Duolingo, Inc. (DUOL) Q1 2022 Earnings Call Transcript


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Duolingo, Inc. (DUOL 6.32%)
Q1 2022 Earnings Name
Could 12, 2022, 5:30 p.m. ET

Contents:

  • Ready Remarks
  • Questions and Solutions
  • Name Individuals

Ready Remarks:

Operator

Good day, and welcome to the Duolingo first quarter 2022 earnings name. All members shall be in a listen-only mode. [Operator instructions] After at the moment’s presentation, there shall be a possibility to ask questions. In consideration of time, please restrict your self to 1 query and one follow-up query.

[Operator instructions] Please observe, this occasion is being recorded. I’d now like to show the convention over to Debbie Belevan, head of investor relations. Please go forward.

Debbie BelevanHead of Investor Relations

Thanks, operator, and welcome to Duolingo’s first quarter 2022 earnings name. Right now, after market shut, we launched a shareholder letter with our Q1 outcomes and commentary, which you will discover on our IR web site at traders.duolingo.com. Right now’s name shall be led by Luis von Ahn, our co-founder and CEO; Matt Skaruppa, our CFO; and Bob Meese, our chief enterprise officer. We’ll start with some transient remarks earlier than opening the decision to Q&A.

Simply to remind everybody, throughout this name, we’ll make forward-looking statements relating to future occasions and our monetary efficiency, that are topic to materials dangers and uncertainties that would trigger precise outcomes to vary materially. A few of these dangers have been set forth within the threat components of our periodic experiences filed with the SEC. These forward-looking statements are primarily based on assumptions that we consider to be affordable as of at the moment, and we undertake no obligation to replace these statements on account of new info or future occasions. Moreover, we are going to current each GAAP and non-GAAP monetary measures on at the moment’s name.

These non-GAAP measures will not be supposed to be thought of in isolation from, an alternative to or superior to our GAAP outcomes, and we encourage you to contemplate all measures when analyzing our efficiency. And with that, I will flip the decision over to Luis.

Luis von AhnCo-Founder and Chief Govt Officer

Thanks, Debbie, and welcome, everybody. As regular, I need to kick off the decision by reminding you of our mission, which is to develop the perfect training on the planet and make it universally obtainable. We work to attain this mission by frequently innovating and bettering our merchandise in order that they’re enjoyable and efficient. Now on to our first quarter outcomes.

Since a shareholder letter incorporates an in-depth dialogue of this quarter’s efficiency, Matt and I’ll present some transient remarks after which get proper into Q&A. Q1 of 2022 was our greatest quarter but. We achieved new highs on practically each metric. In truth, we surpassed our personal efficiency expectations, which led us to lift our full 12 months steerage.

We are actually projecting full 12 months bookings progress properly above 30% and likewise count on to be worthwhile for the 12 months on an adjusted EBITDA foundation. The rationale behind this stellar efficiency is evident: our product-focused technique is working. Hundreds of A/B checks that we run to make our merchandise higher are materializing within the type of stronger word-of-mouth consumer progress, stronger paying subscriber conversion charges, and better general retention. Our consumer progress accelerated from the earlier quarter.

We transformed a report variety of new paid subscribers, and we retained extra of our earlier subscribers. All of this resulted in complete bookings progress of 55% this quarter in comparison with Q1 of final 12 months. And now Matt will talk about our up to date outlook for 2022.

Matt SkaruppaChief Monetary Officer

Thanks, Luis. As Luis simply highlighted, we had an incredible quarter, and due to that, we’re asserting that we’re elevating our full 12 months steerage. For Q2 2022, we’re guiding to $86 million to $89 million in complete bookings, $84 million to $87 million in income, and an adjusted EBITDA of unfavorable $4 million to unfavorable $1 million. For the complete 12 months 2022, we’re rising our steerage to $388 million to $397 million in complete bookings, $349 million to $358 million in income, and an adjusted EBITDA of zero to optimistic $3 million.

