Two West Virginia University researchers, Kirk Hazen and Audra Slocum, examined how language has, in part, defined how Appalachians are viewed and judged elsewhere in the United States.
(WVU/Sheree Wentz Chart)

(Editor’s Note: WVU is the host site for the 45th Annual Appalachian Studies Conference, “Making, Creating, and Encoding: Crafting Possibilities in Appalachia,” which runs through March 20. During and after the conference, WVU experts are available to discuss all things Appalachia.)

Language and how we use it is important for more than communication. According to two West Virginia University researchers, the language has, in part, defined how Appalachians are viewed and judged in other parts of the United States.

In turn, the Appalachians, or people of an eight-state region that stretches from southern New York to northern Georgia, either held their own and continued to use the vowel sounds that betray their linguistic roots, or adapted their speech patterns to fit in new places. or situations.

Kirk Hazen, director of the West Virginia Dialect Project and professor of linguistics in the Department of English, said Appalachia people are stigmatized for their speech and may be marginalized in school or in the workplace because of that stigma. And therein lies the linguistic choices that speakers of the region make – those who choose to maintain their use of stigmatized linguistic features – such as their accents – because of a sense of connection to that identity and those who choose to use less stigmatized language features.

“Teachers who are more proactive can help create these classrooms where we interrupt stigma, whether it’s about language or racial or class identities,” Hazen said. “When we don’t disrupt the social stigmas that limit people’s ability to envision a broader future, then it’s a serious problem educationally.”

Enter “Shayla,” a high school student from Kentucky who was selected for a summer arts academy in Lexington where her speech was ridiculed and one of her peers offered to be “a performer.” “Shayla” said it wasn’t her language, but their perception that was the problem, telling them, “You need to get your ears checked.”

“And that made him never want to go back and never go to college outside of his area,” said Audra Slocum, an English education teacher. “She doubled down to stay home and keep those vernacular characteristics.”

Slocum, also co-director of the National Writing Project at WVU, notes that the linguistic characteristics associated with the region are not “right or wrong.” Society has assigned meaning to the variations.

“There is no singular Appalachian English,” she said. “There is not just one set of models. It’s a whole host that people choose in different contexts for different purposes and there are social consequences attached to those choices.

Hazen said that whenever people interact, language and linguistic nuances are exchanged. In fact, language evolution and vowel shifts only occur in two-way encounters, whether face-to-face or online.

And although Appalachia, in reality, is no more isolated than any other region of the United States, this description fits the purposes that some late 19th and early 20th century authors had for the depiction of the region – rural, pristine, pastoral. Other.

Slocum said an Appalachian “otherness” is still going on, the myth of an Appalachian exceptionalism that says it’s somehow different from the rest of the country. This myth, when rolled onto the tongue, she says, means that people, including Appalachians, will look for differences and retain certain items to sort people based on those differences.

Standard or not, Hazen finds beauty in iterations of Appalachian English, and he believes that if regional speakers and those who judge them find out how the language works, it can give them hope.

“We might be able to foster understanding of their own society and themselves, but also of others and their variety of languages,” he said.

Listen to “How We Talk,” a Sparked podcast from WVU magazine.

-WVU-

03/17/22

CONTACT: Jessica McGee
Marketing and Communications Director
WVU Eberly College of Arts and Sciences
304-293-6867; [email protected]

Call 1-855-WVU-News for the latest West Virginia University news and information from WVUToday.

Follow @WVUToday on Twitter.

We New Yorkers are definitely one of a kind. From surviving brutally cold, snowy winters to America’s most populous city, we’re a different breed. Other Americans have their opinion of us and we definitely have our opinion. This hilarious map I found on Instagram shows how New Yorkers view the rest of the country and New York. Obviously, this map is based on how a resident of New York sees the United States, because even New York State is listed as “New York City”. As someone who lived in Florida for many years, it’s hysterical that the state is being labeled as “where they shot the cops”. Other highlights include seeing the state of Georgia as just Atlanta and Texas as “the South.”

I think it’s fair that we poke fun at the rest of America a bit. There are a lot of stereotypes about New Yorkers. Here are some of the things the rest of the country thinks of us:

– New Yorkers are always in a hurry
– Upstate people are all country thugs
– Everyone in Buffalo LOVES the snow
– Everyone in New York is rude
– New Yorkers always wear Timberland boots and fitted baseball caps
– New Yorkers think they’re better than everyone else
– Everyone in New York lives in a shoebox and has 7 roommates

Off limits: These baby names are banned in New York State

Top 10 Consumer Complaints Filed in New York State in 2021

If you need to file a consumer complaint, you can do so with the Consumer Frauds and Protection Bureau online or by calling (800) 771-7755.

6 cold cases of missing students in New York State

NEW YORK – As Greek Americans, we struggle to ensure our children maintain their Greek skills. English is the language they speak at school, with their friends and it is more than natural to slip into it all the time.

The Greek School Onlinewho started teaching Greek to children and adults in 2012, has found a refreshing way to make teaching the Greek language as natural and easy as possible.

Integrate games into the Greek class

Seeking ways to make a relatively difficult language like Greek more accessible and fun for young learners, educators at Online Greek School began designing language games that turned the typical classroom experience into a fun competition. “When we started incorporating specially designed games into the classroom curriculum and practicing grammar and vocabulary through them, our students started oral language production much faster than expected,” says teacher Maria Gkeme. of modern Greek and deputy director of the school.

Seeing the amazing results, the creative team of educators focused increasingly on game design and integration. “We quickly ended up with over 100 games that we had designed and played in class, in smaller and larger groups of students of all levels and ages of Greek,” adds Gkeme.

The Greek Language League; an online competition celebrating Hellenism

It didn’t stop there. As students learned Greek faster and easier than ever, this team took a step forward and came up with the idea of ​​the Greek Language League. The Greek Language League is an online competition between teams of children who test their knowledge of the Greek language, Greek culture, Greek geography, Greek history, Greek sports and much more. According to the league’s game designer, Maria Moschou, the Greek Language League aims to become a celebration of Greek culture and an institution that will bring children of Greek descent closer and closer to the language of their ancestors.

The approach is modern, with new technologies taking center stage. However, the lens is as old as time; team spirit and camaraderie under the umbrella of Greek language and culture. “We have designed and tested games that help children practice their Greek while using skills that traditional education typically overlooks. Multitasking, strategy development, note taking merge with oral and auditory skills in areas such as Greek geography, culture, music, lifestyle and history The results: students learn Greek without even realizing it and experience unforgettable moments.

The Greek Language League recently won a Venture Impact award from the Hellenic Initiative, as one of the most promising and innovative projects in the field of education. The League is currently in the middle of its pilot season and the teams are about to enter the knockout stage. The League will begin on a large scale in November 2022 with little Greeks from schools across the United States competing in teams to reach the Grand Finals.

From little Greek students to little Greek campers

“Integrating gaming into education doesn’t stop at our online classrooms,” says Gkeme. “Our online program jumps from our computers and into the Greek wilderness every summer at our Greek language summer camp for children.” The Greek Language Summer Camp takes place under the auspices of the Greek Ministries of Foreign Affairs and Tourism and aims to build children’s confidence in speaking Greek and to immerse them in the Greek way of life and culture.

Gkeme explains that just like the school’s online games aim to develop certain skills, the camp games aim to awaken more kinesthetic skills and give children the chance to learn in nature. “In the summer, our students leave their computers, phones and learning apps for a few days and they learn by touching, tasting, smelling and using their bodies. We have designed a summer program that combines morning language lessons with fun activities that help students practice what they have learned experientially and emotionally.”

The Greek language summer camp is aimed at children from 6 to 15 years old and will take place at the Ranch in 2022 in two periods in July and August. You can find out more here.

