Duolingo (DUOL) 8 May 242024 Q1 Earnings call transcript

Good evening, everyone, and welcome to Duolingo's First Quarter 2024 Earnings Webcast.

Just a fun fact before we get started, that catchy song, Spanish Or Vanish, has already 1 million listens on Spotify, if you can believe it.

Today, after market close, we released this -- this quarter's shareholder letter, a copy of which you can find on our IR website at investors.duolingo.com. On today's call, we have Luis von Ahn, our Co-Founder and CEO; and Matt Skaruppa, our CFO.

They'll begin with some brief remarks before opening the call to questions. Instructions]. [Operator this recorded that [Operator is event note and being Instructions]. Please

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

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

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

I over with to will And it Luis. turn that,

We've Debbie, another with quarter. strong you, welcome, Thank and XXXX on a note started stellar everyone.

These record our In respectively, grew DAUs QX, bookings and XX% year-over-year. we show revenue grew delivered and profitability flywheel by is. results how XX%, and XX% product-driven powerful

product excellent data growth, ultimately which product, the and of fuels higher mouth provides engagement improve continuously conversion. driving to subscriber in turn Word Our

Our three-pronged converting be to and winning growing approach better, to us. continues teaching strategy for users a subscribers them of

made we XX more it. rolled to our the results our -- have of we've Max of XX% including today, to on our efforts our about Max Max. Duolingo year, to DAUs on and on our out tier progress experiments that, in of subscription focused based our optimizing This monetization are offerings, X% April. third plan good Because family broadly date. And roughly We the feel access

and We're invite improving it plan by our also few the the more make next in available features. courses We streamlining social to having family experience more and engaging flow countries will months.

other our these current on initiatives alongside year progress confidence raise guidance. full initiatives, to trends us give on the our monetization Our

and long-term will the Finally, foundation initiative growth. our English monetization for user lay learner

a are learners bookings this represent of next global of couple expand the of years. which than majority half DAUs, vast learning opportunity and language our the grow less see learners into English, the users over Although substantial we to English to why market of part is

product opportunity next momentum of This growth in see us. year, learning core can With along ahead the the X% are of language started. massive with less continued you our $XXX market, reach estimated just getting is highlights by billion than area, that we the to which

our that against Our execution strategy sustain are for can rapid continued we we growth come. why confident years to is

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

provide you QX color I'll additional for before year. our some on results guidance updating the Luis. of Thanks, on remainder our the

our shared, of very performance Luis we saw strength of XX% margin, with XX% growth showing and EBITDA a the bookings QX continued a strong record As growth, adjusted XX% a combination revenue business.

and compounding to to our This beat the The drive marketing. QX guidance. first gives We experiments social thanks growth organic our confidence is the what impacts bookings strategy to conversion. the and us our increasing revenue of and growth our business strength raise in continued XXXX subscriber monetization guidance, and continues

XX% we strong incredibly we growth At midpoint, lap even comes and revenue XXXX. the to are growth as an I'd and bookings this respectively. that of note guiding XX%,

rates last year. we bookings QX as to QX, revenue despite strong unseasonably similar and comping For guiding growth full are an the year

from QX we QX and step As rates last on the expect QX. down growth mentioned to call, we

rate bookings rate X constant that X were about -- currency full point foreign higher. be would higher, and year growth QX growth our rates year-over-year, about be We bookings Note points our would

We are our at also XX.X% the to raising guidance margin adjusted EBITDA midpoint.

achieve operating leverage across guidance we expect categories adjusted year expense EBITDA this full Our all the to updated reflects year.

from varies bit and expense our typically bookings seasonality. quarter-to-quarter, given profitability a Our

QX than call, all the we last be across normal by and to to lower sales we are deleverage and to R&D midpoint. some the And course hiring and spend G&A. guiding as said driven expect QX, and Specifically, marketing see in QX increases in to we and categories, on -- expect XX.X% increased margin in

We lower than hiring our be because to and for be QX sales adjusted QX shifted And marketing into largest QX QX. margin because EBITDA will typically spend quarter. expect that some we've and it's similar quarter will

of year, slightly adjusted incremental to I XX%, above -- EBITDA is our margin we an for the long-term which margin of target full guiding XX%. EBITDA adjusted are

with the dilution which We year quarter we had million end outstanding the -- issued XXXX. to to in similar using X% in end is we with price. expect approximately ended fully equity quarter net from diluted XXXX, XX Finally, close employees the about we the shares And to dilution

