Q3 Consumer Subscription Earnings: Duolingo (NASDAQ:DUOL) Earns Top Marks
The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Duolingo (NASDAQ:DUOL) and the rest of the consumer subscription stocks fared in Q3.
Consumers today expect goods and services to be hyper-personalized and on demand. Whether it be what music they listen to, what movie they watch, or even finding a date, online consumer businesses are expected to delight their customers with simple user interfaces that magically fulfill demand. Subscription models have further increased usage and stickiness of many online consumer services.
The 8 consumer subscription stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was 2.2% below.
In light of this news, share prices of the companies have held steady as they are up 3.7% on average since the latest earnings results.
Best Q3: Duolingo (NASDAQ:DUOL)
Founded by a Carnegie Mellon computer science professor and his Ph.D. student, Duolingo (NASDAQ:DUOL) is a mobile app helping people learn new languages.
Duolingo reported revenues of $192.6 million, up 39.9% year on year. This print exceeded analysts’ expectations by 1.8%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ EBITDA estimates and full-year EBITDA guidance exceeding analysts’ expectations.
"We performed superbly across all of our key operating metrics this quarter, with DAU and bookings growth exceeding our expectations,” said Luis von Ahn, Co-Founder and CEO of Duolingo.
Duolingo Total Revenue
Duolingo scored the fastest revenue growth and highest full-year guidance raise of the whole group. The company reported 113.1 million users, up 36.1% year on year. Unsurprisingly, the stock is up 4.9% since reporting and currently trades at $334.53.
Launched by Reed Hastings as a DVD mail rental company until its famous pivot to streaming in 2007, Netflix (NASDAQ: NFLX) is a pioneering streaming content platform.
Netflix reported revenues of $9.82 billion, up 15% year on year, outperforming analysts’ expectations by 0.6%. The business had a very strong quarter with EPS guidance for next quarter exceeding analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.
Netflix Total Revenue
The market seems happy with the results as the stock is up 29.9% since reporting. It currently trades at $893.22.
Started as a physical textbook rental service, Chegg (NYSE:CHGG) is now a digital platform addressing student pain points by providing study and academic assistance.
Chegg reported revenues of $136.6 million, down 13.5% year on year, exceeding analysts’ expectations by 1.9%. Still, it was a slower quarter as it posted a decline in its users and a significant miss of analysts’ number of services subscribers estimates.
Chegg delivered the slowest revenue growth in the group. The company reported 3.83 million users, down 12.9% year on year. Interestingly, the stock is up 12.4% since the results and currently trades at $2.
Originally started as a dial-up service before widespread internet adoption, Match (NASDAQ:MTCH) was an early innovator in online dating and today has a portfolio of apps including Tinder, Hinge, Archer, and OkCupid.
Match Group reported revenues of $895.5 million, up 1.6% year on year. This result lagged analysts' expectations by 0.6%. Overall, it was a slower quarter as it also recorded revenue guidance for next quarter missing analysts’ expectations significantly and a decline in its users.
Match Group had the weakest performance against analyst estimates among its peers. The company reported 15.21 million users, down 3.2% year on year. The stock is down 16.2% since reporting and currently trades at $31.68.
Founded by two Stanford University computer science professors, Coursera (NYSE:COUR) is an online learning platform that offers courses, specializations, and degrees from top universities and organizations around the world.
Coursera reported revenues of $176.1 million, up 6.4% year on year. This number topped analysts’ expectations by 1.2%. Zooming out, it was a mixed quarter as it also produced an impressive beat of analysts’ EBITDA estimates but revenue guidance for next quarter missing analysts’ expectations significantly.
Coursera had the weakest full-year guidance update among its peers. The company reported 162 million users, up 19.1% year on year. The stock is up 9.3% since reporting and currently trades at $8.33.
In response to the Fed's rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed's 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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