Snapshot

The shift toward online travel services has significantly influenced how people and companies plan and manage their travel, prioritizing platforms that offer convenience, value, and a wide range of options.

Over the last three decades, Trip.com Group has emerged as a key player in the sector, providing a comprehensive array of travel services. These include booking flights, hotels, and vacation packages, as well as managing corporate travel. The company’s platform is designed to streamline the travel planning process, making it simpler and more efficient for users worldwide.

Trip operates a suite of prominent travel-related brands, including Trip.com, Ctrip, Skyscanner, and Qunar, catering to a diverse array of travel needs.

Now leveraging advanced technological innovations, the company is integrating artificial intelligence and data analytics to deliver personalized travel recommendations and customer service, facilitating a seamless and efficient user experience across its digital platforms. With customers across the travel spectrum including individual travelers looking for leisure options, business professionals seeking efficient travel solutions, and organizations needing to arrange travel for groups or events, the platform has matured to meet the varied needs of these users.

As it focuses on expanding its reach and enhancing its service offerings, Trip is actively exploring new markets, investing in technology to improve the customer experience, and forming partnerships with other travel service providers that continue to cater to the evolving needs of travelers worldwide.

Background

Founded in China, by a group of entrepreneurs including James Liang, Neil Shen, Min Fan, and Qi Ji, Ctrip.com International was established with the objective of facilitating travel for Chinese consumers through a single comprehensive online platform.

The early 2000s saw the company focusing on consolidating its position within China, rapidly growing its user base and service offerings. Technological advancements and strategic partnerships enabled CTrip to enhance its operational efficiency and expand its product portfolio. By integrating hotel and flight booking services, the company catered to the increasing demand for convenient travel planning solutions.

In 2003, CTrip was listed on the NASDAQ, a move that provided the company with the capital necessary to accelerate its expansion and invest in technology. It subsequently completed a second listed on the HKSE in 2021.

The company found continued success in China with about 70% of the company’s sales in 2006 coming from just four cities – Beijing, Guangzhou, Shanghai, and Shenzhen. However, the acquisition of Skyscanner in 2016 was a significant milestone in Trip’s global expansion strategy, enabling the company to extend its reach beyond China and tap into international markets. Skyscanner, complemented CTrip’s existing services by offering users worldwide the ability to compare prices for flights, hotels, and car rentals.

In 2019, Ctrip.com International rebranded itself as Trip.com Group, headlining the company’s broader strategy to diversify its offerings and target markets outside of China. The name change was accompanied by efforts to enhance user experience through technology-driven solutions, including personalized travel recommendations and AI-powered customer service.

Leadership

Co-founders James Liang and Min Fan continue to serve on the Trip board. Liang is the executive chairman, while Fan is the vice chairman and president. Liang was also CEO from 2000 to 2006 and again from 2013 to 2016. Liang guided Trip through significant transitions, including moving from offline to online and from desktop to mobile platforms. His leadership also saw the company making strategic investments and establishing industry-leading standards, growing Trip into one of the world’s largest online travel agencies. Before Trip, he held various positions at Oracle Corporation and serves on several boards, including Tongcheng-eLong and Sina.

Serving in various leadership roles including CEO from 2006 to 2013, Fan has also been integral to the company’s success. Prior to Trip, he was CEO of Shanghai Travel Service Company and held senior positions at Shanghai New Asia Hotel Management Company.

Customer

Trip’s one-stop travel platform connects users and over 70,000 travel ecosystem partners integrating a comprehensive suite of travel products and services and differentiated travel content. It brings together product and service offerings, reviews, and other content shared by customers based on real travel experiences. While original content from ecosystem partners enables leisure and business travelers to have easy access to ideas for informed and cost-effective bookings.

The platform facilitates online and offline channels, emphasizing mobile use, with over 90% of transactions happening via mobile apps and websites. It supports multiple languages and currencies, offering localized services internationally. Customers also benefit from distinct home pages, geolocation-based recommendations, and transparent pricing.

Offline, the company operates around 4,000 stores in China, providing in-person services like travel consultations. Despite streamlining its offline presence to focus on online advantages, these stores still play a crucial role in its omnichannel strategy.

The accommodation business provides over 1.2 million global accommodation offerings, covering hotels, motels, resorts, homes, apartments, bed and breakfasts, hostels, and other properties. The air ticketing business offers flights from over 480 airlines, covering over 2,600 airports in over 200 countries and regions. Trip also offers over 310,000 in-destination activities around the world designed to ensure an effortless and enjoyable travel experience. However, the vast majority of revenue is generated from accommodation reservations and transportation ticketing.

In transportation ticketing, Trip provides services for booking air, train, bus, and ferry tickets, supported by an extensive network and data analytics capabilities. While air ticket services cover a global network, offering real-time availability and pricing. Air travel experiences are enhanced with additional services such as travel insurance and various convenience-oriented options, including online check-in and express security screening.

In the accommodation space, Trip primarily acts as an agent in hotel transactions, earning revenue from commissions paid by hotels when reservations become non-cancelable. It also receives incentive commissions based on performance targets.

Trip also offers corporate travel management services to a vast array of clients, from small enterprises to Fortune 500 companies, providing comprehensive solutions that cover business visits, incentive trips, and detailed travel management services aimed at optimizing travel efficiency and cost-effectiveness.

Multiple service centers around the globe offer 24/7 assistance across various channels with staff that are trained extensively in travel expertise. They provide not only pre-travel guidance but also comprehensive after-sales support.

User-generated and professional content to inspire and inform travelers creates a community where experiences and tips are shared freely. Through live streaming events and personalized content feeds, Trip also engages users and provides them with exclusive offers and insights into destinations worldwide.

Thematic

As Trip continues to solidify its position globally in the travel industry, it is focusing on the targeted application of AI to refine and personalize its offerings, ensuring that travel planning and booking are both efficient and tailored to individual preferences. The strategic use of AI technology to revolutionize trip planning and enhance the travel experience is a significant differentiator in the industry. AI’s potential to personalize recommendations, streamline booking processes, and provide real-time assistance to travelers is a critical component of Trip’s growth strategy.

The launch of the AI travel assistant TripGenie in 2023 leverages large language model technologies to provide users with a more personal, intuitive, and hassle-free travel planning experience. Just by asking it a simple question within the Trip.com platform, TripGenie can help travelers plan travel itineraries and offer personalized recommendations in flight and hotel lists, all in a matter of seconds.

In addition, the company also launched its innovative Trip.Vision app, designed to leverage the advanced capabilities of Apple’s latest mixed-reality headset, the Apple Vision Pro. Trip.Vision promises a ground-breaking approach to travel exploration, offering users a unique and immersive experience of popular destinations worldwide.

This approach to innovation has been particularly effective in the Asia-Pacific (APAC) region. Trip has demonstrated remarkable success, achieving significant growth by precisely tailoring its travel products and services to align with the distinct preferences and requirements of travelers in these markets. Strategic alliances and a deep focus on creating market-specific user experiences have been key to capturing and maintaining momentum in the APAC region. Such localized strategies, enriched by a deep understanding of regional consumer behavior and cultural diversity are playing a critical role in Trip’s success in these markets.

Trip’s vision to establish itself as a dominant player globally within a three to five-year timeframe is unpinned by its existing presence across 39 countries and regions. Offering localized services that cater to the varied tastes and needs of international travelers further aims to capture a significant portion of the global market. Most recently, Trip signed a Memorandum of Understanding with Vietjet Air to leverage the expertise and resources of both parties to make travel easier and more convenient for travelers around the world.