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

Thanks, whom by to that saying quarter's our mission to testament Matt. close results the to are more I us our both of help and this of our dedication support the team learners. want subscribers, a expand to of

will thank who past member, stepping to to to a a on made Sturdy, been huge of the supporter priorities. you has like for long-serving I'd Duolingo and date. in was extend instrumental focus we've Finally, Laela progress a be Laela other tremendous decade back to board the

the you, we And turn queue. now your Laela. I'll would thank it back Debbie be take to So to to happy questions. manage

Thanks, of comes Louis. Instructions] Blair. Schackart question from Ralph William right. [Operator All first Your

throughout In letter, could. optimizing subscription Two you tiers about year. questions, the if the talked I

think maybe this could, about talked there? give -- you just if an update on you're what previously, I finding you've please, that,

through just I you're And you impact it follow-up. And any don't then we impacting ARPU, some manage a ARPU I year? but as know may guessing relate to the have doing testing. sort then of progress I'm the as

Thank you question. the for Ralph. you, Thank

had we was generative terms subscription models with with that About language experimenting Duolingo. where and year we've we tiers, ago, which the the coincided Max, of started the AI Super X a coming tiers, large idea this third in and Duolingo free a tier, historically, So out. tier call

while. wanted the start is tier, of we to to we use excuse which a as features good third decided something a So for do the AI kind to

Duolingo which a AI had started of features, which couple we mainly experimenting Max, are features. conversational So with

And And from just going this wider rollout. pretty a to about because mean, as I seeing what a to have results. happened. with to was a generally, -- wider it that we a there's We take that tier. rollout desire started is we're we're happy year said, get us users users the to higher

What people you'll in see French first to only the Max Max quarters few languages. and and Duolingo other Right now, next is, Spanish are of us on do it accessible learning X over out to who is countries. roll iOS other all, countries

get DAUs. and higher a languages to of more and We countries in more expect to fraction on put to many many Android which it will learn, it

reason that where to the shifting to see the see see is do you'll there's thing AI us other us And is just The be start features. package no real what you'll packaging. highest features for best around

So a we're put lose doing experiment We're heart mistake. for a hearts -- experiments, unlimited to you time put you example, running in make to hearts, which every unlimited had our Max.

tiers. by of try we'll be end have that to of So the see to features. Max That's as probably set kind done what of many pretty to time, there move -- year, towards the happen what the will a you'll be that to And our as subscribers doing work of for is we're then possible. at

question. the I'll let answer Matt ARPU

Yes.

a trend upside of towards happened if basically if that family ARPU mix in nothing you the about it. flat a Max, back plan that with else general trending there's have we've year-over-year add you higher talked or could side, ARPU some growth On see either before our to

so the in we think model. about that's And how it, Ralph,

Right.

for maybe Luis. more, X Just

big strategic it's of a terms obviously, it's English how update quick focus. product, advanced in Just a just Maybe progressing.

right for this of if if But the maybe us overall get business? of product, maybe how more be could adopt like importantly, this this consumers impactful the a really or you sense give sort

for Thank English about, . excited you question. asking our we're it's great something because learner opportunity. Yes, very

of people are people global market, Duolingo, into you of to Just overwhelming of And in at English. the learning overwhelming learning are the are learning learning look English. put is things if who language the language majority who a majority spend the context, outside

to terms XX% learners. when underrepresented we're more English of learning With in in English. than are Less our for Duolingo, and we're underrepresented revenue it users, example, of comes even DAUs,

So particular, a better. investing teaching and teaching everyone, we we're for remind doing pretty a in this is base course for see in to different that English opportunity, English have we thing this major just as And languages. the English, why we're different

course et an example, Chinese And a course English different we than cetera. the for speakers, have for speakers. Spanish So that's courses for English

we So English have about courses. XX

of particular, And ago very in look is now you to proficiency, each got company last years, to XX so, years got What of achievements and these over to it a the English and proficiency. so XX levels them that is major our different high this of of English none done X have the we get one our high courses, they courses, if proficiency. you due couple of or we've made of you pretty courses this X of

So to in the than levels we more languages. first usually because get English that's people thing English to more particular, advanced is levels at do are other advanced a needed learners

So get weeks. higher content first thing is few proficiencies. now the as to there The we to needed people is of last

So kind checkmark one. that's of good. That's

that people we're working thing right into spot is getting placing -- on course. in The the next the

languages, important in way have is that because Duolingo people for need come English, come than Swedish the them of in who not advanced most we learning to users prior with new content. we to put English that with complete other This more or is other place Now that right language beginners. have more proficiency, as When in are the them whatever course.