Whether it’s in their online classrooms, their virtual League Arenas, or at Camp in the summer, what’s certain for this community of little Greeks is that they’re learning to love Greek and loving it. learn greek!

Child tax credit expiration likely pushes 97,000 New Jersey children back into poverty

For immediate release

Contact: Louis Di Paolo (NJPP): 201-417-5049 (mobile) or [email protected]

On the one-year anniversary of the US bailout taking effect, new state-level data released by the Economic Security Project highlights how nearly 100,000 New Jersey children were likely pushed into poverty when the expanded child tax credit expired.

One of the most successful programs of the US bailout, the expanded Child Tax Credit, has reduced child poverty in the United States and injected local economies with tens of billions of dollars in additional spending. during an unprecedented public health crisis.

When CTC checks started hitting bank accounts in 2021, the impact of credit on life was clear right away. In six weeks, food insufficiency had decreased by almost a third. Improvements have been significant among Black and Latino families, who experience the highest rates of food difficulties.

• Amid a historic economic and public health crisis, CTC payments have defied gravity and lowered child poverty in New Jersey.

• In New Jersey, 1,621,000 children received the expanded monthly child tax credit, an average of $418 per family.
• CTC payments lifted nearly 4 million children out of poverty each month the payments were made. New Jersey is expected to see a sharp rise in the child poverty rate as the US bailout expires. As part of the expanded CTC, ARPA raised 97,000 children out of poverty in New Jersey, reducing poverty by 8 percent.

• Monthly CTC payments have broader economic impacts, injecting millions of dollars into state economies that support family incomes, job growth and local businesses.

• Unless Congress acts to restore the expanded child tax credit, New Jersey stands to lose $514,848,000 in additional economic activity each month.

• Beyond poverty alleviation, monthly payments have helped families in other valuable ways, including:

• Meet basic needs, stay housed and feed their children.
• Reduce stress.
• Rely less on payday loans.
• Resume or stay at work.

The Child Tax Credit is one of the most successful anti-poverty programs in American history. Unless Congress acts to make it a permanent part of American life, New Jersey’s children risk losing access to life-changing benefits, and the whole country will drift away from working families who , now more than ever, deserve government help. . To learn more about how New Jersey lawmakers can enact a child tax credit at the state level, read NJPP’s February 2022 report, Making New Jersey More Affordable for Families: The Case for a State Child Tax Credit.

# # #

New Jersey Policy Perspective (NJPP) is a nonpartisan think tank that promotes policy change to advance economic, social, and racial justice through independent, evidence-based research, analysis, and advocacy.

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Cindy Anderson, an English teacher at Culbreth Middle School, has worked with students from diverse backgrounds, many of whom are new to the United States and have come from non-traditional educational paths.

When English learning moved online during the pandemic, Anderson said, it became difficult for teachers and students.

“It’s put (the students) at least a year behind, if not more, and trying to get them to a certain level at this point is very difficult,” she said.

English language learners often aren’t able to get as much help outside of school as other students, Anderson said. This lack of support can hurt them academically.

“Some of our better-off students can get a lot of help, our kids can’t,” she said. “Maybe they were home alone while mom and dad worked, or mom and dad slept during the day so they could work at night.”

As the pandemic and associated staffing shortages have taken their toll on North Carolina school districts, English teachers like Anderson have faced many unique challenges.

Emily Lewis, ESL facilitator for Orange County Schools, said in an email that the broader teacher shortage has affected the ESL curriculum for the school district.

Lewis said that at one school, several kindergarten teachers had to learn how to deliver language lessons to students due to a lack of available ESL teachers.

“Truly the teachers are stretched and doing their best, but we all know we could do more if we were full,” she said in the email.

Lewis supervises, provides instructional coaching, and monitors the effectiveness of the ESL program. This work, she said, has been directly and significantly affected by the pandemic.

Along with other ESL teachers, Lewis has been forced to learn how to navigate remote learning during the pandemic. She said she provided lessons and support directly to students due to teacher shortages caused by the COVID-19 quarantine and isolation.

Sashi Rayasam, director of K-12 English learner services for Durham Public Schools, said in an email that the pandemic has also had a significant effect on ESL teachers for the DPS.

She said that although the pandemic has affected English learners, there have not been significant vacancies for ESL teachers.

“Teachers had to adapt to virtual delivery of the curriculum, ensure students had access to technology, and manage student access to social/emotional support,” Rayasam said.

Fight against the shortage

To make up for the lack of certified teachers, Lewis said the OCS has added English tutors to its ESL program. She said this opportunity has allowed English learners to receive more one-on-one support.

Carrie Doyle, president of the Orange County Board of Education, said OCS’s ESL programs are working “reasonably well” despite the pandemic and associated staffing shortages.

“Specifically for ESL teachers, we currently have one part-time position at the primary level that is vacant and one full-time position at the middle level that is vacant,” she said. “We don’t have any vacancies in high school.”

However, she said it was difficult to find people involved in translation and family outreach services, which led to these specific shortages in some schools.

To address these staffing shortages, the district has established Parent Academies for families whose first language is not English. These programs are designed to provide parents with a better understanding of how to access services such as the college application process and online education programs for their students.

“A lot of people come from different countries with different understandings of public school, and so it’s as much the language (as) the way the American education system works that we offer families,” Doyle said.

Lewis said in an email that although many families struggled during remote learning, the return to in-person learning has helped ESL teachers better reach their students.

“This partnership between schools and families has continued beyond remote learning and I am proud of our ESL team’s continued efforts to help families become essential members of their respective school communities,” said she declared.

@ianwalniuk

@DTHCityState | [email protected]

BINGHAMTON, NY (WSKG) – High winds carried traditional Ukrainian music and prayers through the streets Sunday as hundreds of people gathered to show their support for Ukraine outside Binghamton City Hall.

Binghamton Mayor Jared Kraham said the rally was perhaps the largest held outside City Hall in the past decade. This happened as Ukraine continues to face a Russian invasion.

Anya Kostyk attended the rally alongside her husband and young daughter. She left Ukraine for the United States in 2019.

His parents live in a town an hour from Kiev, where they have remained since the start of the Russian attacks. Kostyk said without a car it is difficult for them to leave and the nearest train station that would take them west has been seized by Russian forces.

Kostyk said she visits family in Ukraine daily. His mother spent her birthday in an air-raid shelter.

Kostyk had hoped they would flee to Poland, but said it was no longer safe enough for his parents to travel.

“I feel torn emotionally, to pieces,” she said Sunday through her husband, Taras Kostyk. “We felt this pain in 2014 when the war started in the east, with the annexation of Crimea, but this pain is, you can’t even describe it in words right now, what we are feeling. “

She wants the United States and NATO member states to increase their assistance to those still in Ukraine. The couple and their young daughter, Adrianna, held up a sign urging NATO member countries to close their skies to Russian planes.

The US ban on Russian planes went into effect last week.

Authorities seek to resettle Ukrainian refugees, again

Many speakers at the rally declared their support for tougher statewide measures against Russia, including an end to state contracts with Russian companies.

New York Governor Kathy Hochul signed an executive order last week ordering all state agencies to review and withdraw public funds from Russia.

Broome County officials added that they were ready to welcome Ukrainian refugees. According to the United Nations, around 1.3 million people have fled Ukraine so far.

“We are ready, willing and able to help anyone who needs housing, either temporarily or permanently as a result of the violence in Ukraine,” the county manager said. of Broome, Jason Garnar.

The Binghamton area already hosts a large Ukrainian community, which has remained in the southern part for several generations. Orysia Czebiniak-Tunick’s mother was among many Ukrainians who came to Broome County via displaced persons camps in Germany after World War II.

Czebiniak-Tunick, who grew up in the town of Union, said she was raised to be proud of her Ukrainian heritage. She has remained involved in the Ukrainian community through the Ukrainian Catholic Church of the Sacred Heart and hopes to enroll her son in Ukrainian language school.

