Duolingo, Inc. (NASDAQ:DUOL) Q4 2023 Earnings Call Transcript

And they can — they still are close. And then we look at the conversion from free to paid to see how high quality those users are and are those cohorts globally trending the right way over time, and they have been. And so our growth in Q4 was still broad-based and high-quality.

Mark Mahaney: And then would you — one last question. Would you call out any interesting international markets? English language is — can be such a — can have such a material impact on earnings generation for people in multiple countries outside of the US. I know some of us here need to improve our English. I do. But are there particular international markets you’d want to call out as showing particularly interesting organic growth for Duolingo?

Matt Skaruppa: Yeah. We bucket the world into kind of four big segments. And one of our segments is Southeast Asia, in Japan and then including China as well. And then Europe, both of those have shown really robust growth. Japan in particular has grown really nicely. We’ve seen a lot of countries in Europe grow nicely. So, it’s hard to single out one particular country, just given how broad-based it’s been, but those are a couple I’d say, have grown really nicely over the past year.

Mark Mahaney: Thank you, Matt.

Matt Skaruppa: Welcome

Deborah Belevan: So our next question comes from Justin Patterson of KeyBanc, who I understand is driving and not going to be on video.

Matt Skaruppa: Be careful, Justin.

Q – Justin Patterson: Yes. Thank you very much. And I’d also like to echo Louis’s thanks to the marketing team for allowing me to cheekily insert myself into the call, with this avatar while — I try Matt. I try. So just a big picture one for you and Luis. You’ve had the new user interface out for over a year now how much more the ceiling, do you think you have to go here with the product and growth teams as you just look at the opportunity to improve KPIs. It just feels like you’ve had a much broader canvas to A/B test against and you also have a much larger DAU base that’s grown over the past year.

Luis von Ahn: Yes. It’s an excellent question. I mean, we’re the teams that are dedicated to trying to figure out how to grow faster are just — they’re firing on all cylinders. They — what you’ll see — you’ll see us, we have a portfolio approach where you’ll see us try a lot of kind of these really small A/B tests that end up compounding a lot. So we’re definitely going to do that. But we also see us, try bigger things. I mean one of the things that you probably see more of in the coming months or years is, just our app becoming more and more social. So, you’ll see that. We’re spending effort on that. You’re also going to see us experimenting, with placing people better. This is what I was talking about with the English learners.

You’re also going to see us experimenting, with just teaching conversation a lot better. And so these are kind of the big things that we’re doing. But really there’s a lot of stuff, that they’re working on with literally hundreds of A/B tests per month. That pace has not decreased at all since, since the last few years. In fact, the pace is increasing.

Q – Justin Patterson: Got it. Thank you.

Deborah Belevan: Great. Next question comes from Chris Kuntarich of UBS.

Q – Chris Kuntarich: Great. Thanks for taking the question. Can we just unpack some of the strength – yes, just a little bit more color on the strength in the family plan that you saw in 4Q. And maybe can you just talk about, how we should think about or what you all are seeing as far as family plan adoption from English learners versus non-English learners?

Matt Skaruppa: Yes. I’m happy to start and then Louis can jump in on the last one. So, when we talk about the strength in the family plan, what’s been surprising is that we haven’t actually had a ton of resources devoted to taking that product and adding and doing our normal A/B testing on that as a tier or as a subscription bucket. What we did was we released it, we were excited about it and it’s grown really naturally organically. So when we talk about strength in Q4, it grew over 100% year-over-year. So just an enormous amount of organic demand for that product, because it’s a fun product. You want to do Duolingo with friends and family, you want to do math and music with friends and family. It’s just kind of a natural fit.

And that’s why this year, I can’t lay out specific road maps other than what Luis has already talked about generally, like making it more social just making it a more engaging experience. But we’re going to have more devoted resources to it this year, which gives us confidence that that could really grow nicely even above and beyond kind of that organic demand that we’re seeing in the platform.

Luis von Ahn: Yeah. I’m generally very excited by the roadmap of — it will just be much better. I mean right now it’s — we just put a plan out there. And there were all kinds of things for example, we just solved the really dumb bug, that was in the family plan your children were there but you actually couldn’t see their name. It’s just — that was just dumb. So this is — we’re just starting with that, but we are going to see us just making it a much more robust product. And you asked about, the difference between English learners or not in terms of adoption of the family plan? I don’t think there’s anything different in terms of family plan versus the rest of our subscriptions. I mean, generally we see higher penetration of subscription in wealthier countries. Certainly the US has higher penetration. And usually English learners come from less wealthy countries. So there’s probably a — basically family plan is no different than the other subscriptions.

Chris Kuntarich: Got it. Very helpful. Maybe just one follow-up, any way to think about kind of the shape of marketing spend or sales and marketing expense throughout the year? Thanks.