Duolingo (DUOL) 8 Aug 232023 Q2 Earnings call transcript

Good afternoon, and welcome to Duolingo Second Quarter Earnings Webcast. We hope you enjoyed that celebrity compilation which complements the themes we discussed in this quarter's shareholder letter, which was released today after market close.

You can find that letter on our IR website at investor.duolingo.com.

On today's call, we have Luis von Ahn, our Co-Founder and CEO; and Matt Skaruppa, our CFO.

We will begin -- they will begin with some brief remarks before opening the call to questions. note are event in please and being And attendees all listen-only Instructions] that is this recorded, [Operator mode.

material which Just forward-looking a subject performance, statements make uncertainties. to are regarding future reminder events and that risks and we'll financial

statements and forth to believe Some factors a the future as to as SEC. forward-looking be of of on update based today, the risk statements with reasonable in are new been we filings assumptions of these obligation information have These events. risks these have set no our that result of we or

financial Additionally, are we'll all measures present encourage measures considered substitute both on our to our analyzing intended when superior call. GAAP in measures we and GAAP non-GAAP or to from, and a non-GAAP for you These consider be performance. isolation today's not to results,

I'll And over it now Luis. to turn

I'm revenue, welcome, achieved QX, share Debbie, X users, active ever everyone. we you, highest flow, cash million In our pleased Thank quarter. subscribers. another we we and had profitability free to surpassed and monthly record and and that daily

shortly. a also becoming X-year will IPO. raising for you the continued performance, at goals set Matt walk celebrated company, and that top our have outlook our anniversary and through we lofty we of very Thanks outperformed for of line year. time the to just the the ourselves we our guidance I'm our We are proud strong public updated profitability

unique this that film, to I on us, was unhinged, though testament our movie. and our to creates in their request that our an should and efficient, to word-of-mouth tell are which mention times to relentless a us. learners that we a a month, fun like has cultural of delight think about moments, seek And be marketing, this engaging brand out you at the approach I learning. referenced which that, Add the our synonymous the is to organic us for and Barbie in of strong part Our become you We past We brand. didn't more opportunities family saw drives friends get our growth. strength when language on effective. and with results were inbound our focus being making reflection and product who

because the huge This continues financial shareholder broad growth of very come previous Over based we've been market past performance. user growth quarters, have of seen our addressable countries. I've which the the DAU from strong of to language and X and coming nicely, drives growth all users has grow our and strong letters, some The growth, validates not fastest business learners, regions power U.S. been the with wealthier of in world. from that high-quality only discussed European has freemium but of growth model, strong the

attract free to worked app, growing driven primarily improvements word by mouth. them experimenting subscribers. for users convert the them exceptionally of product optimizing subscribers then We we through through playbook and well. has We and This paid delight

been has focus of letter strategy shareholder Last was AI of how a part time. long quarter, the our our on for

intelligence and in advances our for our this throughout and been type embedding technology years have artificial make engaging. the company. We're We more using products also recent product of personalized to the

efficiently AI Duolingo scale for For and our script our example, Stories generative writing up course we're speed content. using to more to

which higher to Max, AI We on generative continue tier innovate to is using offering. Duolingo are a

broadly do major rolling and continue will as pricing out We Max our more all improving it changes. testing with packaging we and features before

help acceleration think us you as tutor. human AI Using it's of as can in about how vision new excellent takes our to well but technologies get make to achieve products teaching the to right, the time exciting

to over it And with turn I'll that, Matt.

expectations for high our MAU Thanks, increasing we Luis. XX.X DAU an of In an and with to with year-over-year, million user the DAU high This to and XX% all-time all-time respectively. MAU growth XX.X respectively. outperformed million, and XX% quarter, second of

total to million. XX% them X.X On our subscribers, by increased paid we

Our revenue increasing and or on year-over-year, strong our performance subscriber growth respectively, top fueled with constant and and currency line user a XX% XX% bookings basis. and XX% XX%

the We continue profit. to quarter, cost we this manage highest business discipline, with our quarterly and delivered

million to totaled Our benefit. quarter. net net benefited of that income a our noncash Note the compared million $XX loss year from $X.X million a ago net $X.X income in tax

