Welcome everyone to Duolingo's fourth quarter 2025 earnings webcast. Today, after market close, we released this quarter's shareholder letter, a copy of which you can find on our IR website at investors.duolingo.com. On today's call, we have Luis von Ahn, our Co-founder and CEO, and Gillian Munson, who we are pleased to welcome as our new CFO. They will begin with some prepared remarks before we open the call for questions. Analysts will be able to ask a question by using the Raise Hand feature. Please note, this call is being recorded, and all participants are in listen-only mode. Before we begin, please note we'll make some forward-looking statements regarding future events and financial performance. These statements are subject to risks and uncertainties described in our SEC filings and are based on assumptions we believe to be reasonable as of today. We undertake no obligation to update them. We'll also discuss both GAAP and non-GAAP financial measures. Reconciliations between the two can be found in our earnings materials, and we encourage you to review them when we're evaluating our performance. Now, I will turn it over to Luis. Thank you, everyone, for joining us. I want to start by talking about Matt Skaruppa, who, up until today, has presided over 100% of our earnings calls as our CFO. It really has been one of the singular honors of my career to work with Matt. Matt, I know you're watching tonight. Thank you, really, for everything you did for our mission. Matt is a hard act to follow. I can't think of anybody better to take his place than the person who helped us hire him, our long-term board member and chair of our audit committee, Gillian Munson. She's our new CFO. She's here with us today. I'm very much looking forward to working closely with her. Let's get to the business at hand. 2025 was another strong year for Duolingo. For the first time, we surpassed 50 million daily active users. That's more than five times as many as we had when we IPO'd in 2021. We also delivered over $1 billion in bookings and more than $300 million in adjusted EBITDA. I'm proud that we have built a business that is profitable at scale and that is having a huge positive impact in the world. What excites me most is not what we've already achieved, it's what's ahead. I'm more convinced than ever that the accelerating advances in AI will fundamentally change the way people learn. This creates an enormous opportunity for us. We are the most popular education app in the world by a margin. We intend to lead this shift. By leaning into this moment, we believe we can redefine the future of learning while generating exceptional value for our shareholders over the long term. Huge opportunity ahead of us, and the most important thing right now is to continue attracting users. We said this in our last earnings call. While our DAU growth over the past several years has been nothing short of phenomenal, it decelerated throughout 2025, and as the new year began, we continued seeing this trend. We now expect DAU growth to be about 20% year-over-year throughout 2026. This reinforced my conviction that we needed to take more decisive actions to re-accelerate DAU growth. Another way of seeing it is that long-term value in this business is driven by two things: the size of our active learner base, that's like the size of the pie, and how effectively we monetize that base. You can think of that as the piece of the pie. At this moment, we are prioritizing growing the size of the pie. As I detailed in our shareholder letter, we have a carefully considered plan for 2026 that focuses on teaching better and user growth. In addition to the thousands of A/B tests we plan to run in 2026 to improve our product, we have larger initiatives that fall into three categories: teaching languages better, improving the free user experience, and feeding our next growth engines, meaning our subjects of math, music, and chess. All of this is in service of growing DAUs faster. Our medium-term goal is to reach 100 million daily active users in 2028. If we succeed in doubling our DAUs, the payoff would be significant. A more resilient brand, a business with meaningfully higher bookings and profit, and most importantly, a company that reaches and teaches far more people around the world. In the short term, the short-term implication is that this year we'll see slower bookings growth and lower profitability, as captured in our guide. I want you to know that I don't take this decision lightly, and that I know it may come as a surprise to some investors, but it's fundamentally aligned with what I said to shareholders in my very first letter, which I will now read. Dear potential investors, the main thing you need to know is that I plan to dedicate my life to building a future in which, through technology, every person on this planet has access to the best quality of education. Not only that, but a future in which people want to spend their time learning. Duolingo is the platform for building that future, and we are just getting started." With that, I'll turn it over to Gillian long-term Munson. Thank you, Luis, for the really warm welcome. Being a full-time member of this team is gonna be a great adventure. I'd be remiss if I didn't say a huge thank you to my friend and colleague, Matt Skaruppa, who we are all gonna miss and who I wish all the best. We had a solid finish to the year and ended in a strong financial position, a great platform from which to look forward strategically, as Luis explained. Turning to the go-forward plan and guidance, in our shareholder letter, we have included a lot of specific details to help you with your 2026 modeling, likely more than we will going forward. I'll repeat a bit here and add some color in areas we really want to be sure we emphasize. At the highest level, our 2026 guidance is bookings growth of 10%-12%, revenue growth of 15%-18%, and adjusted EBITDA margin around 25%. For our Q1 guidance, it is 11% bookings growth, 25% revenue growth, and adjusted EBITDA margin of 25.5%. Here are some details that I hope will help you with your models. Looking at bookings. Quarter to date, as of last Friday, Q1 bookings growth was tracking above our Q1 guidance. However, it's important to remember that we are heading into a particularly tough compare. In the first half, with Dead Duo, a price increase, particularly strong advertising bookings, and the rollout of Energy. We are modeling some improvement to bookings growth rates at the end of the year, but have only factored in modest early returns on our investments at this point, which we think is prudent, as shifts like the ones we are making can take some time to materialize. Turning to revenue, we believe that the rate of year-over-year revenue growth will adjust down following bookings growth rates over the course of the year, with some stabilization in the second half. Given our Q1 guidance is 25% growth, the math implies that quarters three and four will be below the low end of this guidance range. As for costs, as you think about our COGS, the key thing to keep in mind is that we plan to share AI features with a far greater portion of our user