The company is also targeting China’s inbound travel market as it believes it presents an opportunity for the company to diversify its portfolio and attract international travelers to China, thereby increasing its share in the global tourism market. Recent positive developments, such as increased flight capacities and expanded visa-free arrangements, are facilitating international travel to and from China.

Financials

Trip has demonstrated a remarkable rebound in its operational and financial performance throughout 2023, highlighted by a year-over-year net revenue increase of 122% to reach $6.3 billion. This surge is attributed to significant growth across all business segments, with accommodation reservation revenue climbing by 133% to $2.4 billion and transportation ticketing revenue up by 123% to $2.6 billion. Additionally, the packaged-tour segment saw an extraordinary 294% increase, while robust growth in domestic hotel bookings also soared over 130%. The recovery of outbound hotel and air reservations to over 80% of pre-COVID levels, surpassing the industry’s 60% recovery, underscores the company’s successful push through the pandemic’s impacts.

On the expense front, the company’s cost of revenue saw an 80% increase to $1.1 billion, reflecting the expansion of its operations. Product development expenses rose by 45% to $1.7 billion as the company invested in technology and product innovation, aligning with its strategic focus on globalization and AI innovations. Sales and marketing expenses also witnessed a substantial rise of 117% to US$1.3 billion, supporting the company’s efforts to enhance brand recognition and customer reach. Despite these higher costs, net income for the year surged to a record $1.4 billion.

Looking ahead, consensus estimates have Trip continuing a solid outlook for double-digit year-over-year revenue growth, rising 18% in FY24 to $7.3 billion. While analysts also expect earnings per share to remain largely flat for FY24 at $2.64 per share, it is expected they will also return to double-digit growth for FY24 and FY25.

Risks/Competition

The travel industry within Greater China is notably competitive amidst intense rivalry. This sector is populated with a variety of players, including other travel agencies that range from domestic and foreign consolidators of hotel accommodations and airline tickets to traditional travel agencies. As the travel market in Greater China continues to evolve, Trip faces increased competition from emerging domestic travel agencies, some of which are operated by other major internet companies, as well as international entities aiming to establish a presence in the region.

Additionally, Trip’s competitive environment is becoming more complex with hotels and airlines intensifying their direct selling efforts. These entities are not only enhancing their own marketing strategies but are also forming alliances with other travel service providers to capture a larger market share. The entrance of content platforms and social networks into the travel industry introduces another layer of competition, further diversifying the challenges faced by Trip.

Despite these pressures, Trip maintains a leadership position that is underpinned by its advanced technological infrastructure, particularly its investment in AI and data analytics. Furthermore, Trip’s established brand reputation and widespread recognition provide a significant competitive advantage, fostering trust and loyalty among consumers that newcomers to the market may struggle to achieve. The company’s extensive network of partnerships across the travel industry, from hotels to airlines, also ensures a breadth and depth of travel options that are unmatched.

Conclusion

Trip is solidifying its leadership in global travel with its comprehensive suite of services that cater to a broad spectrum of travel needs. Its strategic focus on AI and personalization, coupled with a dominant position in China that is now extending globally gives it a bright outlook ahead.

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Snapshot

The demand for state-of-the-art household items has grown significantly as consumers seek innovative and reliable solutions that simplify daily chores and enhance their quality of life.

By providing highly functional, innovative products, SharkNinja has rapidly carved out a significant market share with a comprehensive array of household appliances to retail customers. Their offerings encompass a wide range of cleaning, cooking, and beauty appliances, alongside home environment and garment care products.

In addition to a relentless focus on quality and durability, SharkNinja prides itself on innovation, ease of use, and competitive pricing. The company seeks to leverage its global, agile, and cross-functional engineering know-how, product development, and manufacturing expertise to increase the efficiency, convenience, and enjoyment of completing daily tasks.

Powered by two trusted, global brands, Shark and Ninja, the company has a proven track record of bringing disruptive products to market. Products that rely heavily on customer feedback and undergo robust testing to ensure they deliver a “wow” factor. SharkNinja’s line of appliances is distributed through major big-box retailers, specialty stores, and its websites.

Currently seeking to continue its rapid expansion, SharkNinja is aiming to be a household name, as it develops more and more solutions that will enable it to enter multiple product categories, driving significant growth and market share gains.

Background

SharkNinja, originally known as Euro-Pro, has its roots stretching back almost three decades, when Mark Rosenzweig, whose family had developed steam cleaners and upright vacuums, started a new company that concentrated on affordable cleaning solutions that appealed to households.

The Shark brand was created in 2007 by Rosenzweig with the launch of the No-Loss-of-Suction vacuum technology that spurred a new era in home cleaning. Shortly thereafter, Mark Barrocas joined as SharkNinja’s President, and over time, the product lineup grew to include a wide range of floorcare products. While in the late 2000s, the company ventured into the kitchen appliances sector with the Ninja brand.

An emphasis on practicality, efficiency, and affordability helped drive rapid growth and a loyal customer base. Eventually, the company changed its name in 2015 to capitalize on its brand names’ prominence and popularity.

Recently going public on the NYSE, SharkNinja continues to focus on addressing everyday challenges faced by consumers as it evolves its product offerings.

Leadership

Mark Barrocas continues to serve as SharkNinja’s CEO. During his tenure, Barrocas has helped drive rapid product innovation and international expansion with the business expanding to nine countries and twenty-five offices around the world. As a result, SharkNinja has grown into a multi-billion dollar business, consistently expanding into new categories and geographies. Prior to joining SharkNinja, he held several senior leadership positions including President of Aramark Uniform, along with Broder Bros Co. He also serves on the Board of the JCC of Greater Boston.

Customer

SharkNinja has transformed the concept of household chores through a diverse array of products designed to enhance efficiency and ease in the home. By focusing on innovation and customer-centric design, the company has carved out a significant niche in the small appliance industry, offering solutions that focus on using technology, and research and development to solve specific customer needs. From cutting-edge vacuum cleaners to advanced kitchen appliances, SharkNinja’s products are all aimed at simplifying domestic tasks.

Operating under two major brands, the company’s Shark line of products includes revolutionary vacuums like the Shark Navigator and the Shark IQ Robot. These incorporate unique features such as a detachable canister for extended reach, while the Shark IQ Robot features a self-emptying base and intelligent room mapping, offering a completely hands-off cleaning experience.

In the kitchen, the Ninja brand offers products like the Ninja Foodi, which combines pressure cooking and air frying capabilities to deliver a multi-purpose device that caters to the desire for quick, healthy, and delicious meals. For coffee enthusiasts, the Ninja Coffee Bar provides a versatile brewing system that allows users to create a variety of coffeehouse-style drinks at home.

From busy parents who appreciate the time-saving convenience of a one-pot meal solution to pet owners who value the efficiency of automated solutions for cleaning up after animals, SharkNinja’s products are designed to address specific pain points across a broad spectrum of household needs.

The company employs a consumer-focused strategy with ongoing direct engagement with consumers, inviting feedback and using it to refine and enhance product features to ensure that the products consistently exceed customer expectations. By engaging with hundreds of thousands of consumers during the product development process and continuously iterating their offerings, SharkNinja maintains a fresh and relevant product line that appeals to a wide demographic.

