0001562088-24-000113 | 10-Q | XBRL Viewer

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Mar. 31, 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)	36,904	36,311
Common stock, shares outstanding (in shares)	36,904	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)	6,153	6,215
Common stock, shares outstanding (in shares)	6,153	6,215

STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 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	(326)	11.21

Forfeited and expired (2)	—	16.27
Options outstanding at March 31, 2024	2,659	$	16.63	5.40	$	543,789
Options exercisable at March 31, 2024	2,578	$	16.34	5.36	$	526,630

________________

(1) There were no stock options granted during the three months ended March 31, 2024.

(2) There was a nominal amount of forfeitures and expirations during the three months ended March 31, 2024.

The total intrinsic value of options exercised was approximately $64,343 and $55,062 for the periods ended March 31, 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	51	188.43
Released	(205)	94.95
Forfeited	(29)	96.78
Outstanding at March 31, 2024	1,844	$	110.00

As of March 31, 2024, there was approximately $710 of unrecognized stock-based compensation expense related to stock options granted under the plans with a weighted-average period of approximately six months. The amount of unrecognized stock-based compensation expense for RSUs as of March 31, 2024 was $188,559 with a weighted-average period of approximately three years. Total unrecognized compensation expense as of March 31, 2024 was $189,269.

There were 9,382 shares available for grant at March 31, 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	$	127.50	90
2	$	153.00	90
3	$	178.50	90
4	$	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

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 stock-price hurdles for the third and fourth tranches were met during the three months ended December 31, 2023. As of the date of this Quarterly Report on Form 10-Q, no additional stock-price hurdles have been met.

The Company recognized $5,540 and $7,140 of stock-based compensation expense related to performance-based RSUs for the three months ended March 31, 2024 and 2023, respectively, which is included within General and administrative in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). As of March 31, 2024, there is $31,195 of unrecognized stock-based compensation expense related to these awards.

Total stock-based compensation expense was $24,985 and $21,073 for the three months ended March 31, 2024 and 2023, respectively.

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


	Three Months Ended March 31,
(In thousands)	2024		2023
Cost of revenues	$	16	$	11
Research and development	13,006		9,346
Sales and marketing	1,054		779
General and administrative	10,909		10,937
Total	$	24,985	$	21,073

Nominal amounts of stock-based compensation expense is capitalized into intangible assets for the three months ended March 31, 2024 and 2023

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net income (loss) attributable to Class A and Class B common stockholders	$ 26,956	$ (2,582)

- Definition

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

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+ Details

EARNINGS (LOSS) PER SHARE - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Numerator:
Net income (loss) attributable to Class A and Class B common stockholders	$ 26,956	$ (2,582)
Denominator:
Weighted-average shares in computing net income (loss) per share attributable to Class A and Class B common stockholders, diluted (in shares)	47,353	40,618
Effect of dilutive securities
Basic loss per common share (in usd per share)	$ 0.63	$ (0.06)
Diluted loss per common share (in usd per share)	$ 0.57	$ (0.06)
Options outstanding (in shares)	2,659		2,985
Founder awards where performance has been met
Effect of dilutive securities
Stock options and RSUs outstanding (in shares)	270	0
Stock options outstanding
Effect of dilutive securities
Stock options and RSUs outstanding (in shares)	2,459	0
RSUs outstanding
Effect of dilutive securities
Stock options and RSUs outstanding (in shares)	1,844	0
Class A and Class B Common Stock
Denominator:
Weighted-average shares in computing net income (loss) per share attributable to Class A and Class B common stockholders, basic (in shares)	42,780	40,618
Weighted-average shares in computing net income (loss) per share attributable to Class A and Class B common stockholders, diluted (in shares)	42,780	40,618

STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

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	(326)	11.21

Forfeited and expired (2)	—	16.27
Options outstanding at March 31, 2024	2,659	$	16.63	5.40	$	543,789
Options exercisable at March 31, 2024	2,578	$	16.34	5.36	$	526,630

________________

(1) There were no stock options granted during the three months ended March 31, 2024.

(2) There was a nominal amount of forfeitures and expirations during the three months ended March 31, 2024.

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	51	188.43
Released	(205)	94.95
Forfeited	(29)	96.78
Outstanding at March 31, 2024	1,844	$	110.00

Share-based Payment Arrangement, Payment Award


Tranche	Company Stock Price Hurdle		Number of RSUs Eligible to Vest
1	$	127.50	90
2	$	153.00	90
3	$	178.50	90
4	$	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

The weighted-average grant date fair value of the Founder Awards was estimated to be $61.56 per share and the

Share-based Payment Arrangement, Expensed, Amount

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


	Three Months Ended March 31,
(In thousands)	2024		2023
Cost of revenues	$	16	$	11
Research and development	13,006		9,346
Sales and marketing	1,054		779
General and administrative	10,909		10,937
Total	$	24,985	$	21,073

REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	$ 167,553	$ 115,661
Subscription
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	131,688	86,185
Advertising
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	12,952	11,635
Duolingo English Test
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	12,755	9,972
In-App Purchases
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	9,924	7,852
Other
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	$ 234	$ 17

- 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.

