Q1 2026 Earnings Call Transcript

Good evening everyone and welcome to Duolingo, Inc.'s first quarter 2026 earnings webcast. Today, after market close, we released this quarter's shareholder letter, a copy of which you can find on our IR website at investors.duolingo.com. On today's call, we have Luis von Ahn, our cofounder and CEO, and Gilian Munson, our CFO. They will begin with prepared remarks before we open the call for questions.

Analysts may ask a question by using the raise hand feature. Please note this call is being recorded and all participants are currently in listen-only mode. Before we begin, please note we will make some forward-looking statements regarding future events and financial performance. These statements are subject to risks and uncertainties described in our SEC filings and are based on our assumptions we believe to be reasonable as of today.

We undertake no obligations to update them. We will also discuss both GAAP and non-GAAP financial measures. Reconciliations between the two can be found in our earnings materials, and we encourage you to review them when evaluating our performance. I will now turn it over to Luis.

Thanks, Debbie.

And thank you all for joining. Q1 was about execution. We said we were going to prioritize teaching better and changes in growing users, and that is exactly what we did. DAUs grew 21% year-over-year, right in line with what we expected as we make this strategic shift.

I want to spend a few minutes on what we shipped this quarter related to language learning, because teaching better is the foundation of everything we are building toward. Speaking practice has historically been the hardest thing to do well on a mobile app. This quarter, we made it a bigger part of the experience for free users and paid subscribers. We introduced spoken tokens, which let learners speak their answers to almost any exercise.

We started rolling out speaking adventures, which put learners in real-world conversational scenarios. And we launched flashcards, which help learners build fast recall by saying words aloud. And for our paid subscribers, video call keeps getting better. Over the past year, we have more than doubled the average number of words spoken per user in that feature.

We also reached a major milestone on content. We now offer courses up to professional proficiency, which is B2 on the CEFR scale, across our nine most learned languages. And we got there fast. In Q1 alone, we published 20.5 thousand course units.

To put that in context, that is more than 10 times what we were shipping per quarter just two years ago. AI has fundamentally changed what is possible for us, and I believe we are just scratching the surface. The product is better than it has ever been, and I could not be more excited about what is ahead. I will now turn it over to Gilian.

Thank you, Luis. Q1 was a solid quarter. We achieved double-digit growth in both bookings and revenue, expanded gross margin, and delivered adjusted EBITDA of $83 million, which is about 29% of our revenue. As you consider 2026, it is worth reiterating how we are thinking about the year.

We are investing deliberately to set us up to be a larger, more durable, long-term business. This means that for this year, we are managing the business towards the targets that we shared on the fourth quarter call. Specifically, 10% to 12% bookings growth, 15% to 18% revenue growth, and an adjusted EBITDA margin of about 25%. To help with your modeling, we have provided point estimates for full-year 2026, consistent with those ranges: bookings growth of roughly 10.5%, revenue growth of roughly 16.1%, and an adjusted EBITDA margin of 25.7%.

A few things we want to make sure are on your radar as you build out your models. On bookings, our expected Q2 bookings growth of about 6% reflects a tough comp. The prior-year quarter included the initial rollout of Energy, a price increase on our most popular subscription plan, and exceptional advertising performance. We expect about 17% growth in Q2 for revenue, after which we expect growth to step down in Q3 before stabilizing in Q4. We do expect bookings growth to accelerate through the second half with about three points of acceleration in Q3 and a further rise in Q4. For gross margin, we expect it to be approximately 71% in Q2, after which it will trend down to roughly 69% by the end of the year as AI-powered feature use in our products expands.

Adjusted EBITDA margin in Q2 should be roughly 24%. We expect Q3 adjusted EBITDA margin to be flat to slightly down from Q2 before approaching 27% in Q4. The overall message is that 2026 is a key strategic investment year for us, and it is playing out as we expected so far, as demonstrated by the point estimates for our financials that we have shared. We enter Q2 with over $1 billion in cash, no debt, and expect to generate over $350 million in free cash flow this year. We plan to continue executing on our buyback authorization under which repurchases to date are 514 thousand shares, or about 1% of our fully diluted shares outstanding. 2026 is a big year for Duolingo, Inc., and I am very excited about what we are building.