base. This is anticipated in the lower gross margins that we outlined in our letter. We are investing in 2026. As a result, we expect that R&D and sales and marketing spend growth will outpace revenue growth. Putting it all together, the trajectory of adjusted EBITDA margins will likely be slightly different in 2026 than in previous years. In Q1, we've guided to 25.5% adjusted EBITDA margin, and we expect adjusted EBITDA margin to decline roughly 3 points sequentially in Q2. It will improve through the back half of the year, with Q4 being our highest margin quarter in 2026. I'd note, however, that we do manage to annual targets, and the timing of our spending could shift, which we will update you on as we continue the year. That's a lot of detail, we know. We hope that in combination with the shareholder letter, this does help you manage your estimates as we execute our strategy. You may ask about our guidance philosophy. I thought I'd note that. This year, our view is that, like in Q4, our hope is to narrow the gap between our guidance and actuals, versus what you have generally seen from Duolingo in the past. Finally, I would like to highlight our buyback authorization that was announced today. Our board has authorized a buyback of up to $400 million in our shares. We believe this represents good capital allocation discipline and expect to execute upon this authorization in the coming year. I couldn't be more excited to have joined this company at this time. The size and scale of the market opportunity ahead is massive, and I very much view 2026 as a foundational year to achieve that opportunity. Thank you, Luis. I'm excited to step into this role during this important moment at the company. Now I'll turn it back to the operator, and we can take your questions. We will now move to our question and answer session. At this time, if you would like to ask a question, please click on the Raise Hand button, which can be found on the black bar at the bottom of your screen. You may remove yourself from the queue at any time by lowering your hand. When it is your turn, you'll receive a message on your screen asking to be promoted to panelist. Please accept, wait a moment, and once you've been promoted, you'll hear your name called, and you may unmute your video and audio and ask your question. Your Zoom application may disappear momentarily. This is expected, and your window will reappear. We are allowing analysts one relevant follow-up question to their main question today. We will now pause a moment to allow the team to gather the questions and assemble the queue. We'll take our first question from Bryan Smilek with JP Morgan. Bryan is just connecting now. It might just take a moment. Bryan, please turn on your video, and unmute your line and ask your question. Great, thanks for taking the questions today. Luis, to start, can you just elaborate a bit more on, you know, what you're seeing in the market across AI and just overall innovation across the technology space that makes this the right time for the strategic shift to re-accelerate user growth? I guess more fundamentally, to achieve your 2028 target to double users, what are the, you know, call it 1 to 2 top priorities across the product that will really enhance that DAU growth and drive the implied acceleration to get there? Thank you. Thank you, Bryan. Thank you for the question. Okay, in terms of AI, look, we really are in a unique time in history. AI is gonna allow us to teach significantly better, and I also believe that the way people learn is just going to change. The reason for that is, I think that in the next few years, we are going to see quality of teaching that is as good as a one-on-one tutor. We're gonna see that. Not only that, not only is it as good as a one-on-one tutor, but it'll be as fun as a mobile game. It's this incredible thing that's gonna happen. You know, the, the things that we're seeing is we're able to find where users or learners are having trouble and really specialize in that and, you know, answer all their questions, and, you know, whenever they have any kind of confusion, we can get in there and really fix it. We also, in the case of, teaching languages, we can finally practice conversation better. You know, we have this, feature, a Video Call with Lily. It keeps getting better and better at being able to practice your conversation. So we can see improvements in how well people are learning. The same is true for all our other subjects, certainly with math. you know, like I said in our shareholder letter, I believe that this year we're gonna have the best tutor app for math. This is gonna be Duolingo Math. you know, I think this is a huge market potential. There's about 1 billion people learning math in the world. We'll be able to teach them, you know, as many as we can really well. I'm very excited about AI in general, and this is why I think now is the time to try to attract as many users as possible. In terms of what are the, you know, the top priorities that will allow us to get to, you know, 100 million daily active users by 2028, you know, it's a number of things that, in general, the three buckets that we're gonna be investing in are teaching languages better. Languages is our largest subject, it'll continue being our largest subject for a while. We're gonna teach languages significantly better, there's a lot of work there. Another one is in making the free user experience better. The less friction that there is in the free user experience, the more users we have. We have seen this over the last 15 years. Whenever we remove friction from the free user experience, the AU's grow. That is another one, and then the third thing that we're going to be doing is just investing a lot in our new growth engines. That's our new subjects. In particular, chess has grown quite a bit. As I said in our shareholder letter, we have about 7 million daily active users in chess, and this is less than a year after we launched. At this point, we believe we're the second-largest chess thing in the world. Which is, by the way, incredible, because if you search for chess on the App Store, we don't appear in the results. We just haven't even gotten there to, you know, doing App Store optimization, but we already got the 7 million daily active users. Those are the things that I think are gonna help us get there. Great, thanks. I guess, you know, elaborating a bit more, you mentioned Video Call as well, too. Can you talk about the philosophy and the product roadmap, really, across Max versus Super? I, you know, you've been very transparent in the past in terms of, you know, oscillating the features and the relative pricing set. How should we think about just overall the Max roadmap as you start to ship those Video Calls to Super users as well? Yeah, when we started Max a few years ago, you know, we introduced some AI features. We were super excited about all the AI features because they really can help us teach better. At the time, cost for AI inference was way higher than it is now. We decided to put our AI features in you know, behind a much higher subscription tier, which is Duolingo Max. That's what we have