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+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Concentration Risk [Line Items]
Advertising costs	$ 14,020	$ 11,093
Accounts Receivable \| Customer Concentration Risk \| Apple
Concentration Risk [Line Items]
Concentration risk (in percent)	68.10%		65.20%
Accounts Receivable \| Customer Concentration Risk \| Google
Concentration Risk [Line Items]
Concentration risk (in percent)	16.00%		20.70%
Accounts Receivable \| Customer Concentration Risk \| Stripe
Concentration Risk [Line Items]
Concentration risk (in percent)	10.80%		10.70%
Revenue from Contract with Customer Benchmark \| Customer Concentration Risk \| Apple
Concentration Risk [Line Items]
Concentration risk (in percent)	59.30%	57.10%
Revenue from Contract with Customer Benchmark \| Customer Concentration Risk \| Google
Concentration Risk [Line Items]
Concentration risk (in percent)	23.70%	26.20%
Revenue from Contract with Customer Benchmark \| Customer Concentration Risk \| Stripe
Concentration Risk [Line Items]
Concentration risk (in percent)	12.90%	11.90%

INTANGIBLE ASSETS AND GOODWILL - Schedule of Capitalized Software Amortization Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Amortization of capitalized computer software	$ 1,007	$ 753
Cost of revenues
Finite-Lived Intangible Assets [Line Items]
Amortization of capitalized computer software	848	403
Sales and marketing
Finite-Lived Intangible Assets [Line Items]
Amortization of capitalized computer software	$ 159	$ 350

SUBSEQUENT EVENTS	3 Months Ended
SUBSEQUENT EVENTS	Mar. 31, 2024
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTS None.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
Revenues	$ 167,553	$ 115,661
Cost of revenues	45,191	31,492
Gross profit	122,362	84,169
Operating expenses:
Research and development	50,878	45,844
Sales and marketing	19,931	16,601
General and administrative	35,114	30,243
Total operating expenses	105,923	92,688
Income (loss) from operations	16,439	(8,519)
Other (expense) income, net	(621)	182
Income (loss) before interest income and income taxes	15,818	(8,337)
Interest income	10,033	5,639
Income (loss) before income taxes	25,851	(2,698)
Benefit from income taxes	(1,105)	(116)
Net income (loss)	26,956	(2,582)
Net comprehensive income (loss)	$ 26,956	$ (2,582)
Net income (loss) per share attributable to Class A and Class B common stockholders, basic (in usd per share)	$ 0.63	$ (0.06)
Net income (loss) per share attributable to Class A and Class B common stockholders, diluted (in usd per share)	$ 0.57	$ (0.06)

INTANGIBLE ASSETS AND GOODWILL - Estimated Future Amortization Expense (Details) $ in Thousands	Mar. 31, 2024 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2024	$ 4,339
2025	6,423
2026	5,150
2027	2,344
2028	222
Total estimated future amortization expense	18,478
Amortization for the year 2029	$ 0

EMPLOYEE BENEFIT PLAN (Details) - USD ($)	3 Months Ended
EMPLOYEE BENEFIT PLAN (Details) - USD ($)	Mar. 31, 2024	Mar. 31, 2023
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, contributions by employer	$ 1,583,000	$ 1,397,000
Defined contribution plan, employer discretionary contribution amount	$ 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%

COMMITMENTS AND CONTINGENCIES	3 Months Ended
COMMITMENTS AND CONTINGENCIES	Mar. 31, 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 months ended March 31, 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 6, Leases

PROPERTY and EQUIPMENT, net - Summary of Depreciation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Property, Plant and Equipment [Line Items]
Total	$ 1,067	$ 1,009
Research and development
Property, Plant and Equipment [Line Items]
Total	440	407
Sales and marketing
Property, Plant and Equipment [Line Items]
Total	52	48
General and administrative
Property, Plant and Equipment [Line Items]
Total	$ 575	$ 554

DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION	3 Months Ended
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION	Mar. 31, 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 months ended March 31, 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 consistently applied the accounting policies consistent with the annual Unaudited Condensed Consolidated Financial Statements elsewhere in this Quarterly Report on Form 10-Q, in preparing these Unaudited Condensed Consolidated Financial Statements. 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.

