0001562088-24-000250 | 10-Q | XBRL Viewer

LEASES

9 Months Ended

Sep. 30, 2024

The Company has entered into various operating leases for its office space expiring between fiscal 2024 and 2036. Certain lease agreements contain an option for the Company to renew a lease for a term of up to five years. The Company considers these options, which may be elected at the Company’s sole discretion, in determining the lease term on a lease-by-lease basis.

On December 18, 2023, the Company entered into an Agreement of Sub-Sublease, with Spotify USA Inc., as Sub-Sublandlord for 85,666 square feet of office space in the building located at 4 World Trade Center, 150 Greenwich Street, New York, New York 10007 for use as additional office space.

The term of the Sub-Sublease commenced on January 8, 2024 and will expire on April 29, 2034

The initial base rent is $442 per month on a triple net basis, increasing to $478 per month at the beginning of the sixth year of the lease term. Payment of rent will commence 20 months after commencement of the Sub-Sublease.

In lieu of a security deposit, the Company has provided an irrevocable stand-by letter of credit to the Sub-Sublandlord. This letter of credit acts as security for the faithful performance by the Company of all terms, covenants and conditions of the lease agreement. The cash collateral and deposits for the letters of credit have been recognized as restricted cash in the unaudited condensed consolidated balance sheets and totaled $2,735 as of September 30, 2024 and December 31, 2023.

In February 2024, the Company signed a lease with Bullitt Center LLC for 7,940 square feet of office space in Seattle, Washington. The term of the lease is 63 months beginning on March 1, 2024 and expiring on May 31, 2029.

In March 2024, the Company entered into the First and Second Amendments (“the Amendments”) to the Office Lease Agreement with 5704 Penn Office, LLC (the "Landlord") for office space located at Liberty East (the “Premise”) at 141 South Saint Clair Street, Pittsburgh, Pennsylvania, which, among other things, increased the leased square footage by 110,008 square feet to a total of 148,266 square feet beginning on August 1, 2025, with an expiration date of April 30, 2036. Under the Amendments, the monthly fixed base rent for the initial square footage increases to approximately $188 per month for the period commencing June 16, 2035 and ending April 30, 2036. The initial base rent of the additional square footage is approximately $394 per month and will increase by approximately 2% per annum, with the exception of the third and fifth years, which have increases of approximately 9% related to additional parking access. Under the terms of the Amendments, the Landlord will provide the Company with an

improvement allowance of up to approximately $6,800 for costs relating to the design, permitting, and construction of improvements to the Premise.

In May 2024, the Company signed a lease with Beijing Hengshi Huarong Holding Co., Ltd. for 16,314 square feet of office space in Beijing, China. The term of the lease is 39 months beginning on May 20, 2024 and expiring on July 15, 2027.

The following represents the components of lease cost for the three and nine months ended September 30, 2024 and 2023 along with supplemental disclosures of cash flow information, lease term and discount rate:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating lease cost	$	2,155	$	1,858	$	7,851	$	5,579
Short term lease cost	12		9		34		31
Variable lease cost	100		111		352		271
Total lease cost	$	2,267	$	1,978	$	8,237	$	5,881

Cash paid for amounts included in the measurement of lease liabilities	$	982	$	2,139	$	4,627	$	5,586
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—	$	—	$	33,039	$	—
Right of use assets disposed or adjusted, modifying operating leases liabilities	$	—	$	—	$	1,303	$	1,397
Gain from termination of leases	$	—	$	—	$	8	$	—


	September 30, 2024		September 30, 2023
Weighted-average remaining lease term	9 years		9 years
Weighted-average discount rate	7.14	%	6.73	%

Sublease income was immaterial for the three and nine months ended September 30, 2024 and 2023. As of July 2024, the Company no longer has sublease income.

The following table reconciles future minimum undiscounted rental commitments for operating leases to operating lease liabilities recorded on the Unaudited Condensed Consolidated Balance Sheet as of September 30, 2024:


Fiscal year
Remainder of 2024	$	1,054
2025	4,212
2026	9,160
2027	9,520
2028	9,299
Thereafter	48,482
Total undiscounted lease payments	$	81,727
Present value adjustment	(24,460)
Operating lease liabilities	$	57,267

Current lease liabilities of $2,616 and $3,944 are presented within Accrued expenses and other liabilities while non-current lease liabilities of $54,651 and $21,094 are presented within Long-term obligation under operating leases on the Unaudited Condensed Consolidated Balance Sheet as of September 30, 2024 and the Audited Consolidated Balance Sheet as of December 31, 2023, respectively.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Sep. 30, 2024
Accounting Policies [Abstract]
Principles of Consolidation	Principles of Consolidation—The Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and subsidiaries over which the Company has control. All intercompany transactions and balances have been eliminated.
Basis of Presentation and Accounting Principles	Basis of Presentation—The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) from the Company’s accounting records and reflect the consolidated financial position and results of operations for the three and nine months ended September 30, 2024 and 2023. Unless otherwise specified, all dollar amounts (other than per share amounts) are referred to in thousands. Accounting Principles—The Unaudited Condensed Consolidated Financial Statements and accompanying notes are prepared in accordance with GAAP.
Use of Estimates	Use of Estimates—The preparation of Unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Unaudited Condensed Consolidated Financial Statements and accompanying notes. Significant estimates and assumptions reflected in the Unaudited Condensed Consolidated Financial Statements include, but are not limited to, useful lives of property and equipment and intangible assets, valuation of deferred tax assets and liabilities, stock-based compensation, common stock valuation, operating lease right-of-use assets and liabilities, capitalization of internally developed software and associated useful lives, contingent liabilities, fair value of investments and valuation of goodwill and intangible assets from acquisitions. Actual results may differ materially from such estimates. Management believes that the estimates, and judgments upon which they rely, are reasonable based upon information available to them at the time that these estimates and judgments are made. To the extent that there are material differences between these estimates and actual results, the Company’s Unaudited Condensed Consolidated Financial Statements will be affected.
Cash and Cash Equivalents	Cash and Cash Equivalents —Cash consists primarily of cash on hand and bank deposits. Cash equivalents consist primarily of money market accounts with maturities of three months or less at the date of acquisition and are stated at cost, which approximates fair value. The Company maintains cash deposits with financial institutions that may exceed federally insured limits at times.
Investments	Investments —Investments consist primarily of corporate debt securities and U.S. Treasury securities. Management determines the appropriate classification of investments at the time of purchase based upon management’s intent with regard to such investments. The Company’s investments are classified as held-to-maturity at the time of purchase, and such classifications are reevaluated as of each balance sheet date. All highly liquid investments with an original maturity of 90 days or less when purchased are considered to be cash equivalents. Investments with remaining contractual maturities of one year or less from the balance sheet date, which are not considered cash equivalents, are classified as short-term investments, and those with remaining contractual maturities greater than one year from the balance sheet date are classified as long-term investments. All investments are recorded at amortized cost. Realized gains and losses on sales and maturities of investments are determined based on the specific identification method and are recognized in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. We perform periodic evaluations to determine whether any declines in the fair value of investments below cost are other-than-temporary. The evaluation consists of qualitative and quantitative factors regarding the severity and duration of the unrealized loss, as well as the Company’s ability and intent to hold the investments until a forecasted recovery occurs. The impairments are considered to be other-than-temporary if they are related to deterioration in credit risk or if it is likely that the underlying securities will be sold or mature prior to a full recovery of their cost basis. Other-than-temporary fair value impairments, if any, are determined based on the specific identification method and are reported in Other income (expense), net in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
Acquisitions	Acquisitions—The Company uses the acquisition method of accounting for business combination transactions, and, accordingly, recognizes the fair values of assets acquired and liabilities assumed in the Company’s Unaudited Condensed Consolidated Financial Statements. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. Transaction costs related to the acquisition of the acquired company are expensed as incurred. The allocation of fair values may be subject to adjustment after the initial allocation for up to a one-year period as more information becomes available relative to the fair values as of the acquisition date. The Unaudited Condensed Consolidated Financial Statements include the results of operations of any acquired company since the acquisition date.
Advertising Costs	Advertising Costs— Advertising costs were approximately $18,149 and $45,617 for the three and nine months ended September 30, 2024, and $16,229 and $39,528 for the three and nine months ended September 30, 2023, respectively, and are included within Sales and marketing in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.
Income Taxes	Income Taxes—The Company’s provision for income taxes is computed by using an estimate of the annual effective tax rate, adjusted for discrete items taken into account in the relevant period, if any. Each quarter, the annual effective income tax rate is recomputed and if there are material changes in the estimate, a cumulative adjustment is made.
Concentration of Credit Risk	Concentration of Credit Risk—The Company’s concentration of credit risk relates to financial institutions holding the Company’s cash and cash equivalents and platforms with significant accounts receivable balances and revenue transactions. The Company maintains cash deposits with financial institutions that may exceed federally insured limits at times. Management believes that the financial institutions that hold the Company’s deposits are financially credit worthy and, accordingly, minimal credit risk exists with respect to those balances.
Impairment of long-lived assets	Impairment of long-lived assets— The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the estimated undiscounted future cash flows expected to result from the use and eventual disposition of an asset is less than the carrying amount of the asset, an impairment loss is recognized. Measurement of an impairment loss is based on the fair value of the asset.
Allowance for Credit Losses	Allowance for Credit Losses—The Company evaluates its cash equivalents, accounts receivable and held-to-maturity marketable securities financial assets for expected credit losses. Expected credit losses represent the portion of the amortized cost basis of a financial asset that an entity does not expect to collect. An allowance for expected credit losses is meant to reflect a risk of loss even if remote, irrespective of the expectation of collection from a particular issuer or debt security. The Company has not historically experienced any credit losses on any of its financial assets. With respect to cash equivalents and accounts receivable, given consideration of their short maturity, lack of historical losses and the current environment, the Company concluded there is generally no expected credit losses for these financial assets. With respect to held-to-maturity marketable securities which are comprised of debt securities, the Company evaluates expected credit losses on a pooled basis based on issuer-type which have similar credit risk characteristics. The allowance for credit losses is immaterial for all periods presented.
Recently Issued Pronouncements Not Yet Adopted and Recently Adopted Accounting Pronouncements	Recently Issued Pronouncements Not Yet Adopted In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company does not expect the adoption of the new guidance will have a material impact on the Company’s consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which includes improvements to income tax disclosures. The standard is effective for public entities in fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company does not expect the adoption of the new guidance will have a material impact on the Company’s consolidated financial statements and related disclosures. Recently Adopted Accounting Pronouncements There are no recently adopted accounting pronouncements.
Fair Value	The Company accounts for certain assets and liabilities at fair value in accordance with the accounting guidance applicable to fair value measurements and disclosures. The carrying values of cash, cash equivalents, accounts receivable, accounts payable, and accrued expenses are deemed to be reasonable estimates of their fair values because of their short-term nature. The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring and non-recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1—Observable inputs such as quoted prices in active markets for identical investments that the Company has the ability to access. Level 2—Inputs include: •Quoted prices for similar assets or liabilities in active markets; •Quoted prices for identical or similar assets or liabilities in inactive markets; •Inputs, other than quoted prices in active markets, which are observable either directly or indirectly; •Inputs that are derived principally from, or corroborated by, observable market data by correlation or other means. Level 3—Unobservable inputs in which there is little or no market activity for the asset or liability, which require the reporting entity to develop its own estimates and assumptions relating to the pricing of the asset or liability including assumptions regarding risk.
Revenue	REVENUE The Company has four predominant sources of revenues; time-based subscriptions, in-app advertising placement by third parties, the Duolingo English Test, and In-App Purchases. Revenue is recognized upon transfer of control of promised products or services to users in an amount that reflects the consideration the Company expects to receive in exchange for those services. The Company does not enter into contracts with a customer that contain multiple promises that result in multiple performance obligations. Revenue is recorded net of taxes assessed by a government authority that are both imposed on and concurrent with specific revenue transactions between Duolingo and its users. Revenue from time-based subscriptions includes a stand-ready obligation to provide hosting services that are consumed by the customer over the subscription period. Users can purchase Duolingo monthly or they can purchase a year-long subscription and pay for the subscription at the time of purchase. Under the year-long subscription, users can also purchase a single plan or a family plan. The family plan includes up to six users on one subscription. Such payments are initially recorded to deferred revenue. The user has the ability to download limited content offline. However, as there is a significant level of integration and interdependency with the online functionality, the Company considers the service to be a single performance obligation for the online and offline content. The Company enters into arrangements with advertising networks to monetize the in-app advertising inventory. Revenue from in-app advertising placement is recognized at a point in time when the advertisement is placed and is based upon the amount received. Duolingo English Test revenue is generally recognized once the tests have gone through the proctoring process and a certification decision has been made. This process usually takes less than 48 hours after the test has been completed and uploaded. Customers have 21 days from the date of purchase to take the exam or their purchase will expire and revenue will be recognized. Virtually all customers complete their exams prior to expiration. Sometimes organizations may purchase tests in bulk via coupons with a one year expiration date. The Company will defer revenue from all tests that have neither been proctored nor expired. The Company’s users have the option to purchase consumable in-app virtual goods. The Company recognizes revenue over the period in which the user consumes the virtual good, which is generally within a month. The Company also recognizes revenue from Duo’s Taquería, a restaurant that opened during 2022, in the space adjacent to Duolingo’s headquarters in Pittsburgh. Revenue from Duo’s Taquería is recognized at a point in time when the sales are made. Principal Agent Considerations—The Company makes its application available to be downloaded through third-party digital distribution service providers. Users who purchase subscriptions also pay through the respective app stores. The Company evaluates the purchases via third-party payment processors to determine whether its revenues should be reported gross or net of fees retained by the payment processor. The Company is the principal in the transaction with the end user as a result of controlling, hosting, and integrating the delivery of the virtual items to the end user. The Company records revenue gross as a principal and records fees paid to third-party payment processors as Cost of revenues. Contract Balances—Deferred revenue mostly consists of payments received in advance of revenue recognition, and is mostly related to time-based subscriptions, which will be recognized into revenue over the course of the upcoming year (recognized over 12 months or less). Additionally, the Duolingo English Test has deferred revenue related to tests that have been purchased, but will not be recognized until the tests have been proctored. Disaggregation of Revenue In accordance with ASC 606, Revenue from Contracts with Customers, the Company disaggregates revenue from contracts with customers into revenue streams, which most closely depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

