Duolingo CEO Not Worried About Potential TikTok Ban

It’s funny. I mean you actually read through the details. You beat on daily active user growth, you beat on EPS. You also raised your revenue outlook for the year. But it feels like really you’re a victim of your own success here in terms of the market’s expectations for you. Yeah, I mean we had, you know, the market’s going to do what the market’s going to do. We had we had ten straight quarters of accelerating user growth. You know in the last quarter it was about 64% year over year daily active user growth. It went down a little bit, but you know it’s impossible to have you know accelerating user growth forever. But we’re more focused in the long term. I mean next quarter for example, we think it’s going to be a little bit better than this quarter. So we’re we’re focused on the long term and we see a huge opportunity ahead of us. So let’s talk about the actual numbers here. So daily active users rose 55%. That is more than double what it was 18 months ago. Like you said, you can’t have, you know crazy growth forever in perpetuity. I’m sure a lot, sure a lot of people would like to. What do you see as a more normal reliable range going forward though? I mean we expect that at least for the rest of the year we’re going to be somewhere between 50 and 60% year over year growth. And it’s just because there’s there’s a lot of, I mean we’re just getting started, there’s there’s about 2 billion people in the world learning a foreign language. We’re the largest language learning, you know, method in the world, but we still only have about 100 million monthly active users. So there’s there’s still a lot of room to grow. We’re also very concentrated on teaching English better. There’s there’s something strange about the English learning market. And Duolingo, if you look at just language learning as a whole, the overwhelming majority of people are learning English, but our users, less than 50% of them are learning English. So there’s a huge opportunity for that. And and we’re very concentrated on that. Well, that was a big focus in in the earnings call as well, that strategic focus on the English product. So tell me a little bit about where you are there. Of course, like you mentioned, less than 50% of your users are learning English. I mean, where are you in terms of developing and really attracting those users to the English product? Yeah, English is a very different language than every other language to learn. Usually other languages are learned as a hobby and most people come in to learn a language, come in with little to no knowledge. English is different. English is usually learned to further your economic possibilities. And most people who come in come with prior proficiency and they want more advanced levels of the language. So this is what we’ve been developing much more advanced levels for English in particular over the last year. We have now launched, it’s very recent, but we’ve been working on it over the last year. We have now launched for all of our English courses intermediate to advanced content. So the content is now there and now we’re working on getting the word out. The dueling was good for advanced English learners. So we expect that to to have a pretty, pretty big impact over the next couple of years. And how do you get the word out because I know that Duolingo is pretty popular on social media. I mean I see the big green bird on TikTok all the time. I mean tell me a little bit about your marketing campaigns. Yeah, our marketing is, is unhinged, I mean we call it wholesome unhinged. We, you know we we’re very popular on all social media not just TikTok, it’s Instagram, YouTube and it’s it’s organic and we this is we know we we pay very little for marketing generally. It’s just all organic posts and it’s usually you know we’re just very good at doing things that people actually want to see our Al mascot, those kind of crazy antics. The good news is that we’re able to also put our message out and we’re we’re really trying to do that especially for English learners to to show that we are efficacious for more advanced people. And like you said, I mean when it comes to marketing you have that owl out across platforms. I see it the most on TikTok. I unfortunately spend a lot of time there and I have to ask, I mean if there’s a TikTok ban in the US, what would that mean for you? Yeah, you know, we’ve we’ve obviously been been looking into that when when we got big on social media over the last few years, TikTok was the first platform that we got really big on. But we’ve realized that this is, you know, that there’s some risk of TikTok, particularly in the United States. We’ve been diversifying by now. Actually YouTube is larger for us than TikTok and also TikTok in the US accounts for the minority of the views compared to international. So we have many more views on Tiktok internationally and and we have more users coming in from from YouTube. So our sense is that you know, this is, you know, if if Tiktok were banned in the US, it it wouldn’t be that impactful for us particularly because our belief is that most users if Tiktok were banned would go to pretty similar products and YouTube has YouTube YouTube shorts and Instagram has reels. So probably what would happen in the US if Tiktok were banned is that users would just go to these two platforms where we’re already pretty big. So I I we we’re not not particularly worried. It would probably be good for me. I mean personally I would probably be a lot more productive. But point taken there. I do want to talk about your different subscription tiers because you have free Duolingo, you have Super Duolingo, now you have a third tier called Duolingo. Max, I understand that you just started really rolling that out more broadly in April. And just to set the scene here, I mean, what is the difference between Super and Max? Sure. So we have 3 tiers before context. The the free tier, it’s about about 91% of our monthly active users are in the free tier. We monetize them through ads. And then to be precise, 8.6% of them are paying subscribers. The majority of them have are in our standard premium tier called Super Duolingo. That’s what we’ve had for several years of late. We’ve started 1/3 tier and the reason we started 1/3 tier is because we realize that there is appetite for some users to, you know, have something even more premium. So, so we have Duolingo Max. It’s just being rolled out right now. Somewhere between 5 and 10% of our daily active users have access to even purchase Duolingo Max. And what it has is some features that help you practice conversation a lot more and they use generative AI. So it’s right now the price point is about twice as much as Super Duolingo. I don’t know where I’ll end. We’re still, we’re still testing prices but we’re seeing really good update on it. And so we’re we’re pretty excited by it actually and I only have about 30 seconds left with you, but just tell me quickly, I mean that continued roll out of the Max product, how much of that is baked into your 2024 forecast, It’s there however it’s so. So it’s the the contribution is in in the forecast but you know we’re but the way we roll out features usually it’s it’s over a long period of time because we roll them out you know on different languages and on different markets. So the contribution is there, but it’s it’s not going to be huge for this year.