STOCK-BASED COMPENSATION - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Number of options
Options outstanding, beginning balance (in shares)	2,985,000
Granted (in shares)	0	0
Exercised (in shares)	(326,000)
Forfeited and expired (in shares)	0
Options outstanding, ending balance (in shares)	2,659,000		2,985,000
Number of options exercisable (in shares)	2,578,000
Weighted- average exercise price
Outstanding, beginning balance (in usd per share)	$ 16.04
Granted (in usd per share)
Exercised (in usd per share)	11.21
Forfeited and expired (in usd per share)	16.27
Outstanding, ending balance (in usd per share)	16.63		$ 16.04
Weighted average exercise price, options exercisable (in usd per share)	$ 16.34
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted average remaining contractual term (in years), outstanding	5 years 4 months 24 days		5 years 7 months 6 days
Weighted average remaining contractual term (in years), exercisable	5 years 4 months 9 days
Aggregate intrinsic value, outstanding	$ 543,789		$ 629,865
Aggregate intrinsic value, exercisable	$ 526,630

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Schedule of Cash and Cash Equivalents

The following table shows the breakout between cash and money market funds.



(In thousands)	March 31, 2024		December 31, 2023
Cash	$	47,917	$	50,373
Money market funds	781,796		697,237
Total	$	829,713	$	747,610

DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION (Details)	Mar. 31, 2024 language
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of languages, more than	40

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Mar. 31, 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
Robert Meese, [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	On December 11, 2023, the 10b5-1 sales plan intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act entered into by Robert Meese, Chief Business Officer, on September 8, 2023 expired in accordance with its terms upon the sale of the maximum aggregate number of shares of Class A common stock covered by such plan. On March 13, 2024, Mr. Meese entered into a 10b5-1 sales plan (the “Meese 10b5-1 Sales Plan”) intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act which provides for the potential exercise of vested stock options and the associated sale of up to 17,675 shares of the Company’s Class A common stock. The Meese 10b5-1 Sales Plan will remain in effect until the earlier of (1) July 31, 2025, (2) the date on which an aggregate of 17,675 shares of the Company’s Class A common stock have been sold under the Meese 10b5-1 Sales Plan, or (3) such time as the Meese 10b5-1 Sales Plan is otherwise terminated or expires according to its terms.
Name	Robert Meese
Title	Chief Business Officer
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	March 13, 2024
Arrangement Duration	505 days
Aggregate Available	17,675

REVENUE

3 Months Ended

Mar. 31, 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 us and our 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 our 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 we receive 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 March 31,
(In thousands)		2024		2023
Revenues:
Subscription		$	131,688	$	86,185
Advertising		12,952		11,635
Duolingo English Test		12,755		9,972
In-App Purchases		9,924		7,852
Other (1)		234		17
Total revenues		$	167,553	$	115,661

________________

(1) Other revenue is mainly comprised of revenue from Duo’s Taquería.

Three service providers, Apple, Google and Stripe, processed 59.3%, 23.7%, and 12.9% of total Revenues for the three months ended March 31, 2024, respectively. Three services providers, Apple, Google, and Stripe processed 57.1%, 26.2% and 11.9% of total Revenues for the three months ended March 31, 2023, respectively.

Changes in deferred revenues were as follows:


	Three Months Ended March 31,
(In thousands)	2024		2023
Beginning balance—January 1	$	249,192	$	157,550
Amount from beginning balance recognized into revenue	(102,257)		(65,492)
Recognition of deferred revenue	(40,907)		(30,129)
Deferral of revenue	173,285		120,013
Ending balance—March 31	$	279,313	$	181,942

- 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
-Topic 606
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-Paragraph 10
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-URI https://asc.fasb.org//1943274/2147479806/606-10-50-10

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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-URI https://asc.fasb.org//1943274/2147479806/606-10-50-15

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

EMPLOYEE BENEFIT PLAN	3 Months Ended
EMPLOYEE BENEFIT PLAN	Mar. 31, 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 $1,583 and $1,397 during the three months ended March 31, 2024 and 2023, respectively. The Company did not make any discretionary matching or profit sharing contributions during the three months ended March 31, 2024 or 2023.

REVENUE (Tables)

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

Schedule of Revenue Sources and Streams


	Three Months Ended March 31,
(In thousands)		2024		2023
Revenues:
Subscription		$	131,688	$	86,185
Advertising		12,952		11,635
Duolingo English Test		12,755		9,972
In-App Purchases		9,924		7,852
Other (1)		234		17
Total revenues		$	167,553	$	115,661

________________

(1) Other revenue is mainly comprised of revenue from Duo’s Taquería.