Czebiniak-Tunick said she was surprised by the influx of support for Ukrainians and Ukrainian-Americans.

“To see how many people have come out to support the community is beyond words for me,” Czebiniak-Tunick said.

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our Consolidated Financial
Statements and related notes included elsewhere in this Annual Report on Form
10-K. This discussion contains forward-looking statements, such as those
relating to our plans, objectives, expectations, intentions, and beliefs, that
involve risks, uncertainties and assumptions. Our actual results could differ
materially from these forward-looking statements as a result of many factors,
including those discussed in Part I, Item 1A. "Risk Factors," "Special Note
Regarding Forward-Looking Statements," and included elsewhere in this Annual
Report on Form 10-K. A discussion of our audited financial statements and the
notes for the fiscal year ended December 31, 2020 and the related notes has been
reported previously in our final prospectus, dated as of July 27, 2021, filed
pursuant to Rule 424(b)(4) (File No. 333-257483) with the SEC on July 28, 2021
(the "Final Prospectus"), under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations." Our historical
results are not necessarily indicative of the results that may be expected for
any periods in the future.

Amounts reported in millions are rounded based on the amounts in thousands. As a
result, the sum of the components reported in millions may not equal the total
amount reported in millions due to rounding. In addition, percentages presented
are calculated from the underlying numbers in thousands and may not add to their
respective totals due to rounding.

Overview

Our flagship app has organically become the world's most popular way to learn
languages and the top-grossing Education app in the App Stores, offering courses
in over 40 languages to approximately 42

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million monthly active users as of December 31, 2021. We believe that we have
become the preeminent online destination for language learning due to our
beautifully designed products, exceptional user engagement, and demonstrated
learning efficacy.

Initial Public Offering

On July 30, 2021, Duolingo completed its Initial Public Offering ("IPO") of 5.9
million shares of its Class A common stock at a price to the public of $102.00
per share, 4.5 million of which were sold by the Company and 1.4 million of
which were sold by certain selling stockholders, which includes the exercise in
full by the underwriters of their option to purchase from the Company an
additional 0.8 million shares of the Company's Class A common stock. The gross
proceeds to the Company from the IPO were $455.5 million, before deducting
underwriting discounts and commissions and offering expenses payable by the
Company. The Company did not receive any proceeds from the sale of shares of
Class A common stock in the offering by the selling stockholders. Immediately
prior to the completion of the IPO, all convertible preferred stock outstanding,
totaling approximately 19.1 million shares, was automatically converted into an
equivalent number of shares of Class B common stock on a one-to-one basis and
their carrying value of $182.6 million was reclassified to additional paid-in
capital within stockholders' equity (deficit). Additionally, on July 15, 2021,
6.9 million shares held by our founders were exchanged from Class A common stock
into Class B common stock.

Our Business Model

How We Generate Revenue

We use a freemium business model that relies on a premium subscription offering,
advertising, and in-app-purchases (IAPs) to produce revenue. We believe the
following key attributes of our freemium subscription business model are core to
our success.

• Large Market: There is a huge pool of potential language learners around the world that HolonIQ estimates at around 2 billion people.

•Free Users: Since none of our learning content is behind a paywall, anyone can
download the Duolingo app, use it for as long as they like, and complete any of
our courses free of charge. This has allowed us to scale to 42 million MAUs for
the quarter ended December 31, 2021. These millions of learners provide two
benefits to our business model:

•They become advocates for Duolingo and provide word-of-mouth publicity for our
product, which enables our growth and has allowed us to make very selective and
efficient marketing investments.

•Our users complete over 500 million exercises every day, generating large
amounts of data that powers our high-volume A/B testing and novel AI techniques.
We use this data and the insights that come from it to continually improve both
engagement and efficacy.

• Paid Subscriber Conversion: As learners tend to use our product for months or even years before deciding to subscribe, we gain economic benefits by attracting new users well beyond their tenure on the platform. In 2021, subscribers represented 6% of our average MAUs.

Subscription

Our subscription offering is called Duolingo Plus. It offers learners features
such as an ad-free experience, along with additional learning and gamification
features that enhance their learning experience. One such enhancement is
unlimited Hearts, which give learners more flexibility in how they move through
course content.

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Advertising and other revenue

For users who are unable or unwilling to pay a subscription fee, we provide free
access to our product and generate advertising revenue from the sale of display
and video advertising delivered through advertising impressions. We generally
enter into arrangements with the major programmatic advertising networks to
monetize our advertising inventory. Our advertising revenue is primarily a
function of the number of our free users, hours of engagement of our free users,
and our ability to provide innovative advertising placements that are relevant
to our users and enhance returns for our advertising partners.

In-app purchases consist of learners purchasing unique perks within the app, such as “sequence freezes” and “timer boosts”.

In addition to monetizing the Duolingo language learning app, we generate
revenue from the Duolingo English Test by charging test takers a one-time fee
that generally costs $49. University program acceptance is a driver of Duolingo
English Test revenue. As of December 31, 2021, over 3,000 higher education
programs around the world accept the Duolingo English Test results as proof of
English proficiency for international student admissions, including 18 of the
top 20 undergraduate programs in the United States according to US News and
World Report.

Key Operating Parameters and Non-GAAP Financial Measures

We regularly review a number of key operating metrics and non-GAAP financial
measures to evaluate our business, measure our performance, identify trends,
prepare financial projections and make business decisions. The measures set
forth below should be considered in addition to, not as a substitute for or in
isolation from, our financial results prepared in accordance with GAAP. Monthly
active users (MAUs) and daily active users (DAUs), along with paid subscribers,
are operating metrics that help inform management about the underlying growth in
users of our platform, and are a measure of our monetization efforts. To
calculate the year-over-year change in MAUs and DAUs for a given period, we
subtract the average for the same period in the previous year from the average
for the same period in the current year and divide the result by the average for
the same period in the previous year. Other companies, including companies in
our industry, may calculate these measures differently or not at all, which
reduces their usefulness as comparative measures.

                                               Three Months Ended December 31,                              Year Ended December 31,
(Operating metrics are in millions)         2021                              2020                     2021                           2020
Operating Metrics
Monthly active users (MAUs)                   42.4                                37.0                    40.5                           36.7
Daily active users (DAUs)                     10.1                                 8.4                     9.6                            8.2
Paid subscribers (at period end)               2.5                                 1.6                     2.5                            1.6


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  Table of     Contents

                                                                     Year Ended December 31,
                                                                       2021               2020
Operating Metrics
Subscription bookings                                          $     224,520           $ 144,379
Total bookings                                                 $     294,247           $ 190,181

Non-GAAP Financial Measures
Net loss (GAAP)                                                $     (60,135)          $ (15,776)
Adjusted EBITDA                                                $      (1,066)          $   3,630

Net cash provided by operating activities (GAAP)               $       9,170           $  17,708
Free cash flow                                                 $      12,746           $  13,976


Operating Metrics

Monthly active users (MAUs). MAUs are defined as unique Duolingo users who
engage with our mobile language learning application or the language learning
section of our website each month. MAUs are reported for a measurement period by
taking the average of the MAUs for each calendar month in that measurement
period. MAUs are a measure of the size of our global active user community on
Duolingo.

We had approximately 42.4 million and 37.0 million MAUs for the three months
ended December 31, 2021 and 2020, respectively, representing an increase of 15%.
We grew MAUs through product initiatives that made the app more social and
engaging and through brand marketing, both of which helped us attract new users,
retain existing users, and reengage the millions of former users who return to
our language learning app.

Daily active users (DAUs). DAUs are defined as unique Duolingo users who engage
with our mobile language learning application or the language learning section
of our website each calendar day. DAUs are reported for a measurement period by
taking the average of the DAUs for each day in that measurement period. DAUs are
a measure of the consistent engagement of our global user community on Duolingo.