some English. most out know turns just in who It learners. of the amount just world English people

they some in pretty third by that with they or come come -- they fifth with prior they or listen But some watching this to songs. have grade it's the because English just it may movies learned in is So prior to proficiency. patchy took proficiency

So pretty know what is English they patchy. in

them in in So place that's right making good the course on, we're problem working and putting But what of the tricky. headway. we're is the

do And I a that these advance which known we're going seeing so have good place to to English happens, courses Once of able contribution we are some is meaningful will now. than English. intermediate we're as this start Duolingo going happen year, they think to to start now marketing that, that learn to when more throughout

pretty this but this exactly, hard think terms opportunity is of how to say is, it's large be we In going to meaningful. that

main this the in this -- a -- be reasons of is span midterm kind one why this we see So and going strong there's next contributor. X-ish years, the is think of of we the to is that

right. All

Justin from comes of question KeyBanc. Next Patterson

tease engagement. driving Great. have in the what of you terms popular been Family can more tell, pretty Luis, letter class, From there. Plan daily we in optimizations in having friend family class

to Plan could optimizations these What do love of more about some the Family I'd thinking how that around you're forward? hear business? So for about just going

the question, Family Plan higher often characteristics, of ARPU part And much then, financial we've found companies, Matt, better retention for pretty the for is much that elastic. price

going So about KPIs do see Family how think more to improving ratio see value, price that really value as forward? you around Plan, you

I'll So with start the future.

Plan anything, Family Plan as something soon they team The Family built as X an There by that the they Family And called was was So a move we to teams. monetization is build Family Plan it, Plan. plans else. feature. was to interesting our doing of no or just built a built

of they So bones It itself just bare plan. it it was kind by . And family there. organically. started left growing pretty

higher buy just a any you of Plan, And much than love long plan. keep to has Family if So our still it, other people using get of users plants multiple we lot you're a from to course, we that Family family it desire what Plan, that there's because them as as your a retention in found on it is the Plan. has that about Family of

for plan. We any XX% it's So And improving great saw on the Plan effort a about subscribers our without us. that's real get really really of Family been to are now. it spending

the couple So by that started of things months They beginning. team a just should work -- just we fixed about really Plan. been X a some were started number They've a done new to months that's ago, fixing out ago the from basically Family on improving have or things. of

couldn't Even much, though Family it kids' if XX see the was it This For in the was no have some Plan, Family the example, grew your that under names. it that you kids adults Plan grew just sense. the case. -- made case

have fixed that. we So

is family. find so it it making to are easier We your that

we're So on that. working

basically We whole to compete. are like family collaborate features, wait social adding for lot a or the more

going know, we're pricing? of that So the increase with few over that an our we think the the in subscriptions quarters, have next our Matt, Plan. you more Family to I see if that about fraction don't

Yes.

just I'll value, great question. to it's Justin, it price I the a us on take out. And broaden On think to

Max. now have even to Family to more And a super we're on So value and subscription value Plan. added with we ton working of adding our

And hear if to do, with pricing, enough general you I find think they're willing pay of we're value we've experimenting us subscriptions. what consumers see their about trying to to for that's that's us more to why when talk ways in that part is added just

I historically people. feature, think in has Luis value adding Plan, that which value was mentioned particular, plan on adding defining just a addition to Family what more had X is

so And I add the Family price continue experiment as will we of value, to the we more think Plan. price with

X to get nudge out do lesson. value a a because of daughters it And more already me consistently I know lot they that my can

of the squint So and experimenting for course, it's pricing plan. biased, see of value not improving because us hard me. are to we already the definitely I'm

stuff. Good

JPMorgan. of Bryan Next Smilek question comes from

about on I as in to terms is target sub graders much tier going ultimate continue Game? roll Super and this guess just start out to just Could contribution revenue And Free mix, forward? you you incremental of from and I how talk the cross Max. versus mix the guess

vision. to We're still option can of term, Yes. talk now is Luis who maybe I we've to mean, rolled Bryan, yet. the to we In more know see XX% answer -- the don't it short the users it. the have about longer-term can about X% out

it, And traction. about so we're we're a excited lot of and seeing

And don't in with of the XX% rollout in seeing to just pay fact we now. XXXX, in yet. evidence will be higher guide, of are our of We're it. for price a the only commensurate Max people a substantially certainly, impact bunch that know mix, it's but -- is to willing it's that ultimate But terms a X% the

relatively XXXX So guide. the it's in modest

So of Luis, I you broader don't to maybe talk at know, if a kind level. want

the in on what to hard is depend in because say plan. it features part to be be we which where It's mix are to Yes. going will settle what ultimate going

to settled be features hard in to say which now, it's plan. I So that. have right mean very on going experimenting not because we're still which we are