Schedule of Deferred Revenues

Changes in deferred revenues were as follows:


	Three Months Ended March 31,
(In thousands)	2024		2023
Beginning balance—January 1	$	249,192	$	157,550
Amount from beginning balance recognized into revenue	(102,257)		(65,492)
Recognition of deferred revenue	(40,907)		(30,129)
Deferral of revenue	173,285		120,013
Ending balance—March 31	$	279,313	$	181,942

EARNINGS (LOSS) PER SHARE - Schedule of Antidilutive Securities (Details) shares in Thousands	3 Months Ended
	Mar. 31, 2023 shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from the computation of earnings per share (in shares)	6,093
Stock options outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from the computation of earnings per share (in shares)	3,865
RSUs outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from the computation of earnings per share (in shares)	2,048
Founder awards where performance has been met
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from the computation of earnings per share (in shares)	180

LEASES

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

LEASES

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 is obligated to provide 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 March 31, 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.

The following represents the components of lease cost for the three months ended March 31, 2024 and 2023 along with supplemental disclosures of cash flow information, lease term and discount rate:


	Three Months Ended March 31,
	2024			2023
Operating lease cost	$	2,990		$	1,861
Short term lease cost	8			3
Variable lease cost	147			33
Total lease cost	$	3,145		$	1,897

Cash paid for amounts included in the measurement of lease liabilities	$	2,039		$	1,749
Right-of-use assets obtained in exchange for new operating lease liabilities	$	31,358		$	—
Right of use assets disposed or adjusted, modifying operating leases liabilities	$	1,303		$	623
Gain from termination of leases	$	8		$	—
Weighted-average remaining lease term	10 years			9 years
Weighted-average discount rate	7.19		%	6.53		%

Sublease income was immaterial for the three months ended March 31, 2024 and 2023.

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 March 31, 2024:


Fiscal year
Remainder of 2024	$	3,524
2025	3,648
2026	8,944
2027	9,158
2028	9,299
Thereafter	48,482
Total undiscounted lease payments	$	83,055
Present value adjustment	(26,412)
Operating lease liabilities	$	56,643

Current lease liabilities of $2,750 and $3,944 are presented within Accrued expenses and other liabilities while non-current lease liabilities of $53,893 and $21,094 are presented within Long-term obligation under operating leases on the Unaudited Condensed Consolidated Balance Sheet as of March 31, 2024 and the Audited Consolidated Balance Sheet as of December 31, 2023, respectively.

LEASES - Future Minimum Rental Payment (Details) $ in Thousands	Mar. 31, 2024 USD ($)
Leases [Abstract]
Remainder of 2024	$ 3,524
2025	3,648
2026	8,944
2027	9,158
2028	9,299
Thereafter	48,482
Total undiscounted lease payments	83,055
Present value adjustment	(26,412)
Operating lease liabilities	$ 56,643

INTANGIBLE ASSETS AND GOODWILL - Capitalized Software (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Capitalized software	$ 30,502	$ 26,895
Other intangible assets	117	117
Total intangible assets	30,619	27,012
Less: accumulated amortization	(12,024)	(11,017)
Intangible assets, net	$ 18,595	$ 15,995

STOCK-BASED COMPENSATION - Narrative (Details) $ / shares in Units, $ in Thousands			1 Months Ended	3 Months Ended
	Jan. 01, 2024 shares	Jul. 26, 2021 shares	Jun. 30, 2021 USD ($) tranche day $ / shares shares	Mar. 31, 2024 USD ($) shares	Mar. 31, 2023 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares) \| shares				0	0
Aggregate intrinsic value, exercised \| $				$ 64,343	$ 55,062
Unrecognized compensation cost, options \| $				710
Unrecognized compensation cost \| $				189,269
Closing trading price, specified calendar day \| day			60
Compensation expense \| $				$ 24,985	21,073
Stock options outstanding
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, weighted-average period of recognition (in years)				6 months
Number of options available for grant (in shares) \| shares				9,382,000
RSUs outstanding
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 \| $				$ 188,559
Equity instruments other than options, grants in period (in shares) \| shares				51,000
Performance Based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense, excluding options \| $				$ 31,195
Compensation expense \| $				$ 5,540	$ 7,140
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

EARNINGS (LOSS) PER SHARE (Tables)

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Schedule of Earnings (Loss) 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 (loss) 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 March 31,
(In thousands, except per share data)	2024		2023
Numerator:
Net income (loss) attributable to Class A and Class B common stockholders	$	26,956	$	(2,582)


Denominator:
Weighted-average shares in computing net income (loss) per share attributable to Class A and Class B common stockholders, basic and diluted	42,780		40,618
Effect of dilutive securities
Founder awards where performance has been met	270		—
Dilutive effect of stock options outstanding (1)	2,459		—
RSUs outstanding	1,844		—
Denominator for dilutive net income per common share - weighted-average shares	47,353		40,618
Basic income (loss) per common share	$	0.63	$	(0.06)
Diluted income (loss) per common share	$	0.57	$	(0.06)

________________

(1) The Company had 2.7 million options outstanding as of March 31, 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.