We had approximately 10.1 million and 8.4 million DAUs for the three months
ended December 31, 2021 and 2020, respectively, representing an increase of 20%.
The DAU / MAU ratio, which we believe is an indicator of user engagement,
increased to 23.8% from 22.8% a year ago. We grew DAUs through many of the same
initiatives as we grew MAUs, like making the product more fun and engaging, as
well as through our marketing efforts.

Paid Subscribers. Paid subscribers are defined as users who pay for access to
Duolingo Plus, including subscribers who pay for a family plan, and had an
active subscription as of the end of the measurement period. Each unique user
account is treated as a single paid subscriber regardless of whether such user
purchases multiple subscriptions, and the count of paid subscribers does not
include users who are currently on a free trial or who are non-paying members of
a family plan.

As of December 31, 2021 and 2020, we had approximately 2.5 million and 1.6
million paid subscribers, respectively, representing an increase of 56%. We grew
paid subscribers through product improvements that increased the size of our
free user base, led to higher conversion of free users to paid subscribers, and
by better retaining subscribers.

Subscription Bookings and Total Bookings. Subscription bookings represent the
amounts we receive from purchases of a subscription to Duolingo Plus. Total
bookings represent the amounts we receive from purchases of a subscription to
Duolingo Plus, a registration for a Duolingo English Test, an in-app

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purchase for a virtual good and from advertising networks for advertisements
served to our users. We believe bookings provide an indication of trends in our
operating results, including cash flows, that are not necessarily reflected in
our revenues because we recognize subscription revenues ratably over the
lifetime of a subscription, which is generally from one to twelve months.

For the years ended December 31, 2021 and 2020, we generated $224.5 million and
$144.4 million of subscription bookings, respectively, representing an increase
of 56%. We grew subscription bookings by selling more first-time and renewal
subscriptions as well as subscriptions to subscribers who previously had a
subscription and return. As we grow our user base, convert a greater proportion
of users to first-time subscribers, increase renewal rates, and increase the
proportion of re-subscribers, we increase subscription bookings.

For the years ended December 31, 2021 and 2020, we generated $294.2 million and
$190.2 million total bookings, respectively, representing an increase of 55%. We
grew total bookings through the growth in subscription bookings noted above, in
addition to growth in Advertising, Duolingo English Test, and other bookings.

Non-GAAP Financial Measures

We use certain non-GAAP financial measures to supplement our Consolidated
Financial Statements, which are presented in accordance with GAAP. These
non-GAAP financial measures include Adjusted EBITDA and free cash flow. We use
these non-GAAP financial measures for financial and operational decision-making
and as a means to evaluate period-to-period comparisons. By excluding certain
items that may not be indicative of our recurring core operating results, we
believe that Adjusted EBITDA and free cash flow provide meaningful supplemental
information regarding our performance. Accordingly, we believe these non-GAAP
financial measures are useful to investors and others because they allow for
additional information with respect to financial measures used by management in
its financial and operational decision-making and they may be used by our
institutional investors and the analyst community to help them analyze the
health of our business. However, there are a number of limitations related to
the use of non-GAAP financial measures, and these non-GAAP measures should be
considered in addition to, not as a substitute for or in isolation from, our
financial results prepared in accordance with GAAP. Other companies, including
companies in our industry, may calculate these non-GAAP financials measures
differently or not at all, which reduces their usefulness as comparative
measures.

Adjusted EBITDA. Adjusted EBITDA is defined as net loss excluding interest
(income) expense, net, income tax provision, depreciation and amortization,
Initial Public Offering ("IPO") and public company readiness costs, stock-based
compensation expenses related to equity awards, tender offer-related costs and
other expenses. Adjusted EBITDA is used by management to evaluate the financial
performance of our business and we present Adjusted EBITDA because we believe it
is helpful in highlighting trends in our operating results and that it is
frequently used by analysts, investors and other interested parties to

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evaluate companies in our industry. The following table provides a reconciliation of our net loss, the most directly comparable financial measure presented in accordance with GAAP, to Adjusted EBITDA.

                                                                       Year Ended December
                                                                               31,
(In thousands)                                                                   2021                2020
Net loss                                                                     $  (60,135)         $  (15,776)
Interest (income) expense, net                                                      (19)               (231)
Provision for income taxes                                                          177                  68
Depreciation and amortization                                                     2,726               2,256
IPO and public company readiness costs (1)                                        3,909                 282
Stock-based compensation expenses related to equity awards (2)                   42,457              17,031
Tender offer-related costs (3)                                                    5,599                   -
Other expenses (4)                                                                4,220                   -
Adjusted EBITDA                                                              $   (1,066)         $    3,630


________________

(1)IPO and public company readiness costs include costs associated with IPO
readiness and establishment of our public company structure and processes,
including consultant costs. These costs are included within our Consolidated
Financial Statements included elsewhere in this Annual Report on Form 10-K as
follows:
                                       Year Ended December 31,
(In thousands)                                             2021        2020
Research and development                                 $    46      $   -
Sales and marketing                                          459          -
General and administrative                                 3,404        282
Total                                                    $ 3,909      $ 282


(2)In addition to stock-compensation expense of $40,804 and $17,031 for the
years ended December 31, 2021 and 2020, respectively, this includes costs
incurred related to taxes paid during 2021 on equity transactions of $1,653, of
which $631 was included within Research and development, $53 was included within
Sales and marketing and $969 was included within General and administrative in
our Consolidated Statement of Operations and Comprehensive Loss.

(3) Includes costs related to our public offer initiated in February 2021 (see Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K), including expenses incurred, as follows:

                                                       Research and             Sales and               General and
(In thousands)              Cost of revenues            development             marketing             administrative              Total
Tender offer               $             10          $        3,302          $         173          $          1,790          $    5,275
Fees and taxes paid on
tender offer               $              -          $            -          $           -          $            324          $      324
Total                      $             10          $        3,302          $         173          $          2,114          $    5,599


(4)Represents one-time cash awards to Duolingo contributors under our
non-employee volunteer program included within Sales and marketing expenses
within our Consolidated Statement of Operations and Comprehensive Loss. See Note
2 included in our Consolidated Financial Statements elsewhere in this Annual
Report on Form 10-K.

Adjusted EBITDA increases as we grow revenue, improve gross margin, and reduce
operating expenses as a percentage of revenue, or through a combination of those
drivers. For the year ended December 31, 2021, we incurred a loss of $1.1
million and for the year ended December 31, 2020 we generated income of $3.6
million of Adjusted EBITDA, respectively. The decrease in Adjusted EBITDA
occurred because operating expenses, adjusted for costs incurred related to IPO
and public company readiness and other costs which did not occur in the prior
year, grew at a higher rate than revenues and gross profit.

Free Cash Flow: Free cash flow represents net cash provided by operating
activities, reduced by purchases of property and equipment, capitalized software
development costs, and increased by IPO and public company readiness costs,
taxes paid related to stock-based compensation equity awards and other costs, as
we believe they are not indicative of future liquidity. We believe that free
cash flow is a measure of liquidity that provides useful information to our
management, investors and others in

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understanding and evaluating the strength of our liquidity and future ability to
generate cash that can be used for strategic opportunities or investing in our
business. The following table presents a reconciliation of net cash provided by
operating activities, the most directly comparable financial measure calculated
in accordance with GAAP, to free cash flow:

                                                                      Year Ended December
                                                                              31,
(In thousands)                                                                  2021                2020
Net cash provided by operating activities                                   $    9,170          $   17,708
Less: Capitalized software development costs                                    (2,620)               (638)
Less: Purchases of property and equipment                                       (3,586)             (3,376)
Plus: IPO and public company readiness costs (1)                                 3,909                 282
Plus: Taxes paid related to stock-based compensation equity
awards (2)                                                                       1,653                   -
Plus: Other (3)                                                                  4,220                   -
Free cash flow                                                              $   12,746          $   13,976


________________

(1) IPO and public company readiness costs include the costs associated with preparing for the IPO and setting up our public company structure and processes, including consultant fees.