So I question to say. -- the answer at the to I you very to quarters. in more the next think probably But we're going have this -- few say moment, know to it's hard

Great. we've That's much just that base? social about helpful. then growth? thinking just campaigns, about growth, seen how some talk marketing as just going you And scale very strong any super guess forward can And and on quarter, you media user to given in marketing you're continue how I just to given MAU contributes the

great It's a question. Yes.

so is So Generally, growing improving there fast. are over just we've and improvements why X The product compound. years, bigger last product several reason those that big the reasons been we're our

people better kind happens. for it's And also when things better, because X tell product and product of is People of word the friends organically, it's a their stick mouth longer. around

user user retention retention not but So -- retention. payer better because it has in just general,

just This job being social and done of stuff getting our we're the and that able I marketing has brand particular, replicate the there. in brand all that over is really also world. So shorts our with a all out TikTok and say the would media Instagram with marketing majority, is to our YouTube but really good

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Mahaney at sitting who's for from in question Li, Jian comes Mark Next Evercore.

Yes.

just Like well, versus different stage share versus early then you the know as super and of First, Max. that follow-up but on annual? is can anything on quick your uptake current family monthly Max from probably mix? the I it's a Max

update year? and and math rest Family of music So relevant, after. be into math, on for learnings definitely you're Plan, the road then any Because I'll also leaning And -- map product the can I the would right? and imagine have follow-up a for

Matt, do you and question math? about want music to next I'll take the then talk and

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So the to Luis yet, except know know quarters. I said, on don't next how you guide of to say that that just we'll like exactly over more couple

I going price And be with the it interacts math again, -- time? go it's things music is to how think Plan, vary Family like going and based features what on where, over what it's to the and

Yes. what year. is the on are courses as Android available to music, months Duolingo again, on and we've music added app. done we for going come And math main They're Currently, this math iOS. of only context, they in a through and terms ago, few

So road part map. that's the of

you're Spanish. German currently, Also -- either the or are if is courses the your language French. phone only available of English,

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them with and just a standard to finding people see of opposed bills bit. those operations, stuff like that, quite quite like and math We're people seeing dollar thermometers kind a bit. as which you'll that like the So

things There's year, to be this for music. That's on working for a a but this music, be like, not over do may you big probably see well, instrument thing that integration. going we're us time,

and we're of math general, the in But happy music. very growth with

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Great. And math another right. I'm just hope guidance. question bookings then on doing the this I

I think potentially last points QX. from quarter, you about X bookings guys talked decel

think I just that. the guidance little is bit a of short

So you anything would call ? that out

we're in strength I subscription seeing that business. think the the

So we was was grew expected. than year-over-year strong. which -- XX% grew subscriptions XX% subscription very faster bookings QX, in It

subscriptions the year That's guide to so subscriptions, to the the In is is of why story. And up. going is full continuing QX, again be majority grow.

have subscription So, the how rest that's we just of the so as performed and expect what year. strength how far shaken the growth for seen has year rates we've out this

Great.

from comes question Ryan Needham. MacDonald Next of

think then be? maybe and Can give for -- incremental investments also us to you of those within magnitude sense of the English make content, As Duolingo English you we need capabilities what of forward. to the might about market investments learning moving a the

and to amongst of going in be terms get And start what to frame [indiscernible]? maybe additional gaining content time share out of able then sort those and that to to obviously, then the marketing take it's

Great question.

that the of For point, at we'll the continue and on is iterating content it. content good is But the there. content improving -- out English, the this news

content. done doing are the we So

really we we content the able generate models of because this. generative is part And what large use that I this first is AI. about language mean was large to it of for were batch in big amazing

have a doing generate and we which cheaper in handmade. it lot been was lot a than So to the past, mostly was quicker what

are much been Now anymore. we've AI. humans this involved, They're is not to not still because the say involvement using is that involved generative but less

changes allowed to AI us is do to everything. -- allowing does, lot awesome with is just us for things that The it faster. other And this still it calculus a it's generative the that -- do what about thing it

years There calculation take how would -- X that's And were would would back to ago, to content. that it pitched that projects do the X say you'll pretty content, and -- the would us mill was just let's the see was if they years not it of make going X I or because to want this of me to project to long to years I be that. clear were ago that and make it I spend do take with I X don't on years going English. the