Our full 12 months bookings steerage displays 32% to 35% year-over-year progress, up from the 26% to 30% year-over-year progress we guided to on our final earnings name. By way of our Q2 steerage, I would prefer to level out that that is seasonally our softest quarter when it comes to absolute bookings as a result of we do not have our New 12 months’s promotion or different huge advertising and marketing occasions as we do in Q1, Q3, and This autumn. We plan to proceed managing the enterprise with sturdy price and capital self-discipline. For the complete 12 months, we count on to be worthwhile on an adjusted EBITDA foundation even whereas we proceed to spend money on R&D as we have now achieved traditionally.

We count on that non-GAAP R&D as a share of income must be roughly flat in comparison with final 12 months. Whereas we count on to proceed to get leverage in non-GAAP gross sales and advertising and marketing via extra environment friendly spend, we are going to see some deleveraging in non-GAAP G&A, primarily pushed by our expanded workplace footprint and the truth that 2022 is our first full 12 months as a public firm. And now I will flip it again to Luis.

Luis von AhnCo-Founder and Chief Govt Officer

Thanks, Matt. Earlier than going to Q&A, I would prefer to take this chance to thank our complete staff for his or her dedication to delivering on our mission. I would prefer to thank our learners who unfold the phrase of our merchandise to their family and friends, and I would prefer to thanks, our shareholders, to your help. We stay up for sharing extra with you within the coming quarters.

And now we shall be joyful to take your questions.

Questions & Solutions:

Operator

We are going to now start the question-and-answer session. [Operator instructions] Presently, we’ll now pause momentarily to assemble our rosters. Your first query comes from Eric Sheridan from Goldman Sachs. Please go forward.

Eric SheridanGoldman Sachs — Analyst

Thanks for taking the query. Perhaps staying centered on the funding commentary in your opening remarks. Are you able to remind us a few of the key priorities on the product aspect that you simply’re investing towards in 2022 and the way we must be desirous about that product roadmap past simply the following 12 months however over the following couple of years? Thanks a lot.

Luis von AhnCo-Founder and Chief Govt Officer

Thanks for the query, Eric. Are you able to hear me OK? All proper. I welcome you, once more. So, thanks for the query.

So, you realize, crucial factor to know is that we’ll be investing the vast majority of our assets on our language studying app. We predict language studying is a large alternative. I imply it is a couple of $50 billion market, which is usually shifting on-line, and we’re the biggest participant on-line. So we’ll be investing largely in our language studying app.

There, you realize, we run [technical difficulty] metrics, and that is sort of the primary factor for the following couple of years. Additionally, as we stated within the shareholder letter, a lot of the adjustments that we make are comparatively small adjustments, however we’re engaged on a fairly large change that’s going to be stay within the subsequent few months, which is a redesign of the house display screen of the app. Whats up?

Operator

Thanks. Your subsequent — I am sorry.

Debbie BelevanHead of Investor Relations

Operator, are you able to hear us?

Operator

Sure, we will hear you. Your subsequent query comes from Justin Patterson from KeyBanc. Please go forward.

Justin PattersonKeyBanc Capital Markets — Analyst

Nice, thanks. Maybe for Luis and Matt can tack on to this, how ought to we take into consideration the potential impression to customers and monetization from Tremendous Duolingo and the brand new dwelling display screen versus previous adjustments to the app like hearts? After which I’ve one follow-up.

Luis von AhnCo-Founder and Chief Govt Officer

Sorry, Justin, are you able to hear me OK?

Justin PattersonKeyBanc Capital Markets — Analyst

Yeah, I can hear you, though you probably did minimize out slightly bit in your response to Eric.

Luis von AhnCo-Founder and Chief Govt Officer

OK. Hopefully, I imply, I feel we’re having slightly little bit of telephone bother, however hopefully if I minimize out, you’ll be able to simply ask once more. However OK. So we’re making some fairly huge adjustments, I imply, the largest one was the house display screen on the app.

