Matt Skaruppa: Yes, happy to talk about the family plan retention rate. So, Ralph as you know we manage the business to LTV, so that’s why retention is important. The family plan does have a materially higher retention rate on an annual basis compared to the other — to the annual plan. And so — and it also has a higher price point. So, it’s just all around a higher LTV product. So, as we shift more towards family plan we’re just really trying to optimize the LTV of the platform over time. And we think there’s a lot of opportunity to do that this year.
Ralph Schackart: Great. And then historically Matt I think you’ve talked about adjusting regional pricing. Maybe sort of give us a reminder of your strategy for the rollout of this year will be a phased approach, will be sort of country-by-country. Just any color you could add on that would be great. Thank you.
Matt Skaruppa: Yes. Yes. So, again pricing is another lever that we use from time-to-time we experiment with. This year I think the pricing story will be less around regional pricing. So, if you remember, we rolled out a pretty broad-based around the world regional pricing change in 2022. We’ve basically lapped that through — in a revenue perspective throughout the course of 2023. If we change prices this year — we will from time-to-time with experiments. But the bigger overall price change for this year will be as we experiment with the three tiers. So, we saw a lot of demand at higher prices for our MAX offering. And we’re going to experiment with that this year and see what happens and that’s where I would expect to see more impact on pricing throughout the year as we roll that out.
Ralph Schackart: Thank you.
Deborah Belevan: Thanks Ralph. And the next question comes from Aaron Kessler of Seaport Research.
Aaron Kessler: Great. Thanks guys. A couple of questions. Maybe just first on the in-app purchases if you can give us your thoughts on growth there, how we should be thinking about that for 2024 as well as some of the other revenue lines within that including Duolingo English test and advertising? And then just anything we should be ways we should be thinking about paid sub conversion as well for 2024?
Matt Skaruppa: Sure. I’m happy to start and Luis can jump in. So, again, Aaron as you know the biggest line item of our business is subscriptions that’s going to continue to be the focus both of revenue growth, bookings growth this year, but then also resourcing. And so, when we look at ads, ads grew a lot slower than subscriptions in 2023. I expect that kind of ad growth delta to be relatively similar in 2024. I don’t see ads picking up speed compared to our subscription product. DET is still early in its journey. It’s had enormous growth over the past several years, it’s 30x’d. It’s a little bit harder to forecast but it’s typically grow slower than our subscriptions as well. And then IAP is the last remaining piece. In 2023, it grew really impressively.
And in 2024, I would expect it to grow nicely as well, but it grew so rapidly in 2023, hundreds of percent, I don’t think it can grow as fast as that. So, I’d expect it to grow probably more in line with all the other revenue lines.
Aaron Kessler: Great. And just that pace of conversion any way to think about that in 2024?
Matt Skaruppa: Yes. So, the way we think about pace of conversion internally is on a cohort basis. And throughout 2023, essentially every cohort of new users had higher free-to-pay conversion. So, we felt that that was evidence of really adding high-quality users to the platform. We don’t see any reason that that’s likely to change in 2024 as of now. What that means is at the aggregate level on a — if you do the subs to the last 12 months MAU ratio that we publish, I wouldn’t expect that to move all that much this year just given how rapidly our MAU base has scaled.
Aaron Kessler: Great. Thank you.
Deborah Belevan: And your next question comes from Zach Morrissey of Wolfe.
Zach Morrissey: Hi, thank you. I guess first just on the 2024 outlook on the user side of things just only kind of expecting a slight deceleration. Historically, we’ve seen — you’ve called out kind of these one-off events like Barbie or House of the Dragon that’s kind of been a nice tailwind for users. So, just curious kind of what you’re seeing today or kind of have line of sight to throughout the course of the year that kind of gives you comfort on the user growth kind of sustaining these really strong growth rates going forward?
Luis von Ahn: Yes. Thanks for the question. So, we’re — the majority of our growth comes from just making our product better. I mean it’s mainly word of mouth and because of that it’s actually quite predictable. I mean it’s not perfectly predictable, it is quite predictable because we just know that our product just keeps getting better and better. So, we expect that to be the case in this — throughout this year. We’re, of course, very proud of the fact that for 10 quarters in a row we accelerated the user growth. And that’s what’s kind of surprising that we just — we always kept on thinking well maybe this is — we’re going to kind of not accelerate user growth anymore, but we did that for 10 quarters in a row. And this time around, we expect kind of mid-50s going forward.
And part of the thing that also helps us feel comfortable about this is we just have so much more of a TAM. I mean we’re — there’s about two billion people in the world learning a foreign language. We have close to but slightly under 100 million MAU. So, there’s just a lot more room to grow. So, we feel pretty good about that.
Zach Morrissey: Great. Thanks. And then, just one on — I think you’re leaning into AI to kind of help generate kind of content creation and personalization of some of these courses. Just curious for like a progress update there. And kind of — I think there were press reports earlier this year in terms of that kind of helping also drive kind of cost efficiencies in the business as well. Just curious how you’re thinking about the kind of opportunities to see kind of further kind of leverage from AI there?
