Duolingo, Inc. (NASDAQ: DUOL), the world’s leading mobile learning
platform, announced results for the fourth quarter and full year
ended December 31, 2023 in a shareholder letter that is posted
at investors.duolingo.com.
“2023 was an exceptional year that exceeded our own high
expectations. It was capped off with a very strong Q4 that saw us
achieve record bookings, revenue and profitability,” said Luis von
Ahn, Co-Founder and CEO of Duolingo. “We accelerated DAU growth in
each quarter of 2023, and in Q4 achieved record-high user
engagement and a record number of subscribers. Our performance
resulted from our pursuit of product excellence and innovation, the
progress we’ve made building an iconic brand, and disciplined
execution.
In 2024, we’ll remain relentlessly focused on the same strategy:
delighting our users, growing subscribers, teaching better and
scaling our mission to more learners around the world. We are early
in our journey and excited about the road ahead.”
Fourth Quarter
2023 Highlights
- Total bookings were $191.0 million, an increase of 51%
from the prior year quarter;
- Subscription bookings were $157.8 million, an increase of
57% from the prior year quarter;
- Paid Subscribers totaled 6.6 million at quarter end, an
increase of 57% from the prior year quarter;
- Daily active users (DAUs) were 26.9 million, an increase of 65%
from the prior year quarter and monthly active users (MAUs) were
88.4 million, an increase of 46% from the prior year quarter;
- Total revenues were $151.0 million, an increase of 45%
from the prior year quarter;
- Net income totaled $12.1 million, compared to a net loss
of $13.9 million in the prior year quarter;
- Adjusted EBITDA was $35.2 million, compared to
$5.2 million in the prior year quarter, a 23.3% versus 5.0%
Adjusted EBITDA margin, respectively;
- Cash flow from operating activities was $49.2 million compared
to $11.6 million in the prior year quarter, and free cash flow was
$47.7 million compared to $11.3 million in the prior year
quarter.
Full Year 2023
Highlights
- Total bookings were $622.2 million, an increase of 45% from the
prior year;
- Subscription bookings were $495.5 million, an increase of 49%
from the prior year;
- Total revenues were $531.1 million, an increase of 44% from the
prior year;
- Net income totaled $16.1 million, compared to a net loss
of $59.6 million in the prior year;
- Adjusted EBITDA was $93.7 million, compared to
$15.5 million in the prior year, a 17.6% versus 4.2% Adjusted
EBITDA margin, respectively;
- Cash flow from operating activities was $153.6 million compared
to $53.7 million in the prior year quarter, and free cash flow was
$144.3 million compared to $46.2 million in the prior year
quarter.
Financial and Key Operating Metrics
The following table summarizes our financial and operating
highlights for the quarters ended December 31, 2023 and
2022.
|
Three Months Ended December 31, |
|
|
(In millions) |
2023 |
|
2022 |
|
% Change |
Operating
Metrics |
|
|
|
|
|
Monthly active users (MAUs) |
88.4 |
|
60.7 |
|
46% |
Daily active users (DAUs) |
26.9 |
|
16.3 |
|
65% |
Paid subscribers (at period
end) |
6.6 |
|
4.2 |
|
57% |
|
Three Months Ended December 31, |
|
|
|
Year Ended December 31, |
|
|
(In thousands) |
|
2023 |
|
|
2022 |
|
|
%Change |
|
|
2023 |
|
|
2022 |
|
|
%Change |
Operating