In addition, the company has effectively utilized modern marketing strategies by partnering with platforms like Amazon to leverage user reviews and create advertisements that resonate with consumers, thus facilitating a seamless shopping experience.

Thematic

SharkNinja’s commitment to innovation and customer satisfaction has driven its expansion from a small, family-owned business to a globally recognized brand. The company has strategically widened its distribution channels, selling products through retailers, both online and offline, and distributors worldwide. With a focus on addressing everyday challenges faced by consumers, SharkNinja continuously evolves its product offerings. Moreover, its capacity to rapidly adapt and extend its product range has been a critical factor in its continued growth.

Thanks to an always-on omnichannel marketing strategy across TV, digital, social media, and press platforms, among others, and a strong focus on retailer diversity, the company is committed to being present across all consumer touchpoints. This is ensuring visibility and accessibility in mass retail, department stores, specialty retail, and online, as well as direct-to-consumer channels. SharkNinja’s storytelling and marketing efforts have resonated with consumers, providing a highly engaged customer base and a strong driver of growth.

Expansion into new geographies has also been a cornerstone of SharkNinja’s expansion. Having established a direct model in the UK, the company has successfully translated this approach to other markets, growing its international sales significantly. Coupled with expanding its share in existing categories, and entering adjacent and new categories, SharkNinja has achieved an astonishing compound annual growth rate of over 20% over the last decade.

Most recently encompassing these various marketing and product expansion strategies, the company announced a partnership with Lala Kent and Scheana Shay of Bravo’s hit show, Vanderpump Rules to celebrate the launch of its next innovation in the beverage category – the Ninja Thirsti Drink System.

The company’s distribution strategies are carefully tailored to meet local needs in various regions, which is complemented by strong relationships with key retail accounts in the US and a global network of retail partners. This approach has established SharkNinja as a reliable partner that offers quality products and a proven track record. Owing to its ability to drive category growth, launch market-leading products, and execute successfully even during peak seasons, SharkNinja has become a preferred vendor for top retailers like Amazon and Target.

Financials

With its ongoing expansion efforts, SharkNinja has delivered an impressive record of consistent growth over the years, surging from less than $250 million in net sales in 2008 to over $3.7 billion in 2022. This run has continued in 2023, as net sales rose a further 13.5% for the first three quarters of the year to $2.88 billion. This uptick has been driven largely by the success of products in cooking and beverage, and food preparation appliances, partially offset by a decline in the cleaning appliances product category.

Gross profit margins are also improving as the company continues to achieve efficiencies and cost savings. Gross profit has leapt by 30.2% to $1.29 billion, now representing 44.7% of net sales, with a similar rise seen in adjusted gross profit, which now stands at 46.7% of adjusted net sales. This result was primarily driven by continued supply chain tailwinds, cost optimization efforts, and a favorable pricing and promotional mix. The company also drove strong sales through its higher-margin direct-to-consumer channel, specifically in the beauty category.

Looking ahead, SharkNinja’s management has just lifted its projections for net sales growth of 11.5% to 12.5%, which were previously in line with consensus expectations at around 9%, taking total revenue to over $4 billion for the current year. Even more encouraging is the forecast for adjusted net income per share which has also increased on the prior quarter estimates. This is now anticipated to climb by 29% to 32%, landing between $3.06 and $3.14. Adjusted EBITDA is also expected to see an impressive rise to between $690 million and $705 million, reflecting a 33% to 36% increase compared to the prior year.

Risks/Competition

With a wide array of companies vying for market share in the home appliance industry, SharkNinja faces off against both well-established household names and innovative newcomers. Its competitors vary in size and scale, from multinational giants like Dyson and Bissell, which have a broad product portfolio and substantial market presence, to newer entrants like Roborock and Anker’s Eufy, which leverage cutting-edge technologies to offer niche products that resonate with tech-savvy consumers.

Competition in this sector typically centers on factors such as product innovation, price, quality, brand recognition, distribution networks, and customer service. Companies aim to offer the most effective and convenient solutions to household problems, often competing on the strength of their technology, such as superior suction capabilities in vacuums or more efficient heating elements in cooking appliances.

SharkNinja has carved out a competitive edge through its commitment to innovation, driven by direct consumer insights and rigorous product testing. The company’s ability to rapidly iterate and refine its product offerings allows it to maintain a fresh and relevant portfolio, which, combined with its strong omnichannel marketing approach, has enabled it to achieve significant market penetration and brand loyalty. Its strategy of non-exclusivity in retail partnerships ensures its products are widely accessible, enhancing its competitive stance.

Conclusion

Despite a competitive landscape, SharkNinja’s direct consumer engagement and agile response to developing products that streamline everyday tasks have solidified its reputation and market presence. As it ventures into new markets and product categories, its growth trajectory looks set to persist, underpinning its continued robust financial outlook.

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The travel industry has seen a seismic shift over the past few decades, with consumers leaning heavily into online platforms to curate personalized, cost-effective, and convenient travel experiences.

Based in India, MakeMyTrip, has become a digital travel juggernaut catering to the burgeoning demands of the modern traveler. Launched in 2000, the company has transformed how people in India and beyond approach trip planning, offering services that encompass flight bookings, hotel reservations, holiday packages, and rail and bus tickets. In addition, it now provides a suite of complementary services including car hire, activities and experiences, and other ancillary travel requirements such as insurance products, foreign currency exchange, and even visa processing.

MakeMyTrip’s technology platforms now allow customers to choose from hundreds of thousands of hotels and properties around the world, leveraging promotional rates offered simultaneously by multiple travel operators in order to meet the requirements of the growing Indian middle-class travel market. The company’s platform caters to a diverse array of users, from solo backpackers to corporate travelers, as tech professionals scout for business accommodations, families plan leisurely vacations, or event managers book large venues for gatherings. MakeMyTrip’s user-friendly interface, coupled with its vast array of choices, makes it a go-to for users from different walks of life, whether they are organizing a quick weekend getaway or a multi-country tour.

From its nascent days as a start-up to its position as a dominant player in the online travel market, MakeMyTrip’s trajectory has been driven by the company’s recognition of a tech-savvy and evolving user base. It continually refines its platform, aiming for a more intuitive user experience and expanded service offerings. Simultaneously, the company is forging ahead with strategic alliances, tapping into newer markets, and leaning into data analytics to better anticipate and cater to user preferences.

Background

MakeMyTrip was founded in 2000 by Deep Kalra and Rajesh Magow. It initially commenced operations with a focus on the non-resident Indian market in the United States, servicing the demand for air tickets. Although online travel bookings were in their infancy in India during the early 2000s, a rapidly growing internet-savvy population presented a lucrative opportunity. Seizing this, MakeMyTrip pivoted its focus to the domestic Indian market in 2005.

Starting with the launch of the Indian MakeMyTrip website, the company targeted Indian leisure and corporate travelers with services and travel products who preferred to make their own arrangements. What started as a flight booking service soon sprawled into a plethora of other travel offerings. By 2008, hotel bookings and rail tickets joined MakeMyTrip’s portfolio, and the company’s user base began to grow exponentially.

Recognizing the versatility of the digital space, MakeMyTrip started introducing other nuanced travel products. Bus bookings, holiday packages, and even cab services became part of the ever-growing product portfolio. Strategic collaborations with hotels, both premium and budget, and integrations with various transport services solidified its position as India’s go-to online travel agency.