posted points. EBITDA spend back this high marketing X.X point from year, XX.X% the adjusted X.X adjusted or this adjusted record half or that EBITDA a a to of of the our $XX.X quarter EBITDA by QX we Note also some and We margin. moved million that increased about

to strong our on total and XX%. our million are in to of full issuing to XXXX, for guidance in margin XX% we $XXX.X results following the year an adjusted raising million and bookings; EBITDA and million million Based QX $XXX.X trends, $XXX.X revenue; $XXX.X

to For EBITDA raising million to to total XX% guidance in bookings, $XXX we range million are we margin XX%. are in our $XXX the updating million XXXX, to adjusted year our and $XXX million full to $XXX revenue,

a and XX% Our revenue full year-over-year at bookings year year-over-year growth guidance growth XX% calls the for midpoint.

free-to-pay our that We because achieved raise significant across EBITDA confidence margin strong we year-over-year adjusted gives continued year call. guidance leverage issued by what top XXX to compared raising full business, guidance us conversion. the to our our our And feel because last basis points user confident on growth operating about of line strong and we've

expenses me QX. operating Let are our compare QX through expected to go how

sales marketing spend we we We as to QX from shifted by and expect percent point. the marketing that I sales increase R&D QX. increase to points to to expect non-GAAP about and of due a revenue X about by mentioned that non-GAAP X And

subscriber be G&A lapping relatively the pricing and impacts. year-over-year year-over-year, our out, change will driven pricing. by FX QX. regional the foreign that At in finish will about of current metric revenue exchange average and expect Non-GAAP that a QX exchange declined by as by stable per regional QX, percentage subscription has X revenue rates, we In X% decline approach and this in to as we year-over-year bottomed impacts

reminder, as half revenue U.S. foreign a Our from rates. assumes our exchange the roughly guidance outside current And of prevailing comes

So the of total every dollar basket currencies, value the headwind $X respectively, a second on for million decrease bookings in or half of tailwind, has about of the X% year. versus increase or our the

As to with subscription. our Luis Max, mentioned, we're excited our are by in we higher AI's help accelerate experimenting us Duolingo generative potential and tier mission, that

Max included yet progress on booking amount not in revenue keep guidance, the have We updated our on from you material we'll and coming quarters. any of our

price. fully approximately we the Finally, with diluted quarter using outstanding quarter million XX.X the shares end ended closing

year about X% end equity from the continue dilution employees. issued to to We with to expect

that, it And Luis. with back I'll turn to

you, helping talented would Matt. amazing quarter. our Thank deliver their to all I'd happy now work would and passion. team take thank results and And These not like record and possible we another your hard us for questions. without be be dedication to of their Duos

to turn it to I'll the manage queue. back Debbie

All right. Thanks, Luis.

As I mentioned can hand a earlier, you the if have question use feature. you raise

first Ryan MacDonald question from comes So of Needham. the

that Thanks Luis, start and on about taking questions with and shareholder to in for my the social quarter. [Indiscernible]. marketing letter. congrats around an talked I commentary you excellent wanted

users great quickly to You've emerged media that usage have given new able of drive job a we always a being channels. social really really and the this some perspective, the And of to I'm channel and done what platform from to based be be I'd an wondering doing curious think sort marketing from additional emissions? to your on there a Thread, can you platform you're those users how in of tailwind that's

Well, thank you, great question.

it. all team Threads, day good launched, was mean, over it. media our social it on engagements So got with quite a of the I We actually yes, number

looking we it. be the into very if becomes network, powerful Threads end, bet we'll social mean So are a in I you there.

or like smaller than think I it's now, YouTube. right significantly things TikTok

I'll is there. this understand social people see seeing us. all be we're say us to impact the too. -- there of this marketing But we're an to organically, experimenting definitely sure. this on paid is hinge I and team. we do will going not for have I it's usually, for all there, in not addition just mean important to media excellent mean we're So for we you What

Excellent. to more about Can't see wait that.