done. We said back then that as AI costs came down, we would experiment putting features in the different tiers, because ultimately, our goal is to be able to teach as many people as possible. At this point, the cost of a Video Call has gone down very significantly over the last, you know, couple of years since we launched Video Call, and we feel pretty comfortable being able to put it inside Super Duolingo. Like everything we do, this is going to be an A/B test. We're gonna A/B test what happens if we put some Video Call in Super Duolingo. I'm not sure what that A/B test will do. It may be that this increases revenue because more people sign up to Super Duolingo, or because the retention of Super Duolingo is significantly higher because Video Call is there. It may be that it decreases bookings because we're not making as much money from selling Max. I don't know what it'll do, but whatever it does, we're gonna take the appropriate action. For example, if the decrease in bookings is too high, we may do something like we meter Video Calls. For example, on Super Duolingo, you only get access to one Video Call a day, versus on Max, you get unlimited. I'm saying all of this very much in advance because I don't actually know what will win in these A/B tests. What I will tell you is that for sure, we will put some form of Video Call in our Super tier, because we just think that it'll help us teach a lot better to a significantly larger number of people. There's about 10 times as many subscribers on Super than there are on Max. If we put Video Call on Super, 10 times as many people have access to conversational practice. The other thing that I think is, we're going to do this on our own terms. I mean, my sense is that over time, it will not make sense to have a feature like video call on their plan that is so expensive as Max. You know, we're doing it from a position of strength right now, where our finances are very strong, and we're going to just do that, as opposed to, you know, if we had to do it defensively three years from now because a competitor popped up. I mean, at the moment, we really are not worried about competition, we're getting ahead of it. Yeah, and Bryan, we designed the guidance to give the company the room to go do all of this and experiment with this and do the right thing for our customers, and that's precisely how the guidance and the way we're thinking about the financials this year are designed. Great. Thank you both. Our next question comes from Ralph Schackart with William Blair. Please unmute your line, turn on your video, and ask your question. Good evening, Luis and Gillian. Thanks for taking the question. How's it going? Luis, last call, when you talked about the reprioritization for 2026, and I think, you know, it was sort of contemplated it was gonna have some impact on the financials for 2026, but maybe not to the level of guided that was presented today. At least that was my interpretation. I could certainly have that wrong. I guess, did something change since last quarter in terms of how you thought about 2026, so the user growth, you know, is this larger than perhaps you know, originally anticipated? Maybe a question for Gillian, on the 20% DAU growth. When these friction points or monetization friction points are removed, should we expect some re-acceleration in the DAU metrics? I guess you sort of suggested that you're tracking above in bookings. Maybe just some kind of early reads on, as you're removing some of these friction points, how the user growth is responding? Thank you. Thank you, Ralph, for your question. Yes, in the last call, as you said, we said that we would be concentrating on user growth. For similar reasons as now, one, we had seen deceleration of DAU growth throughout 2025, some deceleration of user growth, and in addition to that, you know, we think this is just a unique opportunity where instead of decelerating user growth, we should be accelerating user growth because we should, you know, just capture this opportunity. That was what we said in the last earnings call. What happened between then and now are two things. The first is that we kept on seeing this trend of user deceleration, and by now we expect about 20% year-over-year DAU growth throughout 2026. That, you know, that and the other thing is that my conviction of AI just increased even more, and that just made it so that I have even more conviction that we need to spend, you know, really the vast majority of our efforts on DAU growth. As we, you know, built the plan for 2026, this is what came out, I mean, the guidance that we're giving. You know, in terms of the 20%, I guess, Gillian, you can go ahead and answer. As Luis said, we really do expect that 20% through the year. In terms of the Q1, what we're seeing so far, it is tracking ahead of the guidance, we think that shows everyone that there is a lot of health in the business, you do have some really tough comps coming, the overall guide reflects that. You know, a thing I think it's really important to put in context that Luis is talking about is the confidence we've gotten in going for the bigger prize. When you think about that 20% and the $100 million target, that would imply an acceleration to, you know, much higher growth rates in the next couple of years. If you kinda play that out in terms of what the financials could look at, that is as Luis said, a much bigger business. As we look at the business, we think to ourselves, "Okay, we could have grown the business. Probably, we would be at about, you know, a mid-teens CAGR over the next couple of years. If we could keep our margins where they are, we're probably looking at a billion and a half dollar business, you know, $400+ million in adjusted EBITDA." We, at the company, are really motivated to go for the bigger prize, which is much more aligned with what Luis and Severin were thinking about when they founded the company. If you sort of play out the DAU, at least it's all back of the envelope, but if we can get to that DAU and even reasonable monetization assumptions from where we are today, and, you know, we believe we can scale our expenses over time, you're looking at a business in a couple of years that could be $2.5 billion, with over $700 million in adjusted EBITDA. I think around this entire company, we're really motivated to go for the bigger prize, and so that's what you're seeing and kinda how we're thinking about it. In terms of when you're gonna see it, in the model, we've really modeled it late in the year, so it's gonna take a little while. What we're working on is gonna take a little while to see through it. We do have a little bit in the end of the, end of the year. We think it's prudent to keep that small for now until we kinda get going. You'll start to see more and more as we move into 2027 and 2028. Great. Thanks, Luis. Thanks, Gillian. The next question comes from Mark Mahaney with Evercore. Please turn on your video, unmute your line, and ask your question. Okay, great. Want to ask a growth question and a product question. The growth question is, you know, you mentioned these factors that caused this deceleration, you know, law