In 2010, the company went public, with a debut on the NASDAQ, whilst also beginning its foray into international territories, setting its sights on the Southeast Asian market. Acquisitions soon followed with notable purchases including the likes of Thailand-based ITC Group in 2011 and the UAE’s Holiday Tours & Travel in 2012.

As smartphone penetration surged in India, MakeMyTrip was swift to adapt. Launching its mobile application in the early 2010s, it saw an influx of users preferring the convenience of mobile bookings. This transition led to MakeMyTrip pushing the boundaries even further, offering last-minute hotel bookings and exclusive deals for app users.

2016 was also a transformative year as MakeMyTrip merged with the Ibibo Group, another prominent name in the Indian online travel industry. This strategic move combined the strengths of brands like Goibibo, redBus, and Ryde under the MakeMyTrip umbrella, significantly expanding its user base and consolidating its market position.

By 2021, with the evolving dynamics of the travel industry, especially post-pandemic, MakeMyTrip began integrating AI and machine learning capabilities. These tools provided users with personalized travel recommendations, enhanced customer service experiences, and real-time updates, ensuring that MakeMyTrip was not just a booking platform, but a comprehensive travel companion.

Leadership

Deep Kalra and Rajesh Magow are still with MakeMyTrip, serving as chairman and CEO respectively. In his current role, Kalra is involved in business strategy, policy issues, and inorganic growth opportunities, as well as representing the company in various industry forums and with the government. He is also the co-chair of the Confederation of Indian Industry’s National Committee on Tourism and Hospitality, and the vice chairman of the World Travel and Tourism India Chapter. In addition, he serves on several industry and public service boards. Kalra has also been recognized by Ernst & Young as Entrepreneur of the Year and as the most powerful Digital influencer in India by KPMG.

While Rajesh Magow has played a crucial role in multiple landmark events of MakeMyTrip over the years, including its listing on the NASDAQ and the merger of MakeMyTrip and Ibibo group. Most recently, he played a pivotal role in ensuring the company bounced back from the covid pandemic. He also serves on several industry boards and has received multiple industry awards, including being recognized by The Economic Times Human Capital Awards as the People-Focused CEO of the Year and Bloomberg’s Best CFO Award.

Customer

MakeMyTrip has been a forerunner in transforming the travel domain, creating a suite of products catering to the diverse needs of the modern-day traveler under the MakeMyTrip, Goibibo, and redBus brands, among others.

The platform provides a seamless interface for flight bookings. Be it domestic flights darting across the Indian subcontinent or international escapades, MakeMyTrip offers a wide array of options that cater to the budget traveler, the luxury seeker, and everyone in between. Customers can quickly and easily evaluate a broad range of potential fares and airline combinations through user-friendly websites. While the hotel booking segment presents a spectrum of accommodations, from luxury resorts to budget stays, coupled with alternate accommodations, which include villas, apartments, hostels, homestays, and cottages.

For those seeking more than just flights and accommodations, curated holiday packages encompass flights, hotels, sightseeing, and even meals, providing a holistic travel experience. These packages also include various travel services such as facilitating access to travel and other insurance products from third-party insurers, visa processing, airport transfer, and sightseeing. In addition, a Meetings, Incentives, Conferences and Exhibitions team offers services to organizations and other groups with planning meetings, conferences, weddings, trips, or other events.

For ground travelers, the platform’s bus and cab booking services facilitate easy commutes, both inter- and intra-city. While MakeMyTrip’s rail booking section simplifies the often-complex Indian Railways reservation system, ensuring users can secure their train seats with ease. Most recently, redBus also began offering domestic and international ferry tickets in Malaysia and Singapore.

Breaking into fintech in 2021, the TripMoney platform connects customers in India to various lenders that offer short-term credit lines to travelers. TripMoney acquired a majority interest in Book My Forex, which offers currency exchange, prepaid forex cards, cross-border remittances, as well as other ancillary products to Indians traveling abroad.

Customers can also access real-time updates, reviews, and ratings to make informed choices, along with several tools like travel calculators and itinerary generators. MakeMyTrip’s ease of use, combined with robust features like 24/7 customer support, security, and transparency, has made it a household name for online travel.

Thematic

India is the most populous country in the world, yet it has an under-penetrated market for travel. The propensity and willingness to travel is steadily increasing, fueled by a growing Indian middle class. Furthermore, a growing base of more than half a billion internet and smartphone users, coupled with the country’s rapid drive towards digital adoption by its young population provides MakeMyTrip with significant growth opportunities.

The company’s hotels and packages business generally yields higher margins than its air ticketing business, consequently, MakeMyTrip intends to continue shifting its business mix towards this segment. Building on the acquisition of the Goibibo business, automation and adoption of new technologies are key investments to enable more hotel suppliers to seamlessly connect to the company’s various platforms. The company also intends to grow its package business outside India through strategic partnerships and acquisitions, as well as by strengthening relationships with key aggregators from whom it procures inventory for package products.

Expanding service and product offerings remains an important mechanism of customer acquisition, as well as a means to cross-sell higher-margin services and products. In recent years, the additions of bus and rail tickets, experiences, activities, and ancillary services have vastly enhanced user satisfaction. As a result, MakeMyTrip continues to expand options for alternative accommodation, activities and experiences, and multi-modal transportation offerings across regions.

New overseas markets are of particular focus for MakeMyTrip, particularly those with a significant non-resident Indian population and popular regional destinations that are located within a five-hour flight from India. The company has already made strides developing multilingual content and vernacular search-optimized pages following launches in the UAE and GCC countries, along with progress in Southeast Asia and South America following its acquisitions of the ITC Group and ibibo Group, respectively.

Activity in the GCC has extended to the recent launch of the myPartner B2B2C platform where MakeMyTrip offers both flight and accommodation bookings via partners, which now stand at close to 40,000 and are expanding each quarter. In addition, the company is increasing its focus on gaining a greater share of the corporate travel wallet as new capabilities such as automated integration to multiple HRMS and Expense Management platforms reduce onboarding time for corporates and simplify overall travel and expense management for employees.

Financials

MakeMyTrip has embarked on an impressive recovery from the covid pandemic. The company delivered its highest-ever annual gross bookings which more than doubled to a record $6.6 billion for the full year backed by robust travel demand and an evident uptick in consumer sentiment. This ultimately translated into an impressive 96% increase in total revenue of $560.4 million. The positive trend has continued in FY24 as gross bookings increased a further 80% year-over-year to $1.7 billion for the first quarter, delivering its strongest period ever, coupled with the third consecutive quarter of net profits.

Despite operating in a market fraught with macroeconomic challenges and seasonal fluctuations, profitability expansion was also strong, surging by 203% year-over-year to the highest ever in the company’s history, reaching $70.3 million for FY23. While in the first quarter of FY24, the company reported a profit of $18.6 million, in stark contrast to the loss of $10.0 million in the comparative FY23 period.

Looking ahead, consensus estimates have MakeMyTrip growing sales at a steady 20% to 24% over the next three years, delivering total revenue of $805.1 million for FY24. While analysts are also forecasting for full-year earnings per share to improve significantly from a $0.10 loss per share in 2023, turning around to a $0.60 profit in 2024.

Risks/Competition

The market for travel services and products is highly competitive. MakeMyTrip competes with established and emerging providers of travel services and products, including other online travel agencies such as Easemytrip.com, Airbnb.co.in, Booking.com, Expedia.com, traditional travel agencies, tour operators, travel suppliers and intermediaries that provide travel services. Internet search engines have also launched applications offering travel itineraries in destinations around the world, as meta-search companies can aggregate vast databases of travel search results.

