Duolingo Reports Strong Q4 2024 Earnings with User Growth

Duolingo's Q4 2024 results reflect robust performance and user expansion. The company reported significant growth in daily active users and subscriber memberships, particularly with the new Duolingo Max offering, showcasing a strengthened business model.

Date: 28-02-2025

AI Rating: 7

Earnings Highlights
Duolingo's report highlights a remarkable growth trajectory as they closed 2024 with a record quarter. Notably, the company achieved a 39% year-over-year revenue increase alongside total bookings exceeding expectations with a 42% rise. Their adjusted EBITDA margin expanded by about eight points, indicating firm profitability within their growth strategy.

Daily Active Users and Subscriber Growth
The company reported a staggering 51% year-over-year increase in daily active users, now totaling 40 million. This growth is primarily attributed to successful marketing strategies and the launch of features such as Duolingo Max, which is expected to enhance user retention and promote higher lifetime value (LTV). The Family Plan also showcased impressive performance, accounting for 23% of total subscriptions.

Adjusted EBITDA and Profit Margins
Duolingo achieved a 25.7% adjusted EBITDA margin in 2024, demonstrating strong profitability amid robust user growth. However, the company anticipates a temporary 170 basis point decrease in gross margin due to AI costs associated with Max. Despite this, they expect margins to recover as they optimize costs throughout the year, highlighting their focus on balancing growth and profitability.

Free Cash Flow and Future Guidance
Duolingo is on track to exceed $1 billion in bookings for 2025. The company's guidance reflects bookings growing approximately 25% year-over-year, driven primarily by their subscription bookings, projected to rise around 31%. This growth is aligned with their commitment to expanding the Duolingo Max feature and leveraging AI and automation to enhance user experience.

Overall, the strong performance in Q4 and optimistic guidance for 2025 present a positive outlook for investors, indicating the company is well-positioned for sustained growth.

Stocks: DUOL