of large numbers, increased, maybe over in focus on monetization. There are two other potential reasons too, so just address those, which is market saturation and competitive intensity. Maybe there's. Just, and are there new data points that just remind you or open your eyes even more to the long-term growth opportunity here? In the products, you know, the video calls a wonderful product. These other things that you're talking about, the Speaking Adventures, is that on the come? Like, how soon should we expect that? Getting to this more advanced content with, all of your nine largest languages up to that 129 score, is that something that happens now, or is that something that's a multi-year build? Like, how long does it take to get to those two products, you know, that we could potentially see the products and then the impact that they would have? Thank you. Thank you, Mark. Okay, your first question is about market saturation and competition. We're worried about neither one of those. In terms of competition, if you look at language learning apps, we have about 85% of the daily active users of language learning apps in the world. That number has remained, you know, pretty flat over a while. Basically, we're just not particularly concerned about that. In terms of market saturation, you know, for example, we look at things like the percentage of daily active users in a given country compared to the size of the internet base of that country. For example, in the United States, 2% of all internet users on a given day use Duolingo, so 2% penetration in the U.S. for daily users. In the U.K., that's 3%, in Germany, that's 4%, Germany is not the highest country we have. We actually think we can get much higher than that. Even if we only assume that every country got to 2%, which is the U.S. penetration, we would more than double our daily active users. I just don't think we're near saturation at all. You know, in general, we're not seeing anything different. For example, we survey our churned users, the answers to the surveys of our churned users haven't really changed in years. The most common answer, by the way, when people stop using Duolingo, about where they go, is that they stop learning, that has been true for a while. That's just not something we're particularly concerned about. In terms of the features, you know, we mentioned in the shareholder letter, we mentioned Speaking Adventures. We're very excited about that. What that feature is like, it's basically a little game where you're, where you have to do something. For example, you may be told, you know, "Go, buy a sandwich and, you know, give it to that person, and then ask them for money," or something, like something that you have to do. In that, you know, you do a lot of things with just text, but every now and then in there, you have to speak to get the things that, what you want. That's gonna come out, that's gonna be for all users, free and paid. That's gonna be scaled. I mean, we're already testing it. That's gonna be scaled sometime mid-year, so you'll probably see it in your app sometime between now and the middle of the year. We're very excited about that. In terms of more advanced content, that's happening relatively soon, in a matter of, you know, a month or two, you will see significantly more advanced content. Basically, all of our courses that teach the top nine languages that we teach, which by the way, cover more than 90% of our daily active users, will have content up to Duolingo Score 129, which is a particularly important score because that's the score that, you know, you need in order to get a knowledge job in that language. We're very excited about that, and that's coming now. Importantly to say, that content is gonna go out there, and we're very happy about that. That's just the beginning. As soon as it goes out there, we can start improving this content the same way we improve everything. Over the, you know, the remainder of the year, you're just gonna see better and better versions of this more advanced content, and we're pretty excited about that. Okay. Thank you, Luis. Sure. Thank you, Mark. We'll take our next question from Justin Patterson with KeyBanc. Please unmute your video and audio and ask your question. Great. Thank you very much. Luis, I was hoping you'd talk a little bit more about just the social strategy. We haven't really seen the same degree of virality through TikTok that you used to be getting, so would love to hear about how you're refining that and thinking of that as just a vector to grow daily usage. With respect to video call, I know you've made a lot of improvements within there, designed to increase, more words being spoken, to make it easier to use. I'd love to hear about just how that's been going versus expectations, and how you think moving this into the Super tier can really drive more engagement and eventually, help contribute to that bookings re-acceleration. Thank you. Yeah, thank you, Justin. In terms of our social marketing strategy, I mean, we have an excellent marketing team. Really, I think the best in the business. Our videos are going viral, and they're getting millions of views. You know, I have to say, the comparison point, particularly a year ago, a year ago, there were many weeks where we had the single most watched video in all of TikTok. That was, that's incredible. While we're still seeing virality in our videos, we're not in a position where it's the most watched video in all of TikTok. There's a number of reasons for that. One of them is just algorithms have changed enough that it's harder to do that, you know, consistently. I mean, that's one reason. You know, in general, we're gonna continue with the strategy of really trying to get as much virality as possible, and, you know, that will. I'm pretty happy with the results so far, but you are right, that compared to a year ago, it's not quite the same. In terms of Video Call improvements, I'm very happy with the results for Video Call improvements. You know, basically, if you look at the graph of words spoken per user on Video Call, that is just a monotonically increasing graph over time. It just keeps getting better and better, and basically, we're just a lot better at getting a Lily that you're talking to to elicit more conversation. We're right now, we're trying a new thing, where we're actually starting to tell you, "Hey, in your next response, ask a question," or, "In your next response, use the word because or something." That actually really gets people going more and more, so I'm very happy with all these improvements, and I really do think that putting it, giving it to more users, what that'll do is it'll basically get more users to be promoters of Duolingo. We see that people that engage with video call post online and say things like, "My God, I was skeptical that I could learn a language on Duolingo, but I've just been using Duolingo and using video call, and somehow, out of the blue, I am now able to have a conversation." We're very happy with that. Thank you. Our next question comes from Andrew Boone with Citizens JMP. Please unmute your video and audio and ask your question. Thanks