Good afternoon, welcome to Duolingo's Q1 earnings webcast. My name is Debbie Belevan, head of IR. Today after market close, we released our quarter-end shareholder letter with our Q1 results and commentary, which you can find on our IR website at investors.duolingo.com. On today's call, we'll have Luis von Ahn, our co-founder and CEO, and Matt Skaruppa, our CFO. They'll begin with some brief remarks before opening the call to questions. All attendees are in listen-only mode. Analysts will be able to ask a question by using the Raise Hand feature. Please note that this event is being recorded. Just a reminder that we'll make forward-looking statements regarding future events and financial performance, which are subject to material risks and uncertainties. Some of these risks have been set forth in the risk factors of our filings with the S.E.C.
These forward-looking statements are based on assumptions that we believe to be reasonable as of today. We have no obligation to update these statements as a result of new information or future events. Additionally, we'll present both GAAP and non-GAAP financial measures on today's call. These non-GAAP measures are not intended to be considered in isolation from, a substitute for, or superior to our GAAP results. We encourage you to consider all measures when analyzing our performance. With that, I'll turn it over to Luis.
Hello, hello everyone. Thank you, Debbie, and welcome. I'm proud to report that we kicked off this year with another great quarter. We had strong user growth, top-line results, profitability, and free cash flow. In the Q1 , our user growth exceeded our expectations. DAUs increased 62% year-over-year to 20.3 million, with all major markets growing nicely. Our strong user growth, of course, helps us deliver on our mission to create the best education in the world and make it universally available. It also helps us increase paying subscribers, which are up 63% year-over-year to 4.8 million or 8% of MAUs at quarter end. This user and subscriber growth led to bookings and revenue climbing 37% and 42% year-over-year, respectively.
Thanks to our continued financial discipline, this quarter saw us post our highest profitability ever. As a result of this outperformance, we're raising our top line and profitability guidance for this year. Matt is going to walk you through our updated outlook shortly. I've said many times before that the hardest thing about learning a language is staying motivated. That's why I'm proud that our engagement numbers continue to improve, with our DAU to MAU ratio reaching an all-time high of 28%, compared to about 25% a year ago. The number of DAUs with a streak longer than seven days grew to nearly 14 million. Our goal is to keep learners coming back to our products every day, we mainly do that by continually innovating and improving them so that they are fun and effective.
This quarter's shareholder letter focuses on how well the recent advances in generative AI complement our existing competitive advantages, like our data moat, our beloved brand, and our unique way of teaching. As a former computer science professor, I've always believed that humans and computers working together can accomplish incredible things, and applying this synergy to benefit the greater good has long been my passion. I also feel very fortunate to be among the companies with the best chances of taking advantage of the rapid advances in AI. As you'll recall, last quarter, we announced our new higher-tier subscription offering, Duolingo Max, which is powered by GPT-4. We are proud that we are one of the few companies that have launched a live consumer-facing product with this technology. That we did this so quickly speaks to the talent of our team.
Last quarter, my shareholder letter reminded everyone that our freemium business model enables us to grow organically, keeps competitors at bay, and provides us with enormous amounts of data that we use to make our products better. Of our large user base, we're able to test Max features on small fractions of users and iterate rapidly. This is a great example of how our model works in general and how we'll use generative AI in particular. As you can tell, I'm very excited about all the possibilities I see with AI and Duolingo Max, I should emphasize that we're still in the early stages of rolling Max out. We'll continue to update you about the progress we're making over time. With that, I'll turn it over to Matt.
Thanks, Luis. To recap our impressive results, in the Q1 , we delivered 37% bookings growth year-over-year, which was about 42% on a constant currency basis. We had a net loss of $2.6 million compared to a net loss of $12.2 million in the year ago quarter. We post our highest quarterly adjusted EBITDA of $15.1 million, which was a 13.1% adjusted EBITDA margin. We also had our highest quarterly free cash flow margin of about 25%. Based on the strong start to the year, we feel very good about our Q2 and full year outlook.
For Q2 2023, we are issuing guidance of $128 million-$131 million in total bookings, $122 million-$125 million in revenue, and an adjusted EBITDA margin of 11% to 12%. For the full year 2023, we are raising our guidance to $552 million-$561 million in total bookings, $500 million-$509 million in total revenue, and we are updating our adjusted EBITDA margin range from 11% to 12%, which reflects an incremental margin of about 32%. Because of the strong trends we saw in Q1, we are guiding to continued strong top-line growth, with bookings growing at 30% year-over-year at the midpoint and revenue growing at 37% at the midpoint.