I will now turn it back to the operator, and we can take your questions.

We will now begin the question and answer session. If you would like to ask a question, please use the raise hand bar, which can be found at the bottom of your screen. You may remove yourself from the queue at any time by lowering your hand. When it is your turn, you will receive a message on your screen asking to be promoted to a panelist.

Please accept and wait a moment. Once you have been promoted, you will hear your name called, and you may unmute your video and audio and ask your question. Your Zoom application may disappear momentarily. This is expected, and your window will reappear.

We are allowing analysts one relevant follow-up to their main question. We will now pause a moment to allow the team to gather and assemble the queue. Alright. We are waiting one moment for Wyatt Swanson with DA Davidson to accept.

Wyatt, please turn on your video and audio and ask your question.

Thanks for the question. Appreciate it. Could you talk to some of the different drivers of DAU growth this quarter and maybe entering Q2? Whether it is performance marketing, word-of-mouth maybe starting to return, or something else? And could you also talk to what regions you are seeing any particular strength or weakness?

Thanks for the question. DAU growth is very important to us; this is the most important thing we are trying to do this year. We are growing in every single region, as we have been for several years, but some regions are growing faster than others. Asia in particular is the fastest-growing region.

In terms of growth drivers, they remain pretty similar. Word-of-mouth has historically been the main growth driver for us. Most of our users come to Duolingo, Inc. through word-of-mouth. We have some amount of marketing, some amount of performance marketing that we are doing.

We have increased that budget a little bit, but it is not massive compared to other apps our size. Historically, another place where DAU increases is just improvements in retention. That is the work of making the product stickier. That has gone really well.

We have been making a lot of changes to the product, some small, some larger, that make retention higher. The way you would see that is an increase in our DAU-to-MAU ratio, which keeps increasing pretty much every quarter, and it increased again this quarter.

Perfect. Thanks. And then one quick follow-up. Can you provide some color on how you expect DAU growth to look in Q2 and whether 20% is still the right way to think about DAU growth through 2026?

Everything we said in the last call remains. We expect that it is going to stay at around 20% throughout the year. There will be slight ups and downs depending on comps, but it is around 20% for the rest of the year. Nothing has changed from the last time we spoke.

Your next question will come from Ross Sandler with Barclays. We are waiting for a moment for him to accept. Ross, please turn on your audio and video and ask your question.

Luis, you had mentioned a couple interesting things 90 days back as part of the plan this year. One was to revitalize some of the engagement in the free tier, that top 20% of the free tier. Curious to hear any update on that effort. Then you also mentioned getting inspiration from some of the big mobile gaming companies in terms of new things you could potentially bring into Duolingo.

Curious to hear what you have learned and any new strategies on that front. Thanks.

Thanks for the question. In terms of the free tier, we have done a few things. We made it so that the free tier is better than it was two months ago. These changes take time—it has only been two months since the last earnings call—so it is not like we have done a thousand changes, but there are more things available to free users, and we are very happy with that.

We think over time that will increase word-of-mouth. In terms of getting inspiration from mobile games, we have always gotten a lot of inspiration from mobile games. Ultimately we are trying to make something as good at teaching as a one-on-one human tutor but also as fun as a mobile game. If you look over the last quarter, very soon you will see really cool avatar costumes—that is directly coming from mobile games; users are going to love that.

We are making changes in how we show rewards to users; for example, showing them as cards now, which feels really collectible. Another thing important for the free tier: we want monetization tactics that are not at odds with the free tier. We found some really good ones this quarter. One is longer free trials.