call made can same X months. in, content it, That be now

sure, So in make X it's redo yes, we more, now I'm X the months, at up, it the if months. of like, screwed something end realized okay, in go for even again and just months project. the And we X content even we we can the

what it's allowing just to be content lot more a us on. to projects on So projects -- -- do aggressive we work

of I concerned should terms terms think in spend the too this that So is content. the be you spend, about of something of don't in

the marketing, marketing to -- or anything. of we've is something going a example, this, a in else we're company, been as company never because for performance use that that not heavily that terms And this

spend lot way probably Duolingo social see learn is us effective convince is the on a a to strong Probably do a to you'll So our to app, media what very that convince lot more is you're and see on going English. Duolingo English of advanced this. not do of to marketing free million inside an learners $XXX us people campaign which in-product

TikTok sense. then just Makes we around maybe a to media being developments ban Obviously, bills and channels. potential passed. continue color. helpful social and All That's right. of And see speaking

off? on other spends some U.S.? then maybe the need in campaigns to what those on to remind Just you need maybe sort TikTok? effectiveness like migrate to if relative And to now process of us what's arises and the continue the channels of marketing diversify, of can sort you what's TikTok of sort percentage And of relative

Yes. Great Ryan. question,

okay. So

here. of number a are there to things say So,

TikTok are organic. views our First all, of

That's stuff. -- we it's So just that. pay for organic don't

decided very we idea was year -- mean that a TikTok. while The realized a to to got but prominent we've us good wasn't that we diversify. was a than ago good was realized TikTok it we that This great, it for on a diversify away -- from more what and I ago.

done number a So of we've things.

good we've shorts Instagram is are to one, The pretty Instagram YouTube in that shorts. and news that reels TikTok. For invested products and YouTube are similar

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So that's good for us.

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to our TikTok particular use were sense in are may banned, which happen. take not U.S. it's because a the if to type very about of it's a going -- happen, coming users And to minority large diversified TikTok a it's fraction our of year for already, if happen, that from were we've views So that a that probably is that

to view And we're other in then is happened is to from people or India, move strong. what that YouTube, probably TikTok of in-house -- basically the pretty happened where already basically, Instagram kind what

not the U.S. about potential So overall, in ban we're a TikTok concerned particularly

of Securities. JMP comes question from Next Andrew Boone

to do you But are to the ] and more to your would more limited DAU rest ask new where users? growth close users of MAU this deceleration in ability generate think how of and theoretical the wanted to [ a we question. may I guys about occur and be be

a a decelerated every -- it, a This quarters little we et accelerating, saying kept bit all was XX.X%, DAUs almost up -- accelerating the Great like DAU was way forever. was so forever. it like it way happen growth. accelerating of to this It XX%, then growth see mean DAU tiny it bit. bit. went was yes, like was we The XX%. we can of can happen And cetera. had XX quarter well, little growth And I question. decelerated . And kind then but like DAU it XX%,

XX%. growth. at of we of We're than sort -- which we -- looking have DAU -- is This had beginning the XX% the time, XX% already higher QX,

a So we that. think it's little go going than to higher

XX% little we mean, going Kind fluke it quarters XX thing, a -- more, we're some in growth. up is of a a we the were way quarters DAU was the kind quarters at creeping I see It little are that less. around for of like some row.

we a what we think see to for our it that, while. continue that's growth. But around to XX% And a It's way exactly we pretty hard means DAU we're going is good while growth. say the about DAU feel

So yes.

conversion. want just it's the just for as anything is guys call about seeing second, that my about the then what and that else quarter to that's Or And that kind up we're out ticked -- you ask yearly you XX coming of lag, for conversion? there there think we metric? to I healthy. Can looks about talk of wanted subscriber now this very through, It strength cohort and that

Yes. bit, of the then out it. and talk of a products can about Luis I'll little take some

look subscriber the that's question we Andrew, that's and the when earlier bookings what around numbers, at But a saw, I mentioned we to what growth.

across every improved cohort conversion Cohort from has XXXX.

conversion on free-to-pay continuing those we ongoing And good feel and of subscriber cohorts. about really the so the conversion

growth of feel we bookings So pretty that's sub the about the led -- good And why for bookings the side. to to QX. what sub it's XX% booking led guide the in rest on

