Q3 2024 Duolingo Inc Earnings Call Transcript
Key Points
- Duolingo Inc (DUOL) reported a 54% year-over-year increase in daily active users, showcasing strong user growth.
- The company raised its full-year guidance for bookings and revenue growth to 36% and 40%, respectively.
- Duolingo Max, the highest subscription tier, has been rolled out faster than expected and is now available to roughly half of daily active users.
- The introduction of AI-powered features, such as video calls with Lily, has been well-received and is expected to drive further engagement and subscriptions.
- Duolingo Inc (DUOL) has maintained a strong adjusted EBITDA margin of 24.7%, reflecting efficient scaling and profitability.
- The Q4 guidance includes a projected decline in gross margin due to higher generative AI and amortization costs related to scaling Max and its video call feature.
- Despite strong growth, the company faces challenges in converting free users to paid subscribers, particularly in regions with lower purchasing power.
- The rollout of new features on Android lags behind iOS, which may affect user experience and adoption rates on the platform.
- Duolingo Inc (DUOL) has not yet optimized pricing and costs for its Max tier, which could impact future profitability.
- The company relies heavily on word-of-mouth growth, which, while cost-effective, may not scale as quickly as paid marketing strategies.
Good evening, everyone, and welcome to Duolingo's Third Quarter 2024 Earnings Webcast. Today after market close, we released this quarter's shareholder letter, a copy of which you can find on our IR website at investors.duolingo.com. On today, we have -- on today's call, we have Luis von Ahn, our Co-Founder and CEO; and Matt Skaruppa, our CFO. (Operator Instructions) Please note that this evening's event is being recorded. (Operator Instructions) A quick reminder that we'll make some forward-looking statements regarding future events and financial performance, which are subject to material risks and uncertainties.
Some of these are outlined in the risk factors of our filings with the SEC. These forward-looking statements are based on assumptions that we believe to be reasonable as of today, and we have no obligation to update these statements as a result of new information or future events. Additionally, we'll present both GAAP and non-GAAP measures on today's call. These non-GAAP measures are not intended to be considered in isolation from, a
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