Historically Duolingo, Inc. has given a seven-day free trial. We are finding that giving longer free trials is really good. It increases bookings, and it is good for the user. For example, a one-month free trial feels great to them.

We are pretty happy with that.

Our next question will come from Andrew Boone with Citizens JMP. Please unmute your audio and video and ask your question.

Thanks so much for taking the questions. I would love to talk about MAU growth and top of funnel at large. Help us understand the deceleration there—understood the comp and everything from last year—but how do we think about what has been the deceleration and whether that needs to accelerate to support DAU growth?

It is not just one team looking at that. Related to MAU growth is top of funnel, and that we do work on. The reality is that top of funnel has been about flat for this quarter, and we would like to accelerate it. We are working on that.

There is a lot with marketing that I think will be really good, particularly in underpenetrated regions. That is one thing. The other is making changes to the product to teach better and be better for free users. That should accelerate word-of-mouth.

Historically, the main driver of top of funnel has been word-of-mouth. Word-of-mouth is beautiful because it is free, but we do not have that much control over it in the way we can measure retention. So we are doing things we think will be really good for word-of-mouth, but we do not have the same granularity of control.

And then, Luis, just a strategic question in terms of keeping users on platform. You have always focused on fun. It seems there is a change as we think about more of a voice-front experience. Talk about keeping the entertainment value and what has to change as you move toward more of a voice-like experience. Thank you.

I understand why you might perceive a change, but internally there is no change in terms of fun. We are huge believers that the hardest thing about learning something by yourself is staying motivated. That is the secret sauce of Duolingo, Inc. What has gotten us so far is that we know we have to motivate our users.

People may say they want to learn something, but ultimately they will do what is most fun. So we spend a lot of effort making it fun. We think making voice and speaking more prominent does not decrease fun. Our metrics suggest it does not; it can be a pretty fun experience.

Humans are very visual creatures, so you will continue to see beautiful animations and game-like elements even with voice in there. Our teams dedicated to making the app more fun are really firing on all cylinders. You will see a bunch of stuff in the next couple of days. For example, avatar costumes—I am dressed up as a hot dog, and I love it.

Your next question will come from Eric Sheridan with Goldman. Please unmute your audio and video and ask your question.

Hi, great to see everybody. Thanks so much for taking the questions. Maybe a two-parter. Luis, for you, what have been the key lessons so far in terms of scaling AI, both in terms of the user experience as well as the scale of content for the platform over the last couple of months?

And, Gilian, as AI scales on both sides of that equation, how should we think about what that means for margins longer term? Thanks to both.

Great question. We are very excited about AI. At the highest level, we are trying to make something as good at teaching as a one-on-one human tutor and as fun as a mobile game. For the teaching part, AI is what will get us there.

For example, our video call feature that practices conversation has gotten significantly better over the last year. The conversations are more fluid, and users are saying about twice as many words on average as they were a year ago. Similarly, content: the amount of learning content we put out in the last quarter dwarfed everything we have ever done. We put out 20.5 thousand units of content in one quarter—about what we put out in the entire year last year.

And last year we were already using AI. We are just getting better at using it. We are also working on models picking what exercise to give each user, with significantly more personalization—exactly what a one-on-one human tutor does.

From a cost perspective, there are two things to think about. One, the adoption of AI in customer-facing features. You see our gross margin guidance has us landing at about 69% in the fourth quarter, and that assumes we are going to put a lot more of that ingredient in our product. Two, our operating expenses: we have started to see some pretty big increases in AI costs internally, and our guidance reflects that.

But there are always waves of efficiency that come with AI. You might have AI costs come up, and then the team optimizes, and then you move forward. In Q1, gross margin was better than we would have expected and pretty good year-over-year, even with a lot of new AI content, because on a per-unit basis the costs have come down a lot. It goes in waves: costs come down, we adopt more, and we manage that.

As you think about overall margins, expect us to be in that 69% range on gross margin, and we will manage operating expenses accordingly.