(2)Includes costs incurred related to taxes paid on capital transactions.

(3)Represents payment of one-time cash awards to Duolingo contributors under our
non-employee volunteer program included within Sales and marketing expenses
within our Consolidated Statement of Operations and Comprehensive Loss. See Note
2 to our Consolidated Financial Statements included elsewhere in this Annual
Report on Form 10-K.

For the years ended December 31, 2021 and 2020, we generated $12.7 million and
$14.0 million of free cash flow, respectively. The decrease in free cash flow
was mainly attributable to the decrease in net cash provided by operating
activities in addition to higher capitalized software development costs and
capital expenditures.

Impact of COVID-19

To date, the COVID-19 pandemic has not had a significant, negative impact on our
operations or financial performance. We believe that COVID-19 increased our
operating metrics and financial metrics for a period of time in 2020 due, in
part, to stay at home and other social distancing measures, most notably in the
second quarter. The pandemic also increased adoption of the Duolingo English
Test. Because this increase was driven in part by increased acceptance of the
test, and because we believe that the vast majority of universities are unlikely
to stop accepting the test when the pandemic ends, we do not expect the Duolingo
English Test to revert to pre-pandemic levels.

The extent of the impact of the COVID-19 pandemic on our operational and
financial performance, however, depends on certain developments, including
ongoing social distancing measures, and future prevention and mitigation
measures, as well as the potential for some of these measures to be reinstituted
in the event of repeat waves of the virus. Any such developments may have
adverse impacts on global economic conditions and consumer confidence and
spending, and could materially adversely affect demand, or subscribers' ability
to pay, for our products and services. For additional information, see "Risk
Factors-General Risk Factors-Our business and results of operations may be
materially adversely affected by the recent COVID-19 outbreak or other similar
outbreaks."

Seasonality

We see some seasonality in user growth and monetization on our platform. Historically, the number of users on our platform and the number of subscribers we have increases in January and then

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moderate throughout the first quarter and second quarter back to our secular
growth trend. In the third quarter, historically, we've seen the number of users
on our platform increase as our product is used by students that return to
school in certain geographies. Finally, in the latter part of December, as the
new year approaches, we see an increase in usage as people make New Years
resolutions, including resolutions to learn new things like languages.
Monetization, through an increase in subscribers, also increases at the end of
December and into January when we run a promotion tied to the New Year holiday.

Operating results

Comparison for completed fiscal years December 31, 2021 and 2020

Income

We generate revenues primarily from the sale of subscriptions. The term-length
of our subscription agreements are primarily monthly or annual. We began to roll
out a family plan during the second half of 2021 and as of December 31, 2021
offer it exclusively as an annual subscription. We have historically had a
six-month subscription plan but during the fourth quarter of 2020, we began to
phase it out. We also generate revenue from advertising, the in-app sale of
virtual goods, and our English assessment test, the Duolingo English Test.

Revenue cost

Cost of revenues predominantly consists of third-party payment processing fees
charged by various distribution channels, and also includes hosting fees. To a
much lesser extent, cost of revenues includes costs for contractors, wages and
stock-based compensation for certain employees in the capacity of customer
support, amortization of revenue generating capitalized software, and
depreciation of certain property and equipment.

We intend to continue to invest additional resources in our infrastructure and
our customer support and success organization to expand the capabilities of our
platform and ensure that our users are realizing the full benefit of our
products. The level, timing, and relative investment in these areas could affect
our cost of revenues in the future.

Gross profit and gross margin

Gross profit represents revenues less cost of revenues. Gross margin is gross
profit expressed as a percentage of revenues. Our gross profit may fluctuate
from period to period as our revenues fluctuate, and also as a result of the
timing and amount of investments we make in items related to cost of revenues.

Functionnary costs

Our operating expenses consist of research and development, sales and marketing,
and general and administrative expenses. Personnel costs are the most
significant component of operating expenses and consist of salaries, benefits,
and stock-based compensation expense. Operating expenses also include overhead
costs for facilities, including depreciation expense.

Research and Development. We invest heavily in research and development in order
to drive user engagement and customer satisfaction on our platform, which we
believe helps to drive organic growth of new users. This, in turn, drives
additional growth in, and better lifetime value of, our paid subscribers, as
well as increased advertising revenue from impressions from our free users.
Expenses are primarily made up of costs incurred for the development of new and
improved products and features in our applications. Such expenses include
compensation of engineers, designers, product managers, including stock-based

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compensation, materials, travel and direct costs associated with the design and
required testing of our platform. We expect engineers, designers, and product
managers to represent a significant portion of our employees for the foreseeable
future. We regularly test product improvements with our users. Many of these
tests start by making small changes in the product that affect small numbers of
users. As the tests evolve, they can require increasing investment and can
impact more users. This process of constant testing is how we implement many of
our new products and improvements to our platform and, in total, require large
investments and involve substantial time and risks to develop and launch. Some
of these products may not be well received or may take a long time for users to
adopt. As a result, the benefits of our research and development investments may
be difficult to forecast. We expect to continue to spend a significant portion
of our revenues on research and development in the future.

Sales and Marketing. Sales and marketing expenses are expensed as incurred and
consists primarily of brand advertising, marketing, digital and social media
spend, field marketing, travel, trade show sponsorships and events, conferences
and employee-related compensation, including stock-based compensation for
personnel engaged in sales and marketing functions, and amortization of
non-revenue generating capitalized software used to promote Duolingo. We expect
our sales and marketing expenses will decline as a percentage of revenues over
the long-term.

General and Administrative. General and administrative expenses primarily
consist of employee-related compensation, including stock-based compensation,
for management and administrative functions, including our finance and
accounting, legal, and people teams. General and administrative expenses also
include certain professional services fees, general corporate and director and
officer insurance, our facilities costs, and other general overhead costs that
support our operations. We expect to incur additional general and administrative
expenses as a result of operating as a public company, including expenses to
comply with the rules and regulations of the SEC and the Listing Rules of the
Nasdaq Global Select Market, as well as higher expenses for corporate insurance,
director and officer insurance, investor relations, and professional services.
We expect that our general and administrative expenses will increase in absolute
dollars as our business grows. However, we expect that our general and
administrative expenses will remain steady or decrease as a percentage of our
revenues as our revenues grow faster than these expenses over the long-term.

Other income, net of other expenses

Other income, net of other expenses consists primarily of foreign currency
exchange gains and losses in addition to interest expense, partially offset by
income earned on our money market funds included in cash and cash equivalents
and on our marketable securities.

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The following table sets forth our Consolidated Statement of Operations and
Comprehensive Loss data, including year-over-year change, for the periods
indicated:

                                                         Year Ended December 31,
(in thousands)                                                              2021           2020         % Change
Revenues                                                                 $ 250,772      $ 161,696           55  %
Cost of revenues (1) (2)                                                    69,186         45,987           50
Gross profit                                                               181,586        115,709           57
Operating expenses:
Research and development (1)                                               103,833         53,024           96
Sales and marketing (1) (2)                                                 59,170         34,983           69
General and administrative (1)                                              78,590         43,713           80
Total operating expenses                                                   241,593        131,720           83
Operating loss                                                             (60,007)       (16,011)         275
Other income, net of other expenses                                             49            303          (84)
Loss before provision for income taxes                                     (59,958)       (15,708)         282
Provision for income taxes                                                     177             68          160
Net loss and comprehensive loss                                          $ 

(60,135) ($15,776) 281%

________________

(1)Includes stock-based compensation expense as follows:

                                       Year Ended December 31,
(In thousands)                                             2021          2020
Cost of revenues                                        $      8      $      6
Research and development                                   9,298         2,773
Sales and marketing                                          881           348
General and administrative                                30,617        13,904
Total                                                   $ 40,804      $ 17,031

(2)Includes capitalized software amortization as follows:

                                    Year Ended December 31,
(In thousands)                                           2021       2020
Cost of revenues (a)                                    $   -      $  86
Sales and marketing (a)                                   693        546
Total                                                   $ 693      $ 632


________________

(a) Amortization of capitalized software is recorded in cost of sales and sales and marketing for revenue-generating and non-revenue-generating capitalized software, respectively.