A significant market development is the endeavor of travel suppliers to create direct online demand on their platforms. Airlines, particularly low-cost carriers, have been keen on either minimizing or sidestepping third-party distributors like MakeMyTrip. By directly wooing consumers through loyalty programs or eliminating processing fees, these suppliers challenge online travel agencies’ value propositions.

However, amidst this heavy competition, MakeMyTrip has built robust brand recognition, while its comprehensive service and product offerings, spanning from hotel bookings to full-fledged vacation packages, ensure that customers find a one-stop solution for their travel needs. In addition, the company’s broad distribution network, both online and offline, ensures that it maintains touchpoints with a variety of consumer segments.

Conclusion

MakeMyTrip has decisively transformed the travel landscape in India, rising from its humble beginnings to becoming the premier digital travel platform in the region. Capitalizing on the rapid digital adoption and growing middle class, it offers an all-encompassing range of services. The company’s adeptness in recognizing market shifts and proactively integrating cutting-edge technologies continue to set it apart even in a fiercely competitive domain.

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Artificial intelligence, machine learning, and advanced sensors are revolutionizing the future of transportation. Autonomous driving platforms are combining these technologies to create vehicles capable of self-navigation to ultimately provide safer, more efficient, and sustainable roadways.

Helping to steer this advancement is Mobileye Global, a leader in the development and deployment of advanced driver assistance systems (ADAS) and autonomous driving solutions. The company pioneered ADAS technology more than two decades ago and has continuously expanded the scope and capabilities of its products, while leading the evolution to autonomous driving solutions.

Mobileye’s systems now feature in almost 800 vehicle models, while its system-on-chips have been deployed in over 135 million vehicles. The company is actively working with more than 50 original equipment manufacturers worldwide on the implementation of its ADAS solutions.

With market-leading expertise that is focused on efficiency and scalability, the company is developing advanced sensing and perception capabilities, and high-precision mapping systems, along with a complex safety framework that underpins human-like, computationally efficient, driving policy and decision-making.

These purpose-built software and hardware technologies are designed to give customers a viable, modular, and incremental path toward useful and safe consumer and commercial autonomous vehicle solutions that will deliver the future of ADAS and make autonomous driving a reality.

Background

Mobileye was founded in 1999, by Prof. Amnon Shashua, when he evolved his academic research into a monocular vision system to detect vehicles using only a camera and software algorithms on a processor. At the time, ADAS was in its infancy and the industry was dominated by the belief that expensive radar sensors and more cameras were needed to perform necessary functions.

However, Mobileye’s leadership realized that designing a system-on-chip dedicated to the massive computational loads required was the way to realize key advancements. And based on his pioneering academic research, Shashua proved that critical safety functions such as Automatic Emergency Braking and other perception tasks could be achieved using a single camera.

The ability to combine those revolutionary algorithms with a custom-designed and highly efficient EyeQ SoC mounted on the windshield was a true game changer for the industry, making ADAS relevant for the mass market. From that point on, Mobileye established many industry firsts and pioneered many of the vision-based ADAS functions prevalent today.

Mobileye soon realized that the technology it had been developing made up some of the crucial building blocks needed to develop a fully autonomous car, and began pursuing this in earnest. However, advancing from ADAS to AV did not only require additional sensors and more advanced algorithms, it also required solving the industry-wide challenges of regulating AV safety, creating HD maps for AVs at scale, and driving down the cost of the hardware needed for each vehicle. These are all areas where Mobileye is a leader in the industry by tackling the challenges of scale head-on.

In 2014, Mobileye went public before it was subsequently acquired by Intel for over $15 billion, positioning the company at the forefront of Intel’s push into the autonomous driving sector. Since then, Mobileye’s technology has continued to advance and diversify, and the company has worked to scale its autonomous driving solutions and explore new market opportunities, such as robotaxis.

Leadership

Having led Mobileye through the largest Israeli IPO and acquisition deals ever, Amnon Shashua still serves as president and CEO. His expertise in computer vision and machine learning has seen him publish over 160 papers and hold over 94 patents in the field.

Shashua has cofounded several leading and award-winning companies in the field of AI, including OrCam Technologies, a pioneer in developing personal, AI-driven platforms to provide increased independence for people who are blind, visually or hearing-impaired, or otherwise disabled. He also helped form AI21 Labs, which helps AI systems process language as a human mind would. In addition to his AI-based companies, Shashua founded “One Zero”, the first digital bank in Israel, and the country’s first new bank in 40 years.

Joining Shashua as chief technology officer, Professor Shai Shalev-Shwartz is best known for pioneering research in machine learning and is considering one of the world’s most influential researchers for ground-breaking and unique contributions to computer science and engineering.

Customer

Mobileye’s comprehensive and technologically advanced offerings aim to provide a full suite of products in the autonomous driving and ADAS space. The EyeQ family of SoC devices underpins this suite as the chips are designed to support the functions of computer vision and machine learning, ultimately serving as the brain behind the company’s automotive safety technology.

Key products which include SuperVision, Mobileye Chauffeur, and Mobileye Drive, offer computer vision and camera-based perception at varying levels of autonomy up to and including an eyes-off/hands-off solution that will deliver driving functions without the need for any in-vehicle human intervention.

The company also offers its Road Experience Management (REM) technology, a unique mapping solution that uses crowd-sourced data from equipped vehicles to create real-time, high-definition maps. These maps are an integral part of the company’s autonomous driving technology, providing the necessary environmental context to self-driving systems.

Moreover, Mobileye’s product portfolio also includes an entire suite of ADAS functions such as Forward Collision, Lane Departure, Headway Monitoring, and Pedestrian Collision Warning systems, Speed Limit Indication, and Intelligent High-Beam Control.

The breadth and depth of Mobileye’s offerings have attracted a wide range of customers. Automobile manufacturers make up a significant portion of Mobileye’s client base, integrating the company’s technology into their vehicles to improve safety and move toward autonomous capabilities. This includes leading global automakers such as BMW, Volkswagen, and many others.

Aside from manufacturers, Mobileye also provides solutions for ridesharing companies and fleet operators. These customers utilize Mobileye’s technology to enhance the safety and efficiency of their fleets, with the aim of reducing operating costs and liability.

The company’s technology is also being adopted by municipalities and government bodies. They use Mobileye’s solutions for urban planning and infrastructure development, leveraging the crowd-sourced data from REM technology to gain insights into road conditions and traffic patterns.

Thematic

While ADAS has been central to the advancement of automotive safety and mass adoption of autonomous vehicles is still nascent, Mobileye believes that the future of mobility is fully autonomous, where a human is not actively engaged in driving the vehicle for extended periods.

This future of useful autonomy is not without far-reaching complexity. The ability to drive autonomously not only requires a substantial amount of data to be capable of navigating any environment in any condition at any time, but also a robust technology platform that can withstand the validation and audit process of global regulatory bodies. Moreover, any solution needs to be produced at a cost that makes it viable and scalable.