There’s additionally a Tremendous Duolingo. By way of Tremendous Duolingo, we do not assume that, by itself, goes to have a reasonably main impression on metrics. Tremendous Duolingo, the primary motive we’re doing the redesign of what our subscription product appears to be like like as a result of we predict it actually matches in much more with our sort of gamify model. By way of the rationale on the house display screen of the app, we do assume that is going to actually set us up for fairly huge enhancements into our metrics, primarily when it comes to engagement and educating higher.

So these are two issues that we’ll be searching for. I ought to say additionally, for the redesign of the house display screen, we have achieved — we run hundreds of A/B checks. We have achieved some fairly main redesigns roughly each three or 4 years, so we have now expertise doing the sort of redesign. And there is a few issues to say there.

The primary one is we’ll actually be our metrics to ensure that the whole lot will increase once we launch it. By the point we launch the redesign, we could have a whole lot of confidence that the metrics could have elevated. However one factor that I ought to sort of point out to individuals is that individuals do not like change, the customers do not like change, and it is a fairly main change to the house display screen of the app. So regardless that we all know — as soon as we launch it, we’ll know that our metrics are optimistic, we may even see some unfavorable sentiment right here and there, however that is one thing that we’re ready for.

However that is one thing else, however these are two main adjustments we talked about within the shareholder letter.

Justin PattersonKeyBanc Capital Markets — Analyst

OK, excellent. After which for my follow-up, I simply wished to hit on social options. It sounds such as you’re having some success there, even serving to customers discover love. I suppose you may in all probability spin that as a Duolingo love language app down the highway.

However I am curious to listen to as to how these social options are benefiting the KPIs, whether or not it is every day engagement or simply higher conversion over time, much less churn on the app. Thanks.

Luis von AhnCo-Founder and Chief Govt Officer

Yeah. The social options, the attractive factor about social options is that they assist each single metric. Actually what they do is that they get customers to come back again extra actually because their buddies who’re on Duolingo contact them on Duolingo, so we get customers to come back again extra usually. They get customers to spend extra time on the app.

They enhance consumer retention. And since individuals spend extra time on the app, in addition they be taught extra and likewise subscribe extra and truly pay us extra. So it actually — the social metrics actually enhance the whole lot and that is why we’re investing in them.

Justin PattersonKeyBanc Capital Markets — Analyst

Nice. Thanks.

Operator

Thanks. Your subsequent query comes from Mario Lu from Barclays. Please go forward.

Mario LuBarclays — Analyst

Nice. Thanks for taking query. So the primary one is on the sturdy bookings quantity this quarter. I consider you got here in 9 factors above your steerage on the midpoint.

So simply curious should you may present extra coloration when it comes to what led to the outperformance. You guys talked about the New 12 months’s marketing campaign, however anything to sort of level to that led to this? Thanks.

Luis von AhnCo-Founder and Chief Govt Officer

Yeah. Nice query, Mario. I imply, the results of our efficiency, it truly is the — our outperformance actually is the results of simply tons of of A/B checks that we have been operating — I imply, hundreds, really, of A/B checks that we have been operating during the last couple of years, and it is only a compounding impact. I imply, should you have a look at the outperformance on income, that comes from mainly elevated customers, additionally elevated conversion to paying subscribers, and likewise elevated retention of paying subscribers.

So mainly, all our KPIs are up. And it truly is simply the results of compounding results from simply [Inaudible]. We had a very good New 12 months’s marketing campaign, however along with that, the month after that, it is also proceed outperforming.

Mario LuBarclays — Analyst

Nice. Thanks, Luis. After which only a follow-up on the complete 12 months information, that is nice. I suppose how ought to we take into consideration that elevate within the context of the primary quarter peak? After which any embedded impression from FX or impacts from Russia that you simply guys can name out?

Matt SkaruppaChief Monetary Officer

Yeah, thanks. I am joyful to reply that. So clearly, the complete 12 months information takes under consideration the outcomes of Q1 patch rolls. The outperformance that Luis was speaking about is actually broad-based, as we have talked about so it isn’t simply anybody factor within the enterprise.

