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There may be more to come for the course provider. It plans to accelerate innovation by incorporating AI across its platform, and recently opened a new office in Mexico City as part of a plan to scale up its Latin American expansion.

Udemy has come up with several initiatives to drive further growth. The first is to reallocate more resources toward large enterprise companies, defined as those with 1,000 or more employees. It has a less than 10% penetration rate for such large customers, and sees a $1.5 billion revenue opportunity if it can achieve a 50% penetration of this customer segment. Udemy will also focus on AI-driven product innovation, to provide additional methods of accessing its platform while opening up new markets to expand its customer base.

Republic Services

Republic Services (NYSE: RSG) operates a recession-proof business in recycling and waste handling solutions, with more than 13 million customers and a fleet of 17,000 trucks. The company has seen its revenue and net income grow steadily over the years, along with its free cash flow, as shown below:

Data source: Republic Services.

Republic Services also has an impressive dividend track record. Its latest quarterly dividend of $0.58 caps an unbroken track record of increased dividends for over 21 years.

Its recently released first-quarter 2025 earnings continue the trend of earnings and free cash flow growth. Revenue rose nearly 4% year over year to $4 billion while operating income jumped 9.7% year over year to $804 million. Net income stood at $495 million, up 9% year over year. Republic Services also churned out significantly higher positive free cash flow of $566 million for the quarter, versus just $296 million in the prior-year quarter.

Republic Services has identified a current addressable market of $140 billion for the environmental services sector in both the U.S. and Canada. Its goal is to obtain a leading market position by providing a complete suite of products and services. Growth will be achieved organically, and also through acquisitions with a focus on free cash flow conversion to drive dividend increases.

Republic Services has spent a cumulative total of $4.8 billion on tuck-in acquisitions since 2022, and these purchases can achieve synergy within their first year. The acquisitions help the company expand its capabilities and footprint, and the mergers and acquisitions team has built up a robust pipeline of potential future acquisitions.

Management intends to drive shareholder value by increasing customer retention and attracting new business, while using technology to provide differentiated service offerings and improve operating efficiency.

Duolingo

Duolingo (NASDAQ: DUOL) is also an education provider, with a mobile learning platform that teaches users a variety of different languages. The company has seen strong uptake of its courses, leading to increased revenue over the last three years. Operating and net income both turned positive recently, and free cash flow has also surged more than sixfold from 2022 to 2024, as seen below:

Data source: Duolingo.

For 2024, Duolingo saw its monthly active users climb 32% year over year to 116.7 million while daily active users shot up 51% year over year to 40.5 million, attesting to the popularity of its language-learning platform. Paid subscribers, the more important metric to look at, leapt 43% year over year to 9.5 million.

The business has enjoyed tremendous growth since 2021, with bookings growing at a compound annual growth rate (CAGR) of 44%, going from $294 million to $871 million. The increase was driven by the packaging and promotion of Duolingo's premium packages, including its Duolingo Max subscription offering. Over the same period, the business has also published nearly 7,500 course units, defined as collections of lessons that teach vocabulary and grammar topics.

Duolingo is guiding for 2025's bookings to rise by around 25% year over year to $1.09 billion, and for revenue to grow 28.7% to 30.8% year over year to between $962.5 million and $978.5 million. For this year, management intends to experiment with making the learning experience more social and gamified to attract more users, while providing English learners with a more engaging experience via features such as Video Call. Longer-term initiatives include math and music, and the company plans to use generative AI tools to boost user engagement.

A Morgan Stanley report says that Duolingo has a huge $220 billion total addressable market for the mobile gaming and language-learning sector, of which the company currently has just a 0.5% market share. This significant market size means that Duolingo will have ample opportunities to continue growing its top and bottom lines.

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Royston Yang has no position in any of the stocks mentioned. The Motley Fool recommends Duolingo. The Motley Fool has a disclosure policy.

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