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The following table sets forth the components of our Consolidated Statement of
Operations and Comprehensive Loss for each of the periods presented as a
percentage of revenue.
                                                     Year Ended December 31,
                                                                            2021       2020
Revenues                                                                    100  %     100  %
Cost of revenues                                                             28         28
Gross profit                                                                 72         72
Operating expenses:
Research and development                                                     41         33
Sales and marketing                                                          24         22
General and administrative                                                   31         27
Total operating expenses                                                     96         82
Operating loss                                                              (24)       (10)
Other income, net of other expenses                                           -          -
Loss before provision for income taxes                                      (24)       (10)
Provision for income taxes                                                    -          -
Net loss and comprehensive loss                                             

(24)% (10)%

Revenues. Revenues increased $89.1 million, or 55%, to $250.8 million during the
year ended December 31, 2021, from revenues of $161.7 million during the year
ended December 31, 2020. The main driver was an increase in subscription revenue
of $63.2 million, primarily due to an increase in the average number of paid
subscribers during the year ended December 31, 2021 as compared to the year
ended December 31, 2020. In addition, advertising revenues increased $11.5
million. The increase was predominantly driven by the increase in average
revenue per DAU for our ads and also by the increase in DAUs, which resulted in
increased advertisements served, during the year ended December 31, 2021 as
compared to the year ended December 31, 2020. Duolingo English Test revenue
increased by $9.5 million due to the growth in the number of tests taken, which
was in turn driven by an increase in the number of institutions that accept our
test and our marketing efforts. Finally, other revenue increased $4.9 million,
due to growth of in-app purchases.

The following table presents the evolution of revenues by product type:

                                              Year Ended December 31,
(in thousands)                                                   2021           2020          Change       % Change
Subscription                                                  $ 180,698      $ 117,501      $ 63,197           54  %
Advertising                                                      38,501         27,043        11,458           42  %
Duolingo English Test                                            24,658         15,155         9,503           63  %
Other                                                             6,915          1,997         4,918          246  %
Total revenues                                                $ 250,772      $ 161,696      $ 89,076           55  %


Cost of Revenues and Gross Margin. Total gross margin increased to 72.4% during
the year ended December 31, 2021, from 71.6% during the year ended December 31,
2020. This increase is mainly due to increased subscription margins driven by
reduced payment processing fees for subscription revenue due to improved
retention, and increased advertising margins driven by an increase in average
revenues per DAU for ads served to free users, which was partially offset by a
decrease in Duolingo English Test margins driven by increased proctoring costs.

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The following table provides the change in cost of revenues, along with related
gross margins:

                                                         Year Ended December 31,
                                                              2021                       2020
(in thousands)                                                               Costs             Gross Margin            Costs             Gross Margin

Total cost of revenues                                                    $  69,186                   72.4  %       $  45,987                   71.6  %


Operating Expenses

Research and Development. Research and development expense increased
$50.8 million, or 96%, to $103.8 million during the year ended December 31, 2021
from $53.0 million during the year ended December 31, 2020. The increase is
mainly attributable to our growth in headcount leading to an increase in
employee costs of $41.4 million, of which $3.3 million was related to the tender
offer, $1.3 million of it related to RSU expense recorded upon the IPO, in
addition to $4.2 million of it related to contractor costs.

Research and development continues to be our largest operating expense as we
invest heavily in it in order to drive user engagement with and customer
satisfaction in our platform, which we believe helps to drive organic growth in
MAUs and DAUs; this in turn drives additional growth in, and better retention
of, paid subscribers, as well as increased advertising opportunities with free
users.

Sales and Marketing. Sales and marketing expense increased $24.2 million, or
69%, to $59.2 million during the year ended December 31, 2021 from $35.0 million
during the year ended December 31, 2020. While we incurred $4.2 million of costs
related to one-time cash awards we granted to Duolingo contributors under our
non-employee volunteer program, which we refer to as contributor awards, and
$3.8 million of additional expenses related to employee costs, of which
$0.2 million was related to the tender offer and $0.2 million of it related to
RSU expense recorded upon the IPO, the majority of the increase was driven by
spending on performance marketing where we found opportunities to grow quality
DAUs at low cost and from brand marketing in priority markets such as Japan,
India and Southeast Asia. See Note 2 to our Consolidated Financial Statements
included elsewhere in this this Annual Report on Form 10-K for further
discussion of the contributor awards.

General and Administrative. General and administrative expense increased $34.9
million, or 80%, to $78.6 million during the year ended December 31, 2021 from
$43.7 million during the year ended December 31, 2020. The main drivers of this
increase were related to the following:

•Increased stock-based compensation costs of $22.5 million which were recognized
upon the IPO, offset by a decline of $10.2 million related to the November 2020
secondary transaction which did not occur in 2021. Stock-based compensation
costs recognized upon the IPO relate to the following:

• $5.6 million of costs related to the acceleration of founders’ stock options,

• $0.5 million of costs related to PSUs granted in prior periods, when the performance-based vesting condition was satisfied upon IPO, and

• $16.4 million of costs related to performance-based RSUs issued to our founders that will continue for the life of the plan,

•Increased employee related costs of $8.0 million due to the growth in headcount
in addition to $1.8 million of stock-based compensation costs related to the
tender offer,

• Professional fees of $5.9 millionof which $3.1 million was related to IPO and public preparation costs and $0.3 million was related to the takeover bid,

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• Increased costs incurred to expand the footprint of our facilities by $2.2 million,

• Increased insurance costs associated with being a public utility company. $1.8 millionand

• Other increases in $2.8 milliondue to increased headcount, contractor expenses, travel costs, and sales and VAT taxes.

Other income, net of expenses

Other income, net of other expenses, decreased $0.3 millionduring the year ended December 31, 2021 due to the variation in exchange rates, partially offset by the sale of a research and development tax credit.

Cash and capital resources

Since inception, we have financed operations primarily through revenues and the
net proceeds we have received from the issuance of equity and debt securities.
Prior to going public, we raised a total of $183.3 million in capital financing,
less issuance costs of $0.7 million. Additionally, we received aggregate net
proceeds of $431.1 million from the IPO on July 30, 2021, after deducting
underwriting discounts and fees of $24.5 million. The Company paid an additional
$4.9 million related to offering costs.

As of December 31, 2021, we had $553.9 million in cash and cash equivalents. Our
cash and cash equivalents primarily consist of bank deposits and money market
funds. Our marketable securities consist US government treasury and agency
securities.

We believe that our existing cash and cash equivalents, and cash flow from
operations will be sufficient to support working capital and capital expenditure
requirements for at least the next 12 months. Our future capital requirements
will depend on many factors, including our subscription growth rate and renewal
activity, the timing of cash received from our payment processing platforms, the
expansion of our sales and marketing activities, the introduction of new
products and the enhancements to existing products, and the current uncertainty
in the global markets resulting from the ongoing COVID-19 pandemic on our
operations. We may be required to seek additional equity. If we are unable to
raise additional capital or generate cash flows necessary to expand our
operations and invest in continued innovation, we may not be able to compete
successfully, which would harm our business, operations and financial condition.