It is improved consumer progress, conversion, and retention. And so the information takes under consideration all of these issues. Now I simply do need to point out that the world is clearly an unsure place, and we’re clearly paying very shut consideration to what is going on on with the struggle you talked about in Ukraine, inflation, rates of interest, and all these issues. And so we have taken a prudent method to the information for the remainder of the 12 months, simply understanding that there’s a lot of uncertainty on the market.

Mario LuBarclays — Analyst

Received it. Thanks, Matt. [Technical difficulty]

Debbie BelevanHead of Investor Relations

Operator, are you there?

Luis von AhnCo-Founder and Chief Govt Officer

All people, I feel you’ll be able to all nonetheless hear us. It looks like the operator basically disappeared, so we are attempting to determine what to do with the operator for now. Sorry about that. That is Luis once more.

I feel we simply misplaced the operator. How about I inform some jokes? I am kidding. [Technical difficulty]

Operator

Excuse me, however one second. We’ll go forward and proceed with Q&A right here. And it appears to be like like we presently nonetheless have Mario Lu throughout the query queue.

Luis von AhnCo-Founder and Chief Govt Officer

Mario, are you able to hear us?

Operator

Mr. Lu?

Mario LuBarclays — Analyst

Yeah, I can hear them. I feel I am good for now. I will simply bounce again within the queue.

Operator

OK. I do apologize, everybody. It appears to be like like we had been experiencing technical difficulties. Mr.

Lu, we’ll then take away you from the queue, sir. Admire it. And subsequent, we are going to take Ralph Schackart of William Blair.

Ralph SchackartWilliam Blair — Analyst

Thanks for taking the query. However Luis, in case you have a joke, first, that you simply wished to say, be at liberty.

Luis von AhnCo-Founder and Chief Govt Officer

I obtained many, however let’s do that.

Ralph SchackartWilliam Blair — Analyst

Simply when it comes to subscription income progress within the shareholder letter, clearly, you talked about new and renewing paid customers. Perhaps simply sort of zeroing in on the renewing paid customers. Did you alter something perhaps on the testing aspect or product aspect? Simply sort of curious the way you’re bringing again earlier subscribers. After which I’ve a follow-up.

Luis von AhnCo-Founder and Chief Govt Officer

Yeah. I imply we’re all the time operating A/B checks to attempt to proceed rising our variety of subscribers. One of many important issues that we have now been doing to extend renewal charges is rising the fraction of those who get into the Household Plan. The Household Plan is actually good for retention as a result of if you consider it, should you’re — in case you have a Household Plan and also you’re utilizing Duolingo and likewise your important different is utilizing Duolingo and likewise your little one is utilizing Duolingo, so long as anyone continues to be utilizing it, you are going to proceed paying.

In order that’s one thing that we have been — the fraction of individuals which might be on the Household Plan retains going up. It is, the truth is, doubled for the reason that starting of the 12 months, and that is actually helped us with renewal charges. However aside from that, we simply proceed making the app increasingly more partaking and that simply will get increasingly more individuals to subscribe and keep subscribed.

Ralph SchackartWilliam Blair — Analyst

Nice. Perhaps a follow-up. Simply as journey continues to return, simply curious how is that impacting engagement and consumer and subscriber progress. Is that type of a main use case? Simply sort of curious how that is impacting the quarter and the sub base.

Luis von AhnCo-Founder and Chief Govt Officer

Journey is without doubt one of the many use circumstances for Duolingo if not the first use case, and it actually, in fact, will depend on the geography, in some locations slightly greater than others, but it surely’s a minority use case. And we do see it, however I do not assume that is having — it isn’t one thing that we’re maintaining a tally of when it comes to having a significant impression on. So we all know persons are touring extra. And we do see it, however I simply do not assume that is had a significant impression on our numbers.

Ralph SchackartWilliam Blair — Analyst

OK. Thanks, Luis.

Operator

And subsequent, we have now Andrew Boone of JMP Securities.

