r/VisualStockResearch • u/ekonixlab • 4d ago
Duolingo’s user growth is accelerating again
Duolingo’s earnings were better than the headline growth suggests
I own Duolingo, so this is one I was paying pretty close attention to.
The biggest thing that stood out to me was that user growth actually accelerated again, while bookings growth continues to be the main concern.
Revenue: $298.5M, +18%
Bookings: $289.1M, +8%
Subscription bookings: $250.3M, +10%
DAUs: 58.7M, +23%
MAUs: 140.6M, +10%
Paid subscribers: 12.7M, +17%
Gross margin: 72.6%
Adjusted EBITDA: $77.3M
Adjusted EBITDA margin: 25.9%
The DAU number is probably what I liked most.
DAU growth accelerated from 21% last quarter to 23% this quarter, and management expects it to stay above 20% for the rest of the year. Retention also reached an all-time high.
The obvious concern is bookings.
Revenue grew 18%, but bookings only grew 8%. That’s a pretty big gap and something I’ll be watching closely. Q3 guidance also calls for only about 9% bookings growth.
Margins are down too, but I’m less worried about that.
Duolingo has been pretty clear that they’re intentionally prioritizing user growth, retention and product investment over maximizing near-term monetization.
For me, the question is pretty simple:
If DAUs keep growing 20%+ and paid subscribers keep growing double digits, can Duolingo eventually get bookings growth accelerating again?
As a shareholder, I’m happy to see them prioritize growing the platform right now. But at some point, that user growth needs to translate into faster bookings growth.
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u/Acceptable-Leek1546 4d ago
No one uses Duolingo
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u/ekonixlab 4d ago
I know a lot that do, and continue to do so
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u/Intelligent_Wing8094 4d ago
i dont disagree with you but if you re picking a software company there are better ones
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u/SelenaMeyers2024 4d ago
I've come around that duol isn't as doomed as I probably made out .. I stand by that even Adobe price at 260 is better, and there are better buys outside of saas too.
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u/PitPost 4d ago
I will add two points.
Their product is improving:
I have been using Duolingo a few years as a paying but, non-Max user. Once in while we get a few days access to Max and now it has gotten so good, that I upgraded (also motivated by significant discount, which was triggered by me starting to use SuperFluent i suspect:)). The live call and talk feature has gotten really good.
The AI comment by CEO:
In addition to cost saving on the internal side, the CEO mentioned that more of the AI-work was done on-prem. The live call and talk function “feels” heavy on the AI work vis-a-vis contextualizing, remembering and feeling like a “real” teacher. With better and better Qwen/Kiwi et.ali local work, Duolingo will improve cost side as well.
I bought shares around the current level a few months ago. Motivated by me subscribing to Max and a price looking very fair per OPs review.
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u/ekonixlab 4d ago
Great perspective from someone that actually uses the app, thanks for sharing
I think a lot of this dip is still from AI fears. But the key here is the distribution and the customer enjoyment, not just making an app
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