Duolingo IPO: Will the language-learning app live up to market’s expectations?

The ripple effects of the digital boom set off by the fast-paced technology adoption during the pandemic are being felt in all areas including the IPO market, which is witnessing a huge rush of tech start-ups seeking to go public. Online language-learning platform Duolingo, Inc., which is on a mission to make free education accessible to everyone, is taking the IPO route to strengthen its foothold in the market.

On Growth Path

The prevalence of cloud computing and widespread digital transformation helped the Pittsburgh-headquartered company broaden its market in recent years. The management is encouraged by the impressive financial performance — revenues more than doubled in fiscal 2020 and in the early months of the current fiscal year.

---

Read management/analysts’ comments on quarterly reports

---

In a statement submitted to regulators this week, the company revealed plans to list its common shares on the Nasdaq Global Market under the ticker symbol DUOL. Meanwhile, the date of commencement of trading and the offer price are yet to be revealed. Underwriters managing the offering are led by Goldman Sachs and Allen & Company.

Top-grossing App

Duolingo was founded by techies Luis von Ahn and Severin Hacker in 2011, offering courses in around 40 languages including English, Chinese, and Spanish. With around 500 million downloads on Google Play and App Store, its main product is touted as the most popular education app currently.

At the end of fiscal 2020, the company had around 37 million monthly active users, up 34% from the prior year, while the number of paying users surged 84%. Revenues more than doubled to $161.7 million in 2020, with nearly three-fourth of it coming from subscriptions to Duolingo Plus.

Cost Pressure

Meanwhile, costs related to investments in data analytics and product innovation affected margin performance and the company incurred a loss of $15.8 million in 2020, wider than the $13.6 million loss recorded a year earlier. But, adjusted EBITDA moved to the positive territory during the fiscal year, from a loss in 2019, reflecting the underlying momentum.

---

What awaits biotech firm Aerovate after market debut?

---

The management is bullish on the company’s future prospects, considering the growing penchant among professionals and youngsters for learning new languages. It is estimated that users learning certain languages on the platform outnumber the native speakers of those languages. Last year, the company had secured $35 million of funding from General Atlantic and Durable Capital Partners, raising its valuation to about $2.4 billion.

COUR Leads the Way

A few months ago, online education platform Coursera, Inc. (NYSE: COUR) hit a valuation of around $7 billion after its impressive Wall Street debut, setting the stage for other players in the sector to follow suit. Coursera’s shares traded higher early Wednesday, after closing the previous session at $40.74.