So, product? to wanted Luis, anything mention about if you the

more for subscribe working. mean, the just appealing subscription and I making generally, people to keep Well, tiers it's we

more to So people it's more subscribe. Yes. getting and

Next Sheridan Sachs. question Goldman comes Eric of from

and QX than sort demonstrate continued margins of step just cause margin both you versus continue the the through what end X could to and X more the of talking the full be for you a take and a you in you guide put bit now back of margin set drivers of level year, Obviously, I Matt. lower back the . level between about some way for that outperform from outperformance we the the up you or incremental the forward. investments upside node. little year. to quarter margins And Obviously, in QX. make QX of go maybe have that more about just the you're end would in year the as the of want year to remainder the the if . Talk a step to were

And our normal it's . The course. expenses is actually you margin, twofold. why was I higher would No, QX given XX% we question. shifted One that was great Yes. in a a long-term reason happened QX. the that by some a in It's lot. understand of we incremental the ask printed it, of out just than margin which

up relative is QX which Some why of QX, it. about That was went that to expense into mentioned our marketing half previous in I goes of guidance. sales and

The finalizing projects, about Max other about the That was we half X content, margin. million expected. EBITDA more million, some we of additional than of U.S. $X points $X.X adjusted capitalized was so some learning we so and incremental were

if couple. year point take even of incremental invest step into course account, the X ton things So very we detailed the those But and in the things to throughout and overperformance from is back this then half about that of you that get you a for want we broader margin. QX answer, next to of have

on on as business going math that. well. Luis our is going to on English focus We're a going and subscription focus that to We're music. learning, to mentioned focus So priority. We're core

to year. to this what and to that And of and rest the huge where attack why incremental the prudent XX% that's think see think guiding stays to do such the I than closer we're to we we continue have to margin that, so that's thing XX%, opportunity we'll that is that's invest

Chris Next UBS. comes from at question .

restricted be the a kind the to right of Max rolling just simply tier. you give of where Maybe Are as about of can the AI, cost markets that too And it's scale Max there just going now, out tier. for Gen we of kind out maybe rolling to as just what that sense any back think us is?

are low a not of there Yes. lot cost. like markets have India, plan usually current not where out we markets the of to are These roll monetizing we It's where users lot given markets. a do it payers. very but

it's because able that fine. Western out markets roll that world, the call it, pretty that Generally, we Japan, in expect the will Europe, be well, Korea, Max to monetize English-speaking

that go the of we that large down. said, cost expect models AI, generative cost language of will Now the

my to is the countries. able of over higher time, the us you'll kind be for now, year, see probably hope. probably in So rest GDP everywhere. intent our roll But out we'll of That's for

just curious guys helpful. LTV thinking about to for Max. CAC very Okay. you And that of That's how about kind are

it super I plans, how just various of Max? earlier, think plan but the a touched core that you on versus we subscription does family compare it think kind little the about bit across as

forward. Is XQ? also a kind XX% the just right to of on thinking quick be growth Matt, then mentioned you question. had thinking of that going And follow-up about kind framework about DAU another

Yes. Yes.

focus of So the because side, on the LTV organic we LTV on mainly we mouth, primarily of equation. comes from side acquisition most of -- word our that

higher And Plan that Family the Plan price so, the has Super higher now it's has a LTV a higher basically right than it because retention. and

what end settling feature higher up now variables could what depending at of goes but set price a and we into there. on have a bunch right Max mainly in it, go that

if AI remain the medium be term or had to of Right features LTV the will on to is higher we come Gen expected the higher now, pricing Max the to refine both over as paper that it, be So the cost of then down. seen. and I

So have but see. to we'll

We time. experiment second remind then have you of me? -- was the question? And with Can part over what the to that your

Yes.

hadn't XQ of that XX%. on right about you commented DAUs, Just kind Is the XQ? for framework the

Yes.

about up, the that of to of mid-XXs. quarters. And that I think mid-XXs Luis' mid-XXs, course . quarters. over we up then over from was it accelerated the several ton to fact not around percent from comment ticked a the kind XX the up XX-some-odd

in right now, good range in feeling that -- a for so the while. about being we're And very

a said, of him, and it's I'll Luis XXXX. how hard say long to is, from steal for we feel while definitely most for for QX and As but good

Next question . Sklar Raymond James. comes of from Alex

the been successful you move in to are you're Great. and looking which on and But broadly, retention newer LTV development that to Plans, hit sticking of that's at further maybe still Maybe some Family of metrics? most tests just biggest seems kind that LTV on. the kind just on of like retention, LTVs topic What the date. after needle

feature. a it -- Plan, Family just bones good, but tests it improvements And was bare of of Probably in terms Plan. a continuing kind was very it's Family of in

that, Plan, be LTV. that expect there will which will we increase shift So should to have -- a Family higher