STOCK-BASED COMPENSATION - Narrative (Details) $ / shares in Units, $ in Thousands			1 Months Ended	3 Months Ended		9 Months Ended
	Jan. 01, 2024 shares	Jul. 26, 2021 shares	Jun. 30, 2021 USD ($) tranche day $ / shares shares	Sep. 30, 2024 USD ($) shares	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) shares	Sep. 30, 2023 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares) \| shares				0		0
Aggregate intrinsic value, exercised \| $						$ 151,558	$ 127,785
Unrecognized compensation cost, options \| $				$ 86		86
Unrecognized compensation cost \| $				237,223		237,223
Closing trading price, specified calendar day \| day			60
Compensation expense \| $				$ 28,959	$ 25,432	$ 80,690	70,219
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, weighted-average period of recognition (in years)						4 months
Number of options available for grant (in shares) \| shares				8,878,000		8,878,000
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, weighted-average period of recognition (in years)						3 years
Unrecognized compensation expense, excluding options \| $				$ 237,137		$ 237,137
Equity instruments other than options, grants in period (in shares) \| shares						635,000
Performance Based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense, excluding options \| $				21,229		$ 21,229
Compensation expense \| $				$ 4,410	$ 6,595	$ 15,507	$ 20,829
Performance Based RSUs \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award service period (in years)			3 years 6 months 29 days
Performance Based RSUs \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award service period (in years)			5 years 11 months 1 day
Performance Based RSUs \| Founders
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense, excluding options \| $			$ 110,817
Equity instruments other than options, grants in period (in shares) \| shares			1,800,000
Settlement period after vesting (in years)			1 year
Award vesting percentage (in percent)			25.00%
Number of tranches \| tranche			10
Award service period (in years)			10 years
Performance Based RSUs \| Share-Based Payment Arrangement, Founders
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date fair value (in usd per share) \| $ / shares			$ 61.56
2021 Plan \| Common Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for future issuance (in shares) \| shares		7,946,000
Share-based compensation, shares outstanding increase, maximum amount (in percent)		5.00%
Additional shares authorized (in shares) \| shares	2,126,000
Employee Stock Purchase Plan \| Common Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for future issuance (in shares) \| shares		1,119,000
Share-based compensation, shares outstanding increase, maximum amount (in percent)		1.00%
2011 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)						4 years
Share-based compensation, term of award (in years)						10 years
Granted (in shares) \| shares						0

EMPLOYEE BENEFIT PLAN (Details) - USD ($)	3 Months Ended		9 Months Ended
EMPLOYEE BENEFIT PLAN (Details) - USD ($)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, contributions by employer	$ 1,807,000	$ 1,563,000	$ 5,095,000	$ 4,433,000
Defined contribution plan, employer discretionary contribution amount	$ 0	$ 0	$ 0	$ 0
First 4% of Employee Elective Deferral
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent of match (in percent)			100.00%
Employer matching contribution, percent of employees' gross pay (in percent)			4.00%
Next 2% of Employee Elective Deferral
Defined Benefit Plan Disclosure [Line Items]
Employer matching contribution, percent of match (in percent)			50.00%
Employer matching contribution, percent of employees' gross pay (in percent)			2.00%

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities:
Net income	$ 74,667	$ 3,950
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,193	5,053
Stock-based compensation expense	80,690	70,219
Accretion on marketable securities, net	(12)	0
Gain on sale of capitalized software	0	(100)
Loss on disposal of leasehold improvements	0	417
Changes in assets and liabilities:
Deferred revenue	61,411	51,338
Accounts receivable	(5,209)	(14,983)
Deferred cost of revenues	(13,398)	(11,083)
Prepaid expenses and other current assets	(8,842)	(2,299)
Accounts payable	522	1,403
Accrued expenses and other current liabilities	1,351	185
Noncurrent assets and liabilities	3,796	321
Net cash provided by operating activities	202,169	104,421
Cash flows from investing activities:
Purchases of investments	(81,670)	0
Capitalized software expense and purchases of intangible assets	(8,545)	(7,269)
Purchase of property and equipment	(10,155)	(2,267)
Proceeds from sale of capitalized software	0	100
Acquisition of companies, net of $5 cash acquired	(6,595)	0
Net cash used for investing activities	(106,965)	(9,436)
Cash flows from financing activities:
Proceeds from exercise of stock options	11,595	10,054
Taxes paid related to net-share settlement of share-based compensation awards	0	(11,482)
Net cash provided by (used for) financing activities	11,595	(1,428)
Net increase in cash, cash equivalents and restricted cash	106,799	93,557
Cash, cash equivalents and restricted cash - Beginning of period	750,345	608,180
Cash, cash equivalents and restricted cash - End of period	857,144	701,737
Supplemental disclosure of cash flow information:
Cash paid for income taxes	6,797	2,195
Supplemental disclosure of noncash investing activities:
Property and equipment included in Current liabilities	1,094	242
Right of use assets obtained in exchange for new operating lease liabilities	33,039	0
Right of use assets disposed or adjusted modifying operating leases liabilities	$ 1,303	$ 0

SUBSEQUENT EVENTS	9 Months Ended
SUBSEQUENT EVENTS	Sep. 30, 2024
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTS None.

STOCK-BASED COMPENSATION - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Sep. 30, 2024	Dec. 31, 2023
Number of options
Options outstanding, beginning balance (in shares)		2,985,000
Granted (in shares)	0	0
Exercised (in shares)		(802,000)
Forfeited and expired (in shares)		0
Options outstanding, ending balance (in shares)	2,183,000	2,183,000	2,985,000
Number of options exercisable (in shares)	2,180,000	2,180,000
Weighted- average exercise price
Outstanding, beginning balance (in usd per share)		$ 16.04
Granted (in usd per share)
Exercised (in usd per share)		14.45
Forfeited and expired (in usd per share)		20.75
Outstanding, ending balance (in usd per share)	$ 16.62	16.62	$ 16.04
Weighted average exercise price, options exercisable (in usd per share)	$ 16.52	$ 16.52
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted average remaining contractual term (in years), outstanding		4 years 10 months 24 days	5 years 7 months 6 days
Weighted average remaining contractual term (in years), exercisable		4 years 10 months 24 days
Aggregate intrinsic value, outstanding	$ 579,895	$ 579,895	$ 629,865
Aggregate intrinsic value, exercisable	$ 578,771	$ 578,771

DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION (Details)	Sep. 30, 2024 language
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of languages, more than	40

COMMITMENTS AND CONTINGENCIES	9 Months Ended
COMMITMENTS AND CONTINGENCIES	Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES Legal Proceedings— From time to time, the Company may become involved in various legal proceedings in the ordinary course of its business and may be subject to third-party infringement claims. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. The Company is not currently party to any material legal proceedings. Related Parties— The Company has determined that there were no transactions with related parties as of or during the three and nine months ended September 30, 2024 and 2023. Letters of Credit— The Company has a standby letter of credit obtained in connection with an operating lease. This letter of credit acts as security for the faithful performance by us of all terms, covenants and conditions of the lease agreement. The amount of the letter of credit is equal to six months rent of $442, totaling $2,656. The cash collateral for the letter of credit has been recognized as restricted cash in the Unaudited Condensed Consolidated Balance Sheet and is equivalent to 103% of the letter of credit and totaled $2,735. For more information, refer to Note 8, Leases.