so much for taking the question. I wanted to go back to the free user experience and improving it. Really, the question is, how does that evolve into a monetization strategy over time? Right? Luis, as we think about going through this transition, what happens on the other side in terms of the lesson that you guys now have, as you guys come back and start to monetize users later on? Andrew, this is a excellent question. Look, we got ourselves into an interesting situation, where both Duolingo is under-monetized and over-monetized at the same time. It's under-monetized in that, look, only about 10% of our monthly active users pay us. We wholeheartedly believe we can do much better than that. If you look at comps, if you look at, you know, if you look at things like Spotify, for instance, like, half of their users are paying them, give or take. A lot of these freemium businesses, we really think we can get much higher than 10%. However, the way we were, you know, increasing monetization was, you know, we found that the quickest way to increase monetization was basically by adding friction. The more we added friction, the more we got people to subscribe. That, you know, that's okay, but I think that we got it to a point where it really became at odds with DAU growth. There are other ways to get people to subscribe. For example, you can add more features. Or you can have features that are, you know, not exactly a friction, but things like selling customizations for avatars and you know, things like that that have worked really well for, you know, games, and we are kind of half a game. What we're doing now is for the next year, we're, you know, we're using this year to also find ways to monetize, that get more people to subscribe, that is true, but that may not be doing so by adding friction, and we're really confident that we can do that. It's just slower because, you know, monetizing by adding friction, like, you know, if you told me next week I needed to make, whatever, $50,000 more a day, it was actually quite easy to do. You just double the ad load or whatever it was. These other ways of monetizing are just going to take a little longer to do, but we're very confident that we're gonna have some, because, you know, only 10% of our active users pay us to subscribe. I wanted to ask about the Chess disclosure. Yeah. This is really about utilizing multiple apps at the same time. If, if I think about the 7 million users and I think about the core trend of core Duolingo through 2025, how do I think about multiple users using multiple apps, right? Do I just take the 53 million, and I subtract 7- Yes - to be able to think about where you are, or what's the right way to think about that? Thank you so much. Yes, another great question. Yeah, you know, we said Chess has gotten up to about 7 million daily active users in less than 1 year. We're very proud of that. It's an incredible growth. Now, the majority of these users, whenever we put a new subject out on Duolingo, it is a lot easier to get to our own users rather than to get to users outside of Duolingo, because, you know, we have a direct line of communication to our own users. The majority of these users, we're not, you know, basically saying the exact number, but the majority of those users are users that were Duolingo users and now are using both Languages and Chess. That's basically what's the common thing that's happening. You know, we're the way you to see it is not that Languages have not been growing. In fact, Languages are growing at about the same pace as Duolingo because this is the largest course. It's just that we are getting some new users for Chess, but a lot of them are just doubling up from Languages and Chess. What we are seeing is that over time, more and more people are finding out that Duolingo has Chess, and then Chess is starting to attract its own user base, and I think that's what's going to happen over time. You know, that just takes a little bit of time to do that, but that's what's happening. All right. Thank you. Thank you. Our next question comes from Alexander Sklar with Raymond James. Please unmute your video and audio and ask your question. Great. Thank you. Luis or Gillian, I don't know who wants to take this one, but on the bookings outlook, just given some of the unknowns you spoke to with Bryan's question earlier on how video call tests were going to play out on Super, what does the bookings outlook factor in terms of conversion rate of Super relative to what you've experienced in the past? How much time or data, Luis, do you think you need to know if the decision is a successful one based on some of the historical testing? If you look at the bookings, you know, the main thing to think about right now is, if you start from Q4 bookings growth of about 24%, and then look over to the guide, we think about half of that is the user deceleration continuation that Luis talked about, and then the other half of that is us monetizing more carefully and thinking about, you know, taking away some friction for our users. That's how we're thinking about positioning that. In terms of exactly how all the monetization is going to play out, as you know, we A/B test like crazy around here, and so there's a lot to be learned, as Luis explained, over the course of this year. What we're really trying to do with the guidance is give ourselves the room, be from a position of really good financial strength, to go do that work, because we think it gives us the opportunity to reach for the higher price. Yeah, and in terms of how long, you know, it'll take until we know this is working, it's going to take a little while. I mean, we need to make a lot of product changes, et cetera, each of which take a while, and then we also need to see user reactions, et cetera. It's going to take a little while. As Gillian said, we're putting in something modest towards the end of the year to see that some things are working there. Okay, maybe just a quick follow-up. Anything factored in terms of pricing changes within the different packages in the outlook? I mean, you know, what we're gonna do this year is we're gonna be experimenting, like pretty much every year, although probably more so, with prices quite a bit. That means higher prices, lower prices. We're always A/B testing, so we're going to be doing that. You know, this is not something that we're really putting in. We're putting in the results of all the combined experiments in the outlook. I don't, I don't know if I can tell you for a fact that the price of Super will be higher because we have Video Call or not. I don't know the results of the A/B tests. All right. Thank you both. Yeah, thank you. Our next question comes from Wyatt Swanson with D.A. Davidson. Please unmute your video and audio and ask your question. Hey, guys. Thanks for the question. I've just got one, you know, thinking about, like, the medium-term goal of reaching the 100 million DAUs. Does that assume, like, marketing stays elevated and monetization stays on the back burner for the entire duration? I think you've kind of answered it, but just sort of thinking through, as you've sort of ramped monetization