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REVENUE
 12 Months Ended
Dec. 31, 2021
Revenue from Contract with Customer [Abstract]  
REVENUE REVENUE
The Company has three predominant sources of revenues; time-based subscriptions, in-app advertising placement by third parties, and the Duolingo English Test. Revenue is recognized upon transfer of control of promised products or services to users in an amount that reflects the consideration the Company expects to receive in exchange for those services. The Company does not enter into contracts with a customer that contain multiple promises that result in multiple performance obligations. Revenue is recorded net of taxes assessed by a government authority that are both imposed on and concurrent with specific revenue transactions between us and our users.
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 also 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, the Company considers the service to be a single performance obligation for the online and offline content.
The Company enters 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. Virtually all customers complete their exams prior to expiration. Sometimes organizations may purchase tests in bulk via coupons with a
one year expiration date. The Company will defer revenue from all tests that haven’t been proctored nor expired.
The Company’s users have the option to purchase consumable in-app virtual goods. The Company recognizes revenue over the period in which the user consumes the virtual good, which is generally within a month.
Principal Agent Considerations—The Company makes its application available to be downloaded through third-party digital distribution service providers. Users who purchase subscriptions also pay through the respective app stores. The Company evaluates 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. The Company is 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. The Company records revenue gross as a principal and records fees paid to third-party payment processors as Cost of revenues.
Contract Balances—Deferred revenue mostly consists of payments we receive in advance of revenue recognition, and is mostly related to time-based subscriptions, which will be recognized into revenue over the course of the upcoming year (recognized over 12 months or less). Additionally, the Duolingo English Test has deferred revenue related to tests that have been purchased, but will not be recognized until the tests have been proctored.
Disaggregation of Revenue
In accordance with ASC 606, Revenue from Contracts with Customers, the Company disaggregates revenue from contracts with customers into source of revenue, which most closely depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
Information regarding source of revenues:
20212020
Over time$180,698 $117,501 
Point in time70,074 44,195 
Total revenue$250,772 $161,696 
Information regarding revenue by stream:
20212020
Revenues:
Subscription$180,698 $117,501 
Advertising38,501 27,043 
Duolingo English Test24,658 15,155 
Other (1)6,915 1,997 
Total revenues$250,772 $161,696 
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(1) Other revenue is mainly comprised of in-app purchases of virtual goods.
Information regarding geography of revenues is based upon the location where the users are located or, in the case of the Duolingo English Test, where the tests are taken:
20212020
United States$109,163 $70,978 
United Kingdom25,163 15,245 
Rest of World116,446 75,473 
Total$250,772 $161,696 
Customers located in the United States accounted for 44% of total revenues for both of the years ended December 31, 2021 and 2020, respectively, and customers located in the United Kingdom accounted for 10% and 9% for the years ended December 31, 2021 and 2020, respectively. No other country accounted for more than 10% of revenue in the periods presented.
Changes in deferred revenues were as follows:
20212020
Beginning balance—January 1$54,792 $26,307 
Amount from beginning balance recognized into revenue(54,792)(26,307)
Recognition of deferred revenue(139,371)(91,193)
Deferral of revenue237,638 145,985 
Ending balance—December 31$98,267 $54,792