A：Jillian Munson is the new CFO of Duolingo, having previously served as a long-standing board member and chair of the audit committee. She is taking over the role from Matt Rupa, who has stepped down as CFO.

A：For the reported quarter, Duolingo surpassed 100 million daily active users, achieved over a billion dollars in bookings, and generated more than $300 million in Adjusted EBITDA.

A：Luis von Ahn is convinced that the accelerating advances in AI will fundamentally change the way people learn, presenting a huge opportunity for Duolingo to redefine the future of learning.

A：The implementation of the strategy is expected to lead to slower bookings growth and lower profitability in the short term.

A：Luis von Ahn's long-term vision for Duolingo is to build a future where every person on Earth has access to the best quality of education and time spent learning is enjoyable, with Duolingo as a platform to build that future.

A：The 2026 guidance provided by Duolingo includes bookings growth of 10% to 12%, revenue growth of 15% to 18%, and an adjusted EBITDA margin around 25%. For the RQ1 guidance, the figures are 11% bookings growth, 25% revenue growth, and an adjusted EBITDA margin of 25.5%.

A：The anticipated decline in profitability is due to plans to share AI features with a greater portion of the user base, which is expected to result in lower gross margins.

A：The adjusted EBITDA margins are expected to decline three points sequentially from Q1 to Q2 and then improve through the back half of the year, with Q4 being the highest margin quarter.

A：Duolingo's board has authorized a buyback of up to $400 million in the company's shares, representing good capital allocation discipline, and is expected to be executed in the coming year.

A：AI is expected to significantly improve teaching quality, making it as good as having a one-on-one tutor and as engaging as a mobile game. It will allow for specialized support to learners, answering their questions and addressing their confusions in real-time, enhancing the learning experience.

A：AI will enhance language learning by enabling better practice of conversations through features like video calls, with the example of 'Lily.' This is anticipated to improve how well people learn and significantly benefit the market, with an estimated user base of about a billion people worldwide learning math.

A：To reach 100 million daily active users, priorities include investing in teaching languages better, improving the free user experience to remove friction, and growing new subjects like chess, which already has 7 million daily active users, and investing in new growth engines.

A：The company plans to introduce video calls into the Super Duolingo tier, as the cost of video calls has significantly decreased. There will be an AB test to determine the impact of adding video calls; if necessary, the company may meter video call access. The decision to introduce video calls in the Super tier is based on the goal of teaching a larger number of people and not on defensive strategies against competition.

A：Since the last call, the company has seen continued deceleration in user growth and an increased conviction in AI, leading to a new focus on accelerating user growth. Consequently, the company's guidance for 2026 has changed to prioritize user growth, expecting it to surpass previously anticipated levels.

A：The potential reasons for the deceleration in growth mentioned by the speaker are the law of large numbers, an over focus on monetization, market saturation, and competitive intensity.

A：The company measures market saturation by looking at the percentage of daily active users in a given country compared to the size of the internet base of that country. In the US, 2% of all internet users are daily active users on Duolingo; in the UK, it's 3%, and in Germany, it's 4%. The company believes they can get much higher penetration rates than what is currently observed.

A：The company is not particularly concerned about user churn because the most common reason for users to stop using Duolingo is that they stop learning, which has been consistent for a while. They do not see this as a major indicator of issues with their features.

A：Speaking adventures is a new feature described as a game where users have to complete tasks, often involving speaking. The feature is free for all users and is currently in testing, with plans to scale it sometime mid-year, probably appearing in users' apps between now and mid-year.

A：The company is excited about the upcoming improvements in advanced content. Within a month or two, all courses teaching the top 9 languages, which cover more than 90% of daily active users, will have content up to Duolingo score 129. This content is particularly important as it is the score needed for a knowledge job in the language. The company plans to continue improving this content over the remainder of the year.

A：The social strategy has impacted user growth by creating viral marketing through videos that get millions of views. Although the virality isn't as high as before due to algorithm changes, the company continues to strive for as much virality as possible. Video call improvements have been positive, with a monotonically increasing graph of words spoken per user, indicating better conversation elicitation from users.

