Duolingo (DUOL) Q3 2024 earnings summary

Executive summary

• Achieved 54% year-over-year growth in daily active users (DAUs) to 37.2 million and 40% revenue growth in Q3 2024, with 113.1 million MAUs, record family plan penetration, and strong Duolingo Max adoption.

• Net income for Q3 2024 was $23.4 million, up from $2.8 million in Q3 2023; paid subscribers grew 47% to 8.6 million.

• Duolingo Max, the highest subscription tier, saw rapid rollout and strong demand, especially for its AI-powered video call feature.

• Continued investment in generative AI and automation to enhance product efficiency and speed of feature launches.

• Free cash flow for the nine months was $187.2 million, reflecting strong operating cash flow and disciplined capital spending.

Financial highlights

• Q3 2024 revenue rose 40% year-over-year to $192.6 million; total bookings reached $211.5 million, up 38%; subscription bookings grew 45% to $176.3 million.

• Adjusted EBITDA was $47.5 million (24.7% margin), up from $22.5 million (16.3% margin) last year.

• Subscription revenue increased 49% to $157.6 million in Q3; other revenue (ads, English Test, in-app) up 10% to $35.0 million.

• Gross margin for Q3 was 72.9%, slightly down from 73.7% last year; Q4 guidance includes a sequential 100 bps decline due to higher GenAI and amortization costs.

• Family Plan now represents 21% of subscriptions, up from 18% at the end of last year.

Outlook and guidance

• Full-year 2024 guidance: bookings $843.5–$846.5 million, revenues $741.0–$744.0 million, Adjusted EBITDA $188.3–$190.4 million (25.4–25.6% margin).

• Q4 2024 guidance: bookings $244.5–$247.5 million, revenues $202.5–$205.5 million, Adjusted EBITDA $48.6–$50.8 million (24.0–24.7% margin).

• 2024 adjusted EBITDA margin guidance increased to 25.5% at midpoint, up eight points from 2023.

• Management expects existing cash, investments, and cash flow to support operations and capital needs for at least 12 months.

• Q4 Adjusted EBITDA guide at 24.4% midpoint, reflecting continued operating leverage.