OpenAI product. of hearing the is over vendors some the using on AI are proprietary question which of how maybe see interaction, the build can functionality and leveraging features? integration how continues AI. create into customized then use to you're and their models starting to the you? far and Max costs hear AI from be customers evolving large are so that starting instead curious potentially feedback time? to of Duolingo content, for for it's how, cost if some where having to exceed the nature I'd to But language save built And sort that the a Second of the on some additional on evolve bear of own that just that per and what being We're of models curious you newer

questions. are excellent Yes. These

So first everyone of just Max, to where we are. for all, remind

testing testing future So is you users, of test although small going price, the and a It our really fraction -- see subscription are very roughly over of all price testing this of Super, right tier standard features. Max on the is everything. place development, because the is but higher large are the for we our very We're especially we're Xx offering. Max price very to a us now,

And start of a users, tiny get they fractions as we we better to features better, start what our better. start So users. we making we with do giving our is larger and and the larger fraction it better of and and

was we Max large test home it did it year finally last Max, to one had just when the out took change Roleplay, testing two Answer, was us a roll a we like started called mistake. about long make did it which That users called but which home to One changed it we allowed you from explanation the we that. our For when I new conversation; take, and how getting a other first to know we don't example, the an And the out Max, for is a very to as has past screen, My gives users. was thing practice to screen. something first you like features. large an Explain will -- whenever

on been those making better. working We've two features

croissant. is before, a conversation dry have where more interesting, probably a a it just order whereas Roleplay so now you was maybe to example, For -- it's lot

middle the like something something Now in something where the middle. but burglar happens like, you weird may a a know, don't in weird I happens enters order and croissant

a interesting So conversation. mayhem happens, and it's more much

those improving we're features. So

to reception happy The is how answer. thing, you very some grammar it. hints and I to with give answer I'm about we And or in an give then for just this that added before Basically, did answer the is which is lesson, tap your submit a we feature can you you another thing coach. how Max other some good. you very in-lesson will about it mean, hints

with And happy so far, we're very it.

And and close believe by -- an give our features the but time But what our to so it that to so just users, we close to far, it give optimal have be price we testing will so with. way we we're optimal to good. out to kind of all found

in sticking own of costs and terms we're happy developing using we're of and terms it. our OpenAI, now, -- for In with we're model, very

is this super of could Our belief belief we're cost happy for this of spending yet. features. -- starting And down. features optimize And that out is all cost the we best our just the gotten of that say, what go the because now, the point. models our these on than rather most haven't saving to to there internally is at with on we just we're do there making effort would any Basically on is possible after we going this

and a again the on color congrats strong quarter. for Thanks

Thank you. Thank you, Ryan.

Thanks, Ryan.

Mario Barclays. from at Lu comes question Next

the Great. taking questions. Thanks for

one first on revenue is average The the percent. subscription

it's on mentioned thoughts of portion share And kind Matt, low think a and by other Duolingo's power of to I I year, flattish from synergies be this growth. just on have core end So overall. pricing was seen the as with going we the of thought curious forward laps? to you products consumer the pricing increasing your going

No, Mario, great exactly And question. Yes. you're it's a right.

lot of growth year-end, and the talk you pricing when these to be times the goes And to which on in a then the by we've said your We essentially flattish. what experiment back point, packaging calls, price expect with think I is that ARPU bunch year-over-year world. will a we around it power, about

test Europe, and price So Western when always, normal year I just like the over that There just QX at regional like our includes thing tests or time times about we of raising a But last certain guess, we're tuning we'll normal when the in XXX That's raising to pricing once. will we time. in price, fine countries experiment. in U.S. pricing did places. do prices a tests time bigger be are course from

to and in the it's So definitely consider happen could we're future. going something yes, that, that

a on user had Great. of And said in saw that users Thank one. a you just Whereas the over article it I an be that is users, than high-level that? streak XX% you. And had that then age. maybe your XX streaks guys like from applied of over I to users terms younger guess blog by a XX, less like kind learnings X%. why older Thanks. generation? I could and XX year. of And any the was think

habits. case who have And You them get It's are just children. don't teenage noticed just more I it's that's we to that to older are probably mean, their something. constant people the harder do that. in that have