Metrics |
|
|
|
|
|
|
|
|
|
|
|
Subscription bookings |
$ |
157,779 |
|
$ |
100,283 |
|
|
57% |
|
$ |
495,497 |
|
$ |
331,803 |
|
|
49% |
Total bookings |
$ |
191,032 |
|
$ |
126,388 |
|
|
51% |
|
$ |
622,181 |
|
$ |
428,647 |
|
|
45% |
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Measures |
|
|
|
|
|
|
|
|
|
|
|
Total revenues (GAAP) |
$ |
150,985 |
|
$ |
103,824 |
|
|
45% |
|
$ |
531,109 |
|
$ |
369,495 |
|
|
44% |
Net income (loss) (GAAP) |
$ |
12,117 |
|
$ |
(13,930 |
) |
|
nm |
|
$ |
16,067 |
|
$ |
(59,574 |
) |
|
nm |
Adjusted EBITDA
(Non-GAAP) |
$ |
35,195 |
|
$ |
5,183 |
|
|
>100% |
|
$ |
93,678 |
|
$ |
15,457 |
|
|
>100% |
Net cash provided by operating
activities (GAAP) |
$ |
49,193 |
|
$ |
11,608 |
|
|
>100% |
|
$ |
153,614 |
|
$ |
53,656 |
|
|
>100% |
Free cash flow(Non-GAAP) |
$ |
47,669 |
|
$ |
11,307 |
|
|
>100% |
|
$ |
144,273 |
|
$ |
46,170 |
|
|
>100% |
The following table provides revenues by product type:
|
Three Months Ended December 31, |
|
|
|
|
|
Year EndedDecember 31, |
|
|
|
|
(in
thousands) |
|
2023 |
|
|
2022 |
|
Change |
|
% Change |
|
|
2023 |
|
|
2022 |
|
Change |
|
% Change |
Subscription |
$ |
117,454 |
|
$ |
78,131 |
|
$ |
39,323 |
|
50% |
|
$ |
404,684 |
|
$ |
273,507 |
|
$ |
131,177 |
|
48% |
Advertising |
|
13,484 |
|
|
11,146 |
|
|
2,338 |
|
21 |
|
|
49,858 |
|
|
44,731 |
|
|
5,127 |
|
11% |
Duolingo English Test |
|
10,819 |
|
|
8,410 |
|
|
2,409 |
|
29 |
|
|
41,212 |
|
|
32,718 |
|
|
8,494 |
|
26% |
In-App Purchases |
|
8,913 |
|
|
5,855 |
|
|
3,058 |
|
52 |
|
|
34,673 |
|
|
17,914 |
|
|
16,759 |
|
94% |
Other |
|
315 |
|
|
282 |
|
|
33 |
|
12 |
|
|
682 |
|
|
625 |
|
|
57 |
|
9% |
Total revenues |
$ |
150,985 |
|
$ |
103,824 |
|
$ |
47,161 |
|
45% |
|
$ |
531,109 |
|
$ |
369,495 |
|
$ |
161,614 |
|
44% |
Financial Outlook
Duolingo is providing the following guidance for the first
quarter ending March 31, 2024 and the full year ending
December 31, 2024:
|
First Quarter 2024 |
|
Full Year 2024 |
(in
millions) |
Low |
|
High |
|
Low |
|
High |
|
|
|
|
|
|
|
|
Total Bookings |
$187 |
|
|
$190 |
|
|
$790 |
|
|
$802 |
|
Revenues |
$164 |
|
|
$167 |
|
|
$717.5 |
|
|
$729.5 |
|
Adjusted EBITDA |
$35.3 |
|
|
$37.6 |
|
|
$154.3 |
|
|
$171.4 |
|
Adjusted EBITDA Margin |
|
21.5% |
|
|
|
22.5% |
|
|
|
21.5% |
|
|
|
23.5% |
|
With regards to the Non-GAAP Adjusted EBITDA and Adjusted EBITDA
margin outlook provided above, a reconciliation to GAAP net income
(loss), the most directly comparable financial measure presented in
accordance with GAAP, has not been provided as the quantification
of certain items included in the calculation of GAAP net income
(loss) cannot be calculated or predicted at this time without
unreasonable efforts. For example, the non-GAAP adjustment for
stock-based compensation expenses related to equity awards requires
additional inputs such as number of shares granted and market price
that are not currently ascertainable, and the non-GAAP adjustment
for certain legal, tax and regulatory reserves and expenses depends
on the timing and magnitude of these expenses and cannot be
accurately forecasted. For the same reasons, we are unable to
address the probable significance of the unavailable information,
which could have a potentially unpredictable, and potentially
significant, impact on our future GAAP financial results.