Consequently, Mobileye is building its technology platform to address these fundamental and significant challenges. In particular, it has designed solutions to operate with several scale-driven elements in mind:
– Its REM crowd-sourced maps allow the map-building and -updating process to be automated
– The cost-optimized EyeQ SoC family is highly scalable and built to be at the core of the company’s full spectrum of current and future ADAS and AV solutions
– Software-defined imaging radars are aiming to reduce hardware costs significantly, facilitating consumer products at scale

In addition, the company has been optimizing a Responsibility-Sensitive Safety framework, which is used by international bodies that are currently developing standards with respect to the safety of AV, and forms the backbone of a human-like, driving policy and decision-making engine.

These developments are paving the way for computer-driven “robotaxis”. Such automated-Mobility-as-a-Service (aMaaS) offerings will require highly accurate road maps that are far more precise than existing GPS-based geolocation technology in order to scale globally.

The acquisition of Moovit has also brought Mobileye’s aMaaS vision closer to fruition. The comprehensive mobility platform allows users to plan and execute their travel using a variety of modes of transportation driven by a massive global user base, proprietary transportation data, global editors community, and strong partnerships with key transit and mobility ecosystem partners.

Looking ahead, Mobileye expects to benefit from regulatory and safety rating changes promoting ADAS solutions. As a result, it plans to capitalize on Cloud-Enhanced Driver Assist features, leveraging significant value through its REM technology. The company will also further enhance and drive the adoption of its Premium Driver Assist product, which provides a comprehensive eyes-on/hands-off ADAS solution.

Mobileye intends to continue to develop and commercialize next-generation active sensors such as software-defined imaging radars, which leverage its AI capabilities. Furthermore, it will utilize its substantial and growing dataset to continuously improve the intelligence and robustness of its solutions.

Financials

Since going public, Mobileye has experienced significant growth, with revenue more than doubling in just the last two years after reaching $1.9 billion in 2022. Largely due to a combination of volume and average selling price growth for its eyes-on/hands-off, SuperVision solution.

This momentum is continuing in 2023 as the company’s pipeline of design win opportunities in 2023 is expected to be higher than the previously estimated record $6.7 billion in projected future revenue by 2030, from design wins achieved in 2022.

Mobileye is also benefitting from improved gross and operating margins year-over-year due to lower amortization of intangible assets as a percentage of revenue. The conversion of revenue growth into gross profit that significantly outpaced year-over-year growth in operating expenses has also been a key driver.

Due to negative impacts in the Chinese electric vehicle market in recent months, Mobileye and analysts have tempered their earnings outlook. Consequently, full-year earnings per share are expected to contract by 19% in 2023, before returning strongly with 30% and 50+% year-over-year growth in 2024 and 2025, respectively.

Risks/Competition

In the ADAS and consumer AV market, Mobileye faces competition primarily from other external providers including Tier 1 automotive suppliers and silicon providers, as well as in-house solutions developed by OEMs. These include an extensive list of renowned names such as Bosch, Continental, Advanced Micro Devices, Qualcomm, Huawei, and NVIDIA, among many others. While automakers include Tesla, Mercedes-Benz, General Motors, and several Chinese EV manufacturers.

In the autonomous driving market, both automakers and technology companies are investing in AV development and robotaxi offerings. AMaaS competitors include Aurora, Cruise, Yandex, and Zoox in the United States and Europe, while Chinese giants include Baidu, Didi Chuxing, and WeRide.

Despite the intense competition, Mobileye holds several competitive advantages. The company’s EyeQ system-on-chip devices are a major differentiator, providing powerful and efficient processing capabilities for computer vision and machine learning. While its REM technology which provides a unique approach to real-time, high-definition mapping, also sets it apart from its competitors.

Conclusion

In the rapidly evolving world of autonomous driving, Mobileye has proved itself a pioneering force as it continues a trajectory of growth and innovation. With a robust suite of products and technologies, it is uniquely positioned to continue leading the charge toward fully automated driving that aims to make roads safer and more efficient.

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As consumers increasingly prioritize health and wellness, the fitness industry has seen a surge in demand for premium and specialized offerings. As a leading player in the industry, Life Time provides a “Healthy Way of Life” through its luxury athletic country clubs that offer comprehensive health, fitness, and wellness programs to a diverse range of customers across the United States and Canada.

Delivering state-of-the-art facilities, equipment, and amenities, ensuring a premium experience for everyone, Life Time’s fitness services include various types of group classes, such as yoga, Pilates, indoor cycling, dance, and strength training, among many others. These classes are designed to accommodate all skill levels and interests, while specialized fitness programs like Dynamic Personal Training and small group training sessions like Alpha, GTX, and Ultra Fit, focus on different goals and training styles, providing a personalized approach to fitness.

Emerging strongly from the dramatic impacts of the covid pandemic, Life Time is aggressively pursuing growth initiatives that focus on elevating member experiences, expanding their center footprint, and increasing revenue per center membership.

With a strong foundation of engaged members, the company is leveraging its brand reputation and understanding of member experiences to expand its portfolio of products and services, as well as explore international opportunities. It is also developing an enhanced digital platform to deliver an omnichannel experience, including live-streaming fitness classes, remote personal training, nutrition support, and curated content.

By expanding its Healthy Way of Life ecosystem, Life Time is aiming to integrate health and wellness into every aspect of its members’ daily lives.

Background

Founded in 1992 by Bahram Akradi, who currently serves as the company’s CEO, Life Time started as a single athletic club in Minnesota, with the vision of providing a comprehensive, luxury health and wellness experience for its members. With an initial focus on delivering state-of-the-art fitness facilities, it soon expanded to include additional amenities, such as swimming pools, racquet sports, and spa services.

Experiencing steady growth over the years and opening new athletic clubs across the U.S., the company has continued to innovate, adding family-friendly offerings like childcare services, kids’ sports, and specialized fitness programs. It also identified the need to support a more holistic approach to health and wellness expanding its product range to address not only physical fitness, but also mental and emotional well-being. While new growth opportunities such as Life Time Work and Life Time Living have further broadened the company’s offerings.

Leadership

From the beginning, Bahram Akradi has led the company with a focus on designing and delivering the company’s country clubs, programs, products, and events from a member point of view.

Prior to launching Life Time, Akradi led U.S. Swim & Fitness Corporation (formerly Nautilus Fitness Center) as co-founder, executive VP, and part owner. USSW was the second-largest health club company in the Minneapolis market when Akradi and his partners sold it to Bally Total Fitness in 1986. After continuing to operate the business as a division of Bally for more than two years, Akradi left the company to develop plans for Life Time, which was launched soon after.

Customer

From state-of-the-art athletic facilities and specialized fitness programs to wellness services promoting a holistic and balanced approach to healthy living, Life Time offers a diverse range of products and services designed to cater to the health, fitness, and wellness needs of its customers. As a result, its customer base ranges from individuals seeking a premium-quality fitness experience to families looking for a comprehensive and convenient wellness destination, along with professional athletes, fitness enthusiasts, and individuals looking for a supportive community to help them achieve their health and wellness goals.

The brand’s athletic country clubs are designed to provide members with a luxurious and comprehensive experience with cutting-edge fitness equipment, spacious workout areas, indoor and outdoor pools, racquet sports courts, and various group fitness studios. Members can engage in a wide range of activities, from traditional gym workouts to group classes such as yoga, Pilates, and indoor cycling. Additionally, specialized training programs like Alpha, GTX, and Ultra Fit are available for those seeking a more structured and intensive fitness experience.

To cater to families, Life Time has developed numerous family-friendly amenities, including childcare services, kids’ sports programs, and age-appropriate fitness classes. The company also introduced the ARORA community, designed specifically for members aged 55 and older, ensuring that customers of all ages and fitness levels can find suitable activities and programs.

