"Our performance during the third quarter was exceptional. We achieved record bookings and a record number of paid subscribers, with monthly and daily users also reaching all-time highs," said
Third Quarter 2021 Operational Highlights
- Total bookings were
$73 .1 million, an increase of 57% from the prior year quarter; - Subscription bookings were
$55 .4 million, an increase of 64% from the prior year quarter; - Paid Subscribers totaled 2.2 million at quarter end, an increase of 49% from the prior year quarter;
- Monthly active users (MAUs) were 41.7 million and daily active users (DAUs) were 9.8 million, both of which are all-time highs.
Third Quarter 2021 Financial Highlights
- Total revenues were
$63 .6 million, an increase of 40% from the prior year quarter; - Gross Profit was
$45 .5 million, an increase of 41% from the prior year quarter; - Net loss totaled
$29 .0 million, compared to a net loss of$3 .2 million in the prior year quarter, with the majority of this change driven by IPO-related costs; - Adjusted EBITDA was a loss of
$6 .0 million, compared to a loss of$0 .7 million in the prior year quarter.
Financial and Operating Metrics
Three Months Ended | ||||||||||
(In millions, except dollar amounts in thousands) | 2021 | 2020 | % Change | |||||||
Operating Metrics | ||||||||||
Monthly active users (MAUs) | 41.7 | 37.0 | 13 | % | ||||||
Daily active users (DAUs) | 9.8 | 8.4 | 16 | % | ||||||
Paid subscribers (at period end) | 2.2 | 1.5 | 49 | % | ||||||
Subscription bookings | $ | 55,362 | $ | 33,778 | 64 | % | ||||
Total bookings | $ | 73,058 | $ | 46,667 | 57 | % | ||||
Financial Measures | ||||||||||
Net loss (GAAP) | $ | (28,970 | ) | $ | (3,176 | ) | 812 | % | ||
Adjusted EBITDA (Non-GAAP) | $ | (5,968 | ) | $ | (724 | ) | 724 | % | ||
Summary of Financial Results
Revenues increased 40% to
The table below provides the changes in revenue by product type:
Three Months Ended | ||||||||||||||
(in thousands) | 2021 | 2020 | Change | % Change | ||||||||||
Subscription | $ | 46,030 | $ | 32,317 | $ | 13,713 | 42 | % | ||||||
Advertising | 9,029 | 6,720 | 2,309 | 34 | % | |||||||||
Duolingo English Test | 6,695 | 5,607 | 1,088 | 19 | % | |||||||||
Other | 1,841 | 661 | 1,180 | 179 | % | |||||||||
Total revenues | $ | 63,595 | $ | 45,305 | $ | 18,290 | 40 | % | ||||||
Gross margin increased to 71.6% compared to 71.1% in the year-ago quarter. This was driven by a combination of reduced payment processing fees on subscriptions due to improved retention and mix and by higher advertising revenue per DAU, offset by additional test proctoring costs for the DET.
Operating expenses increased
Net loss (GAAP) totaled
Adjusted EBITDA was a loss of
Financial Outlook
Fourth Quarter 2021 | Full Year 2021 | ||||||||||||||
(in millions) | Low | High | Low | High | |||||||||||
Total Bookings | $ | 79.0 | $ | 82.0 | $ | 282.5 | $ | 285.5 | |||||||
Revenues | $ | 66.5 | $ | 69.5 | $ | 244.0 | $ | 247.0 | |||||||
Adjusted EBITDA | $ | (6.5 | ) | $ | (3.5 | ) | $ | (8.0 | ) | $ | (5.0 | ) |
With regards to the Non-GAAP Adjusted EBITDA outlook provided above, a reconciliation to GAAP net earnings (loss) has not been provided as the quantification of certain items included in the calculation of GAAP net earnings (loss) cannot be calculated or predicted at this time without unreasonable efforts. For example, the non-GAAP adjustment for stock-based compensation expense 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 expenses and 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.