Dilutive Securities
Duolingo has various dilutive securities. The table below
details these securities (shares in millions; rounding differences
may occur):
(Amounts in millions,
except share price) |
Price as of December 31,
2023 |
|
Weighted-averageexerciseprice |
|
Shares |
Share price |
$226.85 |
|
|
|
|
Common stock outstanding as of
December 31, 2023 |
|
|
|
|
42.5 |
Founder awards (1) |
|
|
|
|
1.6 |
Dilutive effect of stock options outstanding (2) |
|
|
$ |
16.04 |
|
2.8 |
RSUs outstanding (3) |
|
|
|
|
2.1 |
Total estimated diluted shares
outstanding |
|
|
|
|
49.0 |
________________(1) Includes 1.4 million
underlying performance-based Restricted Stock Units ("RSUs") where
performance criteria has not been satisfied.
(2) The Company has 3.0 million options outstanding as of
December 31, 2023. The estimated dilutive effect is calculated
as the number of shares expected to be issued upon vesting or
exercise, adjusted for the strike price proceeds that are received
by the Company and assumed to be used to repurchase shares of
Duolingo common stock.
(3) Includes 0.05 million RSUs which were granted after
December 31, 2023 but before the date of this press
release.
Video Webcast Duolingo will
host a video webcast to discuss its quarterly results today,
February 28, 2024 at 5:30 p.m. ET. This live webcast and
related materials will be publicly available and can be accessed at
investors.duolingo.com. A replay will be available on the Investor
Relations section of our website two hours following completion of
the call and will remain available for a period of one year.
About Duolingo Duolingo is the leading mobile
learning platform globally. Its flagship app has organically become
the world's most popular way to learn languages and the
top-grossing app in the Education category on both Google Play and
the Apple App Store. With technology at the core of everything it
does, Duolingo has consistently invested to provide learners a fun,
engaging, and effective learning experience while remaining
committed to its mission to develop the best education in the world
and make it universally available.
Definitions
Subscription Bookings and Total Bookings.
Subscription bookings represent the amounts we receive from a
purchase of any Duolingo subscription offering. Total bookings
include subscription bookings, income from advertising networks for
advertisements served to our users, purchases of the Duolingo
English Test, and in-app purchases of virtual goods. We believe
bookings provide an indication of trends in our operating results,
including cash flows, that are not necessarily reflected in our
revenues because we recognize subscription revenues ratably over
the lifetime of a subscription, which is generally from one to
twelve months.
Monthly Active Users (MAUs). MAUs are defined
as unique users who engage with our Duolingo App or the learning
section of our website each month. MAUs are reported for a
measurement period by taking the average of the MAUs for each
calendar month in that measurement period. The measurement period
for MAUs is the three months ended December 31, 2023 and the
same period in the prior year where applicable, and the analysis of
results is based on those periods. MAUs are a measure of the size
of our global active user community on Duolingo.
Daily Active Users (DAUs). DAUs are defined as
unique users who engage with our Duolingo App or the learning
section of our website each calendar day. DAUs are reported for a
measurement period by taking the average of the DAUs for each day
in that measurement period. The measurement period for DAUs is the
three months ended December 31, 2023 and the same period in
the prior year where applicable, and the analysis of results is
based on those periods. DAUs are a measure of the consistent
engagement of our global user community on Duolingo.
