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REVENUE | 12 Months Ended
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Dec. 31, 2024
Revenue from Contract with Customer [Abstract] |
REVENUE | REVENUE The Company has four predominant sources of revenues; time-based subscriptions, in-app advertising placement by third parties, the Duolingo English Test, and In-App Purchases. Revenue is recognized upon transfer of control of promised products or services to users in an amount that reflects the consideration the Company expects to receive in exchange for those services. The Company does not enter into contracts with a customer that contain multiple promises that result in multiple performance obligations. Revenue is recorded net of taxes assessed by a government authority that are both imposed on and concurrent with specific revenue transactions between Duolingo and its users. Revenue from time-based subscriptions includes a stand-ready obligation to provide hosting services that are consumed by the customer over the subscription period. Users can purchase Duolingo monthly or they can purchase a year-long subscription and pay for the subscription at the time of purchase. Under the year-long subscription, users can also purchase a single plan or a family plan. The family plan includes up to six users on one subscription. Such payments are initially recorded to deferred revenue. The user has the ability to download limited content offline. However, as there is a significant level of integration and interdependency with the online functionality, the Company considers the service to be a single performance obligation for the online and offline content. The Company enters into arrangements with advertising networks to monetize the in-app advertising inventory. Revenue from in-app advertising placement is recognized at a point in time when the advertisement is placed and is based upon the amount received. Duolingo English Test revenue is generally recognized once the tests have gone through the proctoring process and a certification decision has been made. This process usually takes less than 48 hours after the test has been completed and uploaded. Customers have 21 days from the date of purchase to take the exam or their purchase will expire and revenue will be recognized. Virtually all customers complete their exams prior to expiration. Sometimes organizations may purchase tests in bulk via coupons with a one year expiration date. The Company will defer revenue from all tests that have neither been proctored nor expired. The Company’s users have the option to purchase consumable in-app virtual goods. The Company recognizes revenue over the period in which the user consumes the virtual good, which is generally within a month. The Company also recognizes revenue from Dos Lenguas LLC “Duo’s Taquería”, a restaurant that opened during 2022, in the space adjacent to Duolingo’s headquarters in Pittsburgh. Revenue from Duo’s Taquería is recognized at a point in time when the sales are made. Principal Agent Considerations—The Company makes its application available to be downloaded through third-party digital distribution service providers. Users who purchase subscriptions also pay through the respective app stores. The Company evaluates the purchases via third-party payment processors to determine whether its revenues should be reported gross or net of fees retained by the payment processor. The Company is the principal in the transaction with the end user as a result of controlling, hosting, and integrating the delivery of the virtual items to the end user. The Company records revenue gross as a principal and records fees paid to third-party payment processors as Cost of revenues. Contract Balances—Deferred revenue mostly consists of payments received in advance of revenue recognition, and is mostly related to time-based subscriptions, which will be recognized into revenue over the course of the upcoming year (recognized over 12 months or less). Additionally, the Duolingo English Test has deferred revenue related to tests that have been purchased, but will not be recognized until the tests have been proctored. Disaggregation of Revenue In accordance with ASC 606, Revenue from Contracts with Customers, the Company disaggregates revenue from contracts with customers into revenue streams, which most closely depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
|  |  | Year Ended December 31,
(In thousands) |  |  |  |  | 2024 |  | 2023 |  | 2022
Revenues: |  |  |  |  |  |  |  |  |
Subscription |  |  |  |  | $ | 607,531 |  |  | $ | 404,684 |  |  | $ | 273,507 |
Other (1) |  |  |  |  | 140,493 |  |  | 126,425 |  |  | 95,988 |
Total revenues |  |  |  |  | $ | 748,024 |  |  | $ | 531,109 |  |  | $ | 369,495 |
________________ (1) Other revenue is comprised of the below.
|  |  | Year Ended December 31, |
(In thousands) |  |  |  |  | 2024 |  | 2023 | 2022 |
Advertising |  |  |  |  | $ | 54,907 |  |  | $ | 49,858 |  | $ | 44,731 |  |
Duolingo English Test |  |  |  |  | 45,640 |  |  | 41,212 |  | 32,718 |  |
In-App Purchases |  |  |  |  | 38,653 |  |  | 34,673 |  | 17,914 |  |
Other |  |  |  |  | 1,293 |  |  | 682 |  | 625 |  |
Total other revenue |  |  |  |  | $ | 140,493 |  |  | $ | 126,425 |  | $ | 95,988 |  |
Three service providers, Apple, Google and Stripe, processed 60.8%, 23.4%, and 11.7% of total revenues for the year ended December 31, 2024, respectively. Three services providers, Apple, Google, and Stripe processed 58.5%, 25.6% and 12.1% of total revenues for the year ended December 31, 2023, respectively. Two services providers, Apple and Google, processed 54.2% and 28.1% of total revenues for the year ended December 31, 2022, respectively. Information regarding geography of revenues is based upon the location where the users are located or, in the case of the Duolingo English Test, where the tests are taken:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
United States | $ | 311,539 |  |  | $ | 238,759 |  |  | $ | 168,320 |
Rest of World | 436,485 |  |  | 292,350 |  |  | 201,175 |
Total | $ | 748,024 |  |  | $ | 531,109 |  |  | $ | 369,495 |
Customers located in the United States accounted for 42%, 45% and 46% of total revenues for the years ended December 31, 2024, 2023 and 2022, respectively. No other country accounted for more than 10% of revenue in the periods presented. Changes in deferred revenues were as follows:
| Year Ended December 31,
(In thousands) | 2024 |  | 2023
Beginning balance—January 1 | $ | 249,192 |  |  | $ | 157,550 |
Amount from beginning balance recognized into revenue | (248,667) |  |  | (157,550) |
Recognition of deferred revenue | (402,937) |  |  | (287,429) |
Deferral of revenue | 775,296 |  |  | 536,621 |
Ending balance—December 31 | $ | 372,884 |  |  | $ | 249,192 |

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 9 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-9 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-10 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-15 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-13 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 606 -Publisher FASB -URI https://asc.fasb.org/606/tableOfContent + Details
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