over the past year, and you've started seeing DAUs start to decel. Like, how do you think about that balance over the medium term? Should we see monetization slowly start to ramp up in these alternate forms that, you know, you're kind of exploring? Yeah, I mean, I can answer, and I can also let Gillian have, you know, have at it. You know, in general, our marketing is still extremely efficient. I mean, it's really still a small fraction of our revenue that we spend in marketing. I assume that every year, the total number of marketing dollars that we spend will continue going up. However, I'm hoping that past this year, we are gonna get some efficiencies. It's hard to say exactly what'll happen past this year. It's not like we're guiding, you know, I assume that we're gonna get some efficiencies past this year. In terms of monetization, you know, like Gillian was saying before, just almost any way you look at it, with 100 million daily active users, this is just a much larger business. I do believe, again, hard to put in numbers exactly, you know, to give you a model or anything for past 2026. I do believe that you're gonna see other things really start ramping up. I'm very excited about direct ad sales. We're seeing just good uptake on that. I'm also very excited about in-app purchases, in particular with our avatars. There's a lot of love for our avatars and for our, you know, playful brand. We think we can do quite a bit there. Yeah, as you think about the margins of the business, you know, one of the reasons I'm so excited about where we're at, is that we've shown that this business can have tremendous scale, even at the size we're at today, and we think we can be a lot bigger. There's nothing that we can see in the business that says we can't scale it going forward. We're making an investment right now and descaling some to make that happen, but really, we don't think we need to hire double the number of people, twice the amount of marketing. We think that this business can scale really beautifully. It's one of the nicest things about the business model, that we have the opportunity to do what we're doing from a position of strength, profitability. We will continue to generate tremendous EBITDA and free cash flow, even as we invest. We see no reason why we couldn't scale up as we re-enter monetization in a bit more of a smarter way from here. Got it. Got it, that's fair. Could you maybe answer as to, like, what the ads business will look like going forward? You've talked about, like, doubling the ad load is maybe causing additional friction and users potentially turning off. Like, are ads, it almost made it sound like ads were almost coming off of the platform, and it wasn't gonna be, like, as big of a monetization channel? What we're unlikely to do is increase ad load. At the moment, you see an ad at the end of a lesson. That is unlikely to go up. Certainly not this year, 'cause that really goes counter to everything that I'm saying. However, we are doing a lot better of a job at displaying better ads. I mean, historically, we just have not spent a lot of effort on ads, historically. For example, we use just these network ads that are kind of, you know, the lowest common denominator network ads. We are now doing direct deals. What that does is it does 2 things for our business. Number 1, it significantly increases the quality of the ad. Rather than getting, you know, ads for like, you know, games that you've never heard of, you're, you know, you're gonna get ads from, like, Disney or something, significantly higher quality ads. Then the amount of money we make per ad is significantly higher when we do that. I think that's kinda how it's gonna be. We're experimenting with some stuff that is really cool, but I don't know if we'll make it work. I'll tell you, my dream has always been to be able to give you ads in the language that you're learning, and we are trying that. If you're learning Spanish, part of the ad's gonna be in Spanish. What I love about that is that the users want that. That's also good in the end for the advertiser because the user is actually paying a lot of attention, so I'm hoping we'll be able to try that. I don't know which of these things will work, but in general, I just think ad load will not be higher, but we'll make a lot more money per ad. Got it. Thank you, guys. Yeah. Our next question comes from Nathan Feather with Morgan Stanley. Please unmute your line and ask your question. Hey, good evening, everyone. Two on my end. You know, first, there's been a lot of concern in the market about the improvement in AI translation tools and the general rise of all-purpose chatbots. I guess, what gives you conviction that the user deceleration we saw in 2025 was not due to those factors? Then second, just of the changes you've made so far to improve the user experience, are you seeing anything in the data that gives you conviction that these changes are gonna stabilize user growth through the year? Are you already seeing that, or when might you expect to reach that stabilization point? Okay, thank you for the question. AI translation isn't... You know, people talk about it, but it is not something that we are worried internally about. AI translation has been essentially perfect among the large languages for, like, more than 10 years. I mean, between Spanish and English, it's essentially been perfect. Our users use Duolingo for two main reasons: one, as a hobby, they actually want to learn, and those people, whether there's AI translation or it doesn't matter, it's a hobby for them. The other group of people is learning English. They want to learn English, and they actually want to learn English. We know also that, you know, we ask users why they leave Duolingo. We have these churned user surveys. This does not come up. I mean, like I said, the main reason that people leave Duolingo is 'cause they got busy. We know what that means. It just means they are doing more social media. Like, that's basically what that means. That's not something we're particularly concerned about. In terms of, you know, data about are we seeing any data that is making us believe that, you know, user growth is accelerating, et cetera. So far, we have done a few things to make the app, you know, the free experience better. For example, we gave a feature that was in Duolingo Max called Explain My Answer. It's now free for everybody. We've done stuff like that, and we are seeing quite a bit of uptake on the features, and we're seeing, you know, that users love it, but we have not yet seen an acceleration in DAUs that we think is like, "Oh my God, we're done!" Now, to be fair, we did not expect this. I think this is why we're saying that you should expect, you know, seeing some modest results towards the end of the year. Great. Thank you. Yeah. Our next question comes from Ryan MacDonald with Needham. Please unmute your video and audio and ask your question. Hi, Luis, Gillian, nice to meet you. Welcome. Luis, I wanted to ask about sort of Duolingo Max to start. fourth quarter, I think, was your first sort of large cohort or lapping the first large cohort of Max subscribers, and