Duolingo IPO filing comes after a 120% growth in 2020 for the Pittsburgh-based language learning business after its last valuation reaching $2.4 billion. Learn more about the company here.
Duolingo Cofounded by CAPTCHA and ReCAPTCHA Creator
The 400-person company was co-founded by CAPTCHA and reCAPTCHA inventors Luis Von Ahn and Severin Hacker. The company has gone through trial and error but was still able to stick to its mission to provide free education.
Despite the mission, the SEC filing reveals that the company is also concerned about its profits. A number of Duolingo's revenue comes directly from subscriptions. The EdTech giant was able to generate 73% of its top-line income from subscriptions. 17% came from advertising, and 10% came from the Duolingo English Test or DET.
Duolingo Revenue
The company's multi-part business model looks like it is paying off, and the revenue growth grew from $70.8 million back in 2019 to a whopping $161.7 million in 2020, reaching a massive 129% increase. According to the story by TechCrunch, some of the growth might have happened during the recent global pandemic.
Duolingo reported $55.4 million in revenue during the company's Q1 2021, which represented a 97% growth from the whole year-ago period. The company just recently turned profitable on a new adjusted basis.
Duolingo GAAP Net Losses
When it comes to stricter accounting terms, however, net losses have also grown for Duolingo. During the three months until March 31, 2021, the company had a net loss of 13.5 million, which was a sharp increase compared to the same period last year when the company lost $2.2 million.
From 2019 to 2020, the company's official GAAP net losses reached $15.8 million from $13.6 million. However, the net margin had also improved in 2020, and the revenue doubled as the losses only barely crept higher.
Duolingo IPO Q3, 2021
The former startup is now effectively going to be the kick-off of the Q3 2021 IPO season. Duolingo has already raised a whopping $183.3 million in venture capital to date. Investors that already have meaningful stakes in the company include Union Square Ventures, NewView Capital, CapitalG, General Atlantic, and Kleiner Perkins, which all recently got a spot on the whole cap table through secondary transactions.
At the company's current run rate reaching around $220 million today and growth of over 100%, Duolingo should not have a problem clearing its privately set $2.4 billion price tag. This is unless the public-market investors are concerned that the EdTech market's growth is, for the most part, behind it.
Duolingo's growth by around 100% during the 1st quarter could also start to temper such concerns. Although the Duolingo IPO price is still unknown, the offering is exciting news for some investors that are into tech.
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Written by Urian B.