Schedule of Antidilutive Securities Excluded from Computation of Net Loss Per Share

The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the period presented because including them would have been antidilutive are as follows:


									Three Months Ended March 31,
(In thousands)									2023

Stock options outstanding									3,865
RSUs outstanding									2,048
Founder awards where performance has been met									180
Total									6,093

PROPERTY and EQUIPMENT, net (Tables)

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

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



(In thousands)	2024		2023
Leasehold improvements	$	20,616	$	18,191
Furniture, fixtures and equipment	5,928		5,869
Total property and equipment	26,544		24,060
Less: accumulated depreciation	(13,335)		(12,268)
Total property and equipment, net	$	13,209	$	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 (Loss).


	Three Months Ended March 31,
(In thousands)		2024		2023

Research and development		$	440	$	407
Sales and marketing		52		48
General and administrative		575		554
Total		$	1,067	$	1,009

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Mar. 31, 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 months ended March 31, 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, 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 and contingent liabilities. 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. The Money market funds are considered Level 1 financial assets. Level 1 financial assets use inputs that are the unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Sales and Marketing	Advertising Costs— Advertising costs were approximately $14,020 and $11,093 for the three months ended March 31, 2024 and 2023, respectively, and are included within Sales and marketing in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
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.
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.
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 us and our 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 our 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 we receive 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.

INCOME TAXES

3 Months Ended

Mar. 31, 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 (loss) 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 months ended March 31, 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 March 31,
(In thousands, except percentages)	2024			2023
Income (loss) before income taxes	$	25,851		$	(2,698)
Benefit from income taxes	(1,105)			(116)
Effective tax rate	(4.3)		%	4.3		%

During the three months ended March 31, 2024, the Company recognized a discrete tax benefit attributable to the excess tax benefits of stock-based compensation. This discrete benefit was the primary driver of the three months ended March 31, 2024 tax benefit recorded as well as changes to the effective tax rate as compared to the prior year.

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 March 31, 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 taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//740/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-14

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-21

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482526/740-270-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-17

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

LEASES - Narrative (Details) $ in Thousands	Jun. 16, 2035 USD ($)	Jan. 10, 2030 USD ($)	Aug. 01, 2025 ft²	Mar. 31, 2024 USD ($) ft²	Feb. 29, 2024 ft²	Dec. 31, 2023 USD ($)	Dec. 18, 2023 USD ($) ft² month	Mar. 31, 2023
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				$ 2,750		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				$ 53,893		$ 21,094
Seattle, Washington
Lessee, Lease, Description [Line Items]
Area of office building \| ft²					7,940
Lease term (in months)					63 months
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 \| month							20
Pittsburgh, Pennsylvania
Lessee, Lease, Description [Line Items]
Initial base rent per month				$ 394
Leased square footage \| ft²				110,008
Initial base rent (in percentage)				2.00%
Additional parking access (in percentage)				9.00%
Cost related to improvement to the premise				$ 6,800
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

REVENUE - Narrative (Details)	3 Months Ended
REVENUE - Narrative (Details)	Mar. 31, 2024 sourceOfRevenue user	Mar. 31, 2023
Disaggregation of Revenue [Line Items]
Number of sources of revenue \| sourceOfRevenue	4
Number of users \| user	6
Number of hours to make certification decision (less than)	48 hours
Number of days to take exam	21 days
Expiration period to take exams (in years)	1 year
Apple \| Revenue from Contract with Customer Benchmark \| Customer Concentration Risk
Disaggregation of Revenue [Line Items]
Concentration risk (in percent)	59.30%	57.10%
Google \| Revenue from Contract with Customer Benchmark \| Customer Concentration Risk
Disaggregation of Revenue [Line Items]
Concentration risk (in percent)	23.70%	26.20%
Stripe \| Revenue from Contract with Customer Benchmark \| Customer Concentration Risk
Disaggregation of Revenue [Line Items]
Concentration risk (in percent)	12.90%	11.90%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

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, 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 and contingent liabilities. 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. The following table shows the breakout between cash and money market funds.



