DUOL could generate significantly more revenue from blended-in ads across all tiers. These kinds of ads wouldn’t hurt the Duolingo experience, especially if they partner with well-known brands and integrate them naturally into lessons. Hopefully, they implement this soon, as it could drive Duolingo’s growth quite easily without requiring major improvements to the core business
Really nice article. Thank you. I learned a lot about the company. Even though I follow it closely. Ext few quarters will be interesting to see if that can push the DAUs higher and what the impact on bookings will really be.
Thank you, while it is difficult to say definitively, short sellers are likely concerned about the threat of AI disruption, both from new use cases (live translation etc) and from new entrants.
On your second point, thank you for pointing that out, you are correct, I will adjust that accordingly!
Hey here. Great content. I will read all your deep dives. I have subbed. Let’s grow together and support each other. Check my deep dive on CRM here https://substack.com/@valueinvestorfromitaly/note/p-190818961?utm_source=notes-share-action&r=3qdo3i
Thank you very much! I will check out your deep dive
DUOL could generate significantly more revenue from blended-in ads across all tiers. These kinds of ads wouldn’t hurt the Duolingo experience, especially if they partner with well-known brands and integrate them naturally into lessons. Hopefully, they implement this soon, as it could drive Duolingo’s growth quite easily without requiring major improvements to the core business
I completely agree, ads have been neglected from the start, which could be a significant opportunity going forward
Ads from brands like Coca-Cola could generate around $20–60M in monthly revenue, based on 50M daily users
Really nice article. Thank you. I learned a lot about the company. Even though I follow it closely. Ext few quarters will be interesting to see if that can push the DAUs higher and what the impact on bookings will really be.
Thank you! I agree it’s a crucial time for the company, but in my opinion management are making the right long term moves
Thanks to Leeder Capital for your analysis of Duolingo, Inc. (DUOL; DUOL US).
(1) Short interest is very high at 22%. Any idea why? What is the short sellers' case?
(2) "Free cash flow is even higher ($370m) as a result of their negative working capital"
USD 370 mn overstates true FCF because it excludes stock-based compensation (USD 137 mn) and investment in intangible assets (USD 9 mn). True FCF is closer to USD 224 mn, ~-40% lower.
Paying SBC is the same as issuing shares in the market and using the cash to pay salaries.
For a software company, investment in intangible assets is capex.
Thank you, while it is difficult to say definitively, short sellers are likely concerned about the threat of AI disruption, both from new use cases (live translation etc) and from new entrants.
On your second point, thank you for pointing that out, you are correct, I will adjust that accordingly!