Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Tim Stenevek on Bloomberg Radio.
Speaker 2: Well, looking for outperformance in today's equity trade and really
Speaker 2: the equity trade for the last year. Check out the
Speaker 2: more than twenty three billion dollar market cap language learning app.
Speaker 2: It's the most popular in the world. We are talking
Speaker 2: about Dual Lingo. The stock up sixty percent year to date,
Speaker 2: up around two hundred percent, Carol in the last year.
Speaker 3: Yeah, and you know a.
Speaker 4: Lot about this company. You actually talked with Our next guest,
Speaker 4: delighted to have with us, the CFO of the company,
Speaker 4: Matthew Scarupa. He is chief financial officer of due Lingo,
Speaker 4: joining us from Pittsburgh. He is featured in the upcoming episode,
Speaker 4: as is my co host Tim Senovek, chief Future Officer.
Speaker 4: It's on Bloomberg Television this evening at nine thirty pm
Speaker 4: Wall Street Time. I got to say, first of all, Matt,
Speaker 4: nice to be talking with you. Tim, host of the episode.
Speaker 4: He's been talking about you and the company so much.
Speaker 4: I mean, you guys are on fire. Talk to us
Speaker 4: about the growth at the company, where it's coming from.
Speaker 4: In an environment that you know, there's a lot of
Speaker 4: pressures on companies and leaders at this time.
Speaker 5: Well, it's great to be here, Thanks for having me,
Speaker 5: and you're absolutely right. You know, we've done a great
Speaker 5: job of growing this year. Our Q one performance was
Speaker 5: strong top to bottom. We saw really strong user growth.
Speaker 5: That user growth translated into a really strong top line
Speaker 5: and bookings and revenue, and we were able to keep
Speaker 5: control of costs like we historically have been able to
Speaker 5: to expand margins and it wasn't just a Q one story.
Speaker 5: As we guided on our last earnings call, we believe
Speaker 5: we're in a really strong position for the rest of
Speaker 5: the year. We feel good about Q two and the
Speaker 5: rest of the year, and it's going to continue to
Speaker 5: come from the same sources. We're a company that grows
Speaker 5: primarily organically by word of mouth, and we expect that
Speaker 5: to continue.
Speaker 2: Hey, Matt, good to have you join us. Thanks for
Speaker 2: doing this today, and thanks again for participating with us
Speaker 2: for the CFO Show premieres again tonight. Ten point three
Speaker 2: million paid subscribers as of the end of the first
Speaker 2: quarter of twenty twenty five. It's growth of forty percent
Speaker 2: year over year. How much can how long can you
Speaker 2: continue that growth? I mean, when we're talking the growth
Speaker 2: at that percentage, like that's pretty substantial.
Speaker 5: No, I appreciate. It was great to do the show
Speaker 5: with you, and I look forward to seeing that. In
Speaker 5: terms of growth, we've done it for several years. I mean,
Speaker 5: we went public in twenty twenty one, and if you
Speaker 5: look back from then to now, we've grown the top
Speaker 5: line really nicely. So i'd say that you know, you
Speaker 5: look back and you think that we have a strong
Speaker 5: path going forward as well. I'd also just call out
Speaker 5: that the ten point three million subs is great. We're
Speaker 5: excited about that. We feel really good about that growth.
Speaker 5: But we're also seeing really nice diversification of subscribe So
Speaker 5: we have continued strength in our Family Plan, which is
Speaker 5: a subscription where multiple friends and family can join, and
Speaker 5: as of the last quarter, seven percent of our subs
Speaker 5: we're on our Max tier, which is our highest tier service,
Speaker 5: which has features like video call with Lily, and it's
Speaker 5: doing really well. So it's it's a great story not
Speaker 5: just on the overall top line numbers, but on how
Speaker 5: we're growing the subscribers.
Speaker 3: I mean, that's.
Speaker 4: Wild almost fifty percent year every year growth Matt, I
Speaker 4: am curious, who are these people that are signing up?
Speaker 4: How long do they stay with you? And what's the
Speaker 4: cost to acquire an individual user?
Speaker 5: Yeah, so one of our core business model advantages is
Speaker 5: that when we acquire a user, we acquire them mainly
Speaker 5: for free. We do spend on performance marketing and some
Speaker 5: brand spend, but it's relatively small as a percentage of revenue,
Speaker 5: and so most of our growth comes from people tell
Speaker 5: telling their friends and family that they've had a great
Speaker 5: and engaging experience with our app.
Speaker 3: That's why Luis is so focused.
Speaker 5: On engagement as a core driver of growth for us,
Speaker 5: is that if you have this wonderful, joyful experience, you're
Speaker 5: going to tell people about it and they're going to
Speaker 5: try it. And then the other way is we have
Speaker 5: a really amazing social first marketing strategy where we, you know,
Speaker 5: insert ourselves into viral moments on online TikTok, Instagram, other platforms,
Speaker 5: and users create their own content which goes viral, and
Speaker 5: so on any given.
Speaker 3: Day, a lot of what people are.
Speaker 5: Talking about on dual Engo isn't generated by us. It's
Speaker 5: generated by our you know, beloved fan base. You know,
Speaker 5: when you have that type of user acquisition, and it
Speaker 5: is global. We're seeing strong user growth around the world.
Speaker 5: We get a lot of opportunities to then convert folks
Speaker 5: from free subscriber to paid or from free user to
Speaker 5: paid subscriber. And they stick around on the platform and
Speaker 5: they come back frequently, and so we get multiple chances
Speaker 5: to convert them. And while we're doing, while time is progressing,
Speaker 5: we're making the subscription product even better and better.
Speaker 3: So that's how we grow the subscriber base.
Speaker 2: Well, we'll talk a little bit in a minute about
Speaker 2: the social first marketing because something kind of wacky seems
Speaker 2: to be happening right now if you look at the
Speaker 2: social channels for Do a Lingo. But I'm wondering specifically,
Speaker 2: mad about growth and about you know, at the end
Speaker 2: of the day, the efficacy of the product. And I'm
Speaker 2: wondering how you measure to what extent the product actually
Speaker 2: resonates and works for people who are trying to learn
Speaker 2: English as a second language, for example, to be able
Speaker 2: to do business in the US or to be able
Speaker 2: to do business in English. How do you measure that?
Speaker 3: Yeah, well, it is core to our mission.
Speaker 5: So our mission is to you know, build the best
Speaker 5: education in the world and make it universally available. And
Speaker 5: so to do that, we need to prove to our
Speaker 5: users and to ourselves that we're teaching really well. We've
Speaker 5: had some studies done that show just how efficacious we are.
Speaker 5: So you know, if you compare us to learning a
Speaker 5: language and a university, we are on par with that.
Speaker 5: You can probably do it faster on dual Lingo. And
Speaker 5: you know, there's plenty of evidence we've put on our
Speaker 5: website that shows those studies in detail.
Speaker 3: I think the bigger.
Speaker 5: Evidence is that we're continuing to add features that just
Speaker 5: really address some of the core desires of particularly English
Speaker 5: learners like you reference. They want to practice conversation, and
Speaker 5: so what we've done over the past you know several quarters,
Speaker 5: is add this feature called video Call with Lily, where
Speaker 5: you can practice your conversation with one of our characters, Lily.
Speaker 3: She's a bit passive, aggressive, she's not impressed. I've yet
Speaker 3: to impress her.
Speaker 5: With my Spanish, and I don't think I'm going to,
Speaker 5: but I'm going to keep trying.
Speaker 2: She's the thing, and yeah, I just want to say,
Speaker 2: she's over your right. Well, we're looking at pictures of
Speaker 2: her on the screen right now, there's also a next
Speaker 2: she's next to duo over your right. So that's the Carol.
Speaker 2: That's Lily, who's not impressed you. By the way, in
Speaker 2: the last couple of months, has unfortunately become a member
Speaker 2: of my family. It seems like with doing this with
Speaker 2: that it is passive aggressive.
Speaker 5: Yeah, Lily is not impressed with me. And so that
Speaker 5: kind of practice, though, is really helpful for folks who
Speaker 5: are trying to learn English. They're trying to learn how
Speaker 5: to speak it, and and that's what we've been able
Speaker 5: to do over the past little bit.
Speaker 2: So you use AI in a few different ways. Lily
Speaker 2: is certainly one of them. When you think about the
Speaker 2: cost associated with this. You're not using AI that a
Speaker 2: platform that you developed actually at dual Lingo, You're you're
Speaker 2: outsourcing the technology. How do you keep those costs and
Speaker 2: control because that's pretty expensive tech, Matt, And you know
Speaker 2: you're watching the bottom line and you're watching margins here.
Speaker 5: Yeah, absolutely, And you know it comes down to the
Speaker 5: fact that we have been using forms of AI, machine
Speaker 5: learning and whatnot for a long time in our company.
