DUOLINGO, Inc - DUOL
DUOL has a language learning platform that offer to teach you to speak 40 different language; which… is a lot. And while I still find English challenging - I did, in fact, study both Latin and Spanish back in the day. Truth be told - neither much ttok and all I remember of either is a few really swell phrases like: Donde es La Biblioteca? And the always good to know after a night of tequila: Donde es el Bano? As for the Latin - well… I do fairly well at converting the Super Bowl symbols into actual numbers; however, nobody I know speaks latin, not even Catholic priests now days, and it sort of vanished from non-use.
Note: I did have a fraternity brother once who talked me into signing up for Russian which he claimed he could get us through; although, without telling me, he dropped the class just before the drop period ended. It did not end well.
So what about Duolingo?
Current Price: $150.06
About 4.6% Below its High
Market Cap: $6.1B (Give or take)
1 Month Momentum: + 10%
YTD Momentum: + 111.5%
EV/Sales (fwd): 10.85
Since we are at heart Growth Investors the only question to answer is this: Does DUOL have the goods? Does it walk the walk - so to speak. And if it does walk the walk and have the goods then what is the TAM - its competitive position, its path to profitability, etc…etc…etc.
Well…you won’t find those answers here. Just some easily researched data that might come in handy - especially if you ever want to learn Nepalese for when you challenge Everest or K-2 (and when you do for goodness sake - man up and leave the oxygen to the amateurs) or perhaps French so you can impress your wife on a romantic date - or something like that.
DUOl last reported FQ1 on May 9th with some nice stats:
Revenue Growth of 42.4% Y/Y which totally almost, sorta, trashed/eeked by and outgrew its last report’s 42.2% Revenue Growth.
Paid Subscribers totaled 4.8 million at quarter end, an increase of 63% from the prior year quarter;
Monthly active users (MAUs) grew 47% to 72.6 million from the prior year quarter and Daily active users (DAUs) grew 62% to 20.3 million from the prior year quarter.
Net loss totaled $2.6 million, compared to a net loss of $12.2 million in the prior year quarter
Here is the Press Release:
Here is the After Report Headline:
AND…Best of all - Their Guidance (at the high end) produces Revenue Growth of +41% BEFORE their typical Revenue Beat of 2-4M. So - rock steady there.
Fan Reaction: The stock popped from 134.30 the day of the report to $147.70 - a nice quick gain of 10% where is has lingered around till this day. Not too shabby.
A couple of Scouting Reports:
This one from the Fool or someone at the Fool who wants you to buy DUOL hand over fist. So should you:
You’ll just have to figure that out for yourself. As for me, its a hard pass just now, not because it might not be a great investment; but rather, largely and primarily due to dysfunctional and malingering laziness as well as new fangled language technology.
The thing about learning a language is that you have to apply memory and study - skills which I somehow lapsed out of a few years back. Now the fact that they have some AI going for them and almost 5 million subscribers (up 63% Y/Y) is really swell and speaks to further upside from here; however, given what I am almost absolutely sure that I might know - is that there are potentially better candidates laying about the market just now and that might probably be a better fit for a concentrated portfolio.
Last Note: Don’t take my word for it - go look at it yourself: the good Lord knows I’ve been wrong before and fairly frequently if I do say so myself.
All the Best,