A：The company acknowledges that it has both undermonetized and overmonetized simultaneously and is looking for new ways to monetize users without adding friction. They are exploring methods such as adding features or customizations that don't involve friction. The goal is to increase the percentage of monthly active users who pay from the current 10% to a more competitive level, and they are confident in achieving this through various monetization strategies that may not rely on increasing friction.

A：The projected bookings growth for the upcoming period is attributed to a continuation of user deceleration and more careful monetization strategies, which together account for the expected growth, as mentioned in the guidance.

A：It is expected to take a considerable amount of time before the company knows if the new strategies are successful, primarily due to the need for product changes and observing user reactions, which can be time-consuming.

A：There are plans for pricing changes in the upcoming year, with the company engaging in AB testing to evaluate different price points. However, it is not confirmed that the price of 'super' will increase due to video calls, pending the results of ongoing tests.

A：The medium-term goal of reaching a million daily active users does assume continued elevated marketing spending and a focus on monetization strategies that may not ramp up significantly. The company hopes to increase marketing efficiency over time and believes that as the user base grows, the business will become larger and more profitable.

A：Strategies for improving monetization and increasing business scale include direct ad sales, in-app purchases, especially for avatars, and continuing to build a strong, profitable business model. The company is making an investment to descale some operations to facilitate scaling without needing to hire significantly more staff or spend more on marketing.

A：The company's stance on ad load is that it will not increase, and efforts are being made to display better quality ads. Although the current ads may not be high quality, the company is improving ad quality by moving away from network ads to direct deals with higher quality and paying ads. Additionally, there is an attempt to align ads with users' interests, such as displaying ads in the language they are learning, aiming to enhance user engagement.

A：The company is not concerned about AI translation impacting user deceleration. They believe that their user base is not significantly affected by AI translation tools since their users engage with the platform for learning purposes or as a hobby, and they have not observed this factor impacting user churn or dissatisfaction.

A：To improve the user experience, the company has implemented features like 'Explain My Answer,' which has been positively received by users. However, while there has been an uptick in feature usage, no significant acceleration in daily active users (DAUs) has been observed as a result of these changes. The company expects modest results towards the end of the year.

A：The retention numbers for Duolingo Max are quite good and the company is happy with them. The strategy for video call integration is not primarily driven by Max numbers but rather the belief that video call should be accessible to a larger user base. The plan is to offer video call for free in more affordable packages rather than just having it in Max, to potentially increase the user base that can be monetized.

A：The strategy behind integrating video call into the Super plan is to make video call available in a more affordable package, potentially free, to increase the user base and facilitate monetization. The entire decision for integrating video call into Super is based on the belief that it is the right thing for users rather than just a numbers game with Max, where the current numbers are satisfactory.

A：The guidance for fiscal 2026 does not include precise assumptions for the impact of video call being rolled out to Super. The company itself does not know the exact outcome of this initiative. However, they plan to conduct a test and ensure that they stay within the bounds of their guidance. They have different ways to manage potential outcomes, such as metering video call access in Super versus unlimited access in Max if the former proves to be harmful to the Max business.

A：Duolingo's plan to enter the math tutoring market is to start by making their math product available, which they consider almost ready. Initially, they intend to position it as a supplemental resource for schools rather than seeking deals with school districts. They anticipate that this approach will allow them to reach a large number of students who receive some form of external help. In the long term, they believe there is a high propensity for parents to pay for math help, which could present a viable revenue stream.

A：Despite AI making it easier to create competing products, the prospects for new entrants in the language learning app market are challenging. The existing market leader, Duolingo, enjoys a large market share and has a sophisticated user base that new entrants find difficult to penetrate. Even when new apps attempt to grow through performance marketing, they often fail to compete with Duolingo's free product offering. Consequently, new entrants often resort to a paywall model, which limits their growth. The complexity and uniqueness of Duolingo's app also pose a barrier to replication, making it difficult for new competitors to emerge and succeed on a large scale.