Duolingo, the favored language-learning app based in 2011, has filed for an preliminary public providing (IPO).
The Duolingo firm reported revenues that elevated 97% to $55.4 million for the primary quarter of 2021. Nevertheless, internet losses got here to $13.5 million.
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App Advertising and marketing Information – Duolingo information for IPO
The corporate was valued at $2.4 billion after it raised $35 million in funding late final yr.
Duolingo stated it has over 500 million world downloads thus far and is the top-grossing language app on each the Google Play Retailer and the Apple App Retailer.
It boasts some 40 million month-to-month energetic customers and presents 38 languages free of charge.
Duolingo Prospectus Abstract
This abstract highlights chosen data that’s offered in larger element elsewhere on this prospectus. This abstract doesn’t include all the data you need to take into account earlier than investing in our Class A typical inventory. It is best to learn this complete prospectus fastidiously, together with the sections titled “Threat Components,” “Particular Be aware Relating to Ahead-Trying Statements,” and “Administration’s Dialogue and Evaluation of Monetary Situation and Outcomes of Operations,” and our consolidated monetary statements and associated notes included elsewhere on this prospectus, earlier than investing choice. Until the context in any other case requires, the phrases “Duolingo,” the “firm,” “we,” “us,” and “our” on this prospectus discuss with Duolingo, Inc. and its consolidated subsidiaries, and the phrase “our learners” refers back to the customers of our language studying app.
Though training can open the door to financial alternative, it is usually among the many principal sources of inequality: the privileged can get the perfect training on the earth, whereas these with fewer assets, particularly in creating nations, might not be capable to get even primary education. That’s the reason we began Duolingo. We imagine that everybody, no matter how rich they’re, ought to have entry to top quality training. And for the primary time in historical past, the expertise essential to allow that is within the palms of billions of individuals, within the type of a smartphone. At Duolingo, we construct merchandise native to the smartphone – bite-sized, on-demand and interesting – to make studying accessible and efficient, opening doorways for everybody alike.
Who Duolingo Are?
Duolingo is a expertise firm based by two engineers, Luis von Ahn and Severin Hacker. Luis and Severin met at Carnegie Mellon College, the place Luis was a professor within the Laptop Science Division and Severin was his Ph.D. pupil. Luis, a MacArthur Fellow, grew up in Guatemala and witnessed firsthand the super affect that entry to top quality training can have on individuals’s lives. Luis and Severin bonded over the dream of constructing an clever studying system knowledgeable by huge quantities of person engagement knowledge that would ship superior studying outcomes.
Our workforce of over 400 passionate workers, together with greater than 170 engineers, goals to construct probably the most subtle training platform on the earth. We imagine that by utilizing trendy expertise, the perfect engineering expertise, and a mission-driven method, we are able to create higher studying experiences and significant enhancements in efficacy. Our merchandise are powered by subtle knowledge analytics and synthetic intelligence that make it simpler for learners to remain motivated, grasp new materials, and obtain their studying objectives.
Duolingo Enterprise
Duolingo is the main cell studying platform globally. With over 500 million downloads, our flagship app has organically change into the world’s hottest method to study languages and the top-grossing app within the Training class on each Google Play and the Apple App Retailer. For a lot of, Duolingo has change into synonymous with language studying: for instance, on Google, individuals search the time period “Duolingo” 9 instances extra usually than “study Spanish.” We’re notably proud that our learners come from all the socioeconomic spectrum, starting from billionaires and celebrities to lately resettled refugees, a uncommon occasion wherein more cash doesn’t suggest higher entry to a top quality academic platform.
Duolingo began with a give attention to instructing languages due to the profound affect studying a brand new language can have on individuals’s lives, in addition to the massive market alternative. Based on HolonIQ, 1.8 billion individuals the world over are studying a brand new language, and in 2019, shopper spend on each on-line and offline language studying represented a $61 billion market. Driving a lot of the demand for language studying is the truth that English can unlock super financial alternative. And the ability of language studying will not be restricted to financial development. Studying one other language can unlock new experiences and deep human connections, starting from navigating a primary journey to a different nation, to speaking with relations of an older technology.
Duolingo presents programs in 40 languages to roughly 40 million month-to-month energetic customers. To place our scale in context, there are extra individuals in america studying languages on Duolingo than there are international language learners in all US excessive colleges mixed, and there are extra individuals studying sure languages on Duolingo, like Irish and Hawaiian, than there are native audio system of these languages worldwide.
Duolingo is the educational product constructed for the cell technology: bite-sized, on-demand and enjoyable. We imagine that the toughest a part of studying one thing new is staying motivated, so we construct gamification options into our platform to inspire our learners, and we run hundreds of A/B exams to optimize every characteristic for optimum engagement. Our obsession with person expertise has yielded affinity and loyalty in our learners, which in flip has helped us domesticate thousands and thousands of name advocates who inform their buddies and households about our merchandise. Certainly, our model has change into half of popular culture, showing in web memes and sketches on late night time comedy exhibits. All of this has allowed us to develop our enterprise organically, primarily counting on word-of-mouth virality moderately than paid person acquisition.
Our thousands and thousands of learners full over 500 million workout routines on daily basis, creating what we imagine to be the world’s largest studying dataset. This knowledge powers the excessive quantity A/B testing and novel synthetic intelligence (AI) that we use to repeatedly enhance how effectively we educate. Based on an inside research, individuals who full 5 “Items” of Duolingo, or roughly half of one in every of our programs, study as a lot as college students taking 4 college semesters of language training—and so they accomplish that in half the time.