The combination of strong top-line growth and continued discipline on operating expenses is why we feel good about raising our adjusted EBITDA margin guidance at the midpoint. In Q2, we expect each non-GAAP expense line item to show operating leverage year-over-year, with R&D showing about 1 point of improvement as a percentage of revenue, G&A showing about 3 points of improvement. S&M showing about 1.5 points of improvement. I know that the S&M line would show about 2.5 points of improvement, but for the roughly $1.5 million of S&M spend that was time shifted from Q1 of this year into Q2. As to the seasonality we expect for the rest of the year in adjusted EBITDA, we are guiding to an 11% to 12% adjusted EBITDA margin for Q2.
Our Q3 margin will be lower than Q2, that's the quarter in which the largest portion of our new hires start. Then in Q4, the margin will expand as that quarter is typically our strongest revenue quarter, and we don't expect a material step-up in cost between Q3 and Q4. As Luis mentioned, we are excited about Duolingo Max, we are still in the early days of rolling it out. We have not yet included any material amount of bookings or revenue in our guidance for this new higher tier. We will keep you posted on the progress in the coming months. Finally, we ended the year with approximately 48.3 million fully diluted shares outstanding using the quarter-end close price. As we mentioned on the last call, we expect to end the year with about 2% dilution from equity issued to employees.
With that, I'll turn it back to Luis.
Thank you, Matt. I just wanna take this opportunity to thank our amazing team, whose collective passion and commitment to excellence helped us deliver another excellent quarter. Now we would be happy to take your questions as long as they're good. I'll turn it back to Debbie to manage the queue.
All right. Thanks, Luis. Just for our analysts, as a reminder, if you have any questions, you can use the Raise Hand feature. Our first question comes from Mark Mahaney of Evercore.
Well, I hope this question is good. We haven't talked to you.
It better be , Mark.
H aven't mentioned yet, one of my favorite topics, which is Math. Could you just, you know, talk about what you're seeing early on in terms of the interest in that? Then could you talk a little bit about the China market too? That's kind of waxed and waned, but I think it's been more waning or now waxing, for you, becoming stronger. How much of a contributor that's been to you in terms of your MAUs and if at all your paid subs? Thank you.
Well, thank you for the questions, Mark. Of course, Math is also one of my favorite topics. As you know, we launched an app to learn Math a few months ago. It's doing really well. It's growing entirely organically, and it's growing very nicely. I should mention, of course, this is still the very early days, and it's still also a very small team. We're, you know, we're just basically have a long list of features that we still need to add, and we're working on doing that. I don't know if there's anything else to say other than I'm loving using it. Very soon there's actually gonna be more content in it, more advanced content. We're very happy with that.
In terms of China, we're also very happy with our progress in China. We're, you know, it's one of our fastest-growing countries. I should remind people, though, I mean, yes, China is one of our fastest-growing countries, and we seem to be doing well, but it is still a small market for us. It's probably, 2% to 3% of our revenue, give or take. But it's growing very nicely and, you know, we're very happy with it.
Thank you, Luis.
Thank you, Mark.
Thanks, Mark. All right, next question comes from Justin Patterson of KeyBank.
Great. Thank you very much. Two, if I can. First, just a big picture one. We've seen a lot of companies in gaming and dating hit an asymptote around monetization and engagement. Could you talk a bit, Luis, about just some of the guardrails you have in building product in a way where monetization initiatives don't necessarily impede the monetization or impede the consumer experience? That'd be the first question. Since you alluded to it in your prepared remarks, would love how you're thinking about just leveraging AI more over the future, whether that's something that investors should think of as just broadening the set of educational apps that Duolingo can participate, so even moving beyond Math over time to even just building deeper, more immersive experiences in existing apps?
Moving up from what might be a casual learning experience to really gaining mastery of a competency. Thank you.
Thank you. Great questions, Justin. In terms of the monetization guardrails, let me just describe to you how we develop product. The way we make our product better is we run a lot of A/B tests. I mean, we're running hundreds of A/B tests every quarter. For each A/B test, usually it's trying to improve something. It's trying to improve either how well we monetize or it's trying to make the app more engaging or it's trying to teach better, et cetera. It usually has a goal. In addition to the goal, for every A/B test we run, we also have these guardrail metrics.
