The shares of the language learning company Duolingo rose more than 35% to $ 141.40 apiece on its market debut Wednesday on the Nasdaq and went public under the ticket symbol “DUOL”.
The company on Tuesday valued 3.7 million shares at $ 102 apiece, which is above its original target range of $ 85 to $ 95. According to PitchBook data, it raised $ 521 million at an implicit valuation of $ 3.7 billion, up from last year’s private market valuation of about $ 2.4 billion.
In its initial public offering prospectus, the Pittsburgh-based company announced annualized sales growth of 129% last year to $ 161.7 million. The company had revenue of $ 55.4 million for the quarter ended March 31, up 97% year over year, while net losses more than six-fold to $ 13.5 million, according to the filing.
Duolingo offers 95 courses in 40 different languages - from the world’s most widely spoken languages such as Spanish, French and Italian to endangered languages such as Hawaiian, Navajo and Scottish Gaelic.
What many do not know is that the world’s most popular educational app began as a computer science project by co-founders Severin Hacker and Luis von Ahn, teaching people foreign languages and at the same time trying to translate the entire Internet simultaneously. Von Ahn was one of the developers behind the invention of CAPTCHA and ReCAPTCHA, which are used to distinguish people from machines.
“We’re the most popular way to learn languages in the world,” said co-founder and CEO Luis von Ahn at CNBC’s TechCheck on Wednesday morning before the stock went public. “We make the majority of our sales through subscriptions.”
This photo illustration shows a Duolingo logo from a language learning website and mobile app on a smartphone.
Pavlo Gonchar | LightRakete | Getty Images
The company claims 40 million monthly active users and more than 500 million downloads. It depends heavily on the distribution via mobile app stores. In 2020, the company reported 51% of sales from Apple’s App Store and 19% from the Google Play Store and was the top-selling app in the Education category for every store. Duolingo also claims to be popular on Google searches, with more than nine times as many searches for its name as it does for the term “learn Spanish”.
In addition to its core platform, the company has developed the Duolingo English Test, a language certification option that is accepted by more than 2,000 universities and institutions worldwide.
“If you live in the United States you might not know about it, but billions of dollars are spent worldwide when people have to take tests to prove they speak English,” said von Ahn. “During the pandemic, many institutions have accepted our tests,” he added, claiming that 17 of the top 20 universities, including Stanford, accept Duolingo’s online test as proof of English proficiency for international students. Von Ahn also said that this part of the business currently accounts for 9% of sales and he expects that number to keep growing.
Last year, the company launched Duolingo ABC, a free English reading app for children ages 3 to 6. The company originally planned to launch the app later this year, but decided because of the coronavirus pandemic to post them ahead of schedule to help parents remotely work and homeschool their children. The app is ad-free and offers more than 300 short lessons that teach basic reading and writing skills.
Kleiner Perkins, Union Square Ventures, and Alphabet’s independent growth fund CapitalG are among Duolingo’s largest venture capitalists and poised to make significant profits on the offering. Goldman Sachs, Allen & Company, Evercore ISI and Barclays were the leading underwriters.
Duolingo is a three-time CNBC Disruptor 50 company that was last ranked 42nd on the 2020 list.
A booming IPO market
Revenue from U.S. exchanges hit $ 89 billion in 2021, up 232% over the same period last year, according to data from Renaissance Capital. This year to date, the market is already at record levels in terms of fundraising and is expected to top the all-time high of $ 97 billion in 2000 amid the dot-com boom. after renaissance.
Businesses, from home-stay technology to healthcare innovators to e-commerce players, are capitalizing on a booming stock market that is constantly refreshing its balance sheet due to optimism about the economic reopening. The IPO boom also coincides with the growing number of retail investors eager to own a piece of their favorite company.
A total of 250 IPOs were priced in in 2021, 191% more than in the same period of the previous year and, according to Renaissance Capital, the total number of IPOs for 2020 was 218.
Nine CNBC Disruptor 50 companies have been publicly traded since the list was first published in 2021 just two months ago, including SoFi, 23andMe, and SentinelOne. Robinhood, a five-time Disruptor 50 company that topped the list in 2021, is slated to begin trading on the Nasdaq on Thursday.
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