REVENUE - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	$ 192,594	$ 137,624	$ 538,474	$ 380,124
Subscription
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	157,617	105,887	433,214	287,230
Other
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	34,977	31,737	105,260	92,894
Advertising
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	14,405	11,678	40,615	36,374
Duolingo English Test
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	10,772	10,612	34,225	30,393
In-App Purchases
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	9,411	9,233	29,511	25,760
Other
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	$ 389	$ 214	$ 909	$ 367

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-41

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 270
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482964/270-10-50-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (ee)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-32

Reference 4: http://fasb.org/us-gaap/role/ref/otherTransitionRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
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+ Details

INTANGIBLE ASSETS AND GOODWILL

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS AND GOODWILL

Intangible assets consist of the following as of September 30, 2024 and December 31, 2023:


(In thousands)	September 30, 2024		December 31, 2023
Capitalized software	$	35,440	$	26,895
Acquired technology	1,007		—
Other intangible assets	117		117
Total intangible assets	36,564		27,012
Less: accumulated amortization	(14,664)		(11,017)
Intangible assets, net	$	21,900	$	15,995

The Company capitalized $8,545 and $7,170 of software development costs, with the majority of the costs being employee wages, during the nine months ended September 30, 2024 and 2023, respectively. Amortization expense is included within the following financial statement line items within the Company’s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2024		2023		2024		2023
Cost of revenues	$	1,397	$	402	$	3,189	$	1,207
Sales and marketing	141		222		458		793
Total	$	1,538	$	624	$	3,647	$	2,000

The estimated future amortization expense of capitalized software and acquired technology with definite lives as of September 30, 2024 was as follows:


(In thousands)	Amortization Expense
Remainder of 2024	$	2,252
2025	8,490
2026	6,910
2027	3,661
2028	157
Thereafter	313
Total estimated future amortization expense	$	21,783

The following table represents the changes to goodwill during the nine months ended September 30, 2024:


	Carrying amount
Balance as of December 31, 2023	$	4,050
Acquisitions	6,488
Balance as of September 30, 2024	$	10,538

As of September 30, 2024 and December 31, 2023, $7,050 and $3,713 of goodwill is deductible for tax purposes, respectively.

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
INCOME TAXES (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income before income taxes	$ 25,389	$ 2,932	$ 79,954	$ 2,644
Provision (benefit) for income taxes	$ 2,029	$ 125	$ 5,287	$ (1,306)
Effective tax rate	8.00%	4.30%	6.60%	(49.40%)

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

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- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References

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+ Details

LEASES (Tables)

9 Months Ended

Sep. 30, 2024

Leases [Abstract]

Schedule of Components of Lease Cost


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating lease cost	$	2,155	$	1,858	$	7,851	$	5,579
Short term lease cost	12		9		34		31
Variable lease cost	100		111		352		271
Total lease cost	$	2,267	$	1,978	$	8,237	$	5,881

Cash paid for amounts included in the measurement of lease liabilities	$	982	$	2,139	$	4,627	$	5,586
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—	$	—	$	33,039	$	—
Right of use assets disposed or adjusted, modifying operating leases liabilities	$	—	$	—	$	1,303	$	1,397
Gain from termination of leases	$	—	$	—	$	8	$	—


	September 30, 2024		September 30, 2023
Weighted-average remaining lease term	9 years		9 years
Weighted-average discount rate	7.14	%	6.73	%

Schedule of Future Minimum Rental Payments for Operating Leases


Fiscal year
Remainder of 2024	$	1,054
2025	4,212
2026	9,160
2027	9,520
2028	9,299
Thereafter	48,482
Total undiscounted lease payments	$	81,727
Present value adjustment	(24,460)
Operating lease liabilities	$	57,267

REVENUE (Tables)

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2024		2023		2024		2023
Revenues:
Subscription	$	157,617	$	105,887	$	433,214	$	287,230
Other (1)	34,977		31,737		105,260		92,894
Total revenues	$	192,594	$	137,624	$	538,474	$	380,124

________________

(1) Other revenue is comprised of the below.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2024		2023		2024		2023
Advertising	$	14,405	$	11,678	$	40,615	$	36,374
Duolingo English Test	10,772		10,612		34,225		30,393
In-App Purchases	9,411		9,233		29,511		25,760
Other	389		214		909		367
Total other revenue	$	34,977	$	31,737	$	105,260	$	92,894

Schedule of Deferred Revenues

Changes in deferred revenues were as follows:


	Nine Months Ended September 30,
(In thousands)	2024		2023
Beginning balance—January 1	$	249,192	$	157,550
Amount from beginning balance recognized into revenue	(227,305)		(143,810)
Recognition of deferred revenue	(239,410)		(173,408)
Deferral of revenue	528,126		368,556
Ending balance—September 30	$	310,603	$	208,888

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Sep. 30, 2024
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Principles—The Unaudited Condensed Consolidated Financial Statements and accompanying notes are prepared in accordance with GAAP. Use of Estimates—The preparation of Unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Unaudited Condensed Consolidated Financial Statements and accompanying notes. Significant estimates and assumptions reflected in the Unaudited Condensed Consolidated Financial Statements include, but are not limited to, useful lives of property and equipment and intangible assets, valuation of deferred tax assets and liabilities, stock-based compensation, common stock valuation, operating lease right-of-use assets and liabilities, capitalization of internally developed software and associated useful lives, contingent liabilities, fair value of investments and valuation of goodwill and intangible assets from acquisitions. Actual results may differ materially from such estimates. Management believes that the estimates, and judgments upon which they rely, are reasonable based upon information available to them at the time that these estimates and judgments are made. To the extent that there are material differences between these estimates and actual results, the Company’s Unaudited Condensed Consolidated Financial Statements will be affected. Cash and Cash Equivalents —Cash consists primarily of cash on hand and bank deposits. Cash equivalents consist primarily of money market accounts with maturities of three months or less at the date of acquisition and are stated at cost, which approximates fair value. The Company maintains cash deposits with financial institutions that may exceed federally insured limits at times. Investments —Investments consist primarily of corporate debt securities and U.S. Treasury securities. Management determines the appropriate classification of investments at the time of purchase based upon management’s intent with regard to such investments. The Company’s investments are classified as held-to-maturity at the time of purchase, and such classifications are reevaluated as of each balance sheet date. All highly liquid investments with an original maturity of 90 days or less when purchased are considered to be cash equivalents. Investments with remaining contractual maturities of one year or less from the balance sheet date, which are not considered cash equivalents, are classified as short-term investments, and those with remaining contractual maturities greater than one year from the balance sheet date are classified as long-term investments. All investments are recorded at amortized cost. Realized gains and losses on sales and maturities of investments are determined based on the specific identification method and are recognized in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. We perform periodic evaluations to determine whether any declines in the fair value of investments below cost are other-than-temporary. The evaluation consists of qualitative and quantitative factors regarding the severity and duration of the unrealized loss, as well as the Company’s ability and intent to hold the investments until a forecasted recovery occurs. The impairments are considered to be other-than-temporary if they are related to deterioration in credit risk or if it is likely that the underlying securities will be sold or mature prior to a full recovery of their cost basis. Other-than-temporary fair value impairments, if any, are determined based on the specific identification method and are reported in Other income (expense), net in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income Acquisitions—The Company uses the acquisition method of accounting for business combination transactions, and, accordingly, recognizes the fair values of assets acquired and liabilities assumed in the Company’s Unaudited Condensed Consolidated Financial Statements. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. Transaction costs related to the acquisition of the acquired company are expensed as incurred. The allocation of fair values may be subject to adjustment after the initial allocation for up to a one-year period as more information becomes available relative to the fair values as of the acquisition date. The Unaudited Condensed Consolidated Financial Statements include the results of operations of any acquired company since the acquisition date. Advertising Costs— Advertising costs were approximately $18,149 and $45,617 for the three and nine months ended September 30, 2024, and $16,229 and $39,528 for the three and nine months ended September 30, 2023, respectively, and are included within Sales and marketing in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. Income Taxes—The Company’s provision for income taxes is computed by using an estimate of the annual effective tax rate, adjusted for discrete items taken into account in the relevant period, if any. Each quarter, the annual effective income tax rate is recomputed and if there are material changes in the estimate, a cumulative adjustment is made. Concentration of Credit Risk—The Company’s concentration of credit risk relates to financial institutions holding the Company’s cash and cash equivalents and platforms with significant accounts receivable balances and revenue transactions. The Company maintains cash deposits with financial institutions that may exceed federally insured limits at times. Management believes that the financial institutions that hold the Company’s deposits are financially credit worthy and, accordingly, minimal credit risk exists with respect to those balances. The majority of revenue comes through the subscriptions and advertising streams, and payments are made to Duolingo through service providers. Two service providers, Apple and Google, accounted for 69.7% and 15.0% of total Accounts receivable as of September 30, 2024, respectively. Three service providers, Apple, Google, and Stripe accounted for 65.2%, 20.7%, and 10.7% of total Accounts receivable as of December 31, 2023, respectively. Impairment of long-lived assets— The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the estimated undiscounted future cash flows expected to result from the use and eventual disposition of an asset is less than the carrying amount of the asset, an impairment loss is recognized. Measurement of an impairment loss is based on the fair value of the asset. No assets were impaired during the three and nine months ended September 30, 2024 and 2023. Allowance for Credit Losses—The Company evaluates its cash equivalents, accounts receivable and held-to-maturity marketable securities financial assets for expected credit losses. Expected credit losses represent the portion of the amortized cost basis of a financial asset that an entity does not expect to collect. An allowance for expected credit losses is meant to reflect a risk of loss even if remote, irrespective of the expectation of collection from a particular issuer or debt security. The Company has not historically experienced any credit losses on any of its financial assets. With respect to cash equivalents and accounts receivable, given consideration of their short maturity, lack of historical losses and the current environment, the Company concluded there is generally no expected credit losses for these financial assets. With respect to held-to-maturity marketable securities which are comprised of debt securities, the Company evaluates expected credit losses on a pooled basis based on issuer-type which have similar credit risk characteristics. The allowance for credit losses is immaterial for all periods presented. Recently Issued Pronouncements Not Yet Adopted In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company does not expect the adoption of the new guidance will have a material impact on the Company’s consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which includes improvements to income tax disclosures. The standard is effective for public entities in fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company does not expect the adoption of the new guidance will have a material impact on the Company’s consolidated financial statements and related disclosures. Recently Adopted Accounting Pronouncements There are no recently adopted accounting pronouncements.