For example, if the goal of an A/B test would be to improve monetization, we may do something where, like, we make the Subscribe button bigger or something like that. This is just a silly example. The goal of that would be to improve monetization. We also look at what it does to our engagement. We look at people spending more or less time on the app. We look at whether people are learning more or less for that A/B test, et cetera. We only launch experiments that do not mess up our guardrail metrics. In this case, if making the Subscribe button bigger would make it so that people are spending less time on the app, we would not launch that experiment. That's what we're doing, and it's actually worked out.
We've been doing this for years. It's worked out really well to be able to grow our monetization, without having an impact on our user engagement, which just to remind you, for us internally, we believe user engagement and user growth is the single most important thing. Because from that, all kinds of good things come up. I mean, when we grow a user, even if it's a free user, we have the chance to convert them into paying subscribers over the next several years because they'll continue coming to Duolingo. This is how we think about that. In terms of AI, you know, we're extremely excited. I'm personally extremely excited about AI.
Since we launched Duolingo, the goal has always been to make something that can teach you as well as a one-on-one human tutor, but without the one-on-one human tutor, because one-on-one human tutors are expensive and not very scalable. That's been the goal, and we've been using AI from the beginning to be able to do that. Now, the main way in which historically we've used AI is we've looked at all the exercises that our users solve, and at this point, we're getting about 1 billion exercises solved by our users every day, and we use that to improve how well we teach. In particular, we use that to try to give users the right exercise at the right time.
We try to make sure that you get exactly the right exercise, and we use all the data from our users. We've built a very sophisticated model called Birdbrain that can do that. Now, over the last few months, we've had this amazing thing of generative AI, and ever since that came out, ever since we got early access to it, we started developing features for it. What's amazing about it is it's like having a really good writer on staff. It allows us to just have really good language that can come pretty quickly. That has allowed us to develop new features. For example, we developed two new features as part of our new higher-tier subscription offering called Duolingo Max.
One of them is called Explain My Answer, which basically explains whenever you have a mistake, it gives you a human language understandable explanation. The other one's called Roleplay, where you can basically, you know, roleplay, or you can pretend to be something like pretend to be ordering a croissant in France or something. That gives you conversational practice. So far, we've decided to use AI to try to teach closer to a human. That's also, of course, going to allow us to get into other areas. We are going to be investing in making, for example, our other app, our math app, for example, better, Duolingo ABC better. We're also going to be using AI to create content faster and cheaper.
T1 here's the part that is online, that is live, where people are interacting with the AI, but there's also the part that is offline, where we just generate a lot of the content, faster and cheaper. You know, in our case, we just think there's a massive opportunity to make our apps teach better, be more engaging, which is really important, and also to, you know, have lower costs.
Yeah. Just to jump in there, Justin, I think the one additional point I would make that I think is our not-so-secret weapon is Luis on this. You can tell by his answer there how excited he is. I mean, it's really been a dream of his to have this type of technology so you can teach in this way. I mean, he really wrote his PhD thesis on how humans and computers could work better to learn better together. It's just a moment in time where I'm pretty lucky that he's leading us through this. It's great.
Great. Thank you both.
Thanks, Justin. Your next question comes from Ralph Schackart of William Blair.
Good afternoon. Thanks for taking the questions. I'm just curious on DAU to MAUs, strong yet again and saw further reacceleration that quarter, which is really impressive. Just curious if there's anything you'd call out there driving that really strong growth once again? Second question, I know you've been testing pricing in different international markets. Just curious what sort of trends you're seeing there and how users are responding to different pricing plans? Thank you.
Thank you, Ralph. In the case of the, you know, DAU and MAU, you're right. We keep getting the product, our main product, the Duolingo language learning app keeps getting more and more engaging. Our DAU to MAU ratio keeps getting better and better. We're at 28% now. The reason for that is just because we keep running more and more A/B tests that make our product more engaging. That's really it. The types of things that we do, we make our streak feature more prominent or just more intuitive. We make our social features better so that users get their friends to come back. In general, we just have a very high-performing growth area.