(In thousands)	March 31, 2024		December 31, 2023
Cash	$	47,917	$	50,373
Money market funds	781,796		697,237
Total	$	829,713	$	747,610

The Money market funds are considered Level 1 financial assets. Level 1 financial assets use inputs that are the unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Advertising Costs— Advertising costs were approximately $14,020 and $11,093 for the three months ended March 31, 2024 and 2023, respectively, and are included within Sales and marketing in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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 our revenue comes through our subscriptions and advertising streams, and payments are made to Duolingo through service providers. Three service providers, Apple, Google, and Stripe accounted for 68.1%, 16.0%, and 10.8% of total Accounts receivable as of March 31, 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 months ended March 31, 2024 and 2023.

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.

INTANGIBLE ASSETS AND GOODWILL

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS AND GOODWILL

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


(In thousands)	2024		2023
Capitalized software	$	30,502	$	26,895
Other intangible assets	117		117
Total intangible assets	30,619		27,012
Less: accumulated amortization	(12,024)		(11,017)
Intangible assets, net	$	18,595	$	15,995

The Company capitalized $3,607 and $731 of software development costs, with the majority of the costs being employee wages, during the three months ended March 31, 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 (Loss).


	Three Months Ended March 31,
(In thousands)		2024		2023
Cost of revenues		$	848	$	403
Sales and marketing		159		350
Total		$	1,007	$	753

The estimated future amortization expense of capitalized software with definite lives as of March 31, 2024 was as follows:


(In thousands)	Amortization Expense
Remainder of 2024	$	4,339
2025	6,423
2026	5,150
2027	2,344
2028 (1)	222
Total estimated future amortization expense	$	18,478

________________

(1)All capitalized software is expected to be fully amortized by December 31, 2028, therefore there is no estimated amortization for the year 2029.

Goodwill was $4,050 at March 31, 2024 and December 31, 2023. As of March 31, 2024 and December 31, 2023, $3,645 and $3,713 of goodwill is deductible for tax purposes, respectively.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities:
Net income (loss)	$ 26,956	$ (2,582)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	2,074	1,762
Stock-based compensation expense	24,985	21,073
Gain on sale of capitalized software	0	(100)
Changes in assets and liabilities:
Deferred revenue	30,121	24,392
Accounts receivable	12,554	(5,781)
Deferred cost of revenues	(6,466)	(5,096)
Prepaid expenses and other current assets	(3,465)	(263)
Accounts payable	(398)	(345)
Accrued expenses and other current liabilities	(4,514)	(3,201)
Noncurrent assets and liabilities	1,667	(255)
Net cash provided by operating activities	83,514	29,604
Cash flows from investing activities:
Capitalized software expense and purchases of intangible assets	(3,607)	(731)
Purchase of property and equipment	(1,414)	(681)
Proceeds from sale of capitalized software		100
Net cash used for investing activities	(5,021)	(1,312)
Cash flows from financing activities:
Proceeds from exercise of stock options	3,610	4,619
Net cash provided by financing activities	3,610	4,619
Net increase in cash, cash equivalents and restricted cash	82,103	32,911
Cash, cash equivalents and restricted cash - Beginning of period	750,345	608,180
Cash, cash equivalents and restricted cash - End of period	832,448	641,091
Supplemental disclosure of cash flow information:
Cash paid for interest	0	0
Cash paid for income taxes	0	28
Supplemental disclosure of noncash investing activities:
Property and equipment included in Current liabilities	1,070	201
Right-of-use assets obtained in exchange for new operating lease liabilities	31,358	0
Right of use assets disposed or adjusted, modifying operating leases liabilities	$ 1,303	$ 0

LEASES (Tables)

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Summary of Components of Lease Cost

The following represents the components of lease cost for the three months ended March 31, 2024 and 2023 along with supplemental disclosures of cash flow information, lease term and discount rate:


	Three Months Ended March 31,
	2024			2023
Operating lease cost	$	2,990		$	1,861
Short term lease cost	8			3
Variable lease cost	147			33
Total lease cost	$	3,145		$	1,897

Cash paid for amounts included in the measurement of lease liabilities	$	2,039		$	1,749
Right-of-use assets obtained in exchange for new operating lease liabilities	$	31,358		$	—
Right of use assets disposed or adjusted, modifying operating leases liabilities	$	1,303		$	623
Gain from termination of leases	$	8		$	—
Weighted-average remaining lease term	10 years			9 years
Weighted-average discount rate	7.19		%	6.53		%

Schedule of Future Minimum Rental Payments for Operating Leases


Fiscal year
Remainder of 2024	$	3,524
2025	3,648
2026	8,944
2027	9,158
2028	9,299
Thereafter	48,482
Total undiscounted lease payments	$	83,055
Present value adjustment	(26,412)
Operating lease liabilities	$	56,643

INCOME TAXES (Tables)

