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How Does Duolingo Make Money (Business and Revenue Model)

The Duolingo business model

How Does Duolingo Make Money?
Here’s what you should know:
  • What is Duolingo, and how does Duolingo work?
  • How does Duolingo make money?
  • Premium Subscription (Duolingo Plus)
  • In-app Advertising
  • Duolingo English Test
  • Selling Virtual Goods (Duolingo Shop)
  • Duolingo’s profit and revenue
  • What is the Duolingo business and revenue model?
  • Duolingo’s funding and market cap

How does Duolingo make money if it’s free to use? Well, here is a full, in-depth, breakdown of their four (4) revenue streams and the different products and services they offer, as well as the Duolingo business model, their profit and revenue, and how Duolingo works.

What is Duolingo, and how does Duolingo work?

Duolingo is a free language-learning educational platform that offers over 94 language courses.

Founded in 2012 by Luis von Ahn and Severin Hacker, Duolingo began trading on the NASDAQ on July 28, 2021, under the ticker symbol “DUOL”.

Since that time, Duolingo now has had more than 500 million app downloads with over 94 language courses. Making them one of the most popular ways to learn a language and is also the top-grossing app in the Education category on both Google Play and the Apple App Store.

How Duolingo works is: Once a user creates an account, they can choose from over 94 language courses on the platform that can be accessed anytime through their app or website for free. If a user wishes to access additional in-app features that the free version does not have, they can upgrade to Duolingo’s paid subscription, Duolingo Plus.

Some of Duolingo’s competitors include Rosetta Stone, Babbel, Memrise, and other language learning companies.

Duolingo App in Apple App Store | Duolingo Business Model | How Does Duolingo Make Money | How Duolingo Works
Source: Apple App Store | Duolingo

How does Duolingo make money?

According to Duolingo, the company says to have over 500+ million registered users on its platform. So how does Duolingo make money off of all those users?

Below is a breakdown of how much money Duolingo makes and its revenue model. Including how they make their money and how much they from doing it.

Here are the 4 ways of how Duolingo makes money (in 2021):

Duolingo generates revenue for the company in four (4) ways – by selling subscriptions, in-app advertising, the Duolingo English Test, and virtual goods.

#1. Premium Subscription (Duolingo Plus)

One of the ways Duolingo makes money is by offering a paid subscription version of their free service called Duolingo Plus.

While Duolingo is free to download and use, their paid version offers its own set of perks and added features that the free version does not have such as a progress tracker, an ad-free experience, and more.

The company says to have around 500 million registered users using the app. Of which, roughly 1.9 million were paid Duolingo Plus users, as of June 30, 2021. Which gives a free to paid conversion rate of approximately ~0.38%.

Users can upgrade to Duolingo Plus in the app or through the desktop web version.

Duolingo Plus Cost:

  • $6.99 to 12.99 per month
Duolingo Plus Cost | Duolingo Business Model | How Does Duolingo Make Money | How Duolingo Works
Source: Duolingo

Note: Duolingo has roughly 1.9 million paying Plus users, as of June 30, 2021.

#2. In-app Advertising

Another way Duolingo makes money is by advertising to users who do not upgrade to Duolingo’s premium subscription service, Duolingo Plus, as mentioned above.

According to page 13 of Duolingo’s 2021 Q2 Form 10-Q, the company recognizes in-app advertising revenue as they “enter into arrangements with advertising networks to monetize the in-app advertising inventory.”

One of those ad networks is Google AdMob. Which talks about partnering with Duolingo as they increased Duolingo’s ad revenue by 70%.

#3. Duolingo English Test

In addition to selling premium subscriptions and in-app advertising, Duolingo also makes money by selling English tests.

What is the Duolingo English Test? The Duolingo English Test is used for international students who wish to study abroad but must pass a TOEFL (Test of English as a Foreign Language) before being considered for admission.

Once complete, test takers can send their test results, for free, through Duolingo to over 3,000 partnering institutions worldwide. (You can see the full list of institutions, here)

Duolingo English Test Cost:

  • $49 per test
Duolingo English Test Cost | Duolingo Business Model | How Does Duolingo Make Money | How Duolingo Works
Source: Duolingo

#4. Selling Virtual Goods (Duolingo Shop)

Duolingo also makes money in the app by selling virtual goods called Lingots and Gems through their shop.

Gems are the Duolingo virtual currency for all iOS and Android mobile users. While, web users will see Lingots instead, which are also a virtual in-app currency. 

Both Gems and Lingots are used to purchase a number of in-app features such as a streak freeze, heart refill, streak wagers, outfits for Duo, and Bonus Skills and are sold in bulk costing anywhere from $4.99 to $19.99.

Duolingo Shop | Duolingo Business Model | How Does Duolingo Make Money | How Duolingo Works
Source: Duolingo

Duolingo’s profit and revenue

In 2020, Duolingo reported a revenue of $161.7 million.

Note: Because Duolingo, Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Duolingo’s publicly released financial reports, including annual reports, through Duolingo’s investor section on their website.

What is the Duolingo business and revenue model?

Duolingo makes money through a few revenue models that they combine within their company, they are:

  • Freemium (upselling) business model
  • Subscription based revenue model
  • Advertising based business model
  • Transaction based revenue model

Duolingo’s funding and market cap

According to Duolingo’s Crunchbase profile, Duolingo has raised $183.3 million over 8 rounds and has a market cap of $5.86 billion as of October 2021.