For us, our growth area, what it does is it grows our DAUs. Of course, our DAU to MAU ratio is gonna get better and better because nobody in this company is looking at MAUs. MAUs, it's nice we report them and everything, but we are trying to grow our DAUs because we believe that getting somebody to come every single day is the right way to, you know, learn a language. You can't learn a language by coming once a month. So that ratio keeps getting better and better, and I would expect that to continue getting better. You know, your next question is about regional pricing. So just to remind everyone, when we IPO'd a couple years ago, we had the same price everywhere in the world.
We of course knew that that was not, you know, the most optimal price. Over the last couple of years, we have tried prices in every country, and at this point, in most regions in the world and most countries in the world, the price makes sense in that it's pretty correlated with the GDP for that country. The prices make sense. That has been an increase in, you know, that has implied already an increase in our bookings. I should say the increase was nice. We took it, of course, but it, you know, it wasn't life-changing, because what happened with the prices was, you know, in wealthy countries like the U.S. or Europe, the prices remained pretty similar. Sometimes they went up a little bit, but they remained pretty similar.
Whereas in poorer countries, the prices went down quite significantly. What that did is it got a lot more people to buy. You gotta remember, these are poor countries where digital subscriptions are just not as mature or, you know, sometimes people don't even have payment methods. We saw the decrease of prices in these poor countries as an important step in monetizing them. You know, we also understand that, you know, over years, over the next few years, more things have to happen in order for us to monetize this as well as we're monetizing the wealthy countries.
Thanks, Louis.
All right. Next question comes from Andrew Boone of JMP Securities.
Hi, guys. Thanks for taking my questions. One on Duolingo Max. I would assume that Duolingo Max is attracting a more advanced learner to the platform. Is that true? What are you seeing in terms of the type of learners that are actually adopting Duolingo Max? Secondly, just broader question on LLMs more broadly, how do you think about this change in the competition for Duolingo? Are you at all concerned there? What comes top of mind as you think through that? Thanks so much.
Thank you, Andrew. Okay. In terms of Max, you know, I should say, we were super happy that we launched Max exactly the day that GPT-4 was announced. We're super happy that we put that out there very fast. Of course, when we put that out there, we didn't give it to all our users. We gave it to only a small fraction of our users. The reason for that is because that's how we do product development here at Duolingo.
We start with a small fraction of our users, and then particularly for complex features like Max or like our home screen redesign or like the Family Plan or anything, it usually takes us about a year to, you know, optimize it on small groups of users, and then we start giving it to more and more users. That is just how we do product development. That is what's happening with Max. At this point, you know, we can't really give, for example, metrics for Max or anything like that because, you know, we just don't know where this will end up. What I can say is, there is a lot of demand for this higher tier, which is good. We're happy with that. There's also demand for the actual features.
Now to your question about whether this is attracting more advanced learners, the honest answer is, we don't know. It is, you know, a number of people are buying it. It's hard to know whether they're more advanced learners or not, but, you know, they're very interested. They may, you know, they may be more committed or wealthier, is probably the things that I would say, rather than more advanced. t’s just hard to know what it’s doing . I should also say because, you know, when we were preparing, Matt would kill me if I did not say that you should not include Max in your models because we ourselves are not including Max in our model. It is too early to tell. That's the thing with Max.
With the language models and competition, this is just not something we're particularly worried about. There's enough moats for us. For example, you know, large language models are this great thing that, you know, allow you. You know, they're trained on the whole worldwide web and, you know, they have this very generic information, so whenever you ask it to write something, it's basically what the worldwide web would say. It's kind of like the average of what the worldwide web would say. What they don't have, and they're not trained with, for example, data about how people learn a language, or they're not trained with all the data we have. We have a lot of data.
The way we use these large language models is kind of on top of how we, you know, we do our AI for our own stuff. We have this huge data moat of all the people that are learning a language with us, and it is, you know, I don't know, 10, 20 times larger than any of our competitors. That's one thing. We also have the distribution to, you know, even if we just apply the large language models without any tweaks, which we're not doing, we're actually tweaking them, but even if we did that without any tweaks, we still have much larger distribution than anybody else. That's a big thing.
We also, of course, have other moats like, the fact that our product is so engaging and our brand and also all our, you know, our engaging characters like the, like our owl being passive-aggressive and stuff like that. This is just not something that we're particularly worried about, in terms of competition. Hopefully that answers your question.
Okay. Next question comes from Ryan MacDonald of Needham.