Matt feature win able that higher big very will is having LTV. Max actually it's Max is our so now. we but other And hopefully, that of hard a tests like it's set But find where of that goes big LTV, a hard is right then are the that we're working up and kind in group to guarantee Max, on, said, be to expectation each but end say, we'll to that's -- what of

we paid. that free Yes. the of I go and would users product convert our have plenty subscription to just And of is Alex, very annual good, emphasize to LTV

there's I our So a amount LTV of users still free go as to get think in well. big

don't of just is that's But to more near that. our to this Plan LTV. I want super the is course be those core even converting to great. Max normal And year Family So ton of to The skip a over term. more of in going the great. produces strategy users

And it. on point super very MAU-based, context. game. a go helpful DAU Got big fair still That's it's base the

maybe you. this for one is Matt,

from of there's tracking past. in you're the been scenes a about up talked You've kind the curious if picking that health in I'm on macro subscribers of terms just paid in now? numbers anything the standpoint, right consumer at-risk

Yes.

base doing, others anything. We with our to subscriber metric consistent see and track a We is how haven't of it seen XXXX. that pretty looks and bunch

so couldn't year. that anything that, this far we say to develop, but not seen So haven't

Okay.

up, Ross Next we've Sandler got . Barclays. from

Awesome.

around or I moving guess conversion we converting that DAU as So the But XX% TTM that so back go to comment. rate payers, I to bit. already a DAU is MAU appreciate answered, was

guess, variation or changes explains I as language you between doing fluctuate we're is? -- seeing that have with So ratio of like the it product what there corridor payer that kind geo guys to are

subs metric what around? Are on? per you metric Or looking moving you're in saying are at you MAU? the keying what's Ross,

Yes.

it's going but answered quarter, a ask why of decoupling your of in to little I then kind the to to kind June all, XX% happening is that it, bit. DAU is bookings decel, So was I well, and in reaccelerate first in guide think the going of the you the but quarter, March

that types these that variations, all. with product? Or of with you understand? would the else the is something of to be key Is That's these guys So it need of kind the that corridors are stuff doing question. that we

no, giving No, And appreciate appreciate it. us a chance to I clarify. you I

QX for expecting be I exactly to think saying XX%. that So Luis was at QX, don't was

April feel and were than range faster good I saying XX% about you we think being in so the the was there.

I XX%, that just normal the a was think that have story don't lever a course on that. from there, growth organic around point it's going -- to be don't that variation it's great meant be minus. to or It's plus you comes operated

can't XX.X% just It's you be XX%, you into that it's going range. in XX%, dial if it, So So it's varying. to wanted right? the

payer the what bookings, would that QX I side us. On typically slower a say is for and is the quarter

throughout that of the can the onetime things You interesting the that nothing that year. it see do that because seasonality. any we all in in have doesn't There's

course which goes of just the is back school, it's of So a in got which with kind been it X quarter, the have New that have has is QX doesn't and kind QX. historically Year's QX, QX just normal doesn't to flow. promo,

anything I a seeing necessarily normal of doing with It's course So just stuff. that product think the don't driving bunch of we're volatility. you're kind

Arvind Ramnani at Sandler. next Okay. comes question from And Piper

Yes.

road. the on I'm Sorry,

kind to market a price higher like like any a indicated India a of So tolerance -- paid sorry -- that that advertising. subscription I really I make are markets market. mean, if or kind right? . And about they of background will want pay those tolerance a interesting Like, maybe basis? point you But ask from the to is have a kind of a for don't of subscription that's kind high business, have there for your different them an noise.

I get to DAUs when mean very We India, up. in significantly that we a subscription lot great. it's Yes. conversion conversion, are it's interesting. to go that's and in do payer other mean is payer based, which companies lower to see very I India talk we've hard grown expected India is

sense my lower. is okay have is is continue with this But We -- India people terms price doing market the things subscription digital being in sense And that -- a India. a of to that mature needs with bit. going little is the is just we're of just this in my to subscriptions.

