Duolingo Announces 51% Bookings Growth and Accelerating User Growth in Second Quarter 2022;
Raises Full Year GuidanceAugust 4, 2022
PITTSBURGH, Aug. 04, 2022 (GLOBE NEWSWIRE) -- Duolingo, Inc. (NASDAQ: DUOL), the world’s leading mobile learning platform, announced
results for the second quarter ended June 30, 2022 in a shareholder letter that is posted at investors.duolingo.com.
"Our second quarter results exceeded expectations, driven by accelerating user growth and strength across our entire business,” said Luis von Ahn,
Co-Founder and CEO of Duolingo. “I’m very proud that we delivered over 50% growth in bookings and revenue from the prior year quarter, despite achallenging macroeconomic environment. We see this growth as a result of our relentless focus on constant product improvement. Throughcontinuous experimentation, we are driving organic growth, deeper user engagement, and stronger free-to-paid user conversion.”
Second Quarter 2022 Highlights

Total bookings were $97.5 million, an increase of 51% from the prior year quarter;
Subscription bookings were $74.1 million, an increase of 51% from the prior year quarter;
Paid Subscribers totaled 3.3 million at quarter end, an increase of 71% from the prior year quarter;
Monthly active users (MAUs) grew 31% to 49.5 million from the prior year quarter and Daily active users (DAUs) grew 44%
to 13.2 million from the prior year quarter;
Total revenues were $88.4 million, an increase of 50% from the prior year quarter;
Net loss totaled $15.0 million, compared to a net loss of $0.2 million in the prior year quarter, with the majority of thechange driven by an increase in stock-based compensation;
Adjusted EBITDA was $4.2 million, compared to $3.7 million in the prior year quarter.
Financial and Operating Metrics
The following table summarizes our financial and operating highlights for the quarter ended June 30, 2022.
Three Months Ended June 30,
2022(In millions)Operating Metrics
Monthly active users (MAUs)
Daily active users (DAUs)
Paid subscribers (at period end)2021

% Change

49.5
13.2
3.3

37.9
9.1
1.9

31%
44%
71%

Three Months Ended June 30,
2022

2021

% Change(In thousands)
Operating Metrics
Subscription bookings
Total bookings$$

74,123
97,467$$

48,94164,53851%
51%

Financial Measures
Total revenues (GAAP)Net loss (GAAP)
Adjusted EBITDA (Non-GAAP)$$$

88,386(15,045)
4,198

$
$
$

58,803
(176)
3,702

50%
8448%
13%

The following table provides revenues by product type:Three Months Ended June 30,(in thousands)
Subscription
Advertising
Duolingo English Test

2022

2021

Change% Change

Other$$$$

65,194
11,218
8,036
3,938$$$$

43,502 $
9,056
4,833
1,412

21,692
2,162
3,203
2,526

50%
24%
66%
179%

Total revenues$88,386 $58,803 $

29,58350%

Financial Outlook
Duolingo is providing the following guidance for the third quarter ending September 30, 2022 and the full year ending December 31, 2022:
Third Quarter 2022
(in millions)

Low

High

Full Year 2022
Low

High

Total Bookings
Revenues
Adjusted EBITDA

$
$
$

94.0
93.0
(4.5)

$
$
$

97.0
96.0
(1.5)