happy for with results I'll very say, our we I are audience. Now younger mean,

known more committed. younger we that are a we're audiences much among that, can people age. It not than necessarily with in change just if we I don't working per happens are lot more just are general, well so but people. older We know older But always

you in We're make ways. working more just always a see can the of number that engaging. product And to

our and long getting It's And getting better. getting better streaks. now other number quarter. up And better keeps essentially. the it and that every XX% is thing DAU-to-MAU and better better with ratio just of keeps the For people example, keeps better

it's number of just millions. that keeps a streaks So number growing, keeps year, with and the that -- than longer people multiple

the just just generally, product keep So engaging. more making we mean I yes,

Great. you. Thank

The comes William from of Schackart question Blair. next Ralph

exceptional. year, for Thanks top year-over-year delivered performance, Since the on guidance new taking strong X,XXX this Great. increase like you more IPO, very even somewhere the my particularly so on your just but question. bottom basis the points system is range line, was the in of line

I margins run? you forward That's first Just philosophically, follow-up. let the without to how reinvest about willing Are are thinking going you question. it? you products? a quantifying new Will them for have

been Yes. We to Thanks, definitely EBITDA agree. line, has this -- top strong growth, year, bottom, since particular, strong user strong, performance. And in gone adjusted Ralph. we public performance top we've strong and our

monetizing before, more the to getting cash think As And is profitable, robust. I opportunities we're start and in business et we're ahead of the glad we is very are us market. because our base both the always a at we first growth invest want business the more the monetizing mean generative, so about of own that user way we large said it cetera. back

That's we and So that we're I going this why proving to think we're continue nicely grow become to profitable. can more invest. materially year,

So it's a yes and for us.

If about comment thinking around margins your run. letting you're

what in step time. progress be. that's make kind I when line usually at after change, is went real And look our like it's of long-term they EBITDA first of companies kind with roughly targets. you when first year to think in IPO become our steady of our more other that, thinking profitable, profitability, we're they materially If looking time towards we ours a And industry, big then cohort, their over their public,

I on maybe there? to apps opportunity. Maybe thoughts Do or that, kind go TAM you people Luis, think terms in this a dating penetration updated do just you've of the any back And quarters the of just terms like asked have of long-term ago, users before of give of an you sort of Great. companies. couple to the in some and size compare been

mean I Yes. it's question. excellent an

language. learning a our about they spend one, estimate, world for about billion a So in $XX X collectively, as billion a there's learning year. I whole, language this people mean And foreign the best

little the XX% but U.S., a users learning many our countries, not than a for more because Duolingo. it's were in complicated that that's of language answer, example, in So before a standard

So how million it's really know getting mean XXX like hard kind of to. close We're exactly get people we're there. I to getting many we to can MAUs. close

the we market. can than are hard I But much to because growing exactly further it's much think we get that. how just know

Okay. Thanks, Luis. Thanks, Matt.

Thanks, Ralph.

Eric comes question from Sachs. Goldman Sheridan Next of

taking of tent. what on the see come investments Thanks the question. for critical as -- the most back Maybe to some so element in much of you

well. about sort but versus the AI content just not And it creating elements lower frictions earlier, the growth out user and little I of initiatives -- some of how talked can look driving only it from this also could Luis, spend and engagement user Thanks bit of much. a you base. we know of how longer sort term, that building incremental of be AI elements might that sort of of some As year, just as of the away so be monetization

Eric. Excellent. you, Yes. Thank

in number we in to some see, major on for terms of advanced of let's So need content, content are: the of courses. that things more invest content our one, terms

we the mean, for said course the more example, courses our in same same proficiency. course to like all covers of to our So lot learn -- to past, not French our level Italian. I learn cover the a than

basically we of to get So all need teach through high pretty our proficiency. to courses levels

place interested our In because courses So a there know are English in to a we're courses, where opportunity we that's more content. adding there's adding content large we particular, of our learners. English that teach one lot English

English advanced learner, learners, knowledge an In just you some the worldwide, kind English world, of general, if previous usually average Spanish because they have an learner learners. usually in English just than for they're more English, average the take

of So lot of courses. English advanced, kind one adding all chunk. that big more there's to a content we of But courses be to our our are to that's

our with of all Another making characters. our narrative content interesting big kind just more particular of making in is and a chunk it have

time. and and So our of been them for working better adding over on and characters storylines all we've better stories making

we we things those can say, don't That's make and or and And We're do cheaper. Hollywood hard hope writers at not also so it's essentially -- would cheaper. that getting -- creating of we've think I both yet. like very to can working faster of same that. we're there fun, it it AI, the and two are of kind for but generate like stories AI probably initiatives. it yet the help cases, I same of us, there something yet. the quality that with that it's faster quite been quite the there, can are those So is quality. In

-- I that of there. kind we're do do on, that's and that's we think think what help So us Yes, there. much stop can what really working better AI I'll

I think say. I'd what that's

so Great. you Thank much

you, Thank Eric.

Okay.

Okay.

at question comes from Boone Andrew So JMP. next

questions. maybe taking to about my the and go disclosures then about maybe I now of we're How rate And the kind wanted how of significant we do guys for trending? X back year years Thanks kind annual of that's out just Can how you to talk you retention pretty do about models cohorts. think talk that or kind of one X? think X today back IPO updating then. about we talked year about that XX% from

Yes, it's great question. a

in we packaging the combination in is is itself. what on optimize for and think we in which retention the about is a So way not of platform, It's retention. of value, pricing, lifetime end a general which piece an

So subscribers better because has have when retention more shifted you look it's LTV. a blended platform because annual and at we they increased basis LTV That's since have a the on we've platform our lot retention. -- IPO, increased up

We've price retention a new and also a is family have brand SKU. which higher a plan, SKU, higher

LTV. platform shifted also has that So

it when at was When a that went So value. blended the same we've we as basis, overall you public. increased on it's retention, LTV look about platform

as together, least the at Some likely plans, it we went we think the of around. all year. when some moved stable that's be the blend you rest annual have throughout those like to the or And But same plan retentions basically it's public. of of monthly,

retention platform that's how LTV. increasing of as part about we're So thinking

What the then, a advanced of that earlier. much key guys. to you And about size talked up like is are the that of us you market? to more about think that, that? learner the product just how levers do minority, that really $XX there Or open billion? then you so the potential help Thanks majority the for And need that right? Is Luis, market unlock

Yes. This is It a great is huge question. a opportunity.

language total something learning of the just just majority of it is these stuff. learning more people people the beginner And at many look market, you want advanced If do English. than

where a we're at lot thing a the -- on are to working -- from, the from opportunity. our revenue not of comes major half our lot Spanish et this courses. more cetera. So English if learning or majority They're why These English. revenue a people I comes yes, for look our kind weird adding a you roughly comes the just think And our And revenue of from because is example, that's States. it's learning content French, it's United usually

it's language in But market if highly as a you learning towards people learning whole, skewed English speaking look at countries. the non-English

et Asia, cetera, you So in Western countries. non-English-speaking see they're them America, Latin Europe,

kind -- make of are but revenue products digital we how and the product, we're kind make part So flipped, a our of we digital because in because it's like revenue.

English-speaking If to you it's kind look cetera. make similar at Netflix the and of like and where that kind from of Spotify revenue, the et make it us. stuff U.S. countries, or We

our But more there's the make our think huge there, of all market, advanced markets. English is language learning that So a do there's we lot to just to money of need unlocks different reach one need courses we the a have And levels. that. to from we opportunity of because

one We more that's -- But have by that, thing needed. a until few thing itself, not are working revenue unlock months from will on English the that. be learners. that. we is will That's that And only more that's it

at that, we we that's at English need Another in our better that. And to have we come this get convincing, that do. better advanced whenever you. product, to proficiency, need with that learners, more after another especially to just big thing need get content. better That's to get get at better in prior need We then is placing at we needed truthfully need we unlock you to

-- need then countries, to not going get to we're you if of there's of I'm pay reduce price they're makes less I going we not So lot sense GDP after need always a just even more And in because the pay per the sense in to them of a get to if yet time, where in we're that something [indiscernible] lot these just that. these we likelihood many don't have well, some how to have -- point to to the like, around -- do we they're countries, that, to also in that the capita, same pay to.

many And is And them, good the is are like, kind free enough. product our just they freemium. of of well, product

So And we we've a seen few to that. do companies need unlock a better us. job than

has than Spotify better done that. example, For a job us at

think to how So need experiment just on I to do we that.

need of once us. But for So things major a think we the of is number working are happen, all there's which things happen. that it's opportunity market. I a this to the of majority those mean on, we

Thank you.

