“We delivered exceptional results this quarter, with our continued strong user growth helping to drive our excellent financial performance,” said
Second Quarter 2023 Highlights
- Total bookings were
$137 .5 million, an increase of 41% from the prior year quarter; - Subscription bookings were
$106 .3 million, an increase of 43% from the prior year quarter; - Paid Subscribers totaled 5.2 million at quarter end, an increase of 59% from the prior year quarter;
- Monthly active users (MAUs) grew 50% to 74.1 million from the prior year quarter and Daily active users (DAUs) grew 62% to 21.4 million from the prior year quarter;
- Total revenues were
$126 .8 million, an increase of 44% from the prior year quarter; - Net income totaled
$3 .7 million, compared to a net loss of$15 .0 million in the prior year quarter; - Adjusted EBITDA was
$20 .9 million, compared to$4 .2 million in the prior year quarter, or a 16.5% and 4.7% Adjusted EBITDA margin, respectively.
Financial and Key Operating Metrics
The following table summarizes our financial and operating highlights for the quarters ended
Three Months Ended | ||||||
(In millions) | 2023 | 2022 | % Change | |||
Operating Metrics | ||||||
Monthly active users (MAUs) | 74.1 | 49.5 | 50 | % | ||
Daily active users (DAUs) | 21.4 | 13.2 | 62 | % | ||
Paid subscribers (at period end) | 5.2 | 3.3 | 59 | % |
Three Months Ended | |||||||||
(In thousands) | 2023 | 2022 | % Change | ||||||
Operating Metrics | |||||||||
Subscription bookings | $ | 106,254 | $ | 74,123 | 43 | % | |||
Total bookings | $ | 137,539 | $ | 97,467 | 41 | % | |||
Financial Measures | |||||||||
Total revenues (GAAP) | $ | 126,839 | $ | 88,386 | 44 | % | |||
Net income (loss) (GAAP) | $ | 3,725 | $ | (15,045 | ) | nm | |||
Adjusted EBITDA (Non-GAAP) | $ | 20,871 | $ | 4,198 | >100 | % | |||
The following table provides revenues by product type:
Three Months Ended | |||||||||||
(in thousands) | 2023 | 2022 | Change | % Change | |||||||
Subscription | $ | 95,158 | $ | 65,194 | $ | 29,964 | 46 | % | |||
Advertising | 13,061 | 11,218 | 1,843 | 16 | |||||||
Duolingo English Test | 9,809 | 8,036 | 1,773 | 22 | |||||||
Other * | 8,811 | 3,938 | 4,873 | >100 | |||||||
Total revenues | $ | 126,839 | $ | 88,386 | $ | 38,453 | 44 | % | |||
* Other primarily includes in-app sales of virtual goods
Financial Outlook
Third Quarter 2023 | Full Year 2023 | ||||||||||||||
(in millions) | Low | High | Low | High | |||||||||||
Total Bookings | $ | 136.5 | $ | 139.5 | $ | 569.0 | $ | 575.0 | |||||||
Revenues | $ | 129.5 | $ | 132.5 | $ | 510.0 | $ | 516.0 | |||||||
Adjusted EBITDA | $ | 16.8 | $ | 18.6 | $ | 71.4 | $ | 77.4 | |||||||
Adjusted EBITDA Margin | 13.0 | % | 14.0 | % | 14.0 | % | 15.0 | % | |||||||
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.