Andrew BooneJMP Securities — Analyst

Hello, thanks for taking my questions. To begin, can we have now an replace on native pricing, simply the testing that you simply had been doing round, I feel, it was 4 international locations? After which secondly, within the letter, you talked about increasing the language studying market. Are you able to discuss, simply given the truth that we simply noticed customers sort of speed up via 1Q, how are you going about increasing the highest of the funnel to simply be extra inclusive and convey extra customers into Duolingo? Thanks a lot.

Luis von AhnCo-Founder and Chief Govt Officer

Yeah. Nice query. Let me first discuss increasing the language studying market. I imply that is one thing that we have seen in a lot of our markets.

Really, in the US, once we requested our customers, roughly 80% of our customers in the US weren’t within the language studying market earlier than Duolingo. In order that they weren’t studying a language earlier than us. And so, in sure international locations, we actually are simply increasing the market. And I feel the rationale that occurs is we simply have — we have now a very iconic model that lots of people discuss.

And it is also — it is simply very easy to be taught with Duolingo. And other people inform that to one another. I imply the primary approach by which we develop is thru phrase of mouth. And the issues that individuals say to one another are identical to, “Oh, have you ever tried Duolingo? It is very easy.” And I feel that is mainly how we’re increasing the market.

That was one query. What was the opposite query?

Matt SkaruppaChief Monetary Officer

Regional pricing.

Luis von AhnCo-Founder and Chief Govt Officer

Regional pricing. Yeah, regional pricing query. Sure, so with regional pricing, we proceed making progress. We’re altering costs in increasingly more international locations.

By the way in which, only for reference, we talked about regional pricing in the course of the IPO. Earlier than the IPO, we actually simply had one worth in each single nation. We perceive that isn’t optimum. Over the previous few months, we have now been altering the costs in international locations.

Within the majority of nations, which means lowering the worth as a result of the worth that we had made a whole lot of sense for the US, however the US is sort of one of many wealthier international locations on the planet. So the vast majority of international locations, we have been testing lowering costs, and that is been taking place. And it’s having an impression. However the factor that I actually need to emphasize about regional pricing is it is simply considered one of actually dozens of levers that we have now.

And that is — it’s having an impression but it surely’s not a large impression, prefer it’s not like, oh, as a result of the worth is cheaper in some international locations, we’re abruptly doubling our income or something like that. It is a modest impression. And the rationale it is a modest impression is as a result of in most of those international locations that we’re altering the worth, these are international locations the place additionally digital subscriptions will not be very mature. So now the worth is smart however we nonetheless in all probability — a while has to move for individuals to actually turn into used to digital subscription.

In order that — so the way in which we see the regional pricing is it is one thing that — it is a crucial situation to actually enhance our penetration of subscribers in these international locations however not a enough situation.

Andrew BooneJMP Securities — Analyst

Thanks.

Operator

The subsequent query we have now will come from Mark Mahaney of Evercore ISI.

Mark MahaneyEvercore ISI — Analyst

OK, thanks. Two questions. So that you had this report variety of MAUs or new customers. Might you present slightly bit — and I perceive all of the A/B testing that helped convert them and helped retain them.

However may you simply discuss the way you introduced them in, within the first place? And perhaps extra coloration, was it explicit markets the place you are beginning to actually break via in markets like India or one thing like that? Simply extra coloration on the place this report variety of new customers got here from. Thanks.

Luis von AhnCo-Founder and Chief Govt Officer

Yeah. Hello, Mark. So, OK, the very first thing to say is that we’re rising in each single area. We’re rising slightly sooner in sure areas.

Asia, specifically, and India, in fact, is considered one of our fastest-growing international locations, however we’re additionally rising fairly quick in the US. So we’re rising in just about each area. And also you requested how they got here in. The overwhelming majority of our customers are available via phrase of mouth, and that is how they’re coming in.

And traditionally, that is been the case for Duolingo, it is natural progress. We have now had some advertising and marketing campaigns which have been fairly environment friendly. Particularly, in Asian international locations, we have now discovered that influencers — paid influencers actually work. And it isn’t like we have spent a ton of cash on that, however that has been actually good for us.

