Duolingo’s IPO could cast golden halo on edtech startups

Edtech giant Duolingo set an initial price range for its impending IPO today. The unicorn expects to price in its public debut at $85 to $95 per share, selling 3,700,000 in the deal.

Another 1,406,113 shares are being sold by existing shareholders, and 765,916 shares are being offered to underwriting banks as part of the transaction. All told, the company may see 5,872,029 shares trade hands in its IPO, worth some $557,842,755. Duolingo itself can raise as much as $424,262,020 in gross proceeds at its current range, provided that its underwriting banks exercise their option.

The IPO is a material fundraising event for the company. Before its public offering, the largest single hit of capital that Duolingo raised was a $45 million Series D from 2015.

Let’s dig into what Duolingo, which we profiled in much more detail here, is worth at its IPO price and peek at its preliminary second-quarter results. Our goal will be to understand its valuation in the context of its growth. From there, we’ll be able to draw some general conclusions about the larger edtech startup market.

What’s it worth?

After its IPO, Duolingo will have 35,892,152 shares outstanding, sans its underwriter’s option. At the lower and upper bounds of its simple IPO valuation, Duolingo is worth $3.1 billion to $3.4 billion.

As with every company going public, Duolingo’s IPO valuation rises if we include shares that have vested in RSU or options form, but have yet to be exercised. In the case of Duolingo, its share count rises to 43,776,271, per an initial TechCrunch analysis of the company’s RSU and options details provided in its S-1 filing. At that share count, Duolingo is worth $3.7 billion to $4.2 billion.

For every number provided, the company’s underwriter’s option adds modestly.

All valuations listed above are a premium over the company’s final private price set during its November 2020 Series H round of funding. That $35 million round valued the company at around $2.4 billion.

At first blush, then, the company’s IPO price range feels strong, regardless of whether we lean on simple or fully diluted share counts to come to a new price for the firm. But how do its new valuations stack against its recent revenue? Let’s find out.