates the AI Summary and Key Q&A highlights shown above the transcript?

They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.