Webcast and Conference Call Information
About
Definitions
Subscription Bookings and Total Bookings. Subscription bookings represent the amounts we receive from a purchase of a subscription to Duolingo Plus. Total bookings represent the amounts we receive from a purchase of a subscription to Duolingo Plus, a registration for 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 revenue because we recognize subscription revenue ratably over the lifetime of a subscription, which is generally from one to twelve months.
Monthly Active Users (MAUs). MAUs are defined as unique
Daily Active Users (DAUs). DAUs are defined as unique
Paid Subscribers. Paid subscribers are defined as users who pay for access to Duolingo Plus and had an active subscription as of the end of the measurement period. Each unique user account is treated as a single paid subscriber regardless of whether such user purchases multiple subscriptions, and the count of paid subscribers does not include users who are currently on a free trial.
Forward-Looking Statements
This press release contains forward-looking statements regarding our future expectations, including but not limited to statements regarding our future financial performance and outlook for the fourth quarter and full year 2021. These forward-looking statements are based on our current assumptions, expectations and beliefs, are only predictions and may differ materially from actual results due to a variety of factors including but not limited to risks related to (1) our ability keep existing users or add new users, or the potential that our existing users decrease their level of engagement with our products or do not convert to paying users, (2) the highly competitive online learning language industry, (3) changes to our existing brand and products, or the introduction of a new brand or products, which could fail to attract or keep users, (4) growing costs and investments that may have the effect of reducing our operating margin and profitability, (5) inherent challenges in measurement of user metrics and other estimates, (6) our ability to maintain good relationships with third-party platforms to distribute our products, (7) third-party hosting and cloud computing providers, (8) complex and evolving US and international laws and regulations applicable to our business, (9) our ability to access, collect, and use personal data about our users and payers, and to comply with applicable data privacy laws, (10) varying and rapidly-evolving regulatory framework on privacy and data protection across jurisdictions, (11) potential intellectual property-related litigation and proceedings, and (12) our ability adequately obtain, protect and maintain our intellectual property rights. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended
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 reconciliations 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 meaningful supplemental 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 a number 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 financials 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, https://investors.duolingo.com and also from time to time 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 we post on our website and on social media could be deemed to be material information, and we encourage investors, the media and others interested in us 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,
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value amounts)
ASSETS | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 549,440 | $ | 120,490 | ||
Accounts receivable | 20,737 | 20,450 | ||||
Deferred cost of revenues | 19,726 | 13,585 | ||||
Prepaid expenses and other current assets | 6,441 | 3,855 | ||||
Total current assets | 596,344 | 158,380 | ||||
Property and equipment, net | 8,010 | 6,428 | ||||
Capitalized software, net | 4,184 | 2,296 | ||||
Operating lease right-of-use assets | 8,231 | 8,073 | ||||
Other assets | 1,008 | 562 | ||||
Total assets | $ | 617,777 | $ | 175,739 | ||
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||
Current liabilities | ||||||
Accounts payable | $ | 8,708 | $ | 2,196 | ||
Deferred revenues | 80,460 | 54,792 | ||||
Income tax payable | 25 | 68 | ||||
Accrued expenses and other current liabilities | 9,452 | 8,634 | ||||
Total current liabilities | 98,645 | 65,690 | ||||
Long term obligation under operating leases | 8,401 | 8,131 | ||||
Total liabilities | 107,046 | 73,821 | ||||