We deliberately don’t put our studying content material behind a paywall. Anybody can obtain the Duolingo app, use it for so long as they like, and full as lots of our programs as they select, all with out paying something. Learners who use Duolingo free of charge see an advert on the finish of every lesson, whereas learners who buy Duolingo Plus, our premium subscription, take pleasure in an ad-free expertise and entry to further options. As of March 31, 2021, roughly 5% of our month-to-month energetic customers had been paid subscribers of Duolingo Plus. Our paid subscriber penetration has elevated steadily since we launched Duolingo Plus in 2017 and, mixed with our person development, has led to our income greater than doubling yearly since. We’ve a powerful future roadmap of characteristic enhancements and optimizations, and imagine we’re within the early phases of accelerating our paid subscriber penetration.
Our freemium enterprise mannequin is core to our success as a result of it allows vital person scale. Our development and aggressive differentiation have been pushed by two mutually-reinforcing flywheels: our studying flywheel and our funding flywheel.
•Studying flywheel: The larger the size of our learner base, the extra we are able to use insights from knowledge analytics to enhance each engagement and efficacy. The extra participating our merchandise are, and the extra successfully we educate, the extra our learners inform their buddies about Duolingo, and the extra we proceed to develop our learner base.
•Funding flywheel: Our learner scale and word-of-mouth development enable us to focus our capital investments on product innovation and knowledge analytics, versus model or efficiency advertising and marketing. The extra learners use Duolingo and convert into paid subscribers, the extra we’re capable of spend money on creating an much more pleasant, participating and efficient studying expertise. In flip, this will increase our reputation and person scale, in addition to the effectiveness of our knowledge analytics, additional widening our aggressive moat.
Trade Tendencies
Cell-first behaviors are reshaping industries. In classes starting from retail to music to relationship, shoppers are more and more gravitating to cell, app-based experiences. We imagine that shopper habits will proceed to be formed by a desire for the handy, on-demand nature of cell experiences.
The shift in direction of on-line studying is accelerating. Traditionally, training has lagged behind different industries within the shift from offline to on-line. Based on GSV Ventures, the 2019 digital studying market represented $160 billion in spend—already a large quantity, however nonetheless solely 2.3% of whole world training expenditures. Nevertheless, the COVID-19 pandemic sparked a radical shift in direction of on-line studying, and its results are more likely to be enduring. GSV Ventures now predicts that digital studying will attain 11% of training market expenditures by 2026, representing roughly $1 trillion in spend and a 26% compound annual development fee (CAGR) from 2019 to 2026.
On-line learners search participating, mobile-first experiences. Customers are more and more accustomed to the extremely participating design of social media apps and cell video games. We imagine that customers turning to on-line studying won’t solely choose the comfort and management that cell apps present, but additionally anticipate experiences to be extremely participating.
Adoption of subscription fashions is rising globally. Rising adoption of subscription fashions throughout the globe is additional enabling the shift in direction of cell experiences. We imagine that as subscriptions enhance in reputation throughout classes, shoppers may even gravitate in direction of subscription fashions in on-line studying.
Market Alternative
The worldwide marketplace for direct-to-consumer language studying is giant, rising, and shifting on-line. Based on HolonIQ, whole shopper spend on each on-line and offline language studying represented a $61 billion market in 2019, and can develop to $115 billion in 2025, implying a CAGR of 11% over this era. On-line language studying is the fastest-growing market phase, projected to develop from $12 billion in 2019 to $47 billion in 2025, representing a CAGR of roughly 26% over this era, and to comprise 41% of whole shopper spend on language studying in 2025. We imagine that development in digital spend will likely be pushed partly by a shift away from offline choices, as shoppers search extra reasonably priced, handy, and better high quality on-line options.
We additionally imagine that development in on-line language studying spend will likely be pushed by shoppers who wouldn’t have paid for offline choices, however now select to buy on-line merchandise. For instance, in accordance with a survey we carried out in 2021, virtually 80% of Duolingo customers within the US weren’t already studying a language once they started utilizing Duolingo. Globally, GSMA studies that the variety of cell web customers is projected to develop from 3.8 billion on the finish of 2019 to five.0 billion by 2025. Progress in smartphone adoption can open up new entry to the comfort and affordability of mobile-first studying to tons of of thousands and thousands of individuals.
We even have a major alternative to affect extra learners all over the world by extending our platform past language studying. Based on HolonIQ, roughly $6 trillion was spent on training globally in 2019. And GSV Ventures studies that $160 billion was spent on digital studying, with digital spend anticipated to develop at a 26% CAGR from 2019 to 2026. We imagine we are able to increase our addressable market by extending our scalable platform to different segments of studying similar to literacy and math.
The Duolingo Studying Expertise
The Duolingo studying expertise sits on the uncommon intersection of enjoyable and self-improvement. Learners love Duolingo as a result of:
•It is enjoyable. Duolingo feels extra like a cell sport than an training product. Our bite-sized classes and gamification options inspire learners to come back again every day to proceed studying.
•It is efficient. Learners persist with Duolingo at first as a result of it’s enjoyable, after which over time additionally as a result of they discover that it really works. Our expert-designed programs assist learners construct strong talking, studying, listening, and writing abilities, and our knowledge analytics energy personalization and superior studying outcomes.
•It is free. Each language course on Duolingo is free to entry. Learners can spend as a lot time studying as they need and full any and each course with out paying. This lowers boundaries to start out studying and to continue to learn.
In a world the place persons are more and more engaged in immersive, bite-sized, mobile-first experiences, we offer such an expertise that additionally leads to studying useful abilities. Certainly, lots of our learners choose to spend time on Duolingo moderately than on social media or cell video games as a result of they will study whereas nonetheless feeling entertained.