Paid Subscribers. Paid subscribers are defined
as users who pay for access to any Duolingo subscription offering
and had an active subscription as of the end of the measurement
period. Each unique user account is treated as a single paid
subscriber regardless of whether such user purchases multiple
subscriptions, and the count of paid subscribers does not include
users who are currently on a free trial or who are non-paying
members of a family plan.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. We intend such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements contained
in Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”) and Section 21E of the Securities Exchange Act of
1934, as amended (the “Exchange Act”). All statements other than
statements of historical facts contained in this press release,
including without limitation, statements regarding our business
model and strategic plans, including the anticipated scaling of our
user base, and our financial outlook are forward-looking
statements. Without limiting the generality of the foregoing, you
can identify forward-looking statements because they contain words
such as “may,” “will,” “shall,” “should,” “expects,” “plans,”
“anticipates,” “could,” “intends,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “potential,”
“goal,” “objective,” “seeks,” or “continue” or the negative of
these words or other similar terms or expressions that concern our
expectations, strategy, plans, or intentions. Such forward-looking
statements are neither promises nor guarantees, but involve a
number of known and unknown risks, uncertainties and assumptions
that may cause our actual results, performance or achievements to
differ materially from those expressed or implied in the
forward-looking statements due to various factors, including, but
not limited to: our ability to retain and grow our users and
sustain their engagement with our products; competition in the
online language learning industry; our limited operating history;
our ability to maintain profitability; our ability to manage our
growth and operate at such scale; the success of our investments;
our reliance on third-party platforms to store and distribute our
products and collect revenue; our reliance on third-party hosting
and cloud computing providers; our ability to compete for
advertisements; acceptance by educational organizations of
technology-based education; our ability to access, collect, and use
personal data about our users and payers, and to comply with
applicable data privacy laws; regulatory and legislative
developments on the use of artificial intelligence and machine
learning; potential intellectual property-related litigation and
proceedings; our ability adequately obtain, protect and maintain
our intellectual property rights; and the other important factors
more fully detailed under the caption "Risk Factors" in our
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2023, as any such factors may be updated from
time to time, including without limitation our Annual Report on
Form 10-K for the fiscal year ended December 31, 2023 and in
our other filings with the SEC, accessible on the SEC’s website at
www.sec.gov and the Investor Relations section of the Company’s
website at investors.duolingo.com. All forward-looking statements
speak only as of the date of this press release. While we may elect
to update such forward-looking statements at some point in the
future, we disclaim any obligation to do so, even if subsequent
events cause our views to change.
Limitation of Key Operating Metrics and Other
DataWe manage our business by tracking several operating
metrics, including MAUs, DAUs, paid subscribers, and subscription
and total bookings. While these metrics are based on what we
believe to be reasonable estimates of our user base for the
applicable period of measurement, there are inherent challenges in
measuring how our platform is used. These metrics are determined by
using internal data gathered on an analytics platform that we
developed and operate and have not been validated by an independent
third party. This platform tracks user account and session
activity. If we fail to maintain an effective analytics platform,
our metrics calculations may be inaccurate. Because we update the
methodologies we employ to create metrics, our operating metrics
may not be comparable to those in prior periods. Other companies,
including companies in our industry, may calculate these metrics
differently.
Non-GAAP Financial MeasuresWe use certain
non-GAAP financial measures to supplement our consolidated
financial statements, which are presented in accordance with GAAP.
These non-GAAP financial measures include Adjusted EBITDA; Adjusted
EBITDA margin; Free cash flow, and Free cash flow margin. Please
refer to the definitions and reconciliation at the end of this
press release. We use these non-GAAP financial measures for
financial and operational decision-making and as a means to
evaluate period-to-period comparisons. By excluding certain items
that may not be indicative of our recurring core operating results,
we believe that these non-GAAP financial measures provide
meaningful supplemental information regarding our performance.
Accordingly, we believe these non-GAAP financial measures are
useful to investors and others because they allow for additional
information with respect to financial measures used by management
in its financial and operational decision-making and they may be
used by our institutional investors and the analyst community to
help them analyze the health of our business. However, there are a
number of limitations related to the use of non-GAAP financial
measures, and these non-GAAP financial measures should be
considered in addition to, not as a substitute for or in isolation
from, our financial results prepared in accordance with GAAP. Other
companies, including companies in our industry, may calculate these
non-GAAP financial measures differently or not at all, which
reduces their usefulness as comparative measures.