Recognizing the importance of a holistic approach to health, Life Time expanded its offerings to include nutrition coaching, weight loss programs, and stress management support, to help members achieve a balanced lifestyle.

Complementing its core services, Life Time Work provides premium co-working spaces integrated with their athletic country clubs, catering to professionals seeking a healthier work environment. While Life Time Living offers luxury wellness-oriented residences located close to their athletic clubs, appealing to individuals seeking a convenient and integrated healthy lifestyle.

The company’s services are designed to be flexible and adaptable. Customers can choose from a variety of membership options, ranging from basic access to more comprehensive plans that include additional services and amenities, ensuring that products and services can be tailored to the specific needs and preferences of each customer.

While recurring membership dues and enrollment fees represent approximately 70% of Life Time’s revenue, around 30% consists of in-center revenue which includes Dynamic Personal Training, LifeCafe, LifeSpa, Life Time Swim, and Life Time Kids, among other services.

Thematic

Life Time is striving to create an integrated “Healthy Way of Life” ecosystem, encompassing various aspects of its members’ lives. While the company has built a strong foundation with an engaged membership base, it is now executing on several offensive strategies to broaden its service offerings, grow its membership base, increase revenue per member, and expand its footprint.

Central to this is the enhancement of member experiences through new and improved in-center services, memberships, concierge-type services, and omnichannel offerings. In particular, a shift from a sales-driven culture to delivering a concierge-type experience to members is enhancing how the company interacts with prospective and existing members.

New membership offerings, including a signature membership that offers unlimited small group training and priority registrations, are driving broader appeal, higher sign-up numbers, and longer member retention. While strategic initiatives such as pickleball, Dynamic Personal Training, small group training, and the company’s ARORA community are driving significant increases in unique participants and total sessions.

To strengthen its omnichannel platform, Life Time is investing in its digital capabilities, including an integrated digital app that allows members to engage with the brand anytime and anywhere. With this holistic approach to integrating health and wellness into every aspect of members’ lives, the company is aiming to position itself to capitalize on the growing demand for proactive health and wellness solutions.

Life Time’s growth has also been fueled by a flexible real estate strategy, focusing on leasing properties instead of owning them. This approach has enabled the company to enter attractive urban and coastal markets with premium centers, where the cost of real estate had previously been a deterrent. Consequently, it is expanding the number of its centers using the asset-light model that targets higher income members, higher average annual revenue per center membership, and higher returns on invested capital.

The company believes there are significant whitespace opportunities for premium athletic country clubs across the U.S. and Canada, as well as internationally. Over the last five-plus years, it has expanded its footprint on the East and West coasts and increased its presence in premium, urban and coastal areas such as Boston, Chicago, New York City, Florida, and California. Life Time has progressively opened more and more centers in recent years, including ten in 2022, and it plans to open a further 18 to 20 new centers over the next two years in increasingly affluent areas.

Financials

Life Time’s financial profile is distinguished by a long-term track record of consistent revenue growth prior to the COVID-19 pandemic. And now as it emerges from the dramatic impacts of lockdowns and closures, the growth of new centers in attractive markets and a high percentage of predictable recurring membership revenue are providing a compelling backdrop.

Closing out 2022 with $1.82 million in total revenue for the full year, the company exceeded 2021 by more than $504 million for more than 38% growth year-on-year, as strong growth in membership dues and in-center revenues was driven by a new higher pricing strategy coming out of the pandemic, as well as the opening of new centers during the year. That trajectory continued in the first quarter of 2023, with revenue increasing by more than 30% to $510.9 million from $392.3 million in the same period last year.

In addition to achieving continued sequential revenue uplifts, the company’s strategic initiatives are delivering profit and margin improvements, as new clubs with faster ramping, in desirable locations are driving momentum. While adjusted EBITDA saw a significant increase of 195.8%, reaching $120.1 million from $40.6 million in the first quarter of 2022. Net income also improved, reaching $27.5 million, compared to a net loss of $38.0 million in 2022.

Looking ahead, Life Time has provided full-year guidance for 2023 with revenue estimated between $2.2 billion to $2.3 billion in line with consensus expectations and representing year-on-year growth of 23%. Analysts are also expecting earnings per share to continue its upwards trajectory, increasing to $0.42 per share, up from a loss of $0.21 in 2022.

Risks/Competition

The health, fitness, and wellness industry is particularly competitive and fragmented, with diverse participants offering a range of services and products. Primary competitors include health center operators such as Equinox, The Bay Club Company, ClubCorp, LA Fitness International, and 24-Hour Fitness Worldwide. While small fitness clubs, studios, and boutique fitness offerings include the likes of Anytime Fitness, Snap Fitness, Planet Fitness, Orange Theory, Barre3, and Crunch Fitness, among others. Additionally, non-profit organizations or community centers like the YMCA, as well as physical fitness and recreational facilities established by local governments and also businesses, provide customers with a wealth of options.

Yet for those seeking a comprehensive and high-quality experience, Life Time distinguishes itself with a wide range of services and amenities under one roof, along with an all-inclusive approach that also allows customers to enjoy a holistic wellness experience, that is supported by the latest technology, equipment, and services to stay ahead of emerging trends.

Conclusion

Life Time has successfully positioned itself as a leader in the health, fitness, and wellness industry, offering a comprehensive and luxurious experience to its diverse customer base. With its strong foundation, innovative strategies, and focus on delivering exceptional member experiences, it appears well-prepared to capitalize on the growing demand for premium and specialized fitness offerings.

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Education can open a world of opportunities, yet it remains a key factor in equality. The privileged can receive the best in the world, while others cannot even access basic schooling. Democratizing learning is at the heart of Duolingo’s mission. And for the first time in history, technology in the hands of billions of people is making learning accessible and effective like never before.

Building products that are native to smartphones, Duolingo creates bite-sized, on-demand, and engaging ways for users to learn new languages through gamified lessons and exercises. The platform covers an extensive range of languages, from widely spoken ones such as English, Spanish, and French, to lesser-known ones like Navajo, Esperanto, and even High Valyrian. Serving a diverse user base, Duolingo’s customers include students, professionals, travelers, and language enthusiasts from various backgrounds and geographies, the platform has attracted over half a billion users from all around the globe.

While smartphones were a seminal change that allowed Duolingo to become what it is today, the company now believes that artificial intelligence will drive the next wave of innovation. Having invested in AI for the last decade to power its learning app and testing capabilities, the technology is now advancing to a level that Duolingo believes is within striking distance of its vision to teach as well as a human tutor.

Currently in a stage of rapid growth, Duolingo is consistently expanding its offerings to further accelerate this success. As a result, the company continues to focus on core strategies which include expanding and refining its language catalog, enhancing the user experience, and ultimately increasing its market presence.

Background

Duolingo was founded in 2011 by Carnegie Mellon University professor, Luis von Ahn, and his post-graduate student, Severin Hacker, who were inspired to create a free and effective language learning platform. With initial support from von Ahn’s MacArthur fellowship and a National Science Foundation grant, the company’s first revenue stream began with a crowdsourced translation service, however, this has been replaced by subscription, advertising, and other certification program revenue.

In its early years, Duolingo was primarily a web-based application offering a limited set of languages. However, as user demand grew, the company started expanding its language offerings and launched mobile apps for iOS and Android. This move led to an explosion in user growth, as millions of people around the world could now access Duolingo’s language courses on their smartphones.