in short is this trying it and like we're we going rather in So because but the opportunity, India our to with the the see way great in like midterm purchases term stuff a is more than things that. continue

if subscribers. the businesses, you it's at other to hard for subscription, Spotify -- subscription it's like India, digital even users companies But is just get or become look to

you'll I But if And see an kind over increase. over X time. look of think changing I it's the you it think at that years, next probably

but is is cheap. of disclose also don't cohorts? once or terrific. this -- a Yes, know cohorts, way, your like come it, various And of That's like helpful. and thing don't margins, whether of does different in do and you Because right, -- each you maybe of Matt, when X not I mean think in think terms guess, -- exciting, AI Plans, but I Max in these it margins I year I like it's it's Family but where general,

there's this lower Max absolute margin were basis year. off, talked our the the of prices gross with even the better talked fact margin the Sure. basis, of priced you're way of the every that We And year that on use . But a ago, to dollar dollar an we because usage about in incremental last we actually at Arvind. And for an about every Yes. on date, happening cost product. least does margin it the Max, absolute an for it. case that -- -- about it's for

to I So you from that that, take again, where away ends. don't want that's this

changing rapidly. experiment we're relatively the price going that's the I where with And to it are starts. think costs and

pretty fine. right I gross margin feel I the So Max. And think our will just ultimately, be good dollar about now, margin on

were last we kind Terrific. you of events? popular I came . Is And met And Last you saying basically a you're of that. just think you. of form for leverage a of lot are all had of this in of lot movie question of a your just when free do that to we some last premarketing whether quasi kind able anything of kind a in that to kind basically me. to it's there the marketing, Barbie business able basically and of time, of from kind year sort of year,

Yes, to -- we terms year mean the these of stuff we similar year. some volume of I stuff in these. last expect similar last of expect

terms brand outsized. in are hard impact, the basically lot of that mainly that's are struck X to cord. us coming free a because - are of But, be Some that very going which just we has a we outsized things know and to is a them to for have of

seeing we're for to that rest be to that. It's so it things we is very big the to know as whether have the as hard the And are hard towards Barbie say. the going of visibility year movie,

But I last year. opportunities, of in can number of than you terms tell it's that even probably higher

we finally We that. right just She finally Dua I were just -- we're finally us. to talking the So think a Lipa. cracked. there's lot She call, before mentioned cracked

been like We've years. her for simping

finally You some in Duolingo the mentioned interview. word

a happening. just that things for are free. lot it's those the entirely stuff of see that's And see we So we

Dua we'll see next Day. Hopefully, Terrific. Investor at the Lipa

knows? Who

further Luis Great. it Thanks, I'm any closing questions. not I'll back for to turn remarks. showing everyone.

Just .

I'm sorry. got at Curtis just up second. the his hand last very

that. Sorry about

raised somehow. X quick music. a the hadn't it I I Luis, on But think just

going be on instruments. in to -- musical I of, there's think I new features terms guess, integration mentioned you some working with that we're

much Just right? and that terms but terms a of I of what I you've market know forgive guess, how curious me, in if unlock, in before, big is [indiscernible] an mentioned TAM?. least little this bit is how more of, don't that at And

Yes.

number don't What had months, I have we things. for, X months, -- working out X what months. up the music a we've only on for know course few is we're So a music, of

a instrument. I like, who music learn Piano to like want on tap mean, course, know of the that we adding a of can still we're learn the lot features. so phone people lot with to you kind want how thing, to And an a Today, actually phone. music play have of our We

integration. So do musical over to instrument going time, we're

which that want in people people that free thing and do. going Right have music. music licensed license music We're what be is all to now, which as we know means Another want going is stuff to to usually well, is songs. the is adding old very are that we domain the

there's a a experience. So of going it's to have learning get to there think -- a lot opportunity we to be really people fun music

looked learning we've a of terms of people the into this. lot In There's TAM, music.

do So the in hard for that's the TAM. and -- good. TAM language to learning, the because what It's because fact, exactly music we to we grew for did which want say same is thing for

learning mean, I our users not we're in learning, language example, for a for United before the States, language XX% Duolingo. of

we So and the that's market, we want music. just kind what grown to of with do

to It's least. of big significant learning hard a I'm as language but for to don't say learning, I going at exactly what as hoping it's language fraction think be it is.

form question support that point music. the follow-up quick a on of that Just to that cost? of on some require that monetization Would license

get have have Yes, full or support payers something do It it's in have be that the are details the at that. or of only least be mean, to the will course, yes, I like payers the up air, -- would it that. experience to that. to the still but to would the something we basically, case

Appreciate it. Okay. Very good.

the last question. That's

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

look to next evening. we forward music have Well, everyone thank learn just great thank and Do quarter. you some you, joining for a Debbie. I'd just lessons, speaking your and like to us, to

Yes.