Subscription and profit both exceeded expectations, "American New Oriental" Duolingo surged 20% after hours.
Duolingo, known as the 'American New Oriental,' focuses on brand building and continuously innovates learning applications through AI technology to enhance user learning experience, leading to a significant increase in paid subscription users. As a result, Duolingo's Q4 performance exceeded expectations across the board, driving a soaring stock price increase of over 22%.
Over the past two years, Duolingo's revenue has consistently exceeded market expectations, averaging a 3.5% outperformance. After the financial report was released on Wednesday, Duolingo once again surpassed expectations in the fourth quarter, driving the stock price up by over 22%.
On February 28th, "American New Oriental" Duolingo released its fourth quarter financial report for the period ending December 31, 2023. The report revealed that Duolingo's Q4 2023 revenue increased by 45% year-on-year to $151 million, surpassing analysts' expectations of $148 million.
The Q4 net profit was $12.1 million ($0.26 per share), exceeding the expected earnings per share of $0.04 and showing a significant improvement from the net loss of $13.9 million ($0.35 per share) in the same period last year. Free cash flow reached $47.7 million, a substantial increase from $11.3 million in the same period last year.
At the end of the fourth quarter, Duolingo's total paid users reached 6.6 million, a 57% increase year-on-year. Daily Active Users (DAU) increased by 65% to 27 million, while Monthly Active Users (MAU) grew by 46% to 88 million year-on-year.
In terms of performance guidance, the company also expects revenue for this quarter and 2024 to outperform expectations. Duolingo anticipates first-quarter revenue to be between $164 million and $167 million, surpassing analysts' expectations of $159 million. The full-year revenue for 2024 is projected to be between $717.5 million and $729.5 million, higher than analysts' forecast of $701 million.
After the financial report was released, Duolingo's stock price surged by over 20% in after-hours trading on Wednesday. Additionally, the stock has seen a 115% increase over the past year, far exceeding the S&P 500 index's 28% during the same period.
In the fiercely competitive educational technology industry, the popularity of the app and user engagement are key factors for long-term success. Analysts believe that Duolingo's success lies in its continuous innovation in learning applications, improvement of product quality, effective brand building, leading to a significant growth in paid subscription users.
With the ongoing AI trend, Duolingo also wants a piece of the action. To achieve this, Duolingo leverages AI technology to enhance user learning experience, optimize educational content, and strengthen the personalization and efficiency of its products. On one hand, as a globally leading mobile learning platform, Duolingo is renowned for its innovative language learning applications. These apps incorporate advanced technologies such as gamified learning, personalized courses, and intelligent review mechanisms, making the learning process both engaging and efficient.
For instance, Duolingo utilizes AI algorithms to analyze users' learning progress, preferences, and challenges, tailoring personalized learning plans for each user. Moreover, Duolingo employs AI-driven speech recognition technology to assess and improve users' pronunciation. Users can practice speaking, and the platform can automatically recognize and evaluate their pronunciation accuracy, providing feedback and improvement suggestions.
On the other hand, Duolingo continuously invests efforts in product quality and brand reputation, constantly innovating and optimizing its learning platform, as well as exploring effective marketing strategies to establish strong brand awareness and loyalty.
Looking ahead, Duolingo's co-founder and CEO Luis von Ahn stated:
"We have accelerated DAU growth every quarter in 2023, achieving record user engagement, subscriber numbers, revenue, and profitability in the fourth quarter. 2023 has been an extraordinary year, surpassing our own high expectations."
"In 2024, the company will continue to focus on its core strategies, namely improving user satisfaction, increasing profitability through subscription services, enhancing teaching quality, and expanding its global influence and user base."