PROPERTY and EQUIPMENT, net - Schedule of Depreciation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Property, Plant and Equipment [Line Items]
Total	$ 1,338	$ 1,033	$ 3,546	$ 3,053
Research and development
Property, Plant and Equipment [Line Items]
Total	648	415	1,588	1,231
Sales and marketing
Property, Plant and Equipment [Line Items]
Total	77	48	188	141
General and administrative
Property, Plant and Equipment [Line Items]
Total	$ 613	$ 570	$ 1,770	$ 1,681

EARNINGS PER SHARE - Narrative (Details)	9 Months Ended
EARNINGS PER SHARE - Narrative (Details)	Sep. 30, 2024 vote votePerShare
Common Class A
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Voting rights, per share \| vote	1
Common Class B
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Voting rights, per share \| votePerShare	20

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Concentration Risk [Line Items]
Advertising costs	$ 18,149,000	$ 16,229,000	$ 45,617,000	$ 39,528,000
Impairment	$ 0	$ 0	$ 0	$ 0
Accounts Receivable \| Customer Concentration Risk \| Apple
Concentration Risk [Line Items]
Concentration risk (in percent)			69.70%		65.20%
Accounts Receivable \| Customer Concentration Risk \| Google
Concentration Risk [Line Items]
Concentration risk (in percent)			15.00%		20.70%
Accounts Receivable \| Customer Concentration Risk \| Stripe
Concentration Risk [Line Items]
Concentration risk (in percent)					10.70%

REVENUE - Schedule of Deferred Revenues (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Revenue from Contract with Customer, Liability [Roll Forward]
Beginning balance	$ 249,192	$ 157,550
Amount from beginning balance recognized into revenue	(227,305)	(143,810)
Recognition of deferred revenue	(239,410)	(173,408)
Deferral of revenue	528,126	368,556
Ending balance	$ 310,603	$ 208,888

PROPERTY and EQUIPMENT, net (Tables)

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment consists of the following as of September 30, 2024 and December 31, 2023:



(In thousands)	September 30, 2024		December 31, 2023
Leasehold improvements	$	26,449	$	18,191
Furniture, fixtures and equipment	8,860		5,869
Total property and equipment	35,309		24,060
Less: accumulated depreciation	(15,814)		(12,268)
Total property and equipment, net	$	19,495	$	11,792

Depreciation expense is included within the following financial statement line items within the Company’s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2024		2023		2024		2023

Research and development	$	648	$	415	$	1,588	$	1,231
Sales and marketing	77		48		188		141
General and administrative	613		570		1,770		1,681
Total	$	1,338	$	1,033	$	3,546	$	3,053

REVENUE

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

REVENUE

The Company has four predominant sources of revenues; time-based subscriptions, in-app advertising placement by third parties, the Duolingo English Test, and In-App Purchases. Revenue is recognized upon transfer of control of promised products or services to users in an amount that reflects the consideration the Company expects to receive in exchange for those services. The Company does not enter into contracts with a customer that contain multiple promises that result in multiple performance obligations. Revenue is recorded net of taxes assessed by a government authority that are both imposed on and concurrent with specific revenue transactions between Duolingo and its users.

Revenue from time-based subscriptions includes a stand-ready obligation to provide hosting services that are consumed by the customer over the subscription period. Users can purchase Duolingo monthly or they can purchase a year-long subscription and pay for the subscription at the time of purchase. Under the year-long subscription, users can also purchase a single plan or a family plan. The family plan

includes up to six users on one subscription. Such payments are initially recorded to deferred revenue. The user has the ability to download limited content offline. However, as there is a significant level of integration and interdependency with the online functionality, the Company considers the service to be a single performance obligation for the online and offline content.

The Company enters into arrangements with advertising networks to monetize the in-app advertising inventory. Revenue from in-app advertising placement is recognized at a point in time when the advertisement is placed and is based upon the amount received.

Duolingo English Test revenue is generally recognized once the tests have gone through the proctoring process and a certification decision has been made. This process usually takes less than 48 hours after the test has been completed and uploaded. Customers have 21 days from the date of purchase to take the exam or their purchase will expire and revenue will be recognized. Virtually all customers complete their exams prior to expiration. Sometimes organizations may purchase tests in bulk via coupons with a one year expiration date. The Company will defer revenue from all tests that have neither been proctored nor expired.

The Company’s users have the option to purchase consumable in-app virtual goods. The Company recognizes revenue over the period in which the user consumes the virtual good, which is generally within a month.

The Company also recognizes revenue from Duo’s Taquería, a restaurant that opened during 2022, in the space adjacent to Duolingo’s headquarters in Pittsburgh. Revenue from Duo’s Taquería is recognized at a point in time when the sales are made.

Principal Agent Considerations—The Company makes its application available to be downloaded through third-party digital distribution service providers. Users who purchase subscriptions also pay through the respective app stores. The Company evaluates the purchases via third-party payment processors to determine whether its revenues should be reported gross or net of fees retained by the payment processor. The Company is the principal in the transaction with the end user as a result of controlling, hosting, and integrating the delivery of the virtual items to the end user. The Company records revenue gross as a principal and records fees paid to third-party payment processors as Cost of revenues.

Contract Balances—Deferred revenue mostly consists of payments received in advance of revenue recognition, and is mostly related to time-based subscriptions, which will be recognized into revenue over the course of the upcoming year (recognized over 12 months or less). Additionally, the Duolingo English Test has deferred revenue related to tests that have been purchased, but will not be recognized until the tests have been proctored.

Disaggregation of Revenue

In accordance with ASC 606, Revenue from Contracts with Customers, the Company disaggregates revenue from contracts with customers into revenue streams, which most closely depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2024		2023		2024		2023
Revenues:
Subscription	$	157,617	$	105,887	$	433,214	$	287,230
Other (1)	34,977		31,737		105,260		92,894
Total revenues	$	192,594	$	137,624	$	538,474	$	380,124

________________

(1) Other revenue is comprised of the below.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2024		2023		2024		2023
Advertising	$	14,405	$	11,678	$	40,615	$	36,374
Duolingo English Test	10,772		10,612		34,225		30,393
In-App Purchases	9,411		9,233		29,511		25,760
Other	389		214		909		367
Total other revenue	$	34,977	$	31,737	$	105,260	$	92,894

Three service providers, Apple, Google and Stripe, processed 61.4%, 23.1%, and 11.4%, and 60.5%, 23.5%, and 11.8% of total revenues for the three and nine months ended September 30, 2024, respectively. Three services providers, Apple, Google, and Stripe processed 59.3%, 24.9%, and 12.6%, and 58.3%, 25.7% and 12.1% of total revenues for the three and nine months ended September 30, 2023, respectively.

Changes in deferred revenues were as follows:


	Nine Months Ended September 30,
(In thousands)	2024		2023
Beginning balance—January 1	$	249,192	$	157,550
Amount from beginning balance recognized into revenue	(227,305)		(143,810)
Recognition of deferred revenue	(239,410)		(173,408)
Deferral of revenue	528,126		368,556
Ending balance—September 30	$	310,603	$	208,888

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479806/606-10-50-9

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

The Company’s income before taxes, income tax provision or benefit and effective tax rates were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except percentages)	2024			2023			2024			2023
Income before income taxes	$	25,389		$	2,932		$	79,954		$	2,644
Provision (benefit) for income taxes	2,029			125			$	5,287		$	(1,306)
Effective tax rate	8.0		%	4.3		%	6.6		%	(49.4)		%

INTANGIBLE ASSETS AND GOODWILL - Schedule of Intangible Assets, Future Amortization Expense (Details) $ in Thousands	Sep. 30, 2024 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2024	$ 2,252
2025	8,490
2026	6,910
2027	3,661
2028	157
Thereafter	313
Total estimated future amortization expense	$ 21,783

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	Jan. 08, 2024	Sep. 30, 2024	Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Period of letter of credit (in months)	6 months
Initial base rent per month	$ 442
Letters of credit	$ 2,656
Percentage of letter of credit (in percent)		103.00%
Restricted cash		$ 2,735	$ 2,735

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net income attributable to Class A and Class B common stockholders	$ 23,360	$ 2,807	$ 74,667	$ 3,950

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Sep. 30, 2024	Dec. 31, 2023
Common Class A
Common stock, par value (in usd per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	2,000,000	2,000,000
Common stock, shares issued (in shares)	37,857	36,311
Common stock, shares outstanding (in shares)	37,857	36,311
Common Class B
Common stock, par value (in usd per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	30,000	30,000
Common stock, shares issued (in shares)	6,087	6,215
Common stock, shares outstanding (in shares)	6,087	6,215

LEASES - Schedule of Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Leases [Abstract]
Operating lease cost	$ 2,155	$ 1,858	$ 7,851	$ 5,579
Short term lease cost	12	9	34	31
Variable lease cost	100	111	352	271
Total lease cost	2,267	1,978	8,237	5,881
Cash paid for amounts included in the measurement of lease liabilities	982	2,139	4,627	5,586
Right-of-use assets obtained in exchange for new operating lease liabilities	0	0	33,039	0
Right of use assets disposed or adjusted, modifying operating leases liabilities	0	0	1,303	1,397
Gain from termination of leases	$ 0	$ 0	$ 8	$ 0
Weighted-average remaining lease term	9 years	9 years	9 years	9 years
Weighted-average discount rate	7.14%	6.73%	7.14%	6.73%

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Statement [Abstract]
Revenues	$ 192,594	$ 137,624	$ 538,474	$ 380,124
Cost of revenues	52,180	36,254	144,720	101,534
Gross profit	140,414	101,370	393,754	278,590
Operating expenses:
Research and development	62,878	50,305	168,903	144,096
Sales and marketing	25,574	22,335	65,679	56,670
General and administrative	38,388	33,400	110,459	95,878
Total operating expenses	126,840	106,040	345,041	296,644
Income (loss) from operations	13,574	(4,670)	48,713	(18,054)
Other income (expense), net	569	(1,023)	(759)	(1,109)
Income (loss) before interest income and income taxes	14,143	(5,693)	47,954	(19,163)
Interest income	11,246	8,625	32,000	21,807
Income before income taxes	25,389	2,932	79,954	2,644
Provision (benefit) for income taxes	2,029	125	5,287	(1,306)
Net income	23,360	2,807	74,667	3,950
Net comprehensive income	$ 23,360	$ 2,807	$ 74,667	$ 3,950
Net income per share attributable to Class A and Class B common stockholders, basic (in usd per share)	$ 0.53	$ 0.07	$ 1.73	$ 0.10
Net income per share attributable to Class A and Class B common stockholders, diluted (in usd per share)	$ 0.49	$ 0.06	$ 1.57	$ 0.09

INTANGIBLE ASSETS AND GOODWILL - Schedule of Intangible Assets Amortization Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Finite-Lived Intangible Assets [Line Items]
Amortization of capitalized computer software	$ 1,538	$ 624	$ 3,647	$ 2,000
Cost of revenues
Finite-Lived Intangible Assets [Line Items]
Amortization of capitalized computer software	1,397	402	3,189	1,207
Sales and marketing
Finite-Lived Intangible Assets [Line Items]
Amortization of capitalized computer software	$ 141	$ 222	$ 458	$ 793

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

Schedule of Share-based Payment Arrangement, Option, Activity

A summary of stock option activity under the Plans was as follows:


(In thousands, except prices and years)	Number of options	Weighted- average exercise price		Weighted- average remaining contractual life (years)	Aggregate intrinsic value





Options outstanding at January 1, 2024	2,985	$	16.04	5.60	$	629,865
Granted (1)	—
Exercised	(802)	14.45

Forfeited and expired (2)	—	20.75
Options outstanding at September 30, 2024	2,183	$	16.62	4.90	$	579,895
Options exercisable at September 30, 2024	2,180	$	16.52	4.90	$	578,771

________________

(1) There were no stock options granted during the three and nine months ended September 30, 2024.