Website InformationWe routinely post important
information for investors on the Investor Relations section of our
website, investors.duolingo.com, and also from time to time may use
social media channels, including our Twitter account
(twitter.com/duolingo) and our LinkedIn account
(linkedin.com/company/duolingo/), as an additional means of
disclosing public information to investors, the media and others
interested in us. It is possible that certain information we post
on our website and on social media could be deemed to be material
information, and we encourage investors, the media and others
interested in us to review the business and financial information
we post on our website and on the social media channels identified
above, in addition to following our press releases, SEC filings,
public conference calls, presentations and webcasts. The
information contained on, or that may be accessed through, our
website and our social media channels is not incorporated by
reference into, and is not a part of, this document.
DUOLINGO, INC. AND SUBSIDIARIESCONDENSED
CONSOLIDATEDBALANCE SHEETS(Amounts in
thousands) |
|
|
December 31, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
747,610 |
|
$ |
608,180 |
Accounts receivable |
|
88,975 |
|
|
46,728 |
Deferred cost of revenues |
|
53,931 |
|
|
35,041 |
Prepaid expenses and other
current assets |
|
7,282 |
|
|
7,234 |
Noncurrent assets |
|
56,159 |
|
|
50,164 |
Total
assets |
$ |
953,957 |
|
$ |
747,347 |
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Accounts payable |
$ |
2,447 |
|
$ |
1,177 |
Deferred revenues |
|
249,192 |
|
|
157,550 |
Other current liabilities |
|
25,723 |
|
|
23,039 |
Long-term obligation under
operating leases |
|
21,094 |
|
|
23,503 |
Total
liabilities |
|
298,456 |
|
|
205,269 |
Total stockholders’
equity |
|
655,501 |
|
|
542,078 |
Total liabilities and
stockholders' equity |
$ |
953,957 |
|
$ |
747,347 |
DUOLINGO, INC. AND SUBSIDIARIESCONDENSED
CONSOLIDATEDSTATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME(LOSS)(Amounts in thousands, except per share
amounts) |
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues |
$ |
150,985 |
|
$ |
103,824 |
|
|
$ |
531,109 |
|
|
$ |
369,495 |
|
Cost of revenues |
|
40,571 |
|
|
27,770 |
|
|
|
142,105 |
|
|
|
99,431 |
|
Gross profit |
|
110,414 |
|
|
76,054 |
|
|
|
389,004 |
|
|
|
270,064 |
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development |
|
50,256 |
|
|
44,470 |
|
|
|
194,352 |
|
|
|
150,444 |
|
Sales and marketing |
|
19,118 |
|
|
19,029 |
|
|
|
75,788 |
|
|
|
66,967 |
|
General and administrative |
|
36,245 |
|
|
30,707 |
|
|
|
132,123 |
|
|
|
117,848 |
|
Total operating expenses |
|
105,619 |
|
|
94,206 |
|
|
|
402,263 |
|
|
|
335,259 |
|
Income (loss) from
operations |
|
4,795 |
|
|
(18,152 |
) |
|
|
(13,259 |
) |
|
|
(65,195 |
) |
Other (expense) income,
net |
|
1,054 |
|
|
665 |
|
|
|
(55 |
) |
|
|
(676 |
) |
Income (loss) before interest income and income taxes |
|
5,849 |
|
|
(17,487 |
) |
|
|
(13,314 |
) |
|
|
(65,871 |
) |
Interest income |
|
9,284 |
|
|
4,273 |
|
|
|
31,091 |
|
|
|
7,235 |
|
Income (loss) before income
taxes |
|
15,133 |
|
|
(13,214 |
) |
|
|
17,777 |
|
|
|
(58,636 |
) |
Provision for income
taxes |
|
3,016 |
|
|
716 |
|
|
|
1,710 |
|
|
|
938 |
|
Net income (loss) and
comprehensive income (loss) |
$ |
12,117 |
|
$ |
(13,930 |
) |
|
$ |
16,067 |
|
|
$ |
(59,574 |
) |
Net income (loss) per share
attributable to Class A and Class B common stockholders, basic |
$ |
0.29 |
|
$ |
(0.35 |
) |
|
$ |
0.39 |
|
|
$ |
(1.51 |
) |
Net income (loss) per share
attributable to Class A and Class B common stockholders,
diluted |
$ |
0.26 |
|
$ |
(0.35 |
) |
|
$ |
0.35 |
|
|
$ |
(1.51 |
) |
DUOLINGO, INC. AND SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOWS(Amounts in thousands) |
|
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating
activities: |
|
|
|
Net income (loss) |
$ |
16,067 |
|
|
$ |
(59,574 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
7,095 |
|
|
|
4,870 |
|
Stock-based compensation expense |
|
95,221 |
|
|
|
73,820 |
|
Gain on sale of capitalized software |
|
(100 |
) |
|
|
— |
|
Loss on disposal of leasehold improvements |
|
433 |
|
|
|
— |
|
Changes in assets and liabilities: |
|
34,898 |
|
|
|
34,540 |
|
Net cash provided by operating activities |
|
153,614 |
|
|
|
53,656 |
|
Net cash used for investing activities |
|
(13,584 |
) |
|
|
(14,174 |
) |
Net cash provided by financing activities |
|
2,135 |
|
|
|
14,776 |
|
Net increase in cash, cash
equivalents and restricted cash |
|
142,165 |
|
|
|
54,258 |
|
Cash, cash equivalents and
restricted cash - Beginning of period |
|
608,180 |
|
|
|
553,922 |
|
Cash, cash equivalents and
restricted cash - End of period |
$ |
750,345 |
|
|
$ |
608,180 |
|
DUOLINGO, INC. AND
SUBSIDIARIESADJUSTED EBITDA
RECONCILIATION(Amounts in thousands)
Adjusted EBITDA. Adjusted EBITDA is defined as
net income (loss) excluding interest income, income taxes,
depreciation and amortization, stock-based compensation expenses
related to equity awards, IPO and public company costs, transaction
costs related to an acquisition, acquisition earn-out costs, gain
on sale of capitalized software and loss on disposal of leasehold
improvements. Adjusted EBITDA margin is defined as Adjusted EBITDA
as a percentage of revenues. These non-GAAP financial measures are
used by management to evaluate the financial performance of our
business and we present these non-GAAP financial measures because
we believe that they are helpful in highlighting trends in our
operating results and that they are frequently used by analysts,
investors and other interested parties to evaluate companies in our
industry. The following table presents a reconciliation of our net
income (loss), the most directly comparable financial measure
presented in accordance with GAAP, to Adjusted EBITDA and Adjusted
EBITDA margin:
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(In thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income (loss) |
$ |
12,117 |
|
|
$ |
(13,930 |
) |
|
$ |
16,067 |
|
|
$ |
(59,574 |
) |
Add (deduct): |
|
|
|
|
|
|
|
Interest income |
|
(9,284 |
) |
|
|
(4,273 |
) |
|
|
(31,091 |
) |
|
|
(7,235 |
) |
Provision for income taxes |
|
3,016 |
|
|
|
716 |
|
|
|
1,710 |
|
|
|
938 |
|
Depreciation and amortization |
|
2,042 |
|
|
|
1,444 |
|
|
|
7,095 |
|
|
|
4,870 |
|
Stock-based compensation expenses related to equity awards (1) |
|
27,288 |
|
|
|
21,105 |
|
|
|
99,226 |
|
|
|
75,822 |
|
Public company costs (2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
338 |
|
Acquisition transaction costs (3) |
|
— |
|
|
|
8 |
|
|
|
— |
|
|
|
185 |
|
Acquisition earn-out costs (4) |
|
— |
|
|
|
113 |
|
|
|
338 |
|
|
|
113 |
|
Gain on sale of capitalized software (5) |
|
— |
|
|
|
— |
|
|
|
(100 |
) |
|
|
— |
|
Loss on disposal of leasehold improvements |
|
16 |
|
|
|
— |
|
|
|
433 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
35,195 |
|
|
$ |
5,183 |
|
|
$ |
93,678 |
|
|
$ |
15,457 |
|
|
|
|
|