3 Months Ended

Mar. 31, 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 March 31,
(In thousands, except percentages)	2024			2023
Income (loss) before income taxes	$	25,851		$	(2,698)
Benefit from income taxes	(1,105)			(116)
Effective tax rate	(4.3)		%	4.3		%

PROPERTY and EQUIPMENT, net - Summary (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 26,544	$ 24,060
Less: accumulated depreciation	(13,335)	(12,268)
Total property and equipment, net	13,209	11,792
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	20,616	18,191
Furniture, fixtures and equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 5,928	$ 5,869

INTANGIBLE ASSETS AND GOODWILL - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Capitalized software development costs	$ 3,607	$ 731
Goodwill	4,050		$ 4,050
Goodwill, tax deductible amount	$ 3,645		$ 3,713

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + 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	21,073		21,073
Stock options exercised (in shares)		542
Stock options exercised	4,619		4,619
Release of restricted stock units (in shares)		115
Net income (loss)	(2,582)			(2,582)
Ending balance (in shares) at Mar. 31, 2023		41,018
Ending balance at Mar. 31, 2023	565,188	$ 4	798,254	(233,070)
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	$ 24,985		24,985
Stock options exercised (in shares)	326	326
Stock options exercised	$ 3,610		3,610
Release of restricted stock units (in shares)		205
Net income (loss)	26,956			26,956
Ending balance (in shares) at Mar. 31, 2024		43,057
Ending balance at Mar. 31, 2024	$ 711,052	$ 4	$ 898,513	$ (187,465)

- Definition

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

+ References

+ Details

- Definition

Amount of equity (deficit) attributable to parent. Excludes temporary equity and equity attributable to noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 829,713	$ 747,610
Cash
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	47,917	50,373
Money market funds
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 781,796	$ 697,237

EARNINGS (LOSS) PER SHARE

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

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

Basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) 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 (loss) 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 March 31,
(In thousands, except per share data)	2024		2023
Numerator:
Net income (loss) attributable to Class A and Class B common stockholders	$	26,956	$	(2,582)


Denominator:
Weighted-average shares in computing net income (loss) per share attributable to Class A and Class B common stockholders, basic and diluted	42,780		40,618
Effect of dilutive securities
Founder awards where performance has been met	270		—
Dilutive effect of stock options outstanding (1)	2,459		—
RSUs outstanding	1,844		—
Denominator for dilutive net income per common share - weighted-average shares	47,353		40,618
Basic income (loss) per common share	$	0.63	$	(0.06)
Diluted income (loss) per common share	$	0.57	$	(0.06)

________________

Since the Company was in a net loss position for the three months ended March 31, 2023 there is no difference between the number of shares used to calculate basic and diluted loss per share. The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the period presented because including them would have been antidilutive are as follows:


									Three Months Ended March 31,
(In thousands)									2023

Stock options outstanding									3,865
RSUs outstanding									2,048
Founder awards where performance has been met									180
Total									6,093

Founder awards of 1,620, where the performance criteria has not been satisfied, are excluded from the above table because the stock-price hurdles for those awards had not been met as of March 31, 2023.

LEASES - Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Leases [Abstract]
Operating lease cost	$ 2,990	$ 1,861
Short term lease cost	8	3
Variable lease cost	147	33
Total lease cost	3,145	1,897
Cash paid for amounts included in the measurement of lease liabilities	2,039	1,749
Right-of-use assets obtained in exchange for new operating lease liabilities	31,358	0
Right of use assets disposed or adjusted, modifying operating leases liabilities	1,303	623
Gain from termination of leases	$ 8	$ 0
Weighted-average remaining lease term	10 years	9 years
Weighted-average discount rate	7.19%	6.53%

PROPERTY and EQUIPMENT, net

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

PROPERTY and EQUIPMENT, net

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



(In thousands)	2024		2023
Leasehold improvements	$	20,616	$	18,191
Furniture, fixtures and equipment	5,928		5,869
Total property and equipment	26,544		24,060
Less: accumulated depreciation	(13,335)		(12,268)
Total property and equipment, net	$	13,209	$	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 (Loss).


	Three Months Ended March 31,
(In thousands)		2024		2023

Research and development		$	440	$	407
Sales and marketing		52		48
General and administrative		575		554
Total		$	1,067	$	1,009

INTANGIBLE ASSETS AND GOODWILL (Tables)

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

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


(In thousands)	2024		2023
Capitalized software	$	30,502	$	26,895
Other intangible assets	117		117
Total intangible assets	30,619		27,012
Less: accumulated amortization	(12,024)		(11,017)
Intangible assets, net	$	18,595	$	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 (Loss).