$
$
$

404.0 $
361.0 $
4.0 $

410.0
367.0
7.0

With regards to the Non-GAAP Adjusted EBITDA outlook provided above, a reconciliation to GAAP net loss, the most directly comparable financialmeasure presented in accordance with GAAP, has not been provided as the quantification of certain items included in the calculation of GAAP net loss
cannot be calculated or predicted at this time without unreasonable efforts. For example, the non-GAAP adjustment for stock-based compensation
expenses related to equity awards requires additional inputs such as number of shares granted and market price that are not currently ascertainable,
and the non-GAAP adjustment for certain legal, tax and regulatory reserves and expenses depends on the timing and magnitude of these expensesand cannot be accurately forecasted. For the same reasons, we are unable to address the probable significance of the unavailable information, which
could have a potentially unpredictable, and potentially significant, impact on our future GAAP financial results.
Video Webcast
Duolingo will host a video webcast to discuss its quarterly results today, August 4, 2022 at 5:30 p.m. ET. This live webcast and related materials will be
publicly available and can be accessed at investors.duolingo.com. A replay will be available on the Investor Relations website two hours followingcompletion of the call and will remain available for a period of one year.
About Duolingo
Duolingo is the leading mobile learning platform globally. Its flagship app has organically become the world's most popular way to learn languages andthe top-grossing app in the Education category on both Google Play and the Apple App Store. With technology at the core of everything it does,
Duolingo has consistently invested to provide learners a fun, engaging, and effective learning experience while remaining committed to its mission todevelop the best education in the world and make it universally available.
Definitions
Subscription Bookings and Total Bookings. Subscription bookings represent the amounts we receive from a purchase of a subscription to Super
Duolingo (formerly called Duolingo Plus). Total bookings represent the amounts we receive from a purchase of a subscription to Super Duolingo, apurchase of a Duolingo English Test, an in-app purchase for a virtual good and from advertising networks for advertisements served to our users. We
believe bookings provide an indication of trends in our operating results, including cash flows, that are not necessarily reflected in our revenues
because we recognize subscription revenues ratably over the lifetime of a subscription, which is generally from one to twelve months.
Monthly Active Users (MAUs). MAUs are defined as unique Duolingo users who engage with our mobile language learning application or thelanguage learning section of our website each month. MAUs are reported for a measurement period by taking the average of the MAUs for eachcalendar month in that measurement period. MAUs are a measure of the size of our global active user community on Duolingo.
Daily Active Users (DAUs). DAUs are defined as unique Duolingo users who engage with our mobile language learning application or the language
learning section of our website each calendar day. DAUs are reported for a measurement period by taking the average of the DAUs for each day inthat measurement period. DAUs are a measure of the consistent engagement of our global user community on Duolingo.
Paid Subscribers. Paid subscribers are defined as users who pay for access to Super Duolingo, including subscribers who pay for a family plan, andhad an active subscription as of the end of the measurement period. Each unique user account is treated as a single paid subscriber regardless ofwhether such user purchases multiple subscriptions, and the count of paid subscribers does not include users who are currently on a free trial or who
are non-paying members of a family plan.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend suchforward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Actof 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements
other than statements of historical facts contained in this press release, including without limitation, statements regarding our business model andstrategic plans and our financial outlook for the third quarter and fiscal year 2022 are forward-looking statements. Without limiting the generality of theforegoing, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,”“anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “goal,” “objective,” “seeks,” or“continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Suchforward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ
materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to: our ability to retainand grow our users and sustain their engagement with our products; competition in the online language learning industry; our limited operating history;
our ability to achieve profitability; our ability to manage our growth and operate at such scale; the success of our investments; our reliance onthird-party platforms to store and distribute our products and collect revenue; our reliance on third-party hosting and cloud computing providers; ourability to compete for advertisements; acceptance by educational organizations of technology-based education; our ability to access, collect, and use
personal data about our users and payers, and to comply with applicable data privacy laws; potential intellectual property-related litigation andproceedings, our ability adequately obtain, protect and maintain our intellectual property rights; and the other important factors more fully detailed
under the caption "Risk Factors" in our Annual report on Form 10-K for the fiscal year ended December 31, 2021, as any such factors may be updated
from time to time, including in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 and in our other filings with the SEC,
accessible on the SEC’s website at www.sec.gov and the Company’s Investor Relations website at https://investors.duolingo.com. All forward-looking
statements speak only as of the date of this press release and, except as required by applicable law, we have no obligation to update or revise any
forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
Limitation of Key Metrics and Other Data
We manage our business by tracking several operating metrics, including MAUs, DAUs, paid subscribers, and bookings. While these metrics arebased on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges inmeasuring how our platform is used. These metrics are determined by using internal data gathered on an analytics platform that we developed andoperate and have not been validated by an independent third party. This platform tracks user account and session activity. If we fail to maintain aneffective analytics platform, our metrics calculations may be inaccurate. Because we update the methodologies we employ to create metrics, ouroperating metrics may not be comparable to those in prior periods. Other companies, including companies in our industry, may calculate these metrics
differently.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures to supplement our consolidated financial statements, which are presented in accordance with GAAP.
These non-GAAP financial measures include Adjusted EBITDA. Please refer to the definitions and reconciliation at the end of this press release. We
use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. By
excluding certain items that may not be indicative of our recurring core operating results, we believe that Adjusted EBITDA provides meaningfulsupplemental information regarding our performance. Accordingly, we believe these non-GAAP financial measures are useful to investors and others
because they allow for additional information with respect to financial measures used by management in its financial and operational decision-making
and they may be used by our institutional investors and the analyst community to help them analyze the health of our business. However, there are anumber of limitations related to the use of non-GAAP financial measures, and these non-GAAP measures should be considered in addition to, not as a
substitute for or in isolation from, our financial results prepared in accordance with GAAP. Other companies, including companies in our industry, may
calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures.
Website Information
We routinely post important information for investors on the Investor Relations section of our website, investors.duolingo.com and also from time totime may use social media channels, including our Twitter account (twitter.com/duolingo) and our LinkedIn account (linkedin.com/company/duolingo/),as an additional means of disclosing public information to investors, the media and others interested in us. It is possible that certain information wepost on our website and on social media could be deemed to be material information, and we encourage investors, the media and others interested inus to review the business and financial information we post on our website and on the social media channels identified above, in addition to following
our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through,our website and our social media channels is not incorporated by reference into, and is not a part of, this document.
DUOLINGO, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands, except par value amounts)

