Duolingo (DUOL) Q2 2024 earnings summary

Executive summary

• Achieved 59% year-over-year DAU growth and 41% revenue growth in Q2 2024, with record Adjusted EBITDA margin of 27% and net income rising to $24.4M from $3.7M a year ago.

• Surpassed 100 million MAUs and reached 8 million paid subscribers, up 52% year-over-year, with record engagement and over 20% of DAUs maintaining streaks longer than a year.

• Strong top-of-funnel growth driven by new and resurrected users, with DAU/MAU ratio reaching a record 33%.

• Continued innovation with rollout of Duolingo Max (AI-enabled premium tier), expansion of Family Plan, and advanced English learner initiatives.

• Free cash flow for Q2 was $54.9M, up 60% year-over-year; cash and cash equivalents reached $888.2M at quarter-end.

Financial highlights

• Q2 2024 revenue was $178.3M, up 41% year-over-year; subscription revenue grew 51% to $143.9M.

• Net income for Q2 2024 was $24.4M, up from $3.7M a year ago; Adjusted EBITDA increased to $48.1M, margin at 27%.

• Free cash flow for the first half was $134.5M, up from $63.1M year-over-year.

• Gross margin held steady at 73.4% in Q2.

• Ended quarter with approximately 49.4 million fully diluted shares outstanding.

Outlook and guidance

• Raised full-year 2024 guidance: revenue of $731.3–$738.3M, bookings of $820.5–$827.5M, and Adjusted EBITDA of $175.5–$184.6M (margin 24–25%).

• Q3 2024 guidance: revenue of $186.7–$189.7M, bookings of $194.5–$197.5M, Adjusted EBITDA of $40.1–$42.7M (margin 21.5–22.5%).

• Second half bookings and revenue growth expected to decelerate to about 27% due to tough comps from last year’s tailwinds.

• 2024 Adjusted EBITDA margin guidance raised to 24.5% (midpoint), up 7 points from 2023.

• Management expects existing cash and cash flow from operations to support capital needs for at least the next 12 months.