Good day, and thank you for standing by. Welcome to the Duolingo Second Quarter 2021 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Debbie Belevan, Head of Investor Relations. Please go ahead.

Welcome, everyone, to Duolingo's first earnings webcast highlighting our results for the second quarter of 2021. It's great to have you join us today after our successful IPO last month. With me on the call today are Luis von Ahn, Co-Founder and Chief Executive Officer; Matt Skaruppa, Chief Financial Officer; and Bob Meese, Chief Business Officer. After prepared remarks, we will open up the call to Q&A. I'd like to remind all participants that during this call, we will make forward-looking statements regarding future events and financial performance of the company, which are subject to material risks and uncertainties that could cause actual results to differ materially. We caution you to consider the important risk factors contained in our SEC filings. These forward-looking statements are based on assumptions that we believe to be reasonable as of today. We undertake no obligation to update these statements as a result of new information or future events. Additionally, we will present both GAAP and non-GAAP financial measures on today's call. These non-GAAP measures are not intended to be considered in isolation from, a substitute for or superior to our GAAP results, and we encourage you to consider all measures when analyzing our performance. And with that, I'd now like to turn the call over to Luis.

Thank you, Debbie, and welcome, everyone. Thanks for joining us today. Since this is our first earnings call and many of you are new to our story, I would like to walk through who we are, where we've been and where we're going from a strategic perspective. Then Matt will cover our results for the quarter, and then we will open up for Q&A. When we started Duolingo, I was in a very fortunate position in my life. I was a professor in computer science at Carnegie Mellon University, and I had just sold 2 companies to Google. I wanted to work on something that was related to my true passion, which has always been education. But my views on education are very influenced by where I'm from. I grew up in Guatemala, which is not a wealthy country. And a lot of people talk about education as something that can bring equality to different social classes, but I always saw it as the opposite, as something that can bring inequality because people who already have a lot of resources can afford to get the best education, whereas people without much money often don't even get basic schooling, especially in poor countries like mine. So along with my PhD student, Severin Hacker, we wanted to do something that would give equal access to education to everybody. And so even before we knew we wanted to teach languages, we actually started with a mission to develop the best education in the world and make it universally available. Now this mission is very general. So we decided to start by teaching one thing. And we thought about various subjects we could start with, like coding or math, but decided on teaching languages for a number of reasons, the biggest one of which…

Thank you, Luis, and thank you all for joining us on our first earnings call. We are pleased to report a strong second quarter. Before I jump into the numbers, I want to quickly talk about our growth framework. We focus on 2 areas of growth. First, we have our core language learning product, which includes subscriptions, ads and in-app purchases. And second, we have our new initiatives, which include the Duolingo English Test, also known as the DET, and other new products that we may seek to monetize in the future. For our language learning product, we plan to continue to grow by expanding the number of active learners on our platform by driving higher conversion of our free users to paid subscribers and by increasing the lifetime value of our subscribers. We plan to continue to invest in R&D to improve our language learning app to drive these growth vectors. For our new initiatives, we plan to continue growing by expanding adoption of the DET among institutions and consumers and by offering more value-added features for Duolingo English Test takers. We will also grow by creating new products on our platform, which we have already started to do through Duolingo ABC, our early literacy app. With that, let's take a look at our Q2 operating and financial metrics and our comparative performance against the same quarter last year. Subscription bookings increased 34% year-over-year to reach $48.9 million in the second quarter. Total bookings increased 30% year-over-year to reach $64.5 million, and revenue increased 47% year-over-year to reach $58.8 million. As to our users and subscriber metrics, MAU decreased year-over-year to 37.9 million and DAU increased slightly to 9.1 million. Paid subscribers increased 46% as compared to Q2 2020. Our non-GAAP financial metrics include adjusted EBITDA and free cash…

[Operator Instructions] Your first question comes from the line of Justin Patterson with KeyBanc.

Great. Could you perhaps elaborate on regional pricing tests? And then Luis, next week, we have Duocon. Any teasers ahead of the event?

Thanks for the question. So we have -- okay. So we’ve been – as we said in the road show, we’ve been testing in different regions so far. We have succeeded in changing the price in a few countries, in Brazil, in Japan and in Germany, and then the prices remain the same – in the U.K. as well, and the prices remain the same in every other country. We’re going to continue doing that over the next few quarters. You’re going to see us do that. And in terms of Duocon, you should watch and see. I mean we’re going to be announcing a lot of really cool stuff, certainly going to be talking about family plan. We’re certainly going to be talking about the new ways of teaching non-Roman scripts, so Asian languages, for example. We’re going to be talking about that and a lot more. You should watch it. It’s going to be cool.

[Operator Instructions] Your next question comes from the line of Jian Li with Evercore ISI.

So I just wanted to -- a couple of questions. One is just the DAU-to-MAU ratio continues to kind of go up pretty nicely. Can you talk about what are the kind of the initiatives of the product development that drives this consistent growth?

Sure. I mean in terms of our product development, we majorly work on 3 things. We work on improving engagement, so getting people to use the app more and more often. We work on teaching better. And we also work on monetizing better. That mainly means getting more people to subscribe. The first 2 are the things that really lead to a higher DAU-to-MAU ratio. Basically, we've added more gamification to the app, and also, it teaches better. So basically, people use it more often.

Great. And also just a follow-up kind of just on the paid subs net adds. Obviously, the year-over-year comp is tougher. But just like moving forward, would you say that -- would you expect kind of the net adds cadence to be on a higher level, like closer to the 2020 level? Or do you expect that to kind of go back to kind of the 2019 level growth?

Yes. Thanks, Jian. That’s a great question. So if you look at the 2020 number, we essentially added around 700,000 net subscribers. And from our projections and what we see in the business, as Luis has mentioned, our MAU growth is, we believe, likely going back to the pre-COVID rate of growth. And we continue to take all the efforts that Luis has talked about in terms of driving increased conversion and then maintaining retention. And so we think that the cadence – that the pre-COVID growth rates will apply going forward.

[Operator Instructions] And we have no further questions at this time. I will now turn the call over back to Luis for closing remarks.

Yes. Thank you. And I’d just really like to thank you all for attending and for all the great questions. And we look forward to talking with you regularly in the future. I also want to take this time to thank all our wonderful employees for the great work they do every day. It’s really all because of them that we’re showing these really strong results. So thank you, and thank you for attending.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.