Thanks for taking my questions. Congrats on an awesome quarter. Luis, maybe just piggybacking off of that topic, as you think about sort of Max and sort of the evolution of it as you sort of mature in scaling it out, you know, I think one of the benefits of why sort of ChatGPT sort of gained so much adoption so quickly is not only was it powerful, but it was also free and learners got to experiment with it. As you think about rolling out the features more broadly with Max, how do you balance sort of functionality with pricing given, you know, obviously if Max is at a as a sort of fairly steep increase relative to the core Super Duolingo?
Yeah, that's an excellent question. It's something that, you know, over time, we're going to see what features belong somewhere or what features belong where. At this point, we're happy that we have... You know, we had the standard free tier. We've always had Super Duolingo or, you know, for the last five years, we've had kind of the paid tier. We knew that adding an extra higher tier was going to be good for the business, so GPT-4 was a good kind of excuse, a good reason to add a higher tier for the business, and we have that.
Now we have these three tiers, and over the next literally years, it's gonna take us years, we're going to be figuring out where to put each feature, and we're gonna do what we think is best for our business. You know, it's important to mention, of course, you know, we care about revenue and everything, but the single most important for us is our free user growth because that leads to good stuff everywhere. Yes, if we see that certain things make more sense in the free tier, we'll put them there. The one thing that I'll mention, which is important to mention, is providing particularly live access to Large Language Models is not super cheap. You know, for example, in our case, we use OpenAI, we have to pay them for GPT-4, et cetera.
For now, we keep them, you know, we keep these features in the highest paid tier so that, you know, we can actually pay for that cost. Over time, though, we expect that the cost of querying large language models is gonna go down quite significantly, and that may allow us to do certain other things, for example, for the free tier. It's just something that is gonna evolve over time, and it's kinda a little early to tell where these features are gonna end up, you know, in kind of in an ongoing basis.
Makes sense. I appreciate the color. That was my good question. That was my lame and sort of bad one. I apologize if I missed this. You know, what really struck me on the metrics is the is the nice jump quarter-over-quarter in paid subs. If I missed it, I apologize, but was there anything that you, in terms of a specific region, or sort of specific feature that you'd attribute that large jump that you saw sort of fourth quarter to Q1 on the paid subs side?
Well, there's a number of things. Our paid subscriptions just have been consistently growing, you know, ever since we launched our subscription. That's just basically, they just keep growing and growing and growing. And there's no single reason for that. I mean, we just get better and better at converting our users. And we do that by a number of things. I mean, one of them is just making the subscription more interesting by adding more features to it or improving the features for it. Also by merchandising, we get a lot better at knowing when to advertise the subscription, what to say to you to get you to subscribe. All of that just we run enough A/B tests that gets us, you know, to more and more subscriptions. I think that's the main answer.
That's just the standard thing that keeps happening every quarter. There was a jump with it. There's been a jump in, I would say every quarter that since we've been public.
Yeah, since we've been public, we've seen a nice trend up in conversion basically every quarter. I, you know, I think this recent quarter was just kind of continued strength in our conversion trends based on what Luis said. Yeah.
Great. Thanks again. Congrats on a great quarter.
Thank you, Ryan.
Okay, next question comes from Mario Lu at Barclays.
Great. Thanks for taking questions. The first one is, you know, why is Love Language not a real TV show?
Listen, a lot of people have asked us for it. You know, we're concentrated right now on our main business, I think is the answer.
It's good.
It is internally, I would say if we had a vote, half the employees would vote to make it a real show or more than that.
Got it. You had my vote as well. The first one's on DAUs. You know, you said it's a very important metric that you guys track. It accelerated in the Q1 . I guess any main drivers for this acceleration? I know you guys talked about, you know, compounding, but is it social media like TikTok, like the newest promotion, anything to call out? How should we think about DAUs for 2Q and the rest of the year?
Yeah. I mean, the, you know, the main reason our DAUs keep growing is because our product keeps getting better. That's it. I mean, we can track that, we know that, and it's this compounding effect of just it becoming stickier and stickier. That's the main reason. Now, there are other reasons. For example, you know, you mentioned marketing. We keep getting more efficient and better at marketing. Our marketing team has really found its stride in terms of what are the things that the levers that work and don't. For example, we have found that organic social media is really good for us. TikTok is an example, but it's not just TikTok. I mean, we do really well in Twitter. We do really well in Instagram.
