Duolingo posts a beat and raise in any language, can it hold gains?
1min read Duolingo, the leading language learning platform, announced its Q4 earnings report, showcasing another quarter of impressive growth and outperformance. Shares jumped 23% in reaction but have run into some resistance at the $240 level in intraday trade. The stock finds itself protecting the post-earnings gains.
The company reported earnings of $0.26 per share, significantly beating the consensus of $0.04. Revenue for the quarter rose by 45.4% year-over-year to $150.99 million, surpassing the consensus of $148.29 million.
Total bookings for the quarter were $191.0 million, a 51% increase from the prior year quarter. Subscription bookings reached $157.8 million, a 57% increase from the same quarter last year. The company reported a 57% increase in paid subscribers to 6.6 million at the end of the quarter. Daily active users (DAUs) increased by 65% to 26.9 million, and monthly active users (MAUs) increased by 46% to 88.4 million, compared to the prior year quarter.
Duolingo also issued upside guidance for Q1, projecting revenue between $164 and $167 million, compared to the consensus of $159.35 million. The company expects total bookings to range between $186 and $190 million.
For FY24, Duolingo issued upside guidance, projecting revenue between $717.5 and $729.5 million, compared to the consensus of $701.12 million. The company expects total bookings to range between $790 and $802 million.
Analysts have been bullish on Duolingo's prospects, with Needham reiterating its Buy rating and raising its price target to $241. Despite the strong outperformance, the firm noted that DAU growth is starting to decelerate into the mid-50s in Q124. However, revenue and adjusted EBITDA guidance came in well ahead of consensus expectations, creating the potential for Duolingo to once again be a Rule of 60+ company in FY24. The company's strong track record of execution and premium fundamental profile continue to warrant a premium multiple, in Needham's view.
Duolingo's Q4 results demonstrated another solid beat and raise driven by user growth and margin outperformance. KeyBanc Capital Markets (KEYB) remains constructive on fundamental trends, but views the quarter as in line with historical beats, and believes the stock reaction (+22% after hours) reflects positioning into the quarter.
In conclusion, Duolingo's Q4 earnings report showcases the company's continued outperformance and impressive growth. The company's strong user growth, bookings beat, and upside guidance for Q1 and FY24 indicate a promising future for the leading language learning platform. With its premium fundamental profile and significant runway for growth, Duolingo remains a compelling investment opportunity in the rapidly growing language learning category.