Yahoo Finance

What are some of the expectations for growth that you have going out this year and that would really point to some of the the ultimate number of users that you have opting into that that max feature as well?

Yeah, I mean, our growth, first of all, we're growing in in every region, um, we really are uh, you know, every single region has, has high growth rates. And one thing that is has really interesting is that even regions that are pretty uh, mature for us are still growing fast. Um, so we think there's a lot of room for that. And then there's a lot of room for people to subscribe to Duolingo, Super Duolingo, and Duolingo Max.

Well, one of the things that's interesting and that the street is disappointed with this morning is the margin pressure, which is caused in part due to your strategic decision to invest a lot up front in AI and then hopefully reap the benefits of that later on. Given the stock price dip that we're seeing today, do you regret that strategic decision?

Uh, uh, look, we we're in a unique point in time with artificial intelligence. Um, we have decided that we're going to invest, uh, particularly the first half of this year, we're going to invest quite a bit uh, on on on making much better features that are related to AI to teach better. Uh, in general, I think this will, this will open up a lot of things. Um, for AI there are two big parts where we invest in AI. There's one, which is creating content, that is actually cutting costs and we really like that. But then there's the part that are that particularly has to do with a conversational practice. There, we are, we just, uh, we're not even trying to save costs right now. We're using the latest models because we want to develop as good of a feature as possible and we know that over time we're going to be able to decrease those costs, not only because the models themselves are going to get cheaper, but we can also optimize. But at the moment we're just trying to go as fast as possible with that.

Louise, I enjoyed my days growing up, taking French classes. Now, as an adult, I must admit that my French is at best masterfully bizarre and sporadic. At at this juncture, though, there is so much AI and artificial intelligence out there that has removed the need for a lot of younger people and people who are just trying to get into learning a new language to feel like they need to learn it. So how are you kind of combating the threat of AI and analyzing how the business is going to ultimately go up against some of the other major tech companies who are just saying, hey, we can integrate this into an experience that we already have where we know we have an installed and a user base.

Yeah. In terms of learning a language, we're not particularly worried about that. Um, we have, you know, our users fall into two big buckets. One is hobbyists, people who are just learning a language as a hobby, whether uh, you know, AI can have uh, immediate translation or something like that doesn't matter for people who are learning as a hobby. A good example is with chess. Computers are better at playing chess and have been for the last 20 years, but people still learn chess. Um, and then the other big bucket of, of, of users that we have are people learning English. And people who are learning English want to learn English and they're going to want to learn English regardless of whether uh, computer can do uh, immediate translation or not. So that it's not just not something we're particularly worried about.

It's interesting in the context though of what you were talking about previously, which is this focus on investing in AI up front in order to have gains later on. I, I know that you don't currently plan on charging additional fees for your AI offerings. At what point do you sit down with your CFO and say, okay, we got to get these margins up, we got to start charging more for these AI offerings, like those video calls that you have on platform?

I mean, in general, our margins, you know, we, we have over the last couple of years, our margins have expanded massively. I mean, we really were basically break even and by now we're at like 25% uh, adjusted EBITDA margin. So we've we've done pretty massive margin expansion over the last two years. We're still going to expand margins this year, but it's just going to be a little slower than previous years. Uh, and mainly it's because of this investment in AI. I I I I think it's just, I think it's the right thing to do at the moment.