was curious what you were seeing from a retention, and renewal perspective, and how much that's guiding sort of the strategy to bring Video Call back into Super. When this sort of transition happens, Gillian, when should we start to see, I guess, the impact of subscribers moving from Max down to Super with Video Call being the feature, and what assumptions are you making for that in the guidance? Yeah. In terms of Max, none of the Max numbers are making us do anything with video call. The Max numbers are actually quite good. We're happy with the Max numbers. We are taking, you know, what I call an offensive move with Max. I just believe that the cost of video call has gone down enough that I, it just kind of doesn't make sense for us to just have it in Max when we can offer it in much cheaper packages. We're not quite there where we can offer it for free, but at some point we may be able to, and I want to offer it for free. Because I actually think that it is in our best interest to have the largest possible user base that we can figure out how to monetize in any way, rather than just keeping this for a tiny little bit of the user base, you know, so that's just our philosophy. The entire decision for trying to put Video Call in Super comes more from, we think that this is the right thing for our users, rather than any numbers with Max. We're pretty happy with the numbers with Max, actually. Gillian, I don't know if you wanted to answer that second part. You're muted, or I cannot hear you. Oh. Well, I, sorry, your question, I kind of forgot what your question was because I was like, "Oh, that's for Gillian. I forget it." What was your question again? I can I can try to answer that. yeah. As you think about the guidance for fiscal 2026- Mm-hmm. I guess what assumptions, if any, are you making, sort of building in for when video call rolls out to Super for sort of, I guess you could call it, sort of a ARPU trend changes of maybe down sells from Max down to Super from that? You know what? I'll tell you probably what I know what Gillian would have said in here. Look, we ourselves don't really know exactly what is going to happen with this A/B test, where we start giving Video Call to Super. We don't know that ourselves, but we're gonna A/B test it. Everything. We put in our guidance some bounds, what we think that will actually, you know, this is what we think in all, and there are some bounds. We'll stay within those bounds, and we have different ways of staying within those bounds. For example, if we see that putting Video Call in Super really, you know, destroys our Max business or something, where it's, like, really terrible, then we'll start doing something like metering Video Call in Super. Like, you only get access to one per day versus in Max, it's unlimited. Something like that. Again, I'm talking about things in the future, 'cause I, and so I just don't know exactly what's gonna happen, but we're gonna stay within the bounds of what we have in the guide. Okay. I don't know, Gillian, if you are, if we can hear you now or not. No, unfortunately. Not quite. Okay, maybe Luis, just one more quick one for you. Yeah. You talked about sort of math and thinking that that's an opportunity to build and sort of have one of the math, best math tutoring apps in the world. As that gets developed, would you look at sort of new channels, in terms of how to sort of, you know, distribute that? Like, I think in the past, you know, Duolingo for Schools, you know, as a way to sort of open up that population on the language side. Is that a potential viable channel as you think about areas where you could get this DAU growth from something like math? Yeah. Math is an interesting subject, and, you know, on the one side, there really, it's, I don't know of another subject other than languages that has as much of a market. I mean, Math, there's 1 billion people learning Math. That's awesome. Now, they're different than languages in the sense that these 1 billion people generally don't wanna learn Math. W hereas, the language people actually wanna do that. These, you know, these billion people are mostly in schools. In fact, they're mostly in K-12 schools. That's where they are. That is definitely where we're gonna get to. Now, there's multiple ways to imagine how to do that. Our first step is to just make this product. We're almost there. I mean, if you look at the internal versions of our Math course, they are incredibly good. Once that happens, you know, there's a big question about go-to-market. At the moment, our hypothesis is that the easier way to get started, that may not be the ultimate thing that we do, but the easier way to get started is to think of it as a supplemental thing for school. Rather than, you know, get deals with school districts and stuff like that, think of it more as a competitor to Kumon. Yeah. That is, we believe, the better way to get started, because there's a, you know, a very large number of people that do you know, have some sort of help outside, et cetera. By the way, what we like about this, and this is not. You're not gonna see this this year, but what we like about this over the long term is that the propensity to pay, not from the kids, but from the parents- Mm-hmm - for math, is very high so, you know, we'll probably be able to do something, there. Awesome. Appreciate the color. Thanks, Luis. Can you hear me now, Luis? Yes! Okay, good. Gillian's back. I'm glad. Uh- Otherwise they would have started asking questions about- I know. - acronyms that I don't know, and we're in trouble. Some nice people just snuck around my computer. We're better now. Thank you, guys. We'll take our next question from Shweta Khajuria with Wolfe Research. Please turn on your video and ask your question. Hello. Hi, Shweta. Hi, Luis. Thank you for taking my questions. I was gonna ask Gillian very specific three questions while she was muted just to test her mic. No, actually, I have two questions: One is on retention, and the other is on AI. On retention rates, as we think about you investing in math and music and chess, and perhaps there are some cross-platform benefits, how do we think about churn and/or retention rates over time as you invest in the product? My understanding is that it has remained largely stable, but is there a reason to think that it actually improves markedly, and what that can do to your platform? Then the second is on AI. You addressed this in terms of competition, where you have a market lead, versus anyone else in the market right now. What AI could potentially do is accelerate the path to creating new competitors that don't even exist today. Could you talk to potential risk of an AI of a competitor emerging because AI is making it easier to create certain products? Yeah, sure. In terms of retention, I'll let Gillian say more stuff, but, you know, generally, our retention, especially for pay retention, is pretty stable. It's very healthy- Mm-hmm - and very stable. There's some chance it may go up. I don't think we're modeling that. You know, I'll let Gillian know because I don't actually know if we're modeling that or not, but there's some chance it may