	Three Months Ended March 31,
(In thousands)		2024		2023
Cost of revenues		$	848	$	403
Sales and marketing		159		350
Total		$	1,007	$	753

Schedule of Intangible Assets, Future Amortization Expense

The estimated future amortization expense of capitalized software with definite lives as of March 31, 2024 was as follows:


(In thousands)	Amortization Expense
Remainder of 2024	$	4,339
2025	6,423
2026	5,150
2027	2,344
2028 (1)	222
Total estimated future amortization expense	$	18,478

________________

(1)All capitalized software is expected to be fully amortized by December 31, 2028, therefore there is no estimated amortization for the year 2029.

Cover Page - shares	3 Months Ended
Cover Page - shares	Mar. 31, 2024	May 07, 2024
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 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	Q1
Amendment Flag	false
Common Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		36,989,041
Common Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		6,133,077

STOCK-BASED COMPENSATION - Schedule of Payment Award (Details) - RSUs outstanding 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

STOCK-BASED COMPENSATION - Schedule of Income Statement Location for Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 24,985	$ 21,073
Cost of revenues
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	16	11
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	13,006	9,346
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	1,054	779
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 10,909	$ 10,937

- 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

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+ Details

EARNINGS (LOSS) PER SHARE - Narrative (Details) shares in Thousands	3 Months Ended
	Mar. 31, 2024 votePerShare	Mar. 31, 2023 shares
Performance Based RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Founder awards where performance not met (in shares) \| shares		1,620
Common Class A
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Voting rights, per share	1
Common Class B
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Voting rights, per share	20

STOCK-BASED COMPENSATION - Schedule of Restricted Stock Unit Activity (Details) - RSUs outstanding - $ / shares shares in Thousands	3 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Restricted stock units
Beginning balance (in shares)	1,844	2,027
Granted (in shares)	51
Released (in shares)	(205)
Forfeited (in shares)	(29)
Ending balance (in shares)	1,844
Weighted- average grant date fair value per share
Beginning balance (in usd per share)	$ 106.32
Granted (in usd per share)	188.43
Released (in usd per share)	94.95
Forfeited (in usd per share)	96.78
Ending balance (in usd per share)	$ 110.00

INCOME TAXES - Provision of Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Tax Disclosure [Abstract]
Income (loss) before income taxes	$ 25,851	$ (2,698)
Benefit from income taxes	$ (1,105)	$ (116)
Effective tax rate	(4.30%)	4.30%

- 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.

+ References

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-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(11))
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+ Details

- Definition

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

+ References + Details

REVENUE - Deferred Revenue Rollforward (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenue from Contract with Customer, Liability [Roll Forward]
Beginning balance	$ 249,192	$ 157,550
Amount from beginning balance recognized into revenue	(102,257)	(65,492)
Recognition of deferred revenue	(40,907)	(30,129)
Deferral of revenue	173,285	120,013
Ending balance	$ 279,313	$ 181,942

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	Dec. 18, 2023	Mar. 31, 2024	Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Period of letter of credit	6 months
Initial base rent per month	$ 442
Letters of credit	$ 2,656
Percentage of letter of credit		103.00%
Restricted cash		$ 2,735	$ 2,735

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets
Cash and cash equivalents	$ 829,713	$ 747,610
Accounts receivable	76,421	88,975
Deferred cost of revenues	60,397	53,931
Prepaid expenses and other current assets	10,747	7,282
Total current assets	977,278	897,798
Operating lease right-of-use assets	49,785	19,103
Intangible assets, net	18,595	15,995
Property and equipment, net	13,209	11,792
Goodwill	4,050	4,050
Restricted cash	2,735	2,735
Deferred tax assets, net	766	766
Other assets	2,249	1,718
Total assets	1,068,667	953,957
Current liabilities
Deferred revenues	279,313	249,192
Accounts payable	2,625	2,447
Income tax payable	362	792
Accrued expenses and other current liabilities	21,422	24,931
Total current liabilities	303,722	277,362
Long-term obligation under operating leases	53,893	21,094
Total liabilities	357,615	298,456
Commitments and contingencies (Note 9)
Stockholders’ equity
Class A common stock, $0.0001 par value; 2,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 36,904 and 36,311 issued and outstanding at March 31, 2024 and December 31, 2023, respectively Class B common stock, $0.0001 par value; 30,000 shares authorized as of March 31, 2024 and December 31, 2023; 6,153 and 6,215 issued and outstanding at March 31, 2024 and December 31, 2023, respectively	4	4
Additional paid-in capital	898,513	869,918
Accumulated deficit	(187,465)	(214,421)
Total stockholders’ equity	711,052	655,501
Total liabilities and stockholders' equity	$ 1,068,667	$ 953,957