(2) There was a nominal amount of forfeitures and expirations during the nine months ended September 30, 2024.

Schedule of Share-based Payment Arrangement, RSU, Activity

A summary of RSU activity under the Plans was as follows:


(In thousands, except prices)	Restricted stock units	Weighted- average grant date fair value per share




Outstanding at January 1, 2024	2,027	$	106.32
Granted	635	177.36
Released	(616)	101.02
Forfeited	(108)	115.32
Outstanding at September 30, 2024	1,938	$	130.77

Schedule of Share-based Payment Arrangement, Payment Award


Tranche	Company Stock Price Hurdle		Number of RSUs Eligible to Vest
1 (1)	$	127.50	90
2 (1)	$	153.00	90
3 (2)	$	178.50	90
4 (3)	$	204.00	180
5	$	255.00	180
6	$	306.00	180
7	$	357.00	180
8	$	408.00	180
9	$	612.00	270
10	$	816.00	360

________________

(1) Stock price hurdle for the tranche was achieved in 2021, the service condition satisfied in 2022, and shares were released to CEO and CTO on August 14, 2023

(2) Stock price hurdle and the service condition for the tranche was achieved as of November 22, 2023; the shares will be released after the one-year holding requirement has been satisfied

(3) Stock price hurdle and the service condition for the tranche was achieved as of December 26, 2023; the shares will be released after the one-year holding requirement has been satisfied

Schedule of Share-based Payment Arrangement, Expensed, Amount

Stock-based compensation expense is included in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income as shown in the following table:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2024		2023		2024		2023
Cost of revenues	$	20	$	15	$	54	$	40
Research and development	16,230		12,244		43,331		32,568
Sales and marketing	1,305		1,151		3,557		2,899
General and administrative	11,404		12,022		33,748		34,712
Total	$	28,959	$	25,432	$	80,690	$	70,219

FAIR VALUE - Narrative (Details) - USD ($)	9 Months Ended	12 Months Ended
FAIR VALUE - Narrative (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Other-than-temporary impairments	$ 0	$ 0
Minimum
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Long-term investments, maturity term (in years)	1 year	1 year
Maximum
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Long-term investments, maturity term (in years)	3 years	3 years

LEASES - Narrative (Details) $ in Thousands	Jun. 16, 2035 USD ($)	Jan. 09, 2030 USD ($)	Aug. 01, 2025 ft²	Sep. 30, 2024 USD ($)	May 31, 2024 ft²	Mar. 31, 2024 USD ($) ft²	Feb. 29, 2024 ft²	Jan. 08, 2024 USD ($) ft²	Dec. 31, 2023 USD ($)
Lessee, Lease, Description [Line Items]
Renewal term (in years)				5 years
Initial base rent per month								$ 442
Restricted cash				$ 2,735					$ 2,735
Obligations under current leases				$ 2,616					$ 3,944
Operating lease, liability, current, statement of financial position, [extensible enumeration]				Accrued expenses and other current liabilities					Accrued expenses and other current liabilities
Long-term obligation under operating leases				$ 54,651					$ 21,094
New York, New York
Lessee, Lease, Description [Line Items]
Area of office building \| ft²								85,666
Initial base rent per month								$ 442
Term before rent increase								6 years
Number of months commencement of the sub-sublease								20 months
Seattle, Washington
Lessee, Lease, Description [Line Items]
Area of office building \| ft²							7,940
Lease term (in months)							63 months
Pittsburgh, Pennsylvania
Lessee, Lease, Description [Line Items]
Initial base rent per month						$ 394
Leased square footage \| ft²						110,008
Initial base rent (in percent)						2.00%
Additional parking access (in percent)						9.00%
Cost related to improvement to the premise						$ 6,800
Beijing, China
Lessee, Lease, Description [Line Items]
Area of office building \| ft²					16,314,000
Lease term (in months)					39 months
Forecast \| New York, New York
Lessee, Lease, Description [Line Items]
Initial base rent per month		$ 478
Forecast \| Pittsburgh, Pennsylvania
Lessee, Lease, Description [Line Items]
Area of office building \| ft²			148,266
Increased in monthly base rate	$ 188

Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2024	Nov. 05, 2024
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	001-40653
Entity Registrant Name	Duolingo, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	45-3055872
Entity Address, Address Line One	5900 Penn Avenue
Entity Address, City or Town	Pittsburgh
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	15206
City Area Code	(412)
Local Phone Number	567-6602
Title of 12(b) Security	Class A common stock, $0.0001 per share
Trading Symbol	DUOL
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001562088
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false
Common Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		37,897,481
Common Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		6,087,077

EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

EARNINGS PER SHARE

Basic and diluted net income per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities.

Basic net income per share attributable to common stockholders is calculated by dividing the net income by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase. The diluted net income per share attributable to common stockholders is calculated by giving effect to all potential dilutive common stock equivalents outstanding for the period. The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to 20 votes per share. Each share of Class B common stock is convertible into a share of Class A common stock voluntarily at any time by the holder, and automatically upon certain events. The Class A common stock has no conversion rights. As the liquidation and dividend rights are identical for Class A and Class B common stock, the undistributed earnings are allocated on a proportional basis and the resulting net income per share attributable to common stockholders will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share data)	2024		2023		2024		2023
Numerator:
Net income attributable to Class A and Class B common stockholders	$	23,360	$	2,807	$	74,667	$	3,950


Denominator:
Weighted-average shares in computing net income per share attributable to Class A and Class B common stockholders, basic and diluted	43,707		41,719		43,253		41,190
Effect of dilutive securities
Founder awards where performance has been met	270		—		270		—
Dilutive effect of stock options outstanding (1)	2,054		3,004		2,054		3,004
RSUs outstanding	1,938		2,223		1,938		2,223
Denominator for dilutive net income per common share - weighted-average shares	47,969		46,946		47,515		46,417
Basic income per common share	$	0.53	$	0.07	$	1.73	$	0.10
Diluted income per common share	$	0.49	$	0.06	$	1.57	$	0.09

________________

(1) The Company had 2.2 million options outstanding as of September 30, 2024. The estimated dilutive effect is calculated as the number of shares expected to be issued upon vesting or exercise, adjusted for the strike price proceeds that are received by the Company and assumed to be used to repurchase shares of Duolingo common stock.

INCOME TAXES

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

Year-to-date income tax expense or benefit is the product of the most current projected annual effective tax rate (“PAETR”) and the actual year-to-date pretax income adjusted for any discrete items. The income tax expense or benefit for a particular quarter, is the difference between the year-to-date calculation of income tax expense or benefit and the year-to-date calculation for the prior year period. Items unrelated to current period ordinary income or loss are recognized entirely in the period identified as a discrete item of tax.

The Company’s PAETR differs from the U.S. federal statutory rate of 21.0% during the three and nine months ended September 30, 2024 and 2023 primarily due to the impact of maintaining a U.S. valuation allowance provided on U.S. deferred tax assets.

The Company’s income before taxes, income tax provision or benefit and effective tax rates were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except percentages)	2024			2023			2024			2023
Income before income taxes	$	25,389		$	2,932		$	79,954		$	2,644
Provision (benefit) for income taxes	2,029			125			$	5,287		$	(1,306)
Effective tax rate	8.0		%	4.3		%	6.6		%	(49.4)		%

For the three and nine months ended September 30, 2024, the Company recorded an income tax provision of $2,029 and $5,287, respectively. For the three and nine months ended September 30, 2023, the Company recorded an income tax provision of $125 and benefit of $1,306, respectively.

For both of the periods ended September 30, 2024 and September 30, 2023, the Company has recognized a year-to-date discrete tax benefit attributable to the excess tax benefits of stock-based compensation activity. However, in 2024, the tax expense from regular operating activities exceeded this benefit, resulting in a net year-to-date tax expense for the period.

The Company periodically evaluates the realizability of its net deferred tax assets based on all available evidence, both positive and negative. The realization of net deferred tax assets is dependent on the Company’s ability to generate sufficient future taxable income to fully utilize these assets. As of

September 30, 2024, the Company continues to maintain a full allowance against its U.S. federal and state net deferred tax assets.

- Definition

The entire disclosure for income tax.

+ References

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+ Details

Insider Trading Arrangements	3 Months Ended	9 Months Ended
Insider Trading Arrangements	Sep. 30, 2024 shares	Sep. 30, 2024 shares
Trading Arrangements, by Individual
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false
Dr. Severin Hacker [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		On September 10, 2024, Dr. Severin Hacker, Chief Technology Officer and Director, entered into a 10b5-1 sales plan (the “Hacker 10b5-1 Sales Plan”) intended to satisfy the affirmative defense of Rule 10b5-1(c) of the Exchange Act and providing for the potential exercise of vested stock options and the associated sale of up to 504,248 shares of the Company’s Class A common stock. The Hacker 10b5-1 Sales Plan will remain in effect until the earlier of (1) December 4, 2025, (2) the date on which all trades set forth in the Hacker 10b5-1 Sales Plan have been executed, or (3) such time as the Hacker 10b5-1 Sales Plan is otherwise terminated according to its terms.
Name	Dr. Severin Hacker
Title	Chief Technology Officer and Director
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	September 10, 2024
Expiration Date	December 4, 2025
Arrangement Duration	450 days
Aggregate Available	504,248	504,248

STOCK-BASED COMPENSATION - Schedule of Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) - $ / shares shares in Thousands	9 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Restricted stock units
Beginning balance (in shares)	1,938	2,027
Granted (in shares)	635
Released (in shares)	(616)
Forfeited (in shares)	(108)
Ending balance (in shares)	1,938
Weighted- average grant date fair value per share
Beginning balance (in usd per share)	$ 106.32
Granted (in usd per share)	177.36
Released (in usd per share)	101.02
Forfeited (in usd per share)	115.32
Ending balance (in usd per share)	$ 130.77

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Statement of Cash Flows [Abstract]
Cash acquired during acquisition	$ 5

INTANGIBLE ASSETS AND GOODWILL - Schedule of Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 4,050
Acquisitions	6,488
Ending balance	$ 10,538

- Definition

Amount, after accumulated impairment loss, of asset representing future economic benefit arising from other asset acquired in business combination or from joint venture formation or both, that is not individually identified and separately recognized.

