Duolingo (DUOL) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 2024 growth: 54% year-over-year DAU increase to 37.2M, 36% MAU growth to 113.1M, and 40% revenue growth to $192.6M.

• Paid subscribers rose 47% to 8.6M, with strong adoption of Duolingo Max and record family plan penetration.

• Net income for Q3 2024 was $23.4M, up from $2.8M in Q3 2023; nine-month net income reached $74.7M.

• Continued investment in generative AI and automation to enhance product features and internal efficiency.

• Duolingo Max rollout accelerated, with strong early demand and new AI-powered Video Call feature driving engagement.

Financial highlights

• Q3 2024 bookings reached $211.5M, up 38% year-over-year; subscription bookings grew 45% to $176.3M.

• Total revenues were $192.6M, a 40% increase from Q3 2023; subscription revenue grew 49% to $157.6M.

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

• Free cash flow for Q3 was $52.7M, with nine-month free cash flow at $187.2M.

• Gross margin for Q3 was 72.9%, slightly down from 73.7% last year.

Outlook and guidance

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

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

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

• Q4 guidance includes a 100 basis point sequential decline in gross margin due to higher GenAI and amortization costs.

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