Your next question will come from Bryan Smilek with JPMorgan. Your line is open. Unmute your audio and video and ask your question.

Great, thanks for taking the questions. Luis, going back to last earnings as well—great to see voice being infused across the ecosystem. Can you discuss the affiliated impact on Max overall? Are you seeing Max subscribers cross back down to Super? How should we think about the product go-to-market for Max now that AI is becoming more available across the broader ecosystem?

Thanks for that question because it helps us clarify. What we said last time was that we wanted to add video call to our medium tier, Super Duolingo. It is important for us to do that because video call is such a good feature in terms of teaching, and we want significantly more people to have access to it. We started doing that.

At the moment, we have a number of experiments giving video call to Super subscribers, particularly new Super subscribers. We have not scaled this to all our existing user base. So at the moment, there is no change for Max. There are a lot of possibilities for what Max could be.

We could lower the price of Max, or give Max subscribers unlimited video call versus not unlimited for Super. There are a number of options, but it has only been two months since we last spoke, so we have not run all the experiments. In terms of metrics we are not seeing a big difference, except that a cohort of new users is not even seeing Max—they are only seeing Super—and that is one of many experiments.

Thank you. That is helpful. And for Gilian, looking at the guidance—understand the tougher comp on bookings into Q2—can you help me think about the puts and takes that drive back-half reacceleration? You mentioned about 20% DAU growth with ebbs and flows each quarter. Would that back-half guidance imply that DAUs would improve from early benefits from these product initiatives?

As you look at the second-half guidance, in general we are planning the business based on that 20% DAU growth basis. You may see some early returns on the investments we are making, but I would not bank on a lot of that. We are taking the long view this year and want to allow ourselves to operate in the range of bookings guidance we gave so we can make all the investments we want and do what we think is right for customers. Q2 is a really tough comp because of the release of Energy in particular and a handful of other features that made bookings a year ago really strong.

You will see us bounce back from that comp, and then you will continue to see DAU numbers drive bookings.

Your next question will come from Nathan Feather with Morgan Stanley. Please unmute your audio and video and ask your question.

Thanks for taking the question. The rapid increase in your ability to do content generation is really interesting. Now that you have a full course set across language learning, at least across most common languages, are you starting to A/B test new content for different engagement? Historically, have you seen an increase in retention, pay rates, etc. with higher quality content?

And looking further, how does that impact your thought on expanding into additional subjects beyond language learning now that the cost to entry is lower?

Thanks, Nathan. Yes, one exciting thing is we have been working for years to have the top nine languages reach Duolingo score 129, which we now have. Internally someone said, “That is just the beginning.” Now that we have all this content, we are in a much better spot to make it significantly better based on how users perform. We are starting to do that.

We have seen that changes in content quality and the type of content shown have meaningful impacts on retention, particularly new-user retention. We are running many experiments; for example, what we teach in the first unit matters a lot. Do we teach greetings, or words like “mom” and “dad”? It is not as simple as “always teach greetings.” These choices impact retention.

We are also likely to move to generating content just for you based on everything we know—maybe not the immediate next exercise, but two exercises from now we might generate a sentence just for you. We are getting to that point, which is very exciting. In terms of other subjects, each has unique challenges. AI is helping us add new subjects faster—chess is a great example; we added it in about nine months.

But each subject has its own content needs. Adding math is relatively easy if you want a wall of text like ChatGPT, but if you want diagrams and user interaction, that is harder. AI makes it easier, but it is still not trivial. We are happy with the subjects we have and are very excited about Math.

You saw we started this call with a video for Math. We have reached a point where our math course covers pretty much all content between grades two and twelve and can actually explain things when you get them wrong. We are very excited about that.

Great. That is helpful. And thinking about the balance sheet—you have a lot of cash and high free cash flow. What are your thoughts on the right level of buybacks, and what are some central uses of that cash going forward?