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+ Details

STOCK-BASED COMPENSATION - Schedule of Payment Award (Details) - Restricted Stock Units (RSUs) shares in Thousands	Jun. 30, 2021 $ / shares shares
1
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Company stock price hurdle (in usd per share) \| $ / shares	$ 127.50
Number of RSUs eligible to vest (in shares) \| shares	90
2
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Company stock price hurdle (in usd per share) \| $ / shares	$ 153.00
Number of RSUs eligible to vest (in shares) \| shares	90
3
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Company stock price hurdle (in usd per share) \| $ / shares	$ 178.50
Number of RSUs eligible to vest (in shares) \| shares	90
4
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Company stock price hurdle (in usd per share) \| $ / shares	$ 204.00
Number of RSUs eligible to vest (in shares) \| shares	180
5
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Company stock price hurdle (in usd per share) \| $ / shares	$ 255.00
Number of RSUs eligible to vest (in shares) \| shares	180
6
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Company stock price hurdle (in usd per share) \| $ / shares	$ 306.00
Number of RSUs eligible to vest (in shares) \| shares	180
7
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Company stock price hurdle (in usd per share) \| $ / shares	$ 357.00
Number of RSUs eligible to vest (in shares) \| shares	180
8
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Company stock price hurdle (in usd per share) \| $ / shares	$ 408.00
Number of RSUs eligible to vest (in shares) \| shares	180
9
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Company stock price hurdle (in usd per share) \| $ / shares	$ 612.00
Number of RSUs eligible to vest (in shares) \| shares	270
10
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Company stock price hurdle (in usd per share) \| $ / shares	$ 816.00
Number of RSUs eligible to vest (in shares) \| shares	360

INTANGIBLE ASSETS AND GOODWILL - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Total intangible assets	$ 36,564	$ 27,012
Less: accumulated amortization	(14,664)	(11,017)
Intangible assets, net	21,900	15,995
Capitalized software
Finite-Lived Intangible Assets [Line Items]
Total intangible assets	35,440	26,895
Acquired technology
Finite-Lived Intangible Assets [Line Items]
Total intangible assets	1,007	0
Other intangible assets
Finite-Lived Intangible Assets [Line Items]
Total intangible assets	$ 117	$ 117

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

FAIR VALUE - Schedule of Net Unrealized Gains (Losses), and Fair Value by Major Security Type for Our Investments (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Cash	$ 63,300	$ 50,373
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(76)	0
Amortized Cost	871,791	697,237
Fair Value	936,015	747,610
Short-term investments	26,354	0
Cash and cash equivalents	854,409	747,610
Long-Term Investments	55,328	0
Level 1
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Cash Equivalents	794,045
Level 1 \| Commercial paper
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Cash Equivalents	2,936
Level 1 \| Money market funds
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Cash Equivalents	791,109	$ 697,237
Level 1 \| Cash Equivalents
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Cash Equivalents	791,109
Level 1 \| Cash Equivalents \| Money market funds
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Cash Equivalents	791,109
Level 1 \| Short-Term Investments
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Short-term investments	2,936
Level 1 \| Short-Term Investments \| Commercial paper
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Short-term investments	2,936
Level 2
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Amortized Cost	77,746
Gross Unrealized Gains	0
Gross Unrealized Losses	(76)
Fair Value	77,670
Short-term investments	23,418
Debt securities, held to maturity	54,328
Level 2 \| Corporate debt securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Amortized Cost	65,901
Gross Unrealized Gains	0
Gross Unrealized Losses	(75)
Fair Value	65,826
Short-term investments	11,573
Debt securities, held to maturity	54,328
Level 2 \| U.S. Treasury securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Amortized Cost	11,845
Gross Unrealized Gains	0
Gross Unrealized Losses	(1)
Fair Value	11,844
Short-term investments	11,845
Debt securities, held to maturity
Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investment in SAFE	$ 1,000

EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

As the liquidation and dividend rights are identical for Class A and Class B common stock, the undistributed earnings are allocated on a proportional basis and the resulting net income per share attributable to common stockholders will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share data)	2024		2023		2024		2023
Numerator:
Net income attributable to Class A and Class B common stockholders	$	23,360	$	2,807	$	74,667	$	3,950


Denominator:
Weighted-average shares in computing net income per share attributable to Class A and Class B common stockholders, basic and diluted	43,707		41,719		43,253		41,190
Effect of dilutive securities
Founder awards where performance has been met	270		—		270		—
Dilutive effect of stock options outstanding (1)	2,054		3,004		2,054		3,004
RSUs outstanding	1,938		2,223		1,938		2,223
Denominator for dilutive net income per common share - weighted-average shares	47,969		46,946		47,515		46,417
Basic income per common share	$	0.53	$	0.07	$	1.73	$	0.10
Diluted income per common share	$	0.49	$	0.06	$	1.57	$	0.09

________________

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets
Cash and cash equivalents	$ 854,409	$ 747,610
Short-term investments	26,354	0
Accounts receivable	94,215	88,975
Deferred cost of revenues	67,329	53,931
Prepaid expenses and other current assets	16,130	7,282
Total current assets	1,058,437	897,798
Operating lease right-of-use assets	48,624	19,103
Intangible assets, net	21,900	15,995
Long-term investments	55,328	0
Property and equipment, net	19,495	11,792
Goodwill	10,538	4,050
Restricted cash	2,735	2,735
Deferred tax assets, net	835	766
Other assets	1,657	1,718
Total assets	1,219,549	953,957
Current liabilities
Deferred revenues	310,603	249,192
Accounts payable	3,649	2,447
Income tax payable	36	792
Accrued expenses and other current liabilities	27,845	24,931
Total current liabilities	342,133	277,362
Long-term obligation under operating leases	54,651	21,094
Deferred tax liabilities, net	312	0
Total liabilities	397,096	298,456
Commitments and contingencies (Note 11)
Stockholders’ equity
Class A common stock, $0.0001 par value; 2,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 37,857 and 36,311 issued and outstanding at September 30, 2024 and December 31, 2023, respectively Class B common stock, $0.0001 par value; 30,000 shares authorized as of September 30, 2024 and December 31, 2023; 6,087 and 6,215 issued and outstanding at September 30, 2024 and December 31, 2023, respectively	4	4
Additional paid-in capital	962,203	869,918
Accumulated deficit	(139,754)	(214,421)
Total stockholders’ equity	822,453	655,501
Total liabilities and stockholders' equity	$ 1,219,549	$ 953,957

PROPERTY and EQUIPMENT, net - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 35,309	$ 24,060
Less: accumulated depreciation	(15,814)	(12,268)
Total property and equipment, net	19,495	11,792
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	26,449	18,191
Furniture, fixtures and equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 8,860	$ 5,869

ACQUISITIONS - Narrative (Details) - Series of Individually Immaterial Business Acquisitions $ in Thousands	1 Months Ended	9 Months Ended
	Jul. 31, 2024 USD ($) acquisition	Sep. 30, 2024 USD ($)
Business Acquisition [Line Items]
Number of businesses acquired \| acquisition	2
Total consideration	$ 7,500
Purchase price	7,100
Payments to acquire businesses	6,600
Current liability	500
Contingent consideration	$ 400
Continued service period (in years)	1 year
Acquisition costs		$ 736
Goodwill recognized is expected to be deductible for income tax	$ 3,600

INTANGIBLE ASSETS AND GOODWILL - Narrative (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Capitalized software development costs	$ 8,545	$ 7,170
Goodwill, tax deductible amount	$ 7,050		$ 3,713

PROPERTY and EQUIPMENT, net

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

PROPERTY and EQUIPMENT, net

Property and equipment consists of the following as of September 30, 2024 and December 31, 2023:



(In thousands)	September 30, 2024		December 31, 2023
Leasehold improvements	$	26,449	$	18,191
Furniture, fixtures and equipment	8,860		5,869
Total property and equipment	35,309		24,060
Less: accumulated depreciation	(15,814)		(12,268)
Total property and equipment, net	$	19,495	$	11,792

Depreciation expense is included within the following financial statement line items within the Company’s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2024		2023		2024		2023

Research and development	$	648	$	415	$	1,588	$	1,231
Sales and marketing	77		48		188		141
General and administrative	613		570		1,770		1,681
Total	$	1,338	$	1,033	$	3,546	$	3,053

LEASES - Schedule of Future Minimum Rental Payments for Operating Leases (Details) $ in Thousands	Sep. 30, 2024 USD ($)
Leases [Abstract]
Remainder of 2024	$ 1,054
2025	4,212
2026	9,160
2027	9,520
2028	9,299
Thereafter	48,482
Total undiscounted lease payments	81,727
Present value adjustment	(24,460)
Operating lease liabilities	$ 57,267

STOCK-BASED COMPENSATION - Schedule of Income Statement Location for Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 28,959	$ 25,432	$ 80,690	$ 70,219
Cost of revenues
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	20	15	54	40
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	16,230	12,244	43,331	32,568
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	1,305	1,151	3,557	2,899
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 11,404	$ 12,022	$ 33,748	$ 34,712

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 35
-Paragraph 1D
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480483/718-10-35-1D

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-URI https://asc.fasb.org/1943274/2147480429/718-10-50-2

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-URI https://asc.fasb.org/1943274/2147480429/718-10-50-2

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-Topic 718
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-Name Accounting Standards Codification
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480429/718-10-50-2

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-Name Accounting Standards Codification
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-URI https://asc.fasb.org/1943274/2147480429/718-10-50-2

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-URI https://asc.fasb.org/1943274/2147480429/718-10-50-2

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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480429/718-10-50-2

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480429/718-10-50-2

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-Topic 718
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-Name Accounting Standards Codification
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-Topic 718
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-Topic 718
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org/1943274/2147480429/718-10-50-2

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480429/718-10-50-2

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480429/718-10-50-2

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-Name Accounting Standards Codification
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-URI https://asc.fasb.org/1943274/2147480429/718-10-50-2

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-Paragraph 2
-Subparagraph (f)(2)(v)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480429/718-10-50-2

+ Details

ACQUISITIONS (Tables)

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the Company’s preliminary allocation of the purchase consideration based on the fair value of assets acquired and liabilities assumed at the acquisition dates:


(In thousands)	July 2024
Cash and cash equivalents	$	5
Other current assets acquired	37
Intangible assets, net
Technology	1,007
Goodwill	6,488
Other liabilities assumed	(437)
Total purchase price	$	7,100

ACQUISITIONS - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Jul. 31, 2024	Dec. 31, 2023
Business Acquisition [Line Items]
Goodwill	$ 10,538		$ 4,050
Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Cash and cash equivalents		$ 5
Other current assets acquired		37
Intangible assets, net		1,007
Goodwill		6,488
Other liabilities assumed		(437)
Total purchase price		$ 7,100

- Definition

+ References

+ Details

REVENUE - Narrative (Details)	3 Months Ended		9 Months Ended
REVENUE - Narrative (Details)	Sep. 30, 2024 revenueSource user	Sep. 30, 2023	Sep. 30, 2024 revenueSource user	Sep. 30, 2023
Disaggregation of Revenue [Line Items]
Number of sources of revenue \| revenueSource	4		4
Number of users \| user	6		6
Number of hours to make certification decision (less than)	48 hours		48 hours
Number of days to take exam	21 days		21 days
Expiration period to take exams (in years)	1 year		1 year
Apple \| Revenue from Contract with Customer Benchmark \| Customer Concentration Risk
Disaggregation of Revenue [Line Items]
Concentration risk (in percent)	61.40%	59.30%	60.50%	58.30%
Google \| Revenue from Contract with Customer Benchmark \| Customer Concentration Risk
Disaggregation of Revenue [Line Items]
Concentration risk (in percent)	23.10%	24.90%	23.50%	25.70%
Stripe \| Revenue from Contract with Customer Benchmark \| Customer Concentration Risk
Disaggregation of Revenue [Line Items]
Concentration risk (in percent)	11.40%	12.60%	11.80%	12.10%

DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION	9 Months Ended
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION	Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION	DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION Duolingo, Inc. (the “Company” or “Duolingo”) was formed on August 18, 2011, and the Duolingo App was launched to the general public on June 19, 2012. The Company’s headquarters are located in Pittsburgh, Pennsylvania. Duolingo is a US-based mobile learning platform, as well as a digital language proficiency assessment exam. The Company has a freemium business model: the app and the website are accessible free of charge, although Duolingo also offers premium services for a subscription fee. As of the date of this filing, Duolingo offers courses in over 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese and Chinese. We have locations in the U.S., China and Germany. Principles of Consolidation—The Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and subsidiaries over which the Company has control. All intercompany transactions and balances have been eliminated. Basis of Presentation—The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) from the Company’s accounting records and reflect the consolidated financial position and results of operations for the three and nine months ended September 30, 2024 and 2023. Unless otherwise specified, all dollar amounts (other than per share amounts) are referred to in thousands. The Unaudited Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. In our opinion, all adjustments considered necessary for a fair presentation of the financial statements have been included, and all adjustments are of a normal and recurring nature. We applied the accounting policies consistently with the policies used in the preparation of the Annual Report on Form 10-K in preparing these Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes for the fiscal year ended December 31, 2023 included in the Annual Report on Form 10-K and filed with the SEC.

EARNINGS PER SHARE - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Numerator:
Net income attributable to Class A and Class B common stockholders	$ 23,360	$ 2,807	$ 74,667	$ 3,950
Denominator:
Weighted-average shares in computing net income per share attributable to Class A and Class B common stockholders, diluted (in shares)	47,969	46,946	47,515	46,417
Effect of dilutive securities
Basic income per common share (in usd per share)	$ 0.53	$ 0.07	$ 1.73	$ 0.10
Diluted income per common share (in usd per share)	$ 0.49	$ 0.06	$ 1.57	$ 0.09
Options outstanding (in shares)	2,183		2,183		2,985
Founder awards where performance has been met
Effect of dilutive securities
Stock options and RSUs outstanding (in shares)	270	0	270	0
Stock options outstanding
Effect of dilutive securities
Stock options and RSUs outstanding (in shares)	2,054	3,004	2,054	3,004
RSUs outstanding
Effect of dilutive securities
Stock options and RSUs outstanding (in shares)	1,938	2,223	1,938	2,223
Class A and Class B Common Stock
Denominator:
Weighted-average shares in computing net income per share attributable to Class A and Class B common stockholders, basic (in shares)	43,707	41,719	43,253	41,190
Weighted-average shares in computing net income per share attributable to Class A and Class B common stockholders, diluted (in shares)	43,707	41,719	43,253	41,190

FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Schedule of Net Unrealized Gains (Losses), and Fair Value by Major Security Type for Our Investments

The following table presents amortized cost, gross unrealized gains and losses, fair value by major security type and balance sheet classification as of September 30, 2024 and December 31, 2023:


As of September 30, 2024
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Short-Term Investments		Long-Term Investments
Cash	$	—	$	—	$	—	$	63,300	$	63,300	$	—	$	—

Level 1
Commercial paper	$	2,936	$	—	$	—	$	2,936	$	—	$	2,936	$	—
Money market funds	791,109		—		—		791,109		791,109		—		—
Subtotal	$	794,045	$	—	$	—	$	794,045	$	791,109	$	2,936	$	—

Level 2
Corporate debt securities	$	65,901	$	—	$	(75)	$	65,826	$	—	$	11,573	$	54,328
U.S. Treasury securities	11,845		—		(1)		11,844		—		11,845
Subtotal	$	77,746	$	—	$	(76)	$	77,670	$	—	$	23,418	$	54,328

Level 3
Investment in SAFE	$	—	$	—	$	—	$	1,000	$	—	$	—	$	1,000
Subtotal	$	—	$	—	$	—	$	1,000	$	—	$	—	$	1,000
Total	$	871,791	$	—	$	(76)	$	936,015	$	854,409	$	26,354	$	55,328


As of December 31, 2023
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Short-Term Investments		Long-Term Investments
Cash	—		—		—		50,373		50,373		—		—

Level 1
Money market funds	$	697,237	$	—	$	—	$	697,237	$	697,237	$	—	$	—





Total	$	697,237	$	—	$	—	$	747,610	$	747,610	$	—	$	—

EMPLOYEE BENEFIT PLAN	9 Months Ended
EMPLOYEE BENEFIT PLAN	Sep. 30, 2024
Postemployment Benefits [Abstract]
EMPLOYEE BENEFIT PLAN	EMPLOYEE BENEFIT PLAN The Company sponsors a profit sharing plan with a 401(k) feature, the Duolingo Retirement Plan (the “Plan”), for eligible employees. The current Plan, effective January 1, 2021, provides for Company safe harbor matching contributions of 100% of the first 4% of the employees’ elective deferrals and 50% of the next 2%, with vesting starting upon the first day of employment. The Company also has the option to make discretionary matching or profit sharing contributions. The Company made safe harbor matching contributions of approximately $1,807 and $1,563 during the three months ended September 30, 2024 and 2023, respectively, and $5,095 and $4,433 during the nine months ended September 30, 2024 and 2023, respectively. The Company did not make any discretionary matching or profit sharing contributions during the three and nine months ended September 30, 2024 or 2023.

INTANGIBLE ASSETS AND GOODWILL (Tables)

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

Intangible assets consist of the following as of September 30, 2024 and December 31, 2023:


(In thousands)	September 30, 2024		December 31, 2023
Capitalized software	$	35,440	$	26,895
Acquired technology	1,007		—
Other intangible assets	117		117
Total intangible assets	36,564		27,012
Less: accumulated amortization	(14,664)		(11,017)
Intangible assets, net	$	21,900	$	15,995

Schedule of Intangible Assets Amortization Expense

Amortization expense is included within the following financial statement line items within the Company’s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2024		2023		2024		2023
Cost of revenues	$	1,397	$	402	$	3,189	$	1,207
Sales and marketing	141		222		458		793
Total	$	1,538	$	624	$	3,647	$	2,000

Schedule of Intangible Assets, Future Amortization Expense

The estimated future amortization expense of capitalized software and acquired technology with definite lives as of September 30, 2024 was as follows:


(In thousands)	Amortization Expense
Remainder of 2024	$	2,252
2025	8,490
2026	6,910
2027	3,661
2028	157
Thereafter	313
Total estimated future amortization expense	$	21,783

Schedule of Goodwill

The following table represents the changes to goodwill during the nine months ended September 30, 2024:


	Carrying amount
Balance as of December 31, 2023	$	4,050
Acquisitions	6,488
Balance as of September 30, 2024	$	10,538

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 350
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-Name Accounting Standards Codification
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+ Details

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2022		40,361
Beginning balance at Dec. 31, 2022	$ 542,078	$ 4	$ 772,562	$ (230,488)
Increase (Decrease) in Stockholders' Deficit [Roll Forward]
Stock-based compensation expense	70,219		70,219
Release of performance stock units (in shares)		180
Taxes paid related to net-share settlement of share-based compensation awards (in shares)		(84)
Taxes paid related to net-share settlement of share-based compensation awards	(11,482)		(11,482)
Stock options exercised (in shares)		1,068
Stock options exercised	10,054		10,054
Release of restricted stock units (in shares)		447
Net income	3,950			3,950
Ending balance (in shares) at Sep. 30, 2023		41,972
Ending balance at Sep. 30, 2023	614,819	$ 4	841,353	(226,538)
Beginning balance (in shares) at Jun. 30, 2023		41,531
Beginning balance at Jun. 30, 2023	596,405	$ 4	825,746	(229,345)
Increase (Decrease) in Stockholders' Deficit [Roll Forward]
Stock-based compensation expense	25,432		25,432
Release of performance stock units (in shares)		180
Taxes paid related to net-share settlement of share-based compensation awards (in shares)		(84)
Taxes paid related to net-share settlement of share-based compensation awards	(11,482)		(11,482)
Stock options exercised (in shares)		152
Stock options exercised	1,657		1,657
Release of restricted stock units (in shares)		193
Net income	2,807			2,807
Ending balance (in shares) at Sep. 30, 2023		41,972
Ending balance at Sep. 30, 2023	614,819	$ 4	841,353	(226,538)
Beginning balance (in shares) at Dec. 31, 2023		42,526
Beginning balance at Dec. 31, 2023	655,501	$ 4	869,918	(214,421)
Increase (Decrease) in Stockholders' Deficit [Roll Forward]
Stock-based compensation expense	$ 80,690		80,690
Stock options exercised (in shares)	802	802
Stock options exercised	$ 11,595		11,595
Release of restricted stock units (in shares)		616
Net income	74,667			74,667
Ending balance (in shares) at Sep. 30, 2024		43,944
Ending balance at Sep. 30, 2024	822,453	$ 4	962,203	(139,754)
Beginning balance (in shares) at Jun. 30, 2024		43,500
Beginning balance at Jun. 30, 2024	766,944	$ 4	930,054	(163,114)
Increase (Decrease) in Stockholders' Deficit [Roll Forward]
Stock-based compensation expense	28,959		28,959
Stock options exercised (in shares)		222
Stock options exercised	3,190		3,190
Release of restricted stock units (in shares)		222
Net income	23,360			23,360
Ending balance (in shares) at Sep. 30, 2024		43,944
Ending balance at Sep. 30, 2024	$ 822,453	$ 4	$ 962,203	$ (139,754)

FAIR VALUE

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

FAIR VALUE

The Company accounts for certain assets and liabilities at fair value in accordance with the accounting guidance applicable to fair value measurements and disclosures. The carrying values of cash, cash equivalents, accounts receivable, accounts payable, and accrued expenses are deemed to be reasonable estimates of their fair values because of their short-term nature.

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring and non-recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.

The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1—Observable inputs such as quoted prices in active markets for identical investments that the Company has the ability to access.

Level 2—Inputs include:

•Quoted prices for similar assets or liabilities in active markets;

•Quoted prices for identical or similar assets or liabilities in inactive markets;

•Inputs, other than quoted prices in active markets, which are observable either directly or indirectly;

•Inputs that are derived principally from, or corroborated by, observable market data by correlation or other means.

Level 3—Unobservable inputs in which there is little or no market activity for the asset or liability, which require the reporting entity to develop its own estimates and assumptions relating to the pricing of the asset or liability including assumptions regarding risk.