Arvind at Sandler. Next Piper from a we question Ramnani have

I either Debbie. terms should tracking obviously How I I numbers like higher mean, Thanks, really we the growth what's like certainly, total healthy in of much healthy users. pace. rate -- in better, ask terms of average the about kind is numbers? to kind of like number but wanted it's at daily been externally like this kind of a of a mean think or

I mean …

Luis. first it? at stab want ahead, take the you Go to Do

the of question optimizing we answer. the the I is, the Well, this are mean, people we more to freemium we to things cetera. the more main Because to for. data And good. experiments that's active et better, have generally users just it's active we see mean I you cetera. a look, for run model, more have, thing users daily way it very hard able we the we et be our daily also have, to is payers, more more personalize to convert can

that daily the giving So just have users. when more active we gift on it's keeps

-- grow the our the growth can very better. very going out have accelerating the been that has hard So to the this. That's either very of happy us, in you some it, remaining for we high. accelerating fact quarters that's quarters humans. with row, a or run We're to like X just for many more how point, just at -- say more we user And growth obviously, have forever. It's cannot we're last

number. continue our it what's very I to we've growing, healthy for and end, know, a need me, it's hard but So -- is on -- to just say don't We been.

some I like right? I'm there problems. It lot paid ways of versus users mean, -- were Yes. trying sure make more that. like like there's -- that mean ratio good. in the of it figure just more many Like users any below below terms what's it of in is like going Like is is a level, out aggressive of solves thought I'm money, for a I to like paying of to of gets terms -- particular or number get like you're

the Yes. to lot One a in scale. to XX% then way of nice cash was got growth had And XX%, public, data. us was went user approach we this It was we before of [indiscernible] range. years a And that really healthy.

this teams, growth This and our pre-IPO. on quarter, I obviously, was anyone we're that think Luis to. went happy. But where I healthy Now next and call, don't that's that certainly,

So in future. at a the rate healthy growth be some point, that will

your but for achievable that and should an that over growth Again, or think you we revenue, rate enormous I don't can long-term. think that's in the if level attainable And quarter, profit in amount bookings level. of was subscribers, still next the be produce

kind approach way, feels that's it the So like one not to way or now, healthy. healthy right though. of what's healthy By

a to several on sort of first in Duolingo Is sort terms there Yes, you've And you can commentary product. you us given the tangible provide applications kind it? next where you of -- apply do of the AO terms in do in for product you're tangible to think like able X where where of to like months look like Max course. AI, then AI, and of on to anything of charge us of XX is just

we're I where sell content things terms our creation to users, Duolingo for charging of to for we've be do efforts on majority going to But be AI I in going places been Max. the are to doing going company, and to making terms we're There of most we're company a content other are mean, Max. to mean, going inside applying of the be our things faster, on of that -- that. within We're the effort lot what of Duolingo our think example, the in cheaper. I is we're we're making

way, thought earnings to But the on out one. all the earnings great the you don't you dated By Terrific. yourself. Yes. top DO can call was good, bringing the but start last that know call. I I next out if

can you top see Let's if earnings. next

Arvind. Thanks,

I should these doing They celebrities pay us. all do deliveries. say not use We that. of for

Arvind. Thanks,

question Evercore. Next Mahaney comes at Mark from

in incremental past? seen from long-term dependable Matt, MAUs, where in X had I X or you've less for than you've XX% more or for the that from? were growth comes give first really of Debbie. surge Thanks, which do color are strong to seen are terms you is, margins above dependable kind question MAUs in what these in EBITDA is recent X you that to second And most the MAUs for that anything reason Any in unusual XX% markets think want your any as growth coming or us to Okay. margins. there's of whether this quarter in Matt, to the finance actually your X the Louis.