As we look at the cash, you saw we returned some level of cash back to shareholders via a buyback in the quarter. We have a $400 million authorization, so we are willing to spend that money. In general, we are focused on operating the business, so we are investing in the business as well. It will be a balance of the two.

On a buyback, you buy more when the stock is lower and less when it is higher. We will look at where the stock is; we think it is a great time to buy our stock. It is a great way to offset dilution from the last couple of years. With our free cash flow estimates, we are going to generate almost as much cash as that buyback anyway this year.

On capital allocation, of course there is M&A. We are out there always looking, but as you have seen, a lot of what we have done is fairly small in nature—not a big deal that hits the balance sheet hard. Duolingo, Inc. is very focused on growing Duolingo, investing in Duolingo, and going from there.

GameStop wants to buy eBay. We may want to do that too. I am kidding.

Your next question will come from Ryan MacDonald with Needham. Please unmute your audio and video and ask your question.

I am going to leave that last comment alone a little bit. We are not buying eBay, just so you know.

Maybe we can talk about the announcement in late April about advanced content being available across all the top subjects. From a marketing perspective, how big of an unlock is that in terms of deploying incremental performance marketing budget now that you have all the content available? How should we think about how that may help replenish the top of the funnel through the back half of the year and into next year?

In performance marketing, this matters most for English learners. English learners are most interested in more advanced content. Some of the main places we are using performance marketing are underpenetrated markets, particularly in Asia. In a number of large Asian markets we can do profitable performance marketing.

Historically, because our free version is so good, it has not been easy for us to do profitable performance marketing—people we acquire are super happy as free users. But we are finding we can do that in some places; for example, in China we are able to acquire profitably, and these are English learners. I would say the main thing is we have historically underinvested in performance marketing, and we are getting a lot more professional about it this year. You will see the benefits in the next few months.

We are building the infrastructure for the right attribution to users and the right place after you acquire them—things a company our size should have built years ago, but we kind of ignored it. We are pretty excited about that.

And as you are testing video call in Super Duolingo for a cohort of net-new paid subs, what are you seeing thus far in terms of elasticity on pricing and the potential demand to pay incrementally for that feature at the Super level? And, Gilian, how is that informing your view on gross margin profile as we move forward?

We are running tests on what the right price should be for Super with video call. I cannot tell you all the results yet. We started this work a couple of months ago, and it takes time to build and run A/B tests and get results. What I can tell you is that people are willing to pay more for Super with video call. How much more, I will be able to tell you in a quarter or two.

One of the reasons we have been focusing everyone on operating within ranges of financials is to allow ourselves to do this kind of work—testing different ways of approaching the customer on price. All of that is anticipated in the guidance around the ranges we want in 2026. In any given quarter, it might be a little more or less, but we anticipated that coming into the year and are executing against it. No big surprises, and the financials we have laid out for 2026 can accommodate that.

Moving forward, we are allowing analysts one relevant follow-up in order to get through the queue. Thank you. Your next question will come from Ralph Schackart with William Blair. Please unmute your audio and video and ask your question.

Hopefully this is relevant. Luis, historically you have a bit of a paradox: you over-monetized historically, and now maybe we are in a duration where you are under-monetizing the user base. Stepping back, what signals are you looking at today that inform you you are on the right path? And more broadly, when would be the right time to start monetizing again?

It is only been a couple months since the last call, but would love to hear your thoughts.

Great question. We are at the same time under-monetized and over-monetized. Roughly 12% of our monthly active users are paying subscribers. We think that number should be much higher.

If you look at other freemium models, they are much higher—Spotify is close to 50%. At the same time, certain types of monetization we probably overdid, making the free user experience have too much friction. Many monetization tactics were at odds with DAU growth—more friction drives some people to subscribe, which is good, but some people leave. What we need to do, and what we are doing, is finding ways to monetize that do not put DAU growth at odds with monetization.

Those ways exist. I mentioned longer free trials. We have not experimented much with trial length historically. Other scaled subscription businesses often have one-month or even three-month free trials.