We just found that we have a brand that is very good for social media, and it's organic. It's not paid stuff, so that works really well. We have found that influencers work, and this is paid. Paid influencers work really well in certain countries, particularly in Asia and Latin America. Paid influencers work really well. We have also found that some small amount of performance marketing in, usually in cheaper markets works also really well for us. So these are the things that we have found work well. Combined, all of this has just, you know, keep accelerating our DAUs.
In terms of what to expect for Q2, I'll let Matt speak to that, but I, you know, I think the one thing that I'll say is it's very nice that our users keep, you know, the growth of our users has been accelerating for I don't know how many quarters in a row by now. Obviously, this can't go on forever. That's the one thing that I'll say. You know, I don't think we can have 300 quarters of accelerating user growth. At some point, we run out of people.
That was, that was gonna be my point is we feel really good about the 7 quarters since we've been public. It can't go on forever, and we can still have really strong user growth even if it doesn't accelerate. It's not a requirement that things accelerate. Just, you know, we want that to stay strong and we like the trends so far in this year.
Great. Thank you. Just, one more on gross margins. If we look at COGS, you know, I assume a big portion of it is App Store fees. There's this new ruling from the Apple versus Epic court case where, you know, apps can now, go direct to consumer, if you will. I guess what is Duolingo's strategy in terms of potentially going to direct to consumer, and kind of expanding gross margins that way? Thanks.
Yeah. I mean, historically, we've been pretty clear that, you know, we view the App Stores as good partners. Luis mentioned part of our advantage earlier as being our incredibly widespread distribution, and that's, you know, in part because of the App Stores. Our margins on our subscription products have gone up because more and more users are staying on our platform for longer than a year, and that reduces our App Store fees. That's our primary way to, you know, increase subscription gross margins over time. As far as the other, you know, taking different tax, that's not really been something. We've experimented with in past, but it's not really been a focus, and I don't expect it to be a focus for us in the near term.
Got it. Thank you.
Great. Next question comes from Arvind Ramnani of Piper Sandler.
Thanks, Debbie.
All the good questions have been taken, so you get my stinky questions. I wanted to ask about Duolingo English Test. I know it's not a big part of the story, but, you know, it's kind of I think it drives a decent amount of optionality if some of the dominoes were to fall in place. Where does that stand in terms of like either broader acceptance from universities or, I think you said the British or the Canadian government are the other sort of like big dominoes that will get it rolling?
Yeah. Thank you for the, for the great question. I mean, the Duolingo English Test is something that we're all very excited about. Me, personally, I'm very excited about the Duolingo English Test. As you said, it provides quite a bit of optionality. It's also, it's quite complimentary to the Duolingo language learning app because, you know, if we are able to really win at that would help us, you know, own the score that people use to talk about their languages. What we really would love to get to is to a point where, as opposed to people saying, you know, when they're asked, "How much French do you know?" As opposed to people saying, "Oh, I took four years of French in high school," we want people to say, "Oh, I'm a Duolingo 65.
Mm-hmm.
That's, of course, that's gonna take a while, but that's kind of where we wanna get to. The Duolingo English Test is one of the ways in which that, you know, that type of score will get a lot of legitimacy. We're, you know, we're very excited by it. It keeps growing. It's growing nicely. Now, of course, I should mention that it's important to say it's, you know, it's about 10% of our revenue. The growth of the Duolingo English Test is not going to be as smooth as the growth of our language learning app, which is just kind of this very predictable, very smooth growth.
Mm-hmm.
The Duolingo English Test has just these externalities, like for example, governments accepting it, universities accepting it. The growth is gonna be just less smooth. We're, you know, we're very happy with the progress. We've made a lot of progress with among U.S. institutions. We're making now good progress with Canada, Australia, and the U.K., and that we keep growing the number of accepting institutions there. You mentioned governments. Yes, we are working on acceptance of, by the U.K. government and, you know, Canadian and Australian government, of course, the U.K. being the bigger one. That's just gonna take some time. The, you know, they have a call for proposals for tests, which hasn't even gone out. We don't know when that's gonna go out.
It's, you know, they've been talking about it for the last year. At some point it'll go out. It's completely outside of our control, that'll, you know, that's the thing about dealing with governments.
