Duolingo, Inc. CFO Discusses User Growth, Monetization Strategies, and New Product Expansions at JPMorgan Global Technology Conference

Key Takeaways

TL;DR Summary:

Duolingo (NASDAQ: DUOL) emphasizes DAU growth (guided +40-45% YoY in Q2), monetization via Max/Family Plan tiers (~7% and 25% of subs, respectively), GenAI-driven content scaling (148 new courses), and margin expansion (LT EBITDA target: ~35%). Key focus on English learners (46% of DAUs) and new verticals incl. chess to expand TAM.

1. User Growth & Retention:

• Q2 2025 DAU Growth Guidance: +40-45% YoY (vs. +60% YoY in Q2 2024). Drivers:
  • Social-first viral strategy: "Unhinged" mascot (Duo) generates UGC and brand traction; claims 1.7B social media views post-Super Bowl campaign.
  • Resurrected users: Key in mature markets; app improvements drive reactivation.
• Retention focus: +30% of engineering/product teams run experiments (e.g., notifications, design) to boost daily/weekly engagement.

2. English Learning Expansion:

• 46% of DAUs learning English; TAM untapped as ~75% global language learners target English.
• New initiatives:
  • Intermediate/advanced English courses + Duolingo English Test integration ("Duolingo Score") to certify proficiency.
  • Max tier adoption (7% of subs): Video Call feature drives engagement (e.g., Japan over-indexes on Max usage).

3. Monetization Levers:

• Duolingo Max ($2x Super price): ~7% of paid subs (up +200bps QoQ). Cross-grade/upgrade paths (free→Max, Super→Max) show favorable LTV.
• Family Plan (1/4 of subs): Higher retention; potential to expand via Max Family Plan (under-marketed).
• Pricing experiments: 10-15% price hike on Super (new subs only) embedded in FY guide; local GDP-adjusted pricing maintained.

4. GenAI & Content Scaling:

• Key use cases:
  • Rapid course creation (148 new courses via AI-assisted tools).
  • Max’s Video Call (AI-powered conversational practice) drives English learner stickiness.
• Cost trade-off: AI adds marginal costs (Video Call), but declining compute costs may lift GP margins.

5. New Verticals: