1
00:00:02,520 --> 00:00:08,920
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Shares of dual Lingo

2
00:00:09,000 --> 00:00:12,400
Speaker 1: are tanking today. The stock in fact right now down

3
00:00:12,600 --> 00:00:17,079
Speaker 1: about seventeen percent. It did though, hit its lowest intra

4
00:00:17,160 --> 00:00:19,920
Speaker 1: day since February of twenty twenty three, now down more

5
00:00:19,960 --> 00:00:23,599
Speaker 1: than eighty percent since May of twenty twenty five, and

6
00:00:23,640 --> 00:00:25,919
Speaker 1: about twenty two percent of the flow is short, so

7
00:00:25,960 --> 00:00:28,800
Speaker 1: there's some real negative sentiment on the name. Shares sliding

8
00:00:28,840 --> 00:00:31,920
Speaker 1: after the companies said it's drive to gain subscribers would

9
00:00:31,960 --> 00:00:34,920
Speaker 1: mean slower earnings growth and narrower profit margins in the

10
00:00:34,960 --> 00:00:37,040
Speaker 1: short term. Tim, you keep reminding us that there's a

11
00:00:37,080 --> 00:00:39,400
Speaker 1: lot going on with the company, some transformations here. Yeah.

12
00:00:39,400 --> 00:00:41,360
Speaker 2: The company said it would step up investment in AI

13
00:00:41,520 --> 00:00:44,360
Speaker 2: and sacrifice some degree of monetization in order to accelerate

14
00:00:44,479 --> 00:00:47,920
Speaker 2: user growth and engagement. The goal double the current number

15
00:00:47,920 --> 00:00:50,600
Speaker 2: of daily active users to one hundred million in twenty

16
00:00:50,720 --> 00:00:53,080
Speaker 2: twenty eight. Great to be talking again with a member

17
00:00:53,120 --> 00:00:56,120
Speaker 2: of the Dulingo c suite, back with us. Luis von Ahn,

18
00:00:56,200 --> 00:00:59,040
Speaker 2: co founder, chairman, president and CEO of Duelingo. He joins

19
00:00:59,120 --> 00:01:01,360
Speaker 2: us from New York. Lou He's always good to see you.

20
00:01:02,280 --> 00:01:04,280
Speaker 2: We're gonna talk about the quarter and the outlook in

21
00:01:04,319 --> 00:01:06,120
Speaker 2: a minute, But I want to start big picture with

22
00:01:06,160 --> 00:01:09,800
Speaker 2: AI because I mean, you've been thinking and researching AI

23
00:01:09,880 --> 00:01:12,080
Speaker 2: for decades. At this point, you're a recipient of a

24
00:01:12,120 --> 00:01:16,080
Speaker 2: MacArthur Genius Foundation grant back in the year two thousand

25
00:01:16,120 --> 00:01:19,160
Speaker 2: and six. We're working on AI. This is nothing, nothing

26
00:01:19,200 --> 00:01:21,640
Speaker 2: new to you, what's happening right now. But answer the

27
00:01:21,720 --> 00:01:25,120
Speaker 2: question for investors, is AI a threat to your business?

28
00:01:26,280 --> 00:01:27,640
Speaker 3: Well, first of all, thank you for having me.

29
00:01:29,600 --> 00:01:32,360
Speaker 4: You know, I think that we're in a unique point

30
00:01:32,360 --> 00:01:35,319
Speaker 4: in time where because of AI, we're going to be

31
00:01:35,319 --> 00:01:40,040
Speaker 4: able to teach significantly better. And you know, Dueling was

32
00:01:40,240 --> 00:01:43,880
Speaker 4: is by a wide margin, the largest app in education

33
00:01:44,040 --> 00:01:47,000
Speaker 4: in the world, and I think because of that, we're

34
00:01:47,000 --> 00:01:49,480
Speaker 4: going to be able to really take advantage of this,

35
00:01:49,840 --> 00:01:53,440
Speaker 4: you know, AI boon to be able to teach significantly better.

36
00:01:53,480 --> 00:01:55,360
Speaker 4: And our sense is that within the next few years

37
00:01:55,400 --> 00:01:57,880
Speaker 4: we're going to have an app that teaches us well

38
00:01:58,120 --> 00:02:00,520
Speaker 4: as a one on one tutor, but also so is

39
00:02:00,720 --> 00:02:03,120
Speaker 4: as fun as a mobile game. And if we're really

40
00:02:03,120 --> 00:02:05,240
Speaker 4: able to do that, I think there's just so much

41
00:02:05,240 --> 00:02:06,160
Speaker 4: more that we encapture.

42
00:02:06,200 --> 00:02:08,960
Speaker 3: So that's what that's what we're doing. We're really shooting

43
00:02:08,960 --> 00:02:09,280
Speaker 3: for that.

44
00:02:10,200 --> 00:02:13,320
Speaker 1: So jumping on the AI bandwagon, I mean, I guess

45
00:02:13,360 --> 00:02:15,320
Speaker 1: what I guess what investors want to know is what

46
00:02:15,480 --> 00:02:20,639
Speaker 1: is dual Lingo's advantage over potential new AI learning apps.

47
00:02:22,360 --> 00:02:25,240
Speaker 4: Well, you know, at the moment, we're not we're not

48
00:02:25,280 --> 00:02:28,800
Speaker 4: particularly concerned with competition in terms of you know, other

49
00:02:29,120 --> 00:02:30,200
Speaker 4: other education apps.

50
00:02:30,200 --> 00:02:30,400
Speaker 2: We have.

51
00:02:30,800 --> 00:02:32,880
Speaker 4: For example, for language learning, we have about eighty five

52
00:02:32,919 --> 00:02:35,359
Speaker 4: percent of the market share of all daily active usies

53
00:02:35,360 --> 00:02:36,720
Speaker 4: of people who are learning a language.

54
00:02:37,080 --> 00:02:38,480
Speaker 3: So we have huge scale.

55
00:02:38,840 --> 00:02:42,440
Speaker 4: And what differentiates us is that, because of that scale,

56
00:02:42,480 --> 00:02:45,120
Speaker 4: we just have more data into how people learn than

57
00:02:45,160 --> 00:02:47,960
Speaker 4: anybody else and we can use that to train our

58
00:02:48,000 --> 00:02:50,600
Speaker 4: own specific models. So we just have the advantage of scale,

59
00:02:50,639 --> 00:02:54,160
Speaker 4: of being able to watch literally billions of exercises every

60
00:02:54,240 --> 00:02:57,280
Speaker 4: day by people who are learning different things.

61
00:02:57,480 --> 00:02:59,560
Speaker 1: But as you know, this is going and this is

62
00:02:59,560 --> 00:03:03,120
Speaker 1: moving quickly, the AI impact it seems, and to be fair,

63
00:03:03,200 --> 00:03:05,960
Speaker 1: you are right, like we'll see many say this is

64
00:03:06,040 --> 00:03:08,000
Speaker 1: you know, we're kind of early in on this process

65
00:03:08,040 --> 00:03:11,080
Speaker 1: and the impact. But what does dual lingo offer that

66
00:03:11,080 --> 00:03:14,400
Speaker 1: can't easily be replicated by a large language model And

67
00:03:14,960 --> 00:03:18,079
Speaker 1: how do you kind of view that competitive landscape evolving.

68
00:03:19,800 --> 00:03:21,520
Speaker 3: Yeah, I mean there's a there's a there's a number

69
00:03:21,560 --> 00:03:21,880
Speaker 3: of things.

70
00:03:21,919 --> 00:03:25,600
Speaker 4: I mean, for one, with do a Lingo, what we

71
00:03:25,639 --> 00:03:29,080
Speaker 4: do is we try to build a habit of learning.

72
00:03:29,280 --> 00:03:31,760
Speaker 4: I mean, for example, fifteen million of our daily active

73
00:03:31,840 --> 00:03:34,760
Speaker 4: users have a streak of longer than three hundred and

74
00:03:34,760 --> 00:03:37,040
Speaker 4: sixty five days, meaning they have been using du Lingo

75
00:03:37,080 --> 00:03:39,200
Speaker 4: for a year or longer and haven't missed the day.

76
00:03:39,640 --> 00:03:42,160
Speaker 4: So we're really trying to build a habit for that.

77
00:03:43,160 --> 00:03:45,720
Speaker 4: And this is why do a linguist part game, part education,

78
00:03:46,520 --> 00:03:49,240
Speaker 4: And that's you know, I think that's just the right thing.

79
00:03:49,280 --> 00:03:52,240
Speaker 4: It just turns out the hardest thing about learning something

80
00:03:52,240 --> 00:03:56,160
Speaker 4: by yourself is staying motivated. The actually the content to

81
00:03:56,280 --> 00:03:58,320
Speaker 4: learn has been there for a long time. So for example,

82
00:03:58,640 --> 00:04:00,640
Speaker 4: it's you know, you've been able to learn a language

83
00:04:00,680 --> 00:04:03,080
Speaker 4: by just reading a book for hundreds of years.

84
00:04:03,160 --> 00:04:04,160
Speaker 3: That has been there.

85
00:04:04,360 --> 00:04:06,840
Speaker 4: It's just what we do differently is we motivate people

86
00:04:06,920 --> 00:04:07,880
Speaker 4: to continue doing it.

87
00:04:08,280 --> 00:04:09,839
Speaker 3: And that's hard to get right.

88
00:04:10,480 --> 00:04:12,640
Speaker 2: So what are what our investor is not getting right?

89
00:04:12,680 --> 00:04:16,520
Speaker 2: In your view, Carol? Carol mentioned some of the stock moves,

90
00:04:16,520 --> 00:04:18,599
Speaker 2: and now you know down at a point that you

91
00:04:18,600 --> 00:04:21,000
Speaker 2: haven't seen since February of twenty twenty three. What are

92
00:04:21,000 --> 00:04:22,039
Speaker 2: investors missing here?

93
00:04:23,800 --> 00:04:27,000
Speaker 4: I think it's a matter of timing. You know, on

94
00:04:27,000 --> 00:04:29,560
Speaker 4: our end, we are trying to build a company for

95
00:04:29,600 --> 00:04:31,760
Speaker 4: the very long term. We're trying to do something that

96
00:04:32,320 --> 00:04:35,880
Speaker 4: you know, for example, in our shareholder letter, we said

97
00:04:35,920 --> 00:04:38,760
Speaker 4: that we are we're shooting to have a double the.

98
00:04:38,720 --> 00:04:40,480
Speaker 3: Daily active uses that we have now. I mean, at

99
00:04:40,480 --> 00:04:41,520
Speaker 3: the moment, we have a little.

100
00:04:41,320 --> 00:04:44,240
Speaker 4: North of fifty million daily active users worldwide. We're trying

101
00:04:44,240 --> 00:04:46,880
Speaker 4: to have more than one hundred million. But we're saying

102
00:04:46,880 --> 00:04:49,479
Speaker 4: that that's going to take some time, and so we're

103
00:04:49,520 --> 00:04:53,280
Speaker 4: cons concentrated in the long term. And you know what

104
00:04:53,320 --> 00:04:56,880
Speaker 4: we're doing is we're trading off this year's you know,

105
00:04:56,920 --> 00:05:00,280
Speaker 4: financial metrics for a much larger thing in the long term.

106
00:05:01,400 --> 00:05:03,760
Speaker 1: Go ahead, Well, I get that right. You know, companies

107
00:05:03,800 --> 00:05:06,480
Speaker 1: have to invest in order to provide growth going forward.

108
00:05:06,520 --> 00:05:08,839
Speaker 1: And I think it's fair to say that we understand

109
00:05:08,880 --> 00:05:12,640
Speaker 1: why investors. I mean, they're not loving your forecast for

110
00:05:12,720 --> 00:05:15,520
Speaker 1: first quarter adjusted EBITA that's missing the mark from what

111
00:05:15,520 --> 00:05:19,000
Speaker 1: the street was expecting twenty twenty six revenue. Also that

112
00:05:19,080 --> 00:05:24,240
Speaker 1: forecast missing same story for twenty twenty six adjusted EBITA overall.

113
00:05:24,440 --> 00:05:29,680
Speaker 1: So you talk about building this to double your daily

114
00:05:29,720 --> 00:05:32,800
Speaker 1: active users to one hundred million, how much will how

115
00:05:32,839 --> 00:05:36,200
Speaker 1: long will that build actually take and what kind of

116
00:05:36,279 --> 00:05:38,679
Speaker 1: visibility do you have on that to kind of maybe

117
00:05:38,720 --> 00:05:42,599
Speaker 1: reassure investors at this isn't something that takes longer while

118
00:05:43,000 --> 00:05:46,760
Speaker 1: the AI world continues to challenge established players.

119
00:05:48,320 --> 00:05:50,960
Speaker 4: Yeah, I mean we're the way we're seeing it is

120
00:05:50,960 --> 00:05:55,760
Speaker 4: We're going to spend this year really working on three things.

121
00:05:55,800 --> 00:05:59,800
Speaker 4: Really teaching better, improving the free user experience, and also

122
00:06:00,000 --> 00:06:02,520
Speaker 4: spanning to other subjects. I mean, by now we are

123
00:06:02,600 --> 00:06:05,960
Speaker 4: we already teach math, music, and chess, and you know,

124
00:06:06,000 --> 00:06:08,799
Speaker 4: we've been growing quite a bit. About fifteen percent of

125
00:06:08,440 --> 00:06:11,680
Speaker 4: our active users are learning things that are you know,

126
00:06:11,720 --> 00:06:15,040
Speaker 4: other than languages. Our chess course has grown quite significantly.

127
00:06:15,240 --> 00:06:17,000
Speaker 4: So these are the three things that we're working on,

128
00:06:17,040 --> 00:06:18,760
Speaker 4: and we're going to be working on that for the

129
00:06:18,800 --> 00:06:22,440
Speaker 4: rest of the year, and we're expecting that towards the

130
00:06:22,560 --> 00:06:26,040
Speaker 4: end of the year we're going to see some improvements

131
00:06:25,640 --> 00:06:27,920
Speaker 4: in our year over year growth rate.

132
00:06:28,520 --> 00:06:29,200
Speaker 3: We're still growing.

133
00:06:29,200 --> 00:06:31,880
Speaker 4: I mean, we've had five years of really phenomenal growth.

134
00:06:31,880 --> 00:06:35,080
Speaker 4: We iPod in twenty twenty one and since then, we've

135
00:06:35,080 --> 00:06:38,440
Speaker 4: more than five x our active users, so you know,

136
00:06:38,640 --> 00:06:41,240
Speaker 4: we expect that will continue growing pretty pretty strongly.

137
00:06:41,320 --> 00:06:44,120
Speaker 2: Luis, is the idea in making changes to the free

138
00:06:44,160 --> 00:06:47,040
Speaker 2: tier is it to get more people who don't use

139
00:06:47,200 --> 00:06:50,279
Speaker 2: du lingo now to use the free tier, or is

140
00:06:50,360 --> 00:06:53,960
Speaker 2: to get those free free tier users to upgrade to

141
00:06:54,040 --> 00:06:54,719
Speaker 2: a paid tier.

142
00:06:57,160 --> 00:07:01,200
Speaker 4: Historically, what we have done is we have, right, you know,

143
00:07:01,240 --> 00:07:04,560
Speaker 4: the way we generate value on dualingo is there's two

144
00:07:04,560 --> 00:07:07,280
Speaker 4: parts of it. One is how many active uses we have.

145
00:07:07,360 --> 00:07:08,960
Speaker 4: That's kind of like the size of the pie that

146
00:07:09,000 --> 00:07:12,800
Speaker 4: has grown quite significantly. And then there's how many of

147
00:07:12,840 --> 00:07:16,160
Speaker 4: these people are paying us because we have this freemium model,

148
00:07:16,200 --> 00:07:17,840
Speaker 4: that's you know, like the fraction of the pie that

149
00:07:17,880 --> 00:07:21,400
Speaker 4: our payers. Historically we have worked on both. We have

150
00:07:21,480 --> 00:07:24,120
Speaker 4: worked on growing the pie and also growing the fraction

151
00:07:25,200 --> 00:07:27,120
Speaker 4: of the pie that is paying, which is why our

152
00:07:27,160 --> 00:07:30,200
Speaker 4: bookings have grown really significantly over the last five years.

153
00:07:30,440 --> 00:07:33,160
Speaker 4: This year, we're mainly concentrating on just growing the pie,

154
00:07:33,200 --> 00:07:35,480
Speaker 4: that is the number of people that are actively using

155
00:07:35,560 --> 00:07:38,400
Speaker 4: dual ingo, because it is our belief that.

156
00:07:39,720 --> 00:07:41,120
Speaker 3: Because of the.

157
00:07:41,200 --> 00:07:43,120
Speaker 4: Moment that we're in, we really want to have as

158
00:07:43,160 --> 00:07:47,200
Speaker 4: many people as possible actually learning something meaningful and dual lingo.

159
00:07:47,680 --> 00:07:47,800
Speaker 1: Uh.

160
00:07:48,160 --> 00:07:49,720
Speaker 4: And once we're able to do that, I mean, one

161
00:07:49,720 --> 00:07:52,120
Speaker 4: of the main advantages that we have, certainly against new

162
00:07:52,240 --> 00:07:56,239
Speaker 4: entrants is scale. They're just there's there's no other education

163
00:07:56,320 --> 00:07:57,800
Speaker 4: app that has the scale that we have.

164
00:07:59,200 --> 00:08:02,400
Speaker 1: Well, great to away get a check on what you

165
00:08:02,440 --> 00:08:04,960
Speaker 1: guys are up to and really appreciate it. Love to

166
00:08:05,000 --> 00:08:06,960
Speaker 1: hear more too as we go out throughout the year.

167
00:08:07,320 --> 00:08:08,160
Speaker 1: How things are going.

168
00:08:08,280 --> 00:08:11,480
Speaker 2: I'm a three fifty five, I think, Lingo, how is this?

169
00:08:12,280 --> 00:08:12,960
Speaker 2: I'm almost at a.

170
00:08:13,000 --> 00:08:15,600
Speaker 1: Year I think I think Sebastian actually said he's on

171
00:08:16,200 --> 00:08:18,080
Speaker 1: his streak is about seven hundred and seventy. That's one

172
00:08:18,120 --> 00:08:20,480
Speaker 1: of our producers. Hey, Louise, thank you so much. Luis

173
00:08:20,560 --> 00:08:23,360
Speaker 1: fan On, co founder, chairman, president, CEO of Duel Lingo.

174
00:08:23,400 --> 00:08:25,520
Speaker 1: When we come back and check on trading and stocks

175
00:08:25,560 --> 00:08:27,760
Speaker 1: on the move. This is Bloomberg Business Week Daily