Yeah. Yeah. Terrific. Then, you know, just in terms of, kind of your math, you know, like if you can kind of share some kind of, I don't know if you've, if I missed it, but any kind of metrics on sort of usage or anything you're sort of willing to kind of share in terms of kind of progress you made on math?
Yeah, we're not sharing exact, metrics yet.
Mm-hmm.
We are very happy with the growth, is what I can tell you. I mean, it's growing very nicely. You can probably look at, you know, there's ways to track metrics external, and you can see that it's growing very nicely.
That, terrific. Yeah. That sounds great. Thank you.
Thanks, Arvind.
Thanks, Arvind. Next question comes from Nat Schindler of BofA.
Hey, thank you guys. I think I'm last here, but Luis, you're a computer scientist and a language learning expert. You're perfect person to ask this question because I really, I've been asked this a lot recently. I've been told this is going to happen. I really wanna know. I'm trying to figure out, how is a search box gonna teach me French?
You mean, how is a search box like a ChatGPT gonna teach you French?
Yeah. It's, really amazing. I keep getting told again and again that ChatGPT is gonna teach me languages, and I'm truly, I'm a little hard, I'm hard-pressed to figure out how that would work. Do you have any ideas?
Well, I'll tell you this: I am sure there exists some savant out there who can probably learn French by just querying something like ChatGPT. Similarly, for hundreds of years, you've been able to learn French by reading books. Books have been out there. You can actually, in fact, some people, a small number of people can actually learn a language by reading a bunch of books. Your average person does not have enough motivation or enough aptitude to be able to really learn a language by reading books. Similarly, I don't think that they can just sit there with just a search box and be like, "Hi." Usually, your average student just does not even know what to ask. Also, the other big problem is keeping yourself motivated.
You know, we've always thought, this is something that I think sets us apart from most educational companies. We've always thought the hardest thing about learning something is staying motivated. The reason we believe that is because the technology to learn anything has been there for like thousands of years. It's called books. You could actually learn almost anything. You wanna learn quantum mechanics? You actually can. You can go and read a book. Just turns out the vast majority of people choose not to because it's really boring. The hardest thing about learning anything is staying motivated. That's the thing.
That's what really sets us apart with Duolingo, that we really are, you know, we are going to use things like GPT-4, but we're gonna combine it with things to keep you more motivated and also guide you through it. I mean, if you have no guide, it's very hard. I mean, this is like asking you to just learn math by yourself. You can, but it's, you know, the vast majority of people just won't do it. I think it's the same thing.
Great answer. Thank you. More serious question, how do I size your market? I know you brought up the 1 billion people around the world who are actively learning a foreign language, and my guess is, of your current subscriber base, half of which probably are in the U.S., all of which, the bulk of which are adults-I would say 100% of that group at least was not actively learning a language before Duolingo. How do I use... What's the, what could possibly be the way to know where you've come in your penetration cycle? Because I'm looking at this accelerating, at DAUs and MAUs, and I'm just wondering, you know, everybody's trying to figure out when and where this goes.
It's a really good question to which, you know, the most honest truth is we ourselves don't really know. I'll tell you the things we know, that we know a few things. There's about 2 billion people in the world that are learning a foreign language. They're spending about $60 billion a year. That is, we know that. We also know, which is very similar to what you said, if you look at a country like the U.S., we're massively growing the market. 80% of our users in the U.S. were not learning a language before Duolingo. They were not in the market. We also know we're growing the market.
It's because we make it so easy, and we make it so, you know, we make it so that people can use Duolingo with no friction, essentially get very engaged with it, and then they feel good that they're, well, they're learning a language. They feel good about that. It's hard to say exactly where this will stop. I mean, I wish I knew. I, if I knew, I would tell you. We do know that there's a lot more room. I mean, we, you know, we have, I think the latest numbers are 73 million MAUs. There's a couple of billion people out there actively learning a language, so even if you just, even if we weren't growing the market, there's still more room.
Again, we're growing the market, so it, you know, my answer to you is, I wish I knew.
Great. Thank you.
Thanks, Nat. We have no more questions, so I'll turn it back to Luis.
That's it. You know, thank you for all the great questions. You know, it is our dream to be able to make apps that really teach, you know, as well as humans can, and this is what we've been working on, and we're gonna continue working on that. That's, you know, that's the dream that I have. That's the dream that this company has. The single most important thing that I can end this with is to remind you, beg you to please do your language lessons today.