to go investments reconsider you I point XX to go year. positive you to more where kind know. So you next through more into and may of you into -- want that into of Or investments want At your you're months? over-earning what don't like XX to we term, can the the lean want long-term? near as be leaning do feel is the back margins it may changes pretty you seems half just

Thanks, questions Mark. Great always. as

user say the growth, things. In terms I'll three of

or kind So first top-of-the-funnel user growth. a great that and great we saw user growth of user one retention the is active current and

for growth the across and past So strong saw we funnel it's have several the really quarters. really

The been broad is it second that based has thing geographically.

fast at it is the Or lopsided? There's of is around are average things all still in Western things is, we Obviously, one the look the So plenty around going like very are and average? But meaning growing some well. it it's the that really, fast, some growing faster, basically is move. slower. Europe is that growing going Asia well. really then as broad-based, U.S. is

based. broad So

seen we've free-to-pay in cohorts of free-to-pay well. great at And then how And we the conversion last on thing trends as are look strong is terms these conversion.

So broad-based. is impressive, we and and it's but the fast user grow feel only high-quality not

So to good about it we forward as about really well. feel performance good on feel date, then and we the that

the framed the in incremental you margin. I'm right is terms about And your to the question, of second one On glad margin it it. long-term think

same updated that But strategy we EBITDA have get very was What incremental a long-term to We model, that I to this slightly view model. another that profit again, question. It's to We margins. and above in I'll the year level in go I long-term we is it's our XX% profitable capital on this think shown there's our this adjusted quarter. power think, so when that still can the just margin. allocation back of not went mentioned public, to as XX% we've it answer

at this the foremost, be and business. of early business. we're First growing large stages a very It can

not should long-term long-term And But margins. read getting business so invest the profitability that talked to we're redefining that. the as about going quarter the us into maintaining that you this towards on also while to continue into threshold we

And then Luis, questions. two Okay. quick

on Just subject. favorite any math update my

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Yes.

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Matt. Thanks, Luis. Thanks,

Thank you, Mark.

Patterson a question KeyBanc. Thanks, of Mark. from And now Justin have we

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side, generations younger On shorter got perhaps the span. you've attention one

to spend the hand, On have limited got on also other consumers you've older who app. the time

you price to making that finding have a [indiscernible] that on propensity right and that to point Andrew to So to the congruent told to the [indiscernible] at if something being you. education that at look pay international with we this succeed really really tier, markets those Luis can Max of position also Thank lower points, of platform. you pain some premium it like kind Duolingo how unlock global

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right. All Thank you.

of it looks like a Morrissey Research. Zach we question Wolfe from have And

Great. Thanks, Debbie.

update of kind spend out you LatAm Asia in Just quarter working called an curious and last influencer in on terms well. paid of

for see core that if you kind seeing of an to as there. strategy of your kind to curious update And well, an Just Western returns. opportunity good translate of kind markets of you're kind also if

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not have don't I if that, we cracked we know ever and So will.

stuff like markets Owl is our more YouTube and on For that stuff U.S., like doing just Shorts marketing unhinged -- and our that, now, really the has in on TikTok well. worked or much

just And gen then Got it. right. That one on makes sense. AI,

you purchase Max. down products layer think talked Max opportunity of is a time? you over focus AI? something you for an now right from product kind of maybe primary can the kind of kind is a in-app Or roadmap premium here for the see driving that Do I gen healthy and road purchases in on in about just that

historically, where everything we or into for the kind And It's higher really But in-app there's so subscription. some in. like subscription putting for nailed do. is the these carte opportunity latter. the power effort we will now, once tier something for we've selling we some going of start may may Max like, of effort our a what mean That's point, definitely start our are almost just an I -- purchases is at be just good. we features we having la that. But or ups business

Makes sense. you. Thank Great.

right. Zach. Thanks, All

other showing further any not I'm questions. So

it to back So to wrap up. I'll turn Luis

like everyone look joining just we to speaking us, forward you to I'd thank in Debbie. for you, Thank to and November.

great have watch Barbie we're movie, If you the it, there. haven't evening. watched a And