New features such as supplementary learning materials, podcasts, and proficiency exams that are officially accepted by universities around the world further bolstered Duolingo’s offerings.

The company went public in 2021, raising $521 million and further solidifying its position as a leading language learning platform.

Leadership

Duolingo continues to be led by co-founder and now chief executive officer, Luis von Ahn. An esteemed computer scientist and entrepreneur, von Ahn is also known for inventing CAPTCHA and reCAPTCHA, the latter of which was acquired by Google in 2009. As a professor at Carnegie Mellon, von Ahn has been recognized with numerous awards, such as the MacArthur, Sloan, and the Packard Fellowships. Under his leadership, Duolingo has experienced tremendous growth, expanding its product offerings and user base while maintaining its commitment to accessible education.

Alongside von Ahn is fellow co-founder and now chief technology officer, Severin Hacker, who has played a crucial role in developing Duolingo’s innovative technology. Hacker holds a Ph.D. in computer science from Carnegie Mellon, where he focused on machine learning and natural language processing. As CTO, Hacker oversees all technical aspects of Duolingo, ensuring that the platform remains cutting-edge and user-friendly.

Customer

Duolingo’s language learning platform offers a comprehensive suite of products catering to the diverse needs of its users. Through its innovative and engaging approach, the platform not only helps users acquire new language skills, but also enhances communication and cultural understanding.

The language learning app provides gamified lessons covering speaking, listening, reading, and writing skills, offering courses in over 40 languages to more than 60 million monthly active users. While all course content on Duolingo can be accessed for free, the company’s subscription offering, Super Duolingo, offers learners additional features to enhance their learning experience.

To supplement the main language courses, Duolingo Stories were introduced, a feature that offers immersive, contextual reading and listening exercises. Users can explore a series of short stories in their target language, helping them improve their comprehension skills while gaining cultural insights. Stories is particularly popular among intermediate and advanced learners seeking to enhance their language proficiency beyond the basics.

Expanding into the audio realm, Duolingo launched its podcast series, starting with Spanish in 2017 and French in 2019. These podcasts provide learners with real-life stories and conversations, catering to those looking to improve their listening skills and gain exposure to authentic language usage. The podcasts have garnered a loyal following of users who incorporate them into their daily routines.

Recognizing the demand for accessible and affordable English proficiency testing, the Duolingo English Test (DET) was introduced in 2017. As an alternative to traditional language exams like the TOEFL and IELTS, the DET offers a user-friendly and cost-effective solution for students and professionals needing to demonstrate their English proficiency for academic or work purposes. The test can be taken online at any time and is accepted by numerous educational institutions and organizations worldwide.

In 2020, Duolingo ventured into early education with the release of Duolingo ABC, an app designed to teach children aged 3 to 6 how to read and write in English. Through engaging, interactive lessons, Duolingo ABC fosters a love for reading and writing in young learners, making it an attractive tool for parents and educators alike. While last year, Duolingo Math added a free app where students can focus on elementary math covering classroom topics, or adults can focus on brain training, which strengthens mental math skills.

Duolingo’s diverse product offerings have attracted a wide range of customers from various backgrounds and geographies. Students use the platform to supplement their language classes or prepare for studying abroad, while professionals utilize it to enhance their communication skills in the workplace or expand their career opportunities. Travelers and language enthusiasts also benefit from Duolingo, as it helps them connect with people from different cultures and navigate foreign environments with ease.

Thematic

Duolingo’s commitment to providing a high-quality free product, coupled with a data-driven approach to improving user engagement has facilitated impressive organic growth of over 90% over the years. Its freemium business model has led to a vast user base that has generated more data on how people learn languages than any other entity, creating a virtuous cycle for effectiveness and engagement, in which the product continually improves as more data is gathered.

Looking ahead, in addition to the thousands of tests Duolingo normally runs to improve its products, it is now particularly focused on two emerging opportunities – generative artificial intelligence and English language learners.

Working closely with OpenAI has enabled the development of Duolingo Max, a higher subscription tier above Super Duolingo, featuring advanced AI features like Explain My Answer and Roleplay. Explain My Answer will provide in-depth explanations, generated by AI, to help learners understand their mistakes in a Duolingo lesson. While Roleplay will give learners a chance to chat with Duolingo characters in order to help build critical conversation skills. These features aim to bring the user experience closer to that of a human tutor while maintaining the platform’s engaging and fun nature.

The company has also recognized the importance of catering to English language learners. The vast majority, nearly 90%, of language learners in the world are learning English, while only about 45% of Duolingo users are doing so. The company sees a clear opportunity to expand its presence in the English-learning market and drive international monetization by broadening English learning course offerings. Consequently, Duolingo is aiming to better serve advanced learners and unlock incremental user and bookings growth. By embracing AI and other unique teaching methods, it is also creating scalable intermediate content to reach a broader range of English learners.

Financials

Since going public, Duolingo has continued its strong trajectory of rapid growth, ending the 2022 year outperforming the company’s expectations and setting new records for active users and bookings. Marking its sixth quarter in a row for accelerating user growth, daily active users increased 62% to 16.3 million, while monthly active users increased 43% to 60.7 million, compared to the prior year. The company also added a record number of paid Super Duolingo subscribers, which totaled 4.2 million at the end of the year, an increase of 67% compared to 2021.

Total bookings, which represent the amounts Duolingo receives from a purchase of a subscription to Super Duolingo, Duolingo English Tests, in-app purchases, and from advertising, and which the company believes provides the most accurate indication of trends in operating results, surged to $428.6 million, up 46% on 2021.

While heavy investment in R&D over the years has kept Duolingo running at a loss, which totaled $59.6 million in 2022, essentially flat on 2021, the company expenses nearly all R&D spend as it is incurred. Consequently, it is beginning to see operating leverage as the improvements from these investments continue to provide value for many years.

Looking ahead, Duolingo has noted that the infrastructure it has built to drive innovation and operating efficiency is poised to help deliver higher incremental profits in 2023 and beyond. Management is forecasting to close out FY23 with total revenue of $530 million to $542 million, representing year-over-year growth of almost 45%, albeit more enthusiastic than consensus expectations at 34% growth year-on-year. Analysts are also expecting strong upswings in full-year losses per share coming in at $0.87 and $0.28, representing improvements of 43% and 38% for FY23 and FY24 respectively.

Risks/Competition

Duolingo faces competition from a diverse range of companies, from well-established players to emerging start-ups such as Rosetta Stone, Babbel, Memrise, and Busuu, among others. These companies offer various language learning solutions, targeting different user segments and learning approaches, while the number of languages offered, learning methodologies, pricing, and additional resources provided are key factors for users.

A major competitive advantage for Duolingo however, is its freemium model allows users to access a significant portion of the platform’s content without charge, making it an attractive option for budget-conscious learners. This approach has allowed Duolingo to amass a large and diverse user base, as well as generate valuable data to refine and improve the platform. The company’s efforts to leverage artificial intelligence and machine learning are also enabling the company to develop adaptive learning algorithms that provide personalized and superior learning experiences for users.

Conclusion

Duolingo’s commitment to democratizing language learning, innovative use of AI, and expanding product offerings have made it a leading force in accessible and effective language learning. And with over half a billion users worldwide, its still-growing user base that is generating invaluable data to drive continuous improvement and personalization are further strengthening this position in the market.

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