Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Equity Bottom-Up

<ul>
<li>Duolingo reported stronger than expected 3QFY23 results, including revenues of $137.6M (consensus: $132.2M) and net income of $2.8M. The company raised guidance for FY23 revenues and total bookings. </li>
<li>Stock indicated up ~9% after hours. Duolingo beat all key estimates. However, ABPDAU declined to $25.38, while net new ARR growth will slow in 4Q and the next fiscal year. </li>
<li>With a market cap of ~$8.2B on a fully diluted basis, Duolingo shares trade at ~14x and ~11x EV/Rev on my respective FY23/FY24 estimates, a significant premium to comparable companies.</li>
</ul>


Duolingo reported stronger than expected 3QFY23 results, including revenues of $137.6M (consensus: $132.2M) and net income of $2.8M. The company raised guidance for FY23 revenues and total bookings. 
Stock indicated up ~9% after hours. Duolingo beat all key estimates. However, ABPDAU declined to $25.38, while net new ARR growth will slow in 4Q and the next fiscal year. 
With a market cap of ~$8.2B on a fully diluted basis, Duolingo shares trade at ~14x and ~11x EV/Rev on my respective FY23/FY24 estimates, a significant premium to comparable companies.


Duolingo: Rich Valuation and Limited Upside Despite Better Than Expected 3QFY23 Results

<ul>
<li>Duolingo shares have outperformed in 2023, with shares up ~115% over the year versus ~26% gain on the Nasdaq. The company priced its IPO at $102 a share in 2021.</li>
<li>EdTech unicorn achieved the highest-ever MAUs and DAUs in 2QFY23, while paid subscribers reached 5.2M, ~7% of MAUs. Management raised top-line and profitability guidance for FY23. </li>
<li>With a market cap of ~$7.4B on a fully diluted basis, Duolingo shares trade at ~13x and ~10x EV/Rev on my FY23/FY24 estimates, a significant premium to comparable companies.</li>
</ul>


Duolingo shares have outperformed in 2023, with shares up ~115% over the year versus ~26% gain on the Nasdaq. The company priced its IPO at $102 a share in 2021.
EdTech unicorn achieved the highest-ever MAUs and DAUs in 2QFY23, while paid subscribers reached 5.2M, ~7% of MAUs. Management raised top-line and profitability guidance for FY23. 
With a market cap of ~$7.4B on a fully diluted basis, Duolingo shares trade at ~13x and ~10x EV/Rev on my FY23/FY24 estimates, a significant premium to comparable companies.


Duolingo Valuation Update: Year-End Profit Taking Is Likely As ARR Growth Is Slowing Down

<ul>
<li>Freshworks, a cloud-based customer services software unicorn, held its first Investor Day on September 7, 2023. Management highlighted the long-term target to deliver the Rule of 40 by 2025. </li>
<li>The 2023 Investor Day agenda included company vision and strategy, solutions in action, strategy for durable growth, customer spotlight, and financial overview, among others. </li>
<li>Management plans to deliver a long-term balance of growth and profitability, with the 2026 model leading to an FCF margin of 20%+ and $1B+ revenue. </li>
</ul>


Freshworks, a cloud-based customer services software unicorn, held its first Investor Day on September 7, 2023. Management highlighted the long-term target to deliver the Rule of 40 by 2025. 
The 2023 Investor Day agenda included company vision and strategy, solutions in action, strategy for durable growth, customer spotlight, and financial overview, among others. 
Management plans to deliver a long-term balance of growth and profitability, with the 2026 model leading to an FCF margin of 20%+ and $1B+ revenue. 


Freshworks: 2023 Investor Day and Valuation Update

Education Sector Analyst, Schoolhouse Solutions

Anik Siwach

Education Sector Analyst

Schoolhouse Solutions

Schoolhouse is a strategy and research provider for the Education sector. We publish differentiated reports and bespoke research on the sector, focused on private and public companies in Asia-Pacific. Our team has decades of experience working with Education companies ranging from K-12 to Tertiary and Edtech.

Strategy and Research Provider

<ul>
<li>
Holistic Educational Suite: 3PL enriched its product portfolio, with the APAC debut of WritingLegends and BrightPath Assessement. </li>
<li>
Steady Financial Growth: Amidst challenges in the UK, 3PL's 9% ARPU growth highlights its consistent performance and market strength. </li>
<li>
Setting the Pace: With attractive-priced offerings, an integrated product approach, and an innovative teacher training vision, 3PL is expected to continue growing its top line as more schools join. </li>
</ul>



Holistic Educational Suite: 3PL enriched its product portfolio, with the APAC debut of WritingLegends and BrightPath Assessement. 

Steady Financial Growth: Amidst challenges in the UK, 3PL's 9% ARPU growth highlights its consistent performance and market strength. 

Setting the Pace: With attractive-priced offerings, an integrated product approach, and an innovative teacher training vision, 3PL is expected to continue growing its top line as more schools join. 


3P Learning (3PL): Steady Through the 3Rs, Eyes on FY24

<ul>
<li>Addition of Writing Legends to existing maths and literacy apps will create more opportunities to upsell and cross-sell. </li>
<li>
Brightpath, the recently acquired assessments technology provider, adds a new horizontal with the potential to reduce school customer churn</li>
<li>Competition is high from groups such as DreamBox, IXL, ABC Mouse, Khan Academy and <a href="https://www.smartkarma.com/entities/think-learn-pvt-ltd-byju-s" target="_blank" data-smartkarma-citation="entities:32203:1" rel="noopener">BYJU'S</a> . <a href="https://www.smartkarma.com/entities/3p-learning-ltd" target="_blank" data-smartkarma-citation="entities:5708:1" rel="noopener">3P Learning</a> remains a significant player with a strong customer base and improving product portfolio.</li>
</ul>


Addition of Writing Legends to existing maths and literacy apps will create more opportunities to upsell and cross-sell. 

Brightpath, the recently acquired assessments technology provider, adds a new horizontal with the potential to reduce school customer churn
Competition is high from groups such as DreamBox, IXL, ABC Mouse, Khan Academy and BYJU'S . 3P Learning remains a significant player with a strong customer base and improving product portfolio.


3P Learning (3PL): Rare Listed EdTech, Offering Exposure to the Growth in Digital Instruction

United States

Duolingo, Inc. designs and develops mobile learning platform. The Company teaches students a foreign language while simultaneously contributing to translate real-world content from the web. Duolingo serves students worldwide.

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Duolingo (DUOL US)

Duolingo: Rich Valuation and Limited Upside Despite Better Than Expected 3QFY23 Results

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Duolingo Valuation Update: Year-End Profit Taking Is Likely As ARR Growth Is Slowing Down

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Andrei Zakharov

Freshworks: 2023 Investor Day and Valuation Update

2023 Investor Day highlights massive TAM, ongoing business momentum, adoption of multi-product strategy, and AI monetization opportunities: PT...

Andrei Zakharov

3P Learning (3PL): Steady Through the 3Rs, Eyes on FY24

3PL stock up 5% since the insight was posted, the market is responding favourably to their FY23 figures as we suggested.

Anik Siwach

3P Learning (3PL): Rare Listed EdTech, Offering Exposure to the Growth in Digital Instruction

3PL provides a rare ticket for an Australian-listed EdTech stock, with a focused management team and steady growth plans

Anik Siwach

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