go up over time. It's because one thing we do know is that multi-subject users have higher retention, and the other thing that is true is that, over time, more and more users are learning multiple subjects just because we offer more subjects. Mm-hmm. There's some chance that it may go up, you know, I don't think. You know, so far, you shouldn't really believe me on this because it has remained pretty flat. Okay. I don't know, Gillian, if you want to add to that. Yeah. I can go to the new competitors on AI. I mean, retention, it looks pretty flat over a fairly long period of time, and we look at it in aggregate, and we look at it via cohorts. I think the perspective we have is that it can stay where it is. That said, I think you're pointing out something really, really important. All the work we're doing to make the product great, so that word of mouth and top of the funnel and all that stuff keeps keeping the size of the, pool bigger, that also helps current customers, too, right? They get those features, too. I think it's a possibility, but we haven't modeled, you know, anything significant on that front on. Okay. Yeah, and in terms of your question about, you know, can a new competitor show up because AI allows the building of something faster? It is true that with AI, you can build stuff faster. I assume that that'll be more true over time. That is an assumption that we have. The good news is that that also applies to us, so we can also build stuff faster. That is good. The other thing to say is, you know, there's a little bit of a misunderstanding, I think, in the market about how easy it is to recreate a very sophisticated app like Duolingo. You know, the reality is that if I were to write down just the spec of Duolingo, and I'm not talking about recreating it as a in a programming language, like, write it down in English, it would take me years. Because there are a million corner cases of things that we do that we're really smart about how, you know, what we do for the user to get them to be more engaged or teach better, et cetera. I'm not particularly worried about somebody just magically pressing a button and an app appearing that, you know, that is just better than Duolingo. On top of that, it's pretty hard. You know, the reason Duolingo so far has not really gotten competition, and, you know, at a large scale, again, we have, like, 85% of the daily active users of language learning apps in the world, is because it's pretty hard to compete with our free product in the sense that we have really huge distribution. A new entrant, when they come in, they need to figure out how to grow. What they usually do is they try performance marketing to try to grow fast, but because our free product is so good, they usually cannot make their performance marketing work if they are to have a free product. What then they do, is they put a paywall on it. Then that just really caps them. It's just been really hard for entrants. I mean, look, the reality is that over the span of Duolingo, we have probably seen, I don't know, 400 apps come up and try to compete with us, and I'm making that number up. It's hundreds. And we just don't see them grow again, because we have a very large distribution. Okay, that's helpful. Thanks, Luis. Thanks, Gillian. Thank you. We'll take our next question from Eric Sheridan with Goldman Sachs. Please unmute your line and ask your question. Eric, hello. Hi, everyone. Thanks so much for taking the questions. Maybe building on Shweta's question and asking it a little bit differently: When you think about the AI landscape, what is the scope by which you think you need to sort of be a leader in AI learning in the four walls of your application and your experience, as opposed to possibly cooperating with LLM agents and being an application layer to their platform if more consumer behavior goes in that direction from an aggregation standpoint? I'd love to get your sort of philosophical view on that. Maybe the second question would be: You guys were probably one of the leading examples of a mobile-first company with Web 2.0. How should we think about the duration and the need to invest to reposition the company to be AI native in its tech stack over the next couple of years? Thanks so much. Good question about does it make sense for us to continue in our own app versus something like an LLM? You know, I'll tell you what we do. Just historically, there have been a number of new platforms that have happened since we launched Duolingo. For example, smartwatches came out. Also, smart speakers came out, like Alexa. In all cases, we had a lot of people asking us questions, and certainly the companies that were building these things, telling us, "This is the next big thing. Everybody's gonna be in their, in their watch. You should be in your watch, in the watch." In the past, we made the mistake of early on making an app for the watch or whatever, and only to realize later that apps for watches are not really a thing other than exercise apps for watches. You know, the way we see it is, if it is the case that consumer behavior changes quite a bit so that nobody has their own app, and then everybody's over there, we will definitely do something about it, obviously. What I'll say, though, is that our app in particular, I mean, there are many other apps, et cetera, but you can think of our app a lot like a game. I mean, it really matters that we are not text-based. It just turns out that people really, really like doing things like playing Candy Crush or doing Duolingo, in part because of the animations, et cetera. If, if you're just asking, are we gonna be a thing in a chatbot? I just don't think you can get the engagement that we can get inside, like a text-based chatbot. You know, again, I just don't know what the future is gonna look like, but this is. You know what? At the moment, we feel pretty confident that the right investments are to continue making a beautiful experience that is very visual, because that's just what keeps people engaged. Yeah, in terms of AI native, I mean, we've always. Ultimately, we're a technology company. We've been really trying to adopt AI and technology as fast as possible. In fact, we've probably gotten in trouble for adopting AI fast, for example, by writing stupid memos that I wrote one time. We've, you know, that's the, I'm... I think you're gonna see us always take the next step with things like AI. This concludes the Q&A section of the call. I would now like to turn the call back to the host for closing remarks. Well, thank you, everyone. These were excellent questions. I just want to say that, you know, we're very excited about 2026. It is probably not exactly what investors expected, but if you are thinking about Duolingo as a long-term company, which obviously I am, because that's kinda what I want, this is really the right investment to do. The second thing that I'll say is that Gillian started her job 3.5 days ago. It is incredible the amount of knowledge that she has about our finances, which already surpasses mine. Thank you, Gillian, for that, and thank you, everyone. I am so delighted to be here. Thank you, everyone. Bye.