A substantial source of our cash from operations comes from deferred revenue,
which is included in the liabilities section of our Consolidated Balance Sheet.
Deferred revenues consists of the unearned portion of customer billings, which
is recognized as revenue in accordance with our revenue recognition policy. As
of December 31, 2021, we had deferred revenues of $98.3 million, which is
recorded as a current liability and expected to be recognized as revenue in the
next 12 months, provided all other revenue recognition criteria have been met.

The following table summarizes our cash flows for the periods presented:

                                                   Year Ended December 31,
(in thousands)                                       2021                

2020

Net cash provided by operating activities    $       9,170            $ 

17,708

Net cash used for investing activities              (6,206)             

(4,014)

Net cash provided by financing activities          430,468              

46,953

Net increase in cash and cash equivalents    $     433,432            $ 60,647


Operating Activities

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Cash flows from operating activities can fluctuate significantly from period to
period due to timing of payments and cash collections. Our largest source of
operating cash is cash collection from sales of subscriptions to our users. Our
primary uses of cash from operating activities are for personnel expenses,
marketing expenses, hosting expenses and overhead expenses.

Cash provided by operating activities for the year ended December 31, 2021
decreased $8.5 million, or 48%, to $9.2 million. This decrease was due mainly to
an increase in net loss for the periods presented, partially offset by increases
from changes in working capital.

Investing activities

Cash used in investing activities increased $2.2 million, or 55%, to $6.2
million for the year ended December 31, 2021, from investing activities for the
year ended December 31, 2020 of $4.0 million. The increase is due to increased
costs from capitalization of software development and capital expenditures to
purchase property and equipment to support office space and site operations.

Fundraising activities

Cash provided by financing activities for the year ended December 31, 2021 was
$430.5 million, and was mainly driven by the net proceeds from the IPO of $431.1
million, less offering expenses of $4.9 million, and proceeds from exercises of
stock options of $12.5 million. These increases were partially offset by
payments made as a result of the tender offer of $8.2 million. Cash provided by
financing activities for the year ended December 31, 2020 was $47.0 million and
primarily relates to the issuance of convertible preferred stock, net of
issuance costs, of $44.9 million, in addition to proceeds from exercises of
stock options of $2.0 million.

Contractual obligations

The following table summarizes our contractual obligations and commitments as of
December 31, 2021:

                                                                    Payments Due by Period
                                                     Less than 1                                                 More than 5
                                    Total               Year              1-3 Years           3-5 Years             years
Operating lease
commitments (1)                  $  44,391          $    5,153          $   11,196          $    6,279          $    21,763
Other commitments (2)               23,000              10,500              12,500                   -                    -
Total contractual
obligations                      $  67,391          $   15,653          $   23,696          $    6,279          $    21,763


________________
(1)Consists of future non-cancelable minimum rental payments under operating
lease obligations, excluding short-term leases. Refer to Note 6 to our
Consolidated Financial Statements included elsewhere in this Annual Report on
Form 10-K for additional information.
(2)Other commitments consist of hosting costs. We are committed to spend $25.0
million over two years, with a minimum spend of $10.5 million in the first year
and $12.5 million in the second year.

Off-balance sheet obligations

We did not have during the periods presented, and we do not currently have any
off-balance sheet financing arrangements or any relationships with
unconsolidated entities or financial partnerships, including entities sometimes
referred to as structured finance or special purpose entities, that were
established for the purpose of facilitating off-balance sheet arrangements or
other contractually narrow or limited purposes.

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Significant Accounting Policies and Estimates

The preparation of financial statements in accordance with GAAP requires
management to make estimates and assumptions about future events that affect
amounts reported in our Consolidated Financial Statements and related notes, as
well as the related disclosure of contingent assets and liabilities at the date
of the financial statements. Management evaluates its accounting policies,
estimates and judgments on an ongoing basis. Management bases its estimates and
judgments on historical experience, current trends and various other factors
that are believed to be relevant at the time Consolidated Financial Statements
are prepared. Actual results may differ from these estimates under different
assumptions and conditions. To the extent that there are differences between our
estimates and actual results, our future financial statement presentation,
financial condition, results of operations, and cash flows will be affected.

Management evaluated the development and selection of its critical accounting
policies and estimates and believes that the following involve a higher degree
of judgment, complexity or uncertainty and are most significant to reporting our
results of operations and financial position, and are therefore discussed as
critical. The following critical accounting policies reflect the significant
estimates and judgments used in the preparation of our Consolidated Financial
Statements.

Revenue Recognition

Nature of Revenue

We account for revenue contracts with customers by applying the five step model
in Accounting Standards Codification (ASC) 606, Revenue from Contracts with
Customers. Our predominant sources of revenue are time-based subscriptions,
in-app advertising placement by third parties and the Duolingo English Test.
Revenue is recognized upon transfer of control of promised goods or services to
customers in an amount that reflects the consideration expected to be received
in exchange for those goods or services. Revenue is recognized net of any taxes
collected from customers, which are subsequently remitted to governmental
authorities.

Revenue from time-based subscriptions includes a stand-ready obligation to
provide hosting services that are consumed by the customer over the subscription
period. Users can purchase Duolingo monthly or they can purchase a six-month or
year-long subscription and pay for the subscription at the time of purchase.
Under the year-long subscription, users can purchase a single plan or a family
plan. The family plan includes up to six users to be on one subscription. Such
payments are initially recorded to deferred revenue. The user has the ability to
download limited content offline. However, as there is a significant level of
integration and interdependency with the online functionality, we consider the
service to be a single performance obligation for the online and offline
content.

We enter into arrangements with advertising networks to monetize the in-app
advertising inventory. Revenue from in-app advertising placement is recognized
at a point in time when the advertisement is placed and is based upon the amount
received.

Duolingo English Test revenue is generally recognized once the tests have gone
through the proctoring process and a certification decision has been made. This
process usually takes less than 48 hours after the test has been completed and
uploaded. Customers have 21 days from the date of purchase to take the exam or
their purchase will expire and revenue will be recognized. The vast majority of
customers complete their exams prior to expiration. Sometimes organizations may
purchase tests in bulk via coupons with a one year expiration date. We defer
revenue from all tests that have not been proctored nor expired.

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Our users have the ability to purchase in-app consumable virtual goods. We recognize revenue over the period in which the user consumes the virtual good, which is generally less than one month.

Principal Agent Considerations-We make our application available to be
downloaded through third-party digital distribution service providers. Users who
purchase subscriptions also pay through the respective app stores. We evaluate
the purchases via third-party payment processors to determine whether its
revenues should be reported gross or net of fees retained by the payment
processor. We are the principal in the transaction with the end user as a result
of controlling, hosting, and integrating the delivery of the virtual items to
the end user. We record revenue gross as a principal and record fees paid to
third-party payment processors as Cost of revenues.

Significant judgment on revenue agreements with multiple deliverables

Determining whether products and services are considered distinct performance
obligations that should be accounted for separately versus together may require
significant judgment. Our time-based subscriptions allow users the ability to
download limited content offline. Significant judgment is required to determine
whether this offline content should be considered distinct and accounted for
separately, or not distinct and accounted for together with the online
functionality provided and recognized over time. As there is a significant level
of integration and interdependency with the online functionality, which is not
the case with the offline functionality, we believe we have a single performance
obligation for the online functionality and offline content.

Share-based compensation

We follow ASC 718, Compensation-Stock Compensation, to account for our stock-based compensation.

Stock-based Compensation

ASC 718 requires all stock-based payments to employees, including grants of
employee stock options, to be recognized in the income statement based on their
fair values. We generally grant our option awards in a combination of
service-based and performance-based. We measure the fair value of our options on
the date of grant using the Black-Scholes pricing model which requires the use
of several estimates, including the volatility of our share price, the expected
life of the option, risk free interest rates and expected dividend yield. The
use of different assumptions in the Black-Scholes pricing model would result in
different amounts of equity based compensation expense. Furthermore, if
different assumptions are used in future periods, our equity based compensation
expense could be materially impacted in the future.