The following table presents amortized cost, gross unrealized gains and losses, fair value by major security type and balance sheet classification as of September 30, 2024 and December 31, 2023:


As of September 30, 2024
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Short-Term Investments		Long-Term Investments
Cash	$	—	$	—	$	—	$	63,300	$	63,300	$	—	$	—

Level 1
Commercial paper	$	2,936	$	—	$	—	$	2,936	$	—	$	2,936	$	—
Money market funds	791,109		—		—		791,109		791,109		—		—
Subtotal	$	794,045	$	—	$	—	$	794,045	$	791,109	$	2,936	$	—

Level 2
Corporate debt securities	$	65,901	$	—	$	(75)	$	65,826	$	—	$	11,573	$	54,328
U.S. Treasury securities	11,845		—		(1)		11,844		—		11,845
Subtotal	$	77,746	$	—	$	(76)	$	77,670	$	—	$	23,418	$	54,328

Level 3
Investment in SAFE	$	—	$	—	$	—	$	1,000	$	—	$	—	$	1,000
Subtotal	$	—	$	—	$	—	$	1,000	$	—	$	—	$	1,000
Total	$	871,791	$	—	$	(76)	$	936,015	$	854,409	$	26,354	$	55,328


As of December 31, 2023
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Short-Term Investments		Long-Term Investments
Cash	—		—		—		50,373		50,373		—		—

Level 1
Money market funds	$	697,237	$	—	$	—	$	697,237	$	697,237	$	—	$	—





Total	$	697,237	$	—	$	—	$	747,610	$	747,610	$	—	$	—

As of September 30, 2024 and December 31, 2023, all of the Company’s short-term investments have contractual maturities of one year or less and all of the Company’s long-term investments have contractual maturities between one and three years.

Changes in market interest rates, credit risk of borrowers and overall market liquidity, amongst other factors, may cause the short-term and long-term debt investments to fall below their amortized cost basis, resulting in unrealized losses. For those debt securities in an unrealized loss position as of September 30, 2024, the Company does not intend to sell, nor is it more likely than not that it will be required to sell, such securities before recovering the amortized cost basis. No other-than-temporary impairments have been recognized in the financial statements for the periods ended September 30, 2024 and December 31, 2023.

Cash equivalents consist primarily of money market accounts with maturities of three months or less at the date of acquisition and are classified within Level 1.

The Company’s investments in U.S. Treasury securities and corporate bonds, which collectively are investments in held-to-maturity debt securities, are classified within Level 2, as their valuation requires quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in

markets that are not active and/or model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
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-Section 55
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+ Details

STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

STOCK-BASED COMPENSATION

Prior to the IPO, the Company granted options to purchase shares of the Company’s common stock and restricted stock units (“RSU”) in respect of shares of the Company’s common stock to employees, directors and consultants under the Company’s 2011 Equity Incentive Plan. In July 2021, Duolingo adopted the 2021 Incentive Award Plan (“2021 Plan”) and the 2021 Employee Stock Purchase Plan (“ESPP”), each of which became effective on July 26, 2021 in connection with the IPO. An aggregate of 7,946 shares and 1,119 shares of Class A common stock were made available for future issuance under the 2021 Plan and ESPP, respectively. Pursuant to the terms of the plan, on each January 1 through January 1, 2031, the number of shares of the Company’s Class A common stock available for issuance automatically increases by the lesser of (i) 5% of the shares outstanding on the preceding December 31 (calculated on an as-converted basis) and (ii) such smaller number of shares of common stock as determined by the Board or the Committee (as defined in the 2021 Plan). Pursuant to the terms of the ESPP, on each January 1 through January 1, 2031, the number of shares of the Company’s Class A common stock available for issuance automatically increases by the lesser of (i) 1% of the shares outstanding on the preceding December 31 and (ii) such smaller number of shares of common stock as determined by the Board or the Committee (as defined in the ESPP). On January 1, 2024, the number of Class A shares available under the 2021 Plan was increased by 2,126 shares of common stock. The Board waived the 2024 automatic annual increase of shares available for future issuance under the ESPP, and the Company intends to waive such automatic annual increase for all applicable future periods.

The Company’s stock options vest based on terms in the stock option agreements, which generally provide for vesting over four years based on continued service to the Company and its subsidiaries. Each option has a term of ten years. Stock options granted under the 2021 Plan must generally have an exercise price of not less than the estimated fair market value of the underlying Class A common stock at the date of the grant. No options have been granted under the 2021 Plan.

A summary of stock option activity under the Plans was as follows:


(In thousands, except prices and years)	Number of options	Weighted- average exercise price		Weighted- average remaining contractual life (years)	Aggregate intrinsic value





Options outstanding at January 1, 2024	2,985	$	16.04	5.60	$	629,865
Granted (1)	—
Exercised	(802)	14.45

Forfeited and expired (2)	—	20.75
Options outstanding at September 30, 2024	2,183	$	16.62	4.90	$	579,895
Options exercisable at September 30, 2024	2,180	$	16.52	4.90	$	578,771

________________

(1) There were no stock options granted during the three and nine months ended September 30, 2024.

(2) There was a nominal amount of forfeitures and expirations during the nine months ended September 30, 2024.

The total intrinsic value of options exercised was approximately $151,558 and $127,785 for the periods ended September 30, 2024 and 2023, respectively.

A summary of RSU activity under the Plans was as follows:


(In thousands, except prices)	Restricted stock units	Weighted- average grant date fair value per share




Outstanding at January 1, 2024	2,027	$	106.32
Granted	635	177.36
Released	(616)	101.02
Forfeited	(108)	115.32
Outstanding at September 30, 2024	1,938	$	130.77

As of September 30, 2024, there was approximately $86 of unrecognized stock-based compensation expense related to stock options granted under the plans with a weighted-average period of approximately 4 months. The amount of unrecognized stock-based compensation expense for RSUs as of September 30, 2024 was $237,137 with a weighted-average period of approximately three years. Total unrecognized compensation expense as of September 30, 2024 was $237,223.

There were 8,878 shares available for grant at September 30, 2024.

Performance-based RSUs

In June 2021, the Company granted an aggregate of 1,800 performance-based RSUs (the “Founder Awards”) to the Company’s founders. The Founder Awards vest upon the satisfaction of both a service-based condition and a performance-based condition and generally are settled one year after vesting. The service-based condition is satisfied as to 25% of the Founder Awards on each anniversary of the IPO on July 27, 2021, subject to the continuous service of the founders through the applicable date. The performance-based condition will be satisfied with respect to each of 10 equal tranches only if the trailing 60-calendar day volume-weighted-average closing trading price of the Company’s Class A common stock reaches certain stock-price hurdles for each such tranche, as set forth below, over a period of 10 years from the date of grant.

Any RSUs associated with stock-price hurdles not achieved by the tenth anniversary of the date of grant will terminate and be canceled for no additional consideration to the founders. The stock-price hurdles and number of RSUs eligible to vest will be adjusted to reflect any stock splits, stock dividends, combinations, reorganizations, reclassifications, or similar events under the 2021 Plan. The Founder Awards will be settled in shares of the Company’s Class B common stock.


Tranche	Company Stock Price Hurdle		Number of RSUs Eligible to Vest
1 (1)	$	127.50	90
2 (1)	$	153.00	90
3 (2)	$	178.50	90
4 (3)	$	204.00	180
5	$	255.00	180
6	$	306.00	180
7	$	357.00	180
8	$	408.00	180
9	$	612.00	270
10	$	816.00	360

________________

(1) Stock price hurdle for the tranche was achieved in 2021, the service condition satisfied in 2022, and shares were released to CEO and CTO on August 14, 2023

(2) Stock price hurdle and the service condition for the tranche was achieved as of November 22, 2023; the shares will be released after the one-year holding requirement has been satisfied

(3) Stock price hurdle and the service condition for the tranche was achieved as of December 26, 2023; the shares will be released after the one-year holding requirement has been satisfied

The Company estimated the grant date fair value of the Founder Awards using a model based on multiple stock-price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the stock-price hurdles may not be satisfied. The weighted-average grant date fair value of the Founder Awards was estimated to be $61.56 per share and the Company estimates that it will recognize total stock-based compensation expense of approximately $110,817 over the derived service period of each of the ten separate tranches which is between 3.58 – 5.92 years. If the stock-price hurdles are met sooner than the requisite service period, the stock-based compensation expense will be adjusted to prospectively recognize the remaining expense over the remaining derived service period. Provided that the founders continue to provide services to the Company, stock-based compensation expense is recognized over the derived service period, regardless of whether the stock-price hurdles are achieved.

The Company recognized $4,410 and $15,507 of stock-based compensation expense related to the Founders Awards for the three and nine months ended September 30, 2024, respectively, and $6,595 and $20,829 for the three and nine months ended September 30, 2023, respectively, which is included within General and administrative in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. As of September 30, 2024, there is $21,229 of unrecognized stock-based compensation expense related to these awards.

Total stock-based compensation expense was $28,959 and $80,690 for the three and nine months ended September 30, 2024, and $25,432 and $70,219 for the three and nine months ended September 30, 2023, respectively.

Stock-based compensation expense is included in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income as shown in the following table:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2024		2023		2024		2023
Cost of revenues	$	20	$	15	$	54	$	40
Research and development	16,230		12,244		43,331		32,568
Sales and marketing	1,305		1,151		3,557		2,899
General and administrative	11,404		12,022		33,748		34,712
Total	$	28,959	$	25,432	$	80,690	$	70,219

Nominal amounts of stock-based compensation expense is capitalized into intangible assets for the three and nine months ended September 30, 2024 and 2023.

ACQUISITIONS

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

ACQUISITIONS

During July 2024, the Company completed two acquisitions which brought new designer, illustration, animation, and engineering talent to Duolingo’s existing teams in addition to developed technology. The total aggregate consideration was $7,500, of which $7,100 represents the purchase price allocated to the fair value of the acquired assets and assumed liabilities, as detailed below. Of this, $6,600 was paid in cash upon closing, and $500 is being held back until certain post-acquisition conditions are satisfied. This $500 is recorded as a Current liability in the Unaudited Condensed Consolidated Balance Sheet. The remaining $400 of the total aggregate consideration is contingent on one year of continued service of certain employees, and will be expensed over the period within General and administrative in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. During 2024, the Company incurred $736 of acquisition costs related to due diligence and valuation, which are included in General and administrative expense within the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.

The accounting for the acquisitions has not yet been completed because the Company has not finalized the valuations of the acquired assets, assumed liabilities and identifiable intangible assets, including goodwill. The following table summarizes the Company’s preliminary allocation of the purchase consideration based on the fair value of assets acquired and liabilities assumed at the acquisition dates:


(In thousands)	July 2024
Cash and cash equivalents	$	5
Other current assets acquired	37
Intangible assets, net
Technology	1,007
Goodwill	6,488
Other liabilities assumed	(437)
Total purchase price	$	7,100

Goodwill is attributable to the assembled workforce, future technologies and general going concern arising from the acquisitions. $3,600 of the goodwill recognized is expected to be deductible for income tax purposes.