You will see us experiment with that. We are seeing that one-month trials increase revenue and are not at odds with DAUs. Saying “one month free” does not drive users away. The work we are doing is finding ways to monetize that are not at odds with DAU growth.

They exist; they are just not as quick as adding friction to the free user experience. This year is for experimenting. We will probably experiment with a three-month free trial. That is something we could not have done without operating with the guidelines we set for this year, because a three-month trial delays bookings by a whole quarter.

This operating approach gives us room to do that.

Your next question will come from Mark Mahaney with Evercore. Please unmute your audio and video and ask your question.

Thanks. I want to ask about gross margins. Your guidance implies they are going to phase down to the high 60s in the fourth quarter. Is there a reason to think margins hold at that level? Is there a reason to think they should recover higher? How should we think about the trajectory after this year?

When we think about margins that have AI content in them—take gross margin—you tend to find that as you introduce features, they might be more expensive at first, and then we optimize costs over time. In Q1, margin held up nicely versus the year before because per-unit AI costs came down a lot. As we look forward, we want to put more and more AI as an ingredient in the product. That is why we have margin guidance down to 69%, which is essentially where we were last quarter too.

That implies a lot more AI content, which we think is great long term. It is possible we could optimize more, but we want to be putting that much AI in the product. I think 69% is a good place to think of us exiting the year. This is a changing environment, and some optimizations come faster than you expect, so you could see both up and down.

Your next question will come from Justin Patterson with KeyBanc. Please unmute your audio and video and ask your question.

Thank you very much, and good evening. Duolingo has always had a high pace of product velocity around A/B tests. Synthetic coding has made it easier to do lots of those. How are you thinking about engineer productivity as a whole, the number of tests being run, and how should we think about that influencing long-term headcount needs?

Great question. We A/B test a lot—running hundreds of A/B tests concurrently at all times. That has been our product philosophy and how Duolingo, Inc. has gotten better over time. We are finding that the number of A/B tests we can run is increasing.

We believe that is because of AI usage, particularly in our engineering and product organization. The increase is not huge, but it is the first time we have seen an increase on a per-capita basis in years. Last year you might have read on Twitter that you can program anything in five seconds and run 10,000 A/B tests at once with a single engineer—that is an exaggeration. Up until very recently, companies at our scale had not seen a real increase in velocity overall, but we are starting to see that increase.

It is still moderate, but it is increasing, and we are happy with it. I do not think we will run 10 times as many A/B tests per engineer, but the trend is positive.

Your next question will come from John Colantuoni with Jefferies. Please unmute your audio and video and ask your question.

Thanks for taking my questions. Can you give a bit of color on how U.S. DAUs are trending relative to international DAUs and what that relative geographic growth could mean for bookings over time, given U.S. users generally adopt a subscription at a higher rate than international users?

DAUs are growing in the U.S., and they are growing in pretty much every country, but in the U.S. they are growing less than in many international markets. Asia is the fastest-growing region. In terms of how that affects monetization, it does not seem to affect it that much. The U.S. monetizes well, but a lot of countries monetize relatively well.

A good example is China—China monetizes about as well as Western Europe, which is not as high as the U.S., but pretty high. Given the growth rate in China, that matters. I do not think slower growth in the U.S. implies lower bookings growth overall. My hope is that by making the product teach better, increasing word-of-mouth, and investing some in marketing in the U.S.—which historically we had not—we will drive higher year-over-year growth in the U.S. than we currently have.

Your next question will come from Shweta Khajuria with Wolfe Research. Please unmute your audio and video and ask your question.

Thank you for taking my question. With AI-driven content creation, there was a meaningful increase in content. How are you managing quality of content as that continues to grow against volume and engagement?

We spend a lot of effort on quality. The main reason our content is not growing even faster is because we are making sure it is very high quality. We do evaluations of our content with AI and with humans. We then test it with our own users in small amounts to see if it is high quality, and if it is, we increase exposure.