December 31,2021

June 30, 2022
ASSETSCash and cash equivalents
Accounts receivableDeferred cost of revenues
Prepaid expenses and other current assets
Noncurrent Assets
Total assets
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Accounts payable
Deferred revenues
Accrued expenses and other current liabilities
Long-term obligation under operating leases$

591,160 $
28,20929,2186,563
45,900553,922
33,16324,2197,967
42,040$701,050 $661,311$

1,504 $
128,194
17,62825,505

7,818
98,267
13,04629,124

172,831

148,255

528,219

513,056

701,050 $661,311

Total liabilities
Total stockholders’ equity
Total liabilities, convertible preferred stock and stockholders' equity$

DUOLINGO, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Amounts in thousands, except per share amounts)
Three Months Ended June 30,
2022
Revenues
Cost of revenues
Gross profit
Operating expenses:
Research and development
Sales and marketing
General and administrative
Total operating expenses$88,386
23,8692021$

58,803
16,13764,51742,66634,217
15,27730,057

21,9409,619
11,58579,55143,144

Loss from operations
Other income (expense), net(15,034)
130(478)
303

Loss before provision for income taxes
Provision for income taxes(14,904)
141(175)1

Net loss and comprehensive loss$(15,045)$(176)Net loss per share attributable to Class A and Class B common stockholders, basic$(0.38)$(0.01)

Net loss per share attributable to Class A and Class B common stockholders, diluted$(0.38)$(0.01)DUOLINGO, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)
Six Months Ended June 30,2022Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
Stock-based compensation$(27,199)$

1,944
32,70025,844

Changes in assets and liabilities
Net cash provided by operating activities
Net cash used for investing activities
Net cash provided by (used for) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents - Beginning of period$

Cash and cash equivalents - End of period2021(13,648)
1,236
5,458
11,18133,2894,227(5,713)(3,634)

9,662(6,447)

37,238553,922(5,854)120,490591,160$

114,636DUOLINGO, INC. AND SUBSIDIARIESADJUSTED EBITDA RECONCILIATION(Amounts in thousands)
Adjusted EBITDA. Adjusted EBITDA is defined as net loss excluding interest (income) expense, net, income tax provision, depreciation andamortization, IPO and public company costs, stock-based compensation expenses related to equity awards and other expenses. Adjusted EBITDA is
used by management to evaluate the financial performance of our business and we present Adjusted EBITDA because we believe it is helpful inhighlighting trends in our operating results and that it is frequently used by analysts, investors and other interested parties to evaluate companies in
our industry. The following table presents a reconciliation of our net loss, the most directly comparable financial measure presented in accordance withGAAP, to Adjusted EBITDA:
Three Months Ended June 30,(In thousands)
Net loss
Interest (income) expense, net
Provision for income taxes
Depreciation and amortization
IPO and public company costs (1)Stock-based compensation expenses related to equity awards (2)2022(15,045)
(669)
141
1,170
107
18,494—$(176)
(1)
1636
1,213
2,907
(878)

$

4,198

$

3,702

Other expenses (3)Adjusted EBITDA

2021$________________(1) IPO and public company costs include costs associated with IPO readiness incurred in 2021 and costs associated with the establishment of ourpublic company structure and processes, including consultant costs, a one-time fee associated with the set-up of our initial proxy statement, and fees
paid to consultants and Deloitte for work in connection with remediation of the material weakness disclosed in our Annual Report on Form 10-K.
(2) In addition to stock-compensation expense, this includes costs incurred related to taxes paid on equity transactions.
(3) Represents one-time cash awards to Duolingo contributors under our non-employee volunteer program included within Sales and marketing
expenses within our Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.
Contacts
Investor Relations:
Deborah Belevan, VP of Investor Relations
IR@duolingo.com
Press:Sam Dalsimer, Global Head of Communications
press@duolingo.com