Prior to the completion of our IPO, we were not a publicly traded company and
had only limited historical information on the price of our common stock as well
as employees' option exercise behavior. As a result, we could not rely on
historical experience alone to develop assumptions for our share price
volatility. As such, our share price volatility was estimated with reference to
a peer group of companies. Subsequent to the completion of our IPO, we
transitioned to utilize the closing price of our publicly-traded stock to
determine our volatility. We determined the expected life of our options using
the simplified method described in the SEC Staff Accounting Bulletin Topic 14,
Share-Based Payment, which defines the expected life as the average of the
contractual term and the vesting period. The risk-free interest rate is based on
the yield curve of a zero-coupon US Treasury bond on the date the option award
was granted with a maturity equal to the expected term of the option award. We
have not and do not expect to pay dividends on our common shares. See Note 9,
"Stock Based Compensation," to our Consolidated Financial Statements appearing
elsewhere in Annual Report on Form 10-K, for further information on equity based
compensation.

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Restricted Stock Units (RSU)

We began to grant RSUs in November 2020. The fair value of RSUs is estimated
based on the fair value of our common stock on the date of grant. Each RSU award
vests based upon the satisfaction, during the term of the RSUs, of two
requirements: length of service and a liquidity event defined as a change in
control or a qualified IPO. The service-based vesting condition for the majority
of these awards is satisfied over four years. The liquidity-based vesting
condition is satisfied upon the occurrence of a qualifying liquidity event. We
measure and recognize compensation expense for all stock-based awards based on
the estimated fair value of the award. Prior to July 30, 2021, no stock-based
compensation expense had been recognized for RSUs because the liquidity-based
vesting condition had not been probable of being satisfied. Upon the IPO, the
liquidity-based vesting condition was met and $2,035 of stock-based compensation
expense was recognized related to these awards.

Performance-based RSUs

In June 2021, we granted an aggregate of 1.8 million performance-based RSUs
("Founder Awards") to our founders. The Founder Awards vest upon the
satisfaction of both a service-based condition and a performance-based condition
and generally are settled one year after vesting. The service-based condition is
satisfied as to 25% of the Founder Awards on each anniversary of the completion
of the IPO, subject to the continuous service of the founders through the
applicable date. The performance-based condition will be satisfied with respect
to each of ten equal tranches only upon the achievement of the specified
stock-price hurdles for each such tranche over a period of ten years from the
date of grant. The fair value of the Founder Awards is determined using a model
based on multiple stock-price paths developed through the use of a Monte Carlo
simulation that incorporates into the valuation the possibility that the
stock-price hurdles may not be satisfied. The associated stock-based
compensation is recorded over the derived service period, using the accelerated
attribution method. If the stock-price hurdles are met sooner than the requisite
service period, the stock-based compensation expense will be adjusted to
prospectively recognize the remaining expense over the remaining derived service
period. Provided that the founders continue to provide services to us,
stock-based compensation expense is recognized over the derived service period,
regardless of whether the stock-price hurdles are achieved.

Common Stock Valuations

Subsequent to our IPO in July 2021, the fair value of common stock is determined
based upon the closing price of our Class A common stock immediately prior to
the grant date.

Prior to our IPO, determining the fair value of our common stock requires
complex and subjective judgment and estimates. There is inherent uncertainty in
making these judgments and estimates. The absence of an active market for our
common stock required our board of directors to estimate the fair value of the
common stock for purpose of setting the exercise price of the options and
estimating the fair value of the common stock at the time options were granted
based on factors such as valuations of comparable companies, the status of our
development and sales efforts, revenue growth, and additional objective and
subjective factors relating to our business. We performed its analysis in
accordance with applicable elements of the practice aid issued by the American
Institute of Certified Public Accountants' ("AICPA") Practice Guide, Valuation
of Privately Held Company Equity Securities Issued as Compensation; with this
guidance, our board of directors exercised reasonable judgment and considered
numerous and subjective factors to determine the best estimate of fair value of
our common stock, including the following:

Company specific factors

•Actual and forecast operational and financial performance based on management’s estimate;

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•Developing and maintaining relationships with clients;

•Customer and industry recognition;

• Hiring and retaining key personnel;

•The historical absence of a public market for our common stock;

General economic factors

• Industry trends and competitive environment;

• Trends in customer and public spending, including customer and public confidence;

•Global economic indicators;

•The general economic outlook; and

• Common stock valuations have historically leveraged historical valuations we have received to value our common stock, using an income-based approach.

Income taxes

Deferred tax assets and liabilities are recognized principally for the expected
tax consequences of temporary differences between the tax basis of assets and
liabilities and their reported amounts, using currently enacted tax rates. The
measurement of a deferred tax asset is reduced, if necessary, by a valuation
allowance if it is more likely than not that some portion or all of the deferred
tax asset will not be realized. Significant judgment is required in evaluating
the need for and magnitude of appropriate valuation allowances. The realization
of our deferred tax assets is dependent on generating future taxable income and
the reversal of existing temporary differences. Changes in tax laws and
assumptions with respect to future taxable income could result in adjustment to
these allowances. As of December 31, 2021, we maintained a valuation allowance
of approximately $76,293 against net deferred tax assets related to both
domestic and foreign net operating loss carryforwards, and state research and
development credit carryovers as its future utilization remained uncertain.

In addition, we recognize a tax benefit for uncertain tax positions only if we
believe it is more likely than not that the position will be upheld on audit
based solely on the technical merits of the tax position. We evaluate uncertain
tax positions after the consideration of all available information.

Recent accounting pronouncements

See Note 2, Basis of Presentation and Summary of Significant Accounting Policies
in the notes to our Consolidated Financial Statements included in Part I, Item I
of this Annual Report on Form 10-K for a discussion of Recent Accounting
Pronouncements.

Emerging Growth Company Status

We are an "emerging growth company" as defined under the JOBS Act. Under the
JOBS Act, emerging growth companies can delay adopting new or revised accounting
standards until such time as those standards would otherwise apply to private
companies. While we have not historically delayed the adoption of new or revised
accounting standards until such time as those standards would apply to private
companies, we have elected to take advantage of this extended transition period
and, as a result, our operating results and financial statements in the future
may not be comparable to the operating results and financial statements of
companies who have adopted the new or revised accounting standards.

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© Edgar Online, source Previews

Amazon has named 140 U.S. colleges, including nine in Texas, where hourly employees can take classes and earn degrees as part of the company’s plan to raise the education level of its workforce.

Amazon said it would spend $1.2 billion to provide free tuition benefits to more than 300,000 employees by 2025. The largest U.S. online retailer said on Thursday it had expanded colleges where it had established a relationship for its employees.

Hourly Amazon workers in Texas can pursue bachelor’s degrees at these schools:

• Alamo College
• Austin Community College
• Dallas College
• Houston Community College
• Lonestar College
• Tarrant County Community College
• Texas State University
• University of Texas at Dallas
• University of North Texas

Eligibility for the Employee Education Program begins after 90 days of employment. Education benefits also include industry certificates, English courses, and high school graduation programs.

Amazon has more than 70,000 employees in Texas, including 37,000 employees in Dallas-Fort Worth, according to an economic impact report released last summer.

Walmart is the largest employer of hourly workers to extend tuition benefits to all employees. Traditionally, companies provided tuition allowances to salaried workers, but the burden of student debt has led large employers to rethink how tuition allowances are awarded. Other companies such as Taco Bell and Disney Co. have added such benefits.

In 2018, Walmart originally asked workers to contribute $1 a day to cover costs. Last year, Walmart said it would cover full tuition and books for its 1.5 million part-time and full-time Walmart and Sam’s Club employees in the United States.

Target followed in 2021 with a program for its hourly workers and said it would spend $200 million over the next four years.

Twitter: @MariaHalkias

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