Speaker 5: The lesson you get served up, you know is for
Speaker 5: many many years been based on a machine learning algorithm,
Speaker 5: and now with generative AI, with video call with Lily,
Speaker 5: and in some of our content creation, we are seeing
Speaker 5: that there's an amazing advancement in this technology that helps
Speaker 5: us do these things much quicker and more even producing
Speaker 5: more content than we thought was possible. You know. For example,
Speaker 5: you know, it took us about ten years to create
Speaker 5: the first hundred courses, and then in less than a
Speaker 5: year with this new technology, we created more than one
Speaker 5: hundred more, and so this technology is really powerful. The
Speaker 5: good news about it is that the costs are coming
Speaker 5: down naturally. You know, we don't have to do much internally,
Speaker 5: although we are still doing things to optimize the costs.
Speaker 5: But just by the nature of this technology, we're seeing
Speaker 5: rapid declines in the cost and we don't know for
Speaker 5: sure that that's going to continue. But if it does,
Speaker 5: you know, I think that you know, the use of
Speaker 5: this will go up and margins will be will be good.
Speaker 4: I just want to know. I'm one hundred percent Slovak,
Speaker 4: and I just want to know how long would it
Speaker 4: take me to learn a language with you guys? I
Speaker 4: know a few keywords, you know, your parents, your grandparents
Speaker 4: teach it the squear words and all that good stuff.
Speaker 4: But how long does it take for someone to learn
Speaker 4: certain languages?
Speaker 5: Sure, well, you know, I don't know that I've ever
Speaker 5: met anyone else or talked to them live on air.
Speaker 5: But I am also Slovakian, which is which is quite
Speaker 5: the coincidence, but I think, yeah, that's it's a very
Speaker 5: nice coincidence. It turns out more will depend on your
Speaker 5: ability to put in the time. You're learning a language
Speaker 5: takes practice, and that's why we're so focused on engagement.
Speaker 5: We want you to enjoy our app and come back
Speaker 5: every day because it's going to take time to learn.
Speaker 5: So if you're really committed and you want to learn
Speaker 5: any language on du or lingo, and you put in
Speaker 5: a bunch of time, you're going to learn it much faster.
Speaker 5: And that's what the research shows. And so it's really
Speaker 5: motivation dependent. What we find is that the hardest thing
Speaker 5: about learning a languag which isn't verb conjugation or grammar
Speaker 5: or speaking, it's your motivation to keep practicing and keep learning.
Speaker 5: And that's why most of our company is geared around
Speaker 5: bringing you back every day and making sure you're engaged
Speaker 5: in the product. Because if you're engaged in the product,
Speaker 5: you have a chance to continue to learn.
Speaker 2: Yeah, the gamification, the alerts, the emails like the friends streak,
Speaker 2: all the stuff that brings you back into the program. Matt,
Speaker 2: I promise that we would go to this unhinged marketing
Speaker 2: and social media strategy because you got to shed some
Speaker 2: light on what exactly is happening across Dueling GOS social
Speaker 2: channels right now. I checked in on it yesterday and
Speaker 2: this morning, and it looks like Duo has been taken hostage.
Speaker 2: There's like some sort of hostage video. Everything else has
Speaker 2: been wiped. What can you tell.
Speaker 5: Us, Well, I can only tell you that our owl
Speaker 5: is truly unhinged.
Speaker 3: You can never predict what that guy is going to do.
Speaker 4: I was like my co host, I'm just gonna tell you, Matt,
Speaker 4: never know what he's gonna do. Anyway, go ahead.
Speaker 5: I've only spent a little bit of time with him,
Speaker 5: but you know, I kind of can see it our
Speaker 5: all mascot earlier this year, right after the Super Bowl,
Speaker 5: decided that he was going to fake his own death
Speaker 5: and then you know return and so like, you just
Speaker 5: never can predict it. I would just encourage everyone who's
Speaker 5: watching and listening. To check in again tomorrow. You'll get
Speaker 5: some interesting insight.
Speaker 2: All right, there it is Matt scarupa, Chief financial officer
Speaker 2: over at DUA Lingo. Matt, thanks for joining us. Good
Speaker 2: to see you once again. Chief Future Officer with Matt
Speaker 2: premieres tonight nine thirty pm Wall Street Time on a
Speaker 2: Bloomberg Television. You can also check it out online and
Speaker 2: everywhere you watch Bloomberg TV.