|
|
|
|
Revenues |
$ |
150,985 |
|
|
$ |
103,824 |
|
|
$ |
531,109 |
|
|
$ |
369,495 |
|
Adjusted EBITDA Margin |
|
23.3 |
% |
|
|
5.0 |
% |
|
|
17.6 |
% |
|
|
4.2 |
% |
DUOLINGO, INC. AND
SUBSIDIARIESFREE CASH FLOW
RECONCILIATION(Amounts in thousands)
Free Cash Flow. Free cash flow represents net
cash provided by operating activities, reduced by capitalized
software development costs and purchases of property and equipment
and increased by taxes paid related to stock-based compensation
equity awards, IPO and public company costs, transaction costs
related to an acquisition and an acquisition earn-out payment as we
believe they are not indicative of future liquidity. Free cash flow
margin is defined as Free cash flow as a percentage of revenues. We
believe that free cash flow is a measure of liquidity that provides
useful information to our management, investors and others in
understanding and evaluating the strength of our liquidity and
future ability to generate cash that can be used for strategic
opportunities or investing in our business. Free cash flow has
certain limitations in that it does not represent our residual cash
flow for discretionary expenditures and our non-discretionary
commitments. The following table presents a reconciliation of net
cash provided by operating activities, the most directly comparable
financial measure calculated in accordance with GAAP, to free cash
flow.
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(In thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net cash provided by operating
activities |
$ |
49,193 |
|
|
$ |
11,608 |
|
|
$ |
153,614 |
|
|
$ |
53,656 |
|
Less: Capitalized software
development costs and purchases of intangible assets |
|
(3,224 |
) |
|
|
(603 |
) |
|
|
(10,493 |
) |
|
|
(4,562 |
) |
Less: Purchases of property
and equipment |
|
(924 |
) |
|
|
(292 |
) |
|
|
(3,191 |
) |
|
|
(5,562 |
) |
Plus: Taxes paid related to
stock-based compensation equity awards |
|
2,286 |
|
|
|
473 |
|
|
|
4,005 |
|
|
|
2,002 |
|
Plus: Public company costs
(2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
338 |
|
Plus: Acquisition transaction
costs (3) |
|
— |
|
|
|
8 |
|
|
|
— |
|
|
|
185 |
|
Plus: Acquisition earn-out
payment (4) |
|
338 |
|
|
|
113 |
|
|
|
338 |
|
|
|
113 |
|
Free cash flow |
$ |
47,669 |
|
|
$ |
11,307 |
|
|
$ |
144,273 |
|
|
$ |
46,170 |
|
|
|
|
|
|
|
|
|
Revenues |
$ |
150,985 |
|
|
$ |
103,824 |
|
|
$ |
531,109 |
|
|
$ |
369,495 |
|
Free cash flow margin |
|
31.6 |
% |
|
|
10.9 |
% |
|
|
27.2 |
% |
|
|
12.5 |
% |
________________(1) In addition to stock-based compensation
expense, this includes costs incurred related to taxes paid on
equity transactions.
(2) Public company costs include costs associated with the
establishment of our public company structure and processes,
including consultant costs, a one-time fee associated with the
set-up of our initial proxy statement, and fees paid to consultants
and Deloitte for work in connection with remediation of the
material weakness disclosed in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2021.
(3) Represents costs incurred related to an acquisition,
including integration costs.
(4) Represents costs incurred related to the earn-out payment on
an acquisition.
(5) Represents proceeds from a sale of capitalized software.
Contacts
Investor Relations:Deborah
Belevan, VP of Investor RelationsIR@duolingo.com
Press:Sam Dalsimer, Global Head
of Communicationspress@duolingo.com
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