(Amounts in millions, except share price) | Price as of | Weighted- average exercise price | Shares | ||||
Share price | $ | 142.94 | |||||
Common stock outstanding as of | 41.5 | ||||||
Founder awards (1) | 1.8 | ||||||
Dilutive effect of stock options outstanding (2) | $ | 15.31 | 3.1 | ||||
RSUs outstanding | 2.4 | ||||||
Total estimated diluted shares outstanding | 48.8 |
________________
(1) | Includes 1.6 million shares where performance criteria has not been satisfied. |
(2) | The Company has 3.5 million options outstanding as of |
Video Webcast
About
Definitions
Subscription Bookings and Total Bookings. Subscription bookings represent the amounts we receive from a purchase of any
Monthly Active Users (MAUs). MAUs are defined as unique
Daily Active Users (DAUs). DAUs are defined as unique
Paid Subscribers. Paid subscribers are defined as users who pay for access to any
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 release of new products, 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 Annual Report on Form 10-K for the fiscal year ended
Limitation of Key Operating Metrics and Other Data
We 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 Measures
We 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 and Adjusted EBITDA 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 Information
We 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,
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(Amounts in thousands) | |||||
ASSETS | |||||
Cash and cash equivalents | $ | 678,665 | $ | 608,180 | |
Accounts receivable | 53,406 | 46,728 | |||
Deferred cost of revenues | 42,720 | 35,041 | |||
Prepaid expenses and other current assets | 10,150 | 7,234 | |||
Noncurrent assets | 49,862 | 50,164 | |||
Total assets | $ | 834,803 | $ | 747,347 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
Accounts payable | $ | 2,305 | $ | 1,177 | |
Deferred revenues | 192,753 | 157,550 | |||
Other current liabilities | 22,048 | 23,039 | |||
Long-term obligation under operating leases | 21,292 | 23,503 | |||
Total liabilities | 238,398 | 205,269 | |||
Total stockholders’ equity | 596,405 | 542,078 | |||
Total liabilities and stockholders' equity | $ | 834,803 | $ | 747,347 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | |||||||
(Amounts in thousands, except per share amounts) | |||||||
Three Months Ended | |||||||
2023 | 2022 | ||||||
Revenues | $ | 126,839 | $ | 88,386 | |||
Cost of revenues | 33,788 | 23,869 | |||||
Gross profit | 93,051 | 64,517 | |||||
Operating expenses: | |||||||
Research and development | 47,947 | 34,217 | |||||
Sales and marketing | 17,734 | 15,277 | |||||
General and administrative | 32,235 | 30,057 | |||||
Total operating expenses | 97,916 | 79,551 | |||||
Loss from operations | (4,865 | ) | (15,034 | ) | |||
Other expense, net of other income | (268 | ) | (539 | ) | |||
Loss before interest income and income taxes | (5,133 | ) | (15,573 | ) | |||
Interest income | 7,543 | 669 | |||||
Income (loss) before income taxes | 2,410 | (14,904 | ) | ||||
(Benefit) provision for income taxes | (1,315 | ) | 141 | ||||
Net income (loss) and comprehensive income (loss) | $ | 3,725 | $ | (15,045 | ) | ||
Net income (loss) per share attributable to Class A and Class B common stockholders, basic | $ | 0.09 | $ | (0.38 | ) | ||
Net income (loss) per share attributable to Class A and Class B common stockholders, diluted | $ | 0.08 | $ | (0.38 | ) |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Amounts in thousands) | |||||||
Six Months Ended | |||||||
2023 | 2022 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 1,143 | $ | (27,199 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 3,396 | 1,944 | |||||
Stock-based compensation expense | 44,787 | 32,700 | |||||
Gain on sale of capitalized software | (100 | ) | — | ||||
Changes in assets and liabilities | 17,545 | 25,844 | |||||
Net cash provided by operating activities | 66,771 | 33,289 | |||||
Net cash used for investing activities | (4,683 | ) | (5,713 | ) | |||
Net cash provided by financing activities | 8,397 | 9,662 | |||||
Net increase in cash and cash equivalents | 70,485 | 37,238 | |||||
Cash and cash equivalents - Beginning of period | 608,180 | 553,922 | |||||
Cash and cash equivalents - End of period | $ | 678,665 | $ | 591,160 | |||
ADJUSTED 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, and acquisition earn-out costs. 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 | |||||||
(In thousands) | 2023 | 2022 | |||||
Net income (loss) | $ | 3,725 | $ | (15,045 | ) | ||
Interest income | (7,543 | ) | (669 | ) | |||
(Benefit) provision for income taxes | (1,315 | ) | 141 | ||||
Depreciation and amortization | 1,634 | 1,170 | |||||
Stock-based compensation expenses related to equity awards (1) | 24,258 | 18,494 | |||||
IPO and public company costs (2) | — | 107 | |||||
Acquisition earn-out costs (3) | 112 | — | |||||
Adjusted EBITDA | $ | 20,871 | $ | 4,198 | |||
Revenues | $ | 126,839 | $ | 88,386 | |||
Adjusted EBITDA Margin | 16.5 | % | 4.7 | % |
________________
(1) | In addition to stock-based compensation expense, this includes costs incurred related to taxes paid on equity transactions. |
(2) | IPO and 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 |
(3) | Represent costs incurred related to the earn-out payment on an acquisition, which is included within General and administrative within our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). |
Contacts
Investor Relations:
IR@duolingo.com
Press:
press@duolingo.com
Source:
2023 GlobeNewswire, Inc., source