The opposite factor that has been actually good for us in bringing new customers is our use of social media, specifically, our TikTok has been — a minimum of for English-speaking international locations just like the U.S. and the U.Ok., our TikTok has been fairly good at getting the phrase out. However nonetheless, the overwhelming majority of our progress comes from phrase of mouth.

Mark MahaneyEvercore ISI — Analyst

OK. After which so far, you have — simply sort of state the apparent query, you have been a language studying app and a very attention-grabbing one. And your aim right here is far broader than that once you’re speaking about training. So simply discuss in regards to the timeline and let’s set some expectations.

Remind us of when Math is popping out, the Duolingo Math product. After which there’s clearly much more to training than simply math and language. So simply what else ought to we — what else may we see and when may we see it? Thanks.

Luis von AhnCo-Founder and Chief Govt Officer

Yeah, that is a terrific query. And it is true, our ambitions are fairly giant. I imply we actually do need to do all of training. I do need to say a few issues.

The primary is the language studying market is humongous, and we’re nonetheless — there’s nonetheless a whole lot of runway there. We’re simply getting began in our monetization and we’re simply getting began in penetrating the market. So for the foreseeable future, you will note the vast majority of our progress and positively of our income come from language studying. We’re engaged on these different apps.

We already launched Duolingo ABC, which is for literacy. We’re going to have a public beta of our Math app later this 12 months, and that is going to occur. And that is going to develop from there. By way of contributions to income, I do not assume it is best to count on something this 12 months and even subsequent 12 months.

And if there’s any, it is going to be minimal. And the bulk — the primary motive for that’s simply our language studying product is rising a lot that it is going to take a while to catch up for that to turn into significant.

Mark MahaneyEvercore ISI — Analyst

OK, that is smart. Thanks very a lot, Luis.

Luis von AhnCo-Founder and Chief Govt Officer

Thanks, Mark.

Operator

Once more, everybody, I do apologize for the technical delay earlier. [Operator instructions] The subsequent query we have now comes from Arvind Ramnani of Piper.

Arvind RamnaniPiper Sandler — Analyst

Hello, and thanks for taking my query. Yeah. I simply wished to ask, once I have a look at a few of the different type of digital studying corporations, clearly, very totally different enterprise fashions however a lot of them are dealing with varied type of headwinds. And it sort of appears to be like such as you all have not obtained any — you have not obtained a memo on sort of the post-pandemic type of slowdown.

In truth, you are sort of seeing fairly good progress. Simply wished to get a way of perhaps from a high-level perspective, like what’s so distinctive in regards to the mannequin the place you are not seeing any slowdown? Or is it — or ought to we count on a slowdown within the subsequent two or three quarters?

Luis von AhnCo-Founder and Chief Govt Officer

We have now no motive to consider there’s going to be a slowdown. In truth, our consumer — our progress numbers are accelerating for now. We simply — it is various issues. The very first thing to say is that we actually will not be.

I feel once you see a whole lot of, significantly training issues, they actually had been a COVID story. We aren’t. For those who have a look at our progress numbers, our consumer numbers, and mainly, we had an natural progress charge earlier than COVID. Then the early sort of lockdown round 2020 of March via Could, we did see a rise in demand.

However after that, we had been again to the sort of pre-COVID progress charges. So I feel simply sort of for us, COVID was simply not what it was for another firms. That is one factor. I feel one other factor that’s necessary to say is we’re primarily a product-driven firm.

And should you have a look at a whole lot of training firms or many of those different firms, they spend a whole lot of their assets on advertising and marketing, and many others. We spend the overwhelming majority of our assets on simply making a very glorious product that works, that grows via phrase of mouth. And I feel the outcomes are simply displaying. I imply, mainly, the compounding of hundreds of A/B checks is making it so the product is simply higher and higher.

I simply need to say one different factor, which moreover, we additionally simply — language studying is attention-grabbing. I imply it’s a big, big market. And the truth that we’re simply — we actually are simply getting began with this market, with not solely with the consumer progress but in addition with monetization. I feel we’re simply in a degree of the curve that you simply simply proceed seeing progress.

Arvind RamnaniPiper Sandler — Analyst

Terrific. And simply from a product perspective, a few of the different ancillary — not ancillary, type of like tangential like studying, that is repetitive in nature, for instance, Math, is there like a timeline you will have that you simply’re capable of share? Or is it sort of issues like Math not within the close to future.

Luis von AhnCo-Founder and Chief Govt Officer

Sorry, are you able to hear me?

Operator

We are able to hear you. I do apologize.

Luis von AhnCo-Founder and Chief Govt Officer

Sorry, are you able to — OK. So I used to be going to say, so with Math, we should always see — we’re in all probability going to launch — not in all probability, we’re going to launch a public beta model of the Math app later this 12 months. So it will be there. However one of many issues that I wished to emphasise once more is simply that you shouldn’t count on any significant income contribution from the Math app or from these different issues, primarily as a result of our language studying is simply rising a lot that over the following few years, that is the place the contribution goes to come back from primarily.

Arvind RamnaniPiper Sandler — Analyst

Terrific. Thanks very a lot.

Luis von AhnCo-Founder and Chief Govt Officer

Thanks.

Operator

And subsequent, we have now a query from Nat Schindler of Financial institution of America.

Nat SchindlerFinancial institution of America Merrill Lynch — Analyst

Yeah. Hello, guys. I simply wished to comply with up on that Math remark. I can perceive that you simply’re not trying to monetize in a short time.

And — however extra what are your ideas? Most of your subscribers haven’t been kids. There’ve been grownup customers traditionally for Duolingo. Folks do language studying their entire life. I do not see lots of people — and I am an engineer and a geek, and I do not see lots of people who sit and do math studying later in life.

So is there an actual marketplace for adults paying for math studying?

Luis von AhnCo-Founder and Chief Govt Officer

That is a terrific query. I imply so the very first thing to say is that is — these are new merchandise and we’ll develop them. We’re very bullish on Math as a result of we predict that is one thing that just about everyone must be taught. Nearly all of the individuals which might be going to be utilizing it are in all probability not going to be adults, though we predict that there is some marketplace for adults associated to mind coaching.

However we predict it is going to be primarily kids. Now the factor to say about that’s that is what — we have now a whole lot of kids customers of Duolingo. And along with that, this is without doubt one of the the reason why we’re so enthusiastic about our Household Plan. We’re rising the fraction of our subscribers which might be within the Household Plan, and the concept goes to be to bundle the a number of studying merchandise into this Household Plan.

And that is one thing that we predict shall be very profitable.

Nat SchindlerFinancial institution of America Merrill Lynch — Analyst

Nice. Thanks.

Operator

Nicely, presently, we’re displaying no additional questions. I’ll then plan to conclude at the moment’s Q&A. Presently, I would like at hand the convention again over to the administration staff for any closing remarks. Sir?

Luis von AhnCo-Founder and Chief Govt Officer

Simply thanks. Thanks very a lot, everyone, for the nice questions. And yeah, we stay up for talking once more subsequent quarter, and sorry in regards to the operator dropping off. They in all probability went and obtained hooked on Duolingo.

OK, bye.

Operator

[Operator signoff]

Period: 37 minutes

Name members:

Debbie BelevanHead of Investor Relations

Luis von AhnCo-Founder and Chief Govt Officer

Matt SkaruppaChief Monetary Officer

Eric SheridanGoldman Sachs — Analyst

Justin PattersonKeyBanc Capital Markets — Analyst

Mario LuBarclays — Analyst

Ralph SchackartWilliam Blair — Analyst

Andrew BooneJMP Securities — Analyst

Mark MahaneyEvercore ISI — Analyst

Arvind RamnaniPiper Sandler — Analyst

Nat SchindlerFinancial institution of America Merrill Lynch — Analyst

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