![]() ![]() This is up from 4% in 2020, however, this does represent a 49% increase in revenue from subscribers. In the November earnings they released data showing that 5% of their users are subscribing and 95% are on the free model. Revenue has been increasing along with gross profit, operating expenses have grown pushing operating income lower, however, that is not unusual for an early-stage company and is not really a red flag.ĭuolingo uses a freemium marketing plan. It has reported positive cash flow indicating it has more than 5 years of cash on hand. With substantial short-term assets including over $500 million in cash Duolingo is in excellent financial health. Duolingo looks strong in the smaller low margin segments and weak in the largest most profitable and fastest-growing segment.ĭespite its excellent financial situation and growing revenue analysis of this industry suggests that Duolingo may never make a profit. ![]() The language learning industry is large but it segments into various sectors some of which have the potential for large profits others less so. My bearish thesis is based on a competitive analysis of the market Duolingo operates in. Duolingo has a flawless balance sheet and has grown its revenue stream quickly whilst maintaining a healthy profit margin. Duolingo had more than 500 million downloads in 2021, making it one of the most popular learning apps in both the App Store and on Google play. ![]() The app is beautiful it has an excellent interface with gamification features that many people find helpful, even addictive. Duolingo ( NASDAQ: DUOL), blessed with proven IT entrepreneurs as its founders, is undoubtedly the best app in its field. ![]()
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