As amazing as AI is, if you are not careful you can get a lot of slop. We are trying very hard for that not to happen. Over the last couple of quarters, the quality has actually increased. We know this from spot checks and rating the quality across content.

Your next question will come from Omar Dusa lki with Bank of America. Please unmute your audio and video and ask your question.

Hi. I want to get back to performance marketing. Glad to hear the company is treating that with more seriousness. Last time we spoke, I got the impression the product would be leaps and bounds better in the future and really change the way people learn languages.

Does the maturity of the product itself bottleneck scaling performance advertising spend? Performance advertising typically tries to optimize specific behaviors in users. Is that the case? And do you have any sense of when you might be ready to really put the pedal to the metal, assuming your organization has done its experiments—when would the product be ready to go full-bore on performance marketing?

I would say the bottleneck for performance marketing for us has been, first, building the infrastructure to be a much more serious performance marketing machine, which we are doing now. Second, and not the quality of teaching, is how good our free tier is. One problem, depending on region and what we advertise, has been acquiring a user and having them be very happy free users rather than subscribers. That is the main bottleneck we need to overcome.

At the moment, in some geographies we have profitable performance marketing, but in many we do not.

The only thing I would add is that we are making an investment in marketing this year, and it is not just performance marketing. The team has a multi-tiered approach to marketing and to stepping up that investment that is well thought through and has diversity to it.

I want to make sure I am not thinking about performance marketing the wrong way, because I thought it would be difficult to performance market a product that is not stable or mature, since you do not actually know what you are marketing if it is changing so much.

I would not say that. Duolingo, Inc. has been around for 15 years. It has never stayed the same, and it never will. That is not going to change, but I do not think that has been the problem.

Your next question will come from Alex Brondelow with Wells Fargo. Your line is open. Please ask your question.

Thanks so much for the question. You mentioned how fast China is growing. There have been two successful brand tie-ins over the last 12 months—Luckin Coffee last year and Meituan in March. Are there learnings we can take from how successful those brand tie-ins have been in China to extend that success to other markets over the next year?

Thank you. We have had incredible brand partnerships in China. Our IP and brand in China are very strong, and that commands some of the largest brands wanting to partner with us. For example, we very soon have a partnership with McDonald’s in China.

Large brands come to us. Brands in China, like Luckin Coffee, are more open to partnerships than many Western brands—you do not see Starbucks changing all their stores every two weeks with a new brand, whereas Luckin does. There are learnings our partnerships and marketing teams in China are bringing to other places, particularly in Asia. But some of this is specific to the China market.

Also, China is not just growing fast because of partnerships; it is kind of the other way around. The great partnerships are coming in part because we are growing fast and seen as a very cool brand. There is a huge appetite for English learning in China that keeps growing, and that is the main reason China is growing.

Your next question will come from Alexander Sklar with Raymond James. Your line is open. Please ask your question.

Thanks. On the relationship between DAUs and top-of-funnel growth versus the visibility you have talked to on the shape of the bookings inflection this year, what early tests—or maybe it is tier or geo mix—are providing your visibility in terms of that bookings inflection exiting the year?

On bookings, if you look at the quarterly progression we are guiding to as you go Q2 into Q3 and Q3 into Q4, it is fairly on par with where the company has been in the last couple of years. We are playing a long game here, and the investments we are making may show some things this year, but we are really looking beyond this year. 2026 is about operating around that 20% DAU growth and growing the business. What you are seeing in Q3 and Q4 is typical seasonality. There has been an adjustment in Q1 and Q2 to our new monetization balance, but in Q3 and Q4 what you are seeing is quite typical for us.

I am showing no further questions. This concludes the Q&A section of the call. I would now like to turn the call back to the host for closing remarks.

Thank you. Thanks, operator. I would like to thank everyone for joining us, and we look forward to seeing you on the next call.