Convertible preferred stock, | — | 182,609 | ||||
Total stockholders’ equity (deficit) | 510,731 | (80,691 | ) | |||
Total liabilities, convertible preferred stock and stockholders' equity (deficit) | $ | 617,777 | $ | 175,739 | ||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Amounts in thousands, except per share amounts)
Three Months Ended | |||||||
2021 | 2020 | ||||||
Revenues | $ | 63,595 | $ | 45,305 | |||
Cost of revenues | 18,078 | 13,101 | |||||
Gross profit | 45,517 | 32,204 | |||||
Operating expenses: | — | — | |||||
Research and development | 29,345 | 15,894 | |||||
Sales and marketing | 15,267 | 11,142 | |||||
General and administrative | 29,605 | 8,235 | |||||
Total operating expenses | 74,217 | 35,271 | |||||
Loss from operations | (28,700 | ) | (3,067 | ) | |||
Other (expense) income, net | (219 | ) | (86 | ) | |||
Loss before provision for income taxes | (28,919 | ) | (3,153 | ) | |||
Provision for income taxes | 51 | 23 | |||||
Net loss and comprehensive loss | $ | (28,970 | ) | $ | (3,176 | ) | |
Net loss per share attributable to Class A and Class B common stockholders, basic | $ | (0.98 | ) | $ | (0.25 | ) | |
Net loss per share attributable to Class A and Class B common stockholders, diluted | $ | (0.98 | ) | $ | (0.25 | ) | |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Nine Months Ended | |||||||
2021 | 2020 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (42,618 | ) | $ | (5,369 | ) | |
Adjustments to reconcile net loss to net cash used for operating activities: | |||||||
Depreciation and amortization | 1,969 | 1,649 | |||||
Stock-based compensation | 26,120 | 4,517 | |||||
Changes in assets and liabilities | 23,267 | 13,230 | |||||
Net cash (used for) provided by operating activities | 8,738 | 14,027 | |||||
Cash flows from investing activities: | |||||||
Capitalized software | (2,035 | ) | (123 | ) | |||
Purchase of property and equipment | (3,063 | ) | (2,557 | ) | |||
Net cash used for investing activities | (5,098 | ) | (2,680 | ) | |||
Cash flows from financing activities: | |||||||
Issuance of common stock in connection with the initial public offering, net of underwriting discounts and issuance costs | 426,191 | — | |||||
Net proceeds from issuance of convertible preferred stock | — | 9,976 | |||||
Proceeds from exercise of stock options | 7,322 | 1,130 | |||||
Repurchases of stock options | $ | (7,335 | ) | — | |||
Repurchase of common stock | $ | (868 | ) | — | |||
Repayment of deferred offering costs | — | — | |||||
Net cash provided by financing activities | 425,310 | 11,106 | |||||
Net increase in cash and cash equivalents | 428,950 | 22,453 | |||||
Cash and cash equivalents - Beginning of period | 120,490 | 59,843 | |||||
Cash and cash equivalents - End of period | $ | 549,440 | $ | 82,296 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest | $ | — | $ | — | |||
Cash paid for income taxes | $ | 94 | $ | 11 | |||
Supplemental disclosure of noncash operating activities: | |||||||
Implementation costs for cloud computing included in accrued expenses | $ | 27 | $ | — | |||
Supplemental disclosure of noncash investing activities: | |||||||
Capitalized software included in accrued expenses | $ | 337 | $ | — | |||
Property and equipment included in accrued expenses | $ | 2 | $ | 55 | |||
ADJUSTED EBITDA RECONCILIATION
(Amounts in thousands)
Adjusted EBITDA. Adjusted EBITDA is defined as net loss excluding interest (income) expense, net, income tax provision, depreciation and amortization, IPO and public company readiness costs, stock-based compensation expense, tender offer-related costs 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 in highlighting 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 with GAAP, to Adjusted EBITDA:
Three Months Ended | |||||||
(In thousands) | 2021 | 2020 | |||||
Net loss | $ | (28,970 | ) | $ | (3,176 | ) | |
Interest (income) expense, net | (4 | ) | (7 | ) | |||
Income tax provision | 51 | 23 | |||||
Depreciation and amortization | 733 | 627 | |||||
IPO and public company readiness costs(1) | 1,560 | 127 | |||||
Stock-based compensation expense | 20,662 | 1,682 | |||||
Adjusted EBITDA | $ | (5,968 | ) | $ | (724 | ) | |
____________________
(1) IPO and public company readiness costs include costs associated with IPO readiness and establishment of our public company structure and processes, including consultant costs.
Contacts
Investor Relations:
IR@duolingo.com
Press:
press@duolingo.com
Source:
2021 GlobeNewswire, Inc., source