With stellar earnings in Q1 2021 and a growing customer base, Duolingo is seeking higher valuations as it goes for public listing on Wall Street.
On Monday, July 26, the popular language-learning app Duolingo announced that it will raise the price target for its Initial Public Offering (IPO). Thus, it sets a new price band of $95-$100 moving up from the previous $85-$95 range.
Duolingo shall be releasing 5.1 million shares in its public offering, reports Reuters. Thus, at the top of the range, it will raise a massive $510 million at a total valuation of at least $3.4 billion. A syndicate of ten banks is the underwriter for this deal. Leading them are Wall Street giants Goldman Sachs and Allen & Co.
The proceeds of the fund raised through IPO will go towards business investments, general corporate purposes, and other products and technologies. The listing application also shows that Duolingo’s listing will happen on tech-heavy index NASDAQ with ticker “DUOL”.
The Duolingo language learning app is available on both platforms – Android and iOS. It is also one of the top-grossing apps under education on both platforms with over 500 million downloads. Luis von Ahn and Severin Hacker – the two engineers from Carnegie Mellon University are the brains behind Duolingo.
Wall Street is buzzing with IPOs this year with some stocks clocking record listings. Also, the ed-tech space is booming which can give Duolingo an edge in the market. The move with IPO has certainly created some excitement in the market as analysts are looking ahead to the fundraise.
Good Success in Q1 2021 Boosts Duolingo IPO Price
Duolingo had an impressive first quarter for the year 2021. During the first quarter of 2021, the company’s revenue shot 97 percent hitting a record $55 million.
Market survey shows that more than 1.8 billion people have interesting in learning new languages. The Duolingo app has more than 40 million active users every month. Of this, more than 1.8 million people have subscribed to Duolingo Plus services. These premium subscribers contribute 72% of the company’s revenue.
Another 17% of the revenue comes from advertising while the rest comes from the English language tests. the important thing is that Duolingo has managed to have a good time during this pandemic. It has rather helped fuel growth with more people staying indoors. The company notes:
“The daily active user (DAU) count has gone up a lot in 2020 due to people staying at home, which has had a positive impact on Duolingo’s business. Interestingly, as MAUs grew, so did the percentage of paid subscribers. So growth in free users resulted in even more paid users. More people are also choosing to subscribe for the year instead of one or six months.”
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.