¿Dónde está la biblioteca?

That’s about the only Spanish my mom remembers. She was born in Peru and spoke fluently as a toddler yet somehow forgot it all and managed to fail high school Spanish. The irony.

Sadly, directions to the library were of little use in our trip to the Yucatan last year. So we had to rely on my broken Spanish to get around. Thankfully, English is common across most of the region, keeping my embarrassment to a minimum.

I need to brush up on German as well. We are planning to visit Bavaria at some point and right now communicating with the locals might be difficult. All I can say is “Ein Bier, bitte.”

There are millions of other Americans in the same boat. Surveys indicate that roughly four-in-five U.S. adults have big travel plans this summer. Of those, nearly one-quarter are jetting off to international destinations like Paris. Time to learn a few words besides croissant and soufflé.

Many of us took foreign language classes in high school, and some pursue further study in college. But other than a few words and phrases, it usually doesn’t stick — especially after 10 or 20 years. Let’s face it, memorizing and reciting a passage from Don Quixote junior year probably doesn’t prepare anyone to converse with locals on the streets of San Juan.

Still, that’s better than nothing.

Enrollment numbers for foreign language classes have been steadily falling for years. Some blame the lack of state-level curriculum requirements, others the lack of qualified teachers. In any case, just 20% of K-12 students have a foreign language class on their transcript (versus 92% in Europe).

That explains why so many are now taking the initiative to learn outside a formal classroom setting. According to Travel & Leisure, nearly half of Americans actively practice a foreign language before traveling abroad. The big five are Italian, German, French, Spanish, and Japanese. But some of the fastest-growing languages might surprise you… Turkish. Indonesian. Ukrainian. Vietnamese.

As we speak, tens of millions of Americans are investing time and energy to become bilingual. The estimated number stood at approximately 30 million back in 2020. Of course, that was during the lockdowns, when there was plenty of time for leisure pursuits. You can only binge-watch Netflix for so long.

Each day brings hopeful new learners taking their first steps to foreign language fluency.

A few minutes per day can make a big difference over time — just like the gym. And most find it well worth the effort. Learning a foreign language removes much of the trepidation associated with venturing overseas. More than that, it can provide deeper cultural immersion and connection. According to surveys, most Americans believe that speaking like a native can unlock new adventures and make trips more enjoyable.

Of course, it’s not always about vacation.

Some study to communicate with extended family… or neighbors. According to Census data, there are nearly 70 million people living in the U.S. (including half of New Yorkers) who speak a primary language other than English. That includes 3.5 million Chinese speakers, and 1.8 million Korean.

There are large populations of Arabic speakers in Michigan, Polish speakers in Wisconsin, and Russian speakers in Illinois.

Language proficiency can also open doors in the business world and be a savvy career move. According to Forbes, more than half of large employers intend to step up their recruitment of multilingual candidates over the next five years. This resume booster can dramatically increase both job prospects and advancement opportunities — as well as salary demands.

In fact, CNN Money rated bilingualism as the single hottest skill for job seekers trying to stand out from the crowd.

Whatever the reason, many are saying hola to foreign language studies. Or bonjour. Or ni hao. And most are willing to shell out a few bucks to sharpen their linguistic skills. Online courses are the preferred avenue for most. They are effective and affordable and work around anyone’s schedule.

Babbel, one of the most popular, generally runs $8 to $10 per month depending on the subscription plan — about the price of a Starbucks coffee. For $50 per month, you can join live classes taught by certified language instructors. And those with real aspirations of becoming multi-lingual can buy a lifetime subscription plan with unlimited access to 60,000 lessons across more than a dozen languages.

It’s a modest investment. But it adds up. The platform has been downloaded by more than 15 million paying subscribers. The company reportedly hauled in $750 million in revenues last year and has toyed with the idea of an IPO (initial public offering) on the Frankfurt Stock Exchange.

There are other players trying to carve out a slice of this lucrative market. Thanks to the research I’ve done for this little article, my social media feeds have been flooded with offers from Rosetta Stone, Jumpspeak and a host of others.

But one early-mover has built a huge lead over the rest of the field and has been attracting roughly 100,000 new users per day. Created in 2012, it has spent more than a decade helping individuals gain proficiency in a second (or third) language. The easy-to-use platform is available to anyone with an internet connection and ranks as the highest-grossing mobile phone app in the education category on Google Play and the Apple App Store.

I’m talking about Duolingo (NSDQ: DUOL).

The brainchild of a Carnegie Mellon professor, Duolingo was initially meant to be a nonprofit entity. But that idea was quickly dismissed, and the fledgling business attracted serious financial interest from private equity and institutional backers via multiple rounds of fundraising before it went public in 2021.

Duolingo offers instructional courses in more than 40 different languages ranging from Spanish to Navajo (even Klingon). Forget about rote memorization of verb conjugations and other mundane learning methods. Duolingo turns the entire process into something resembling a video game, with fun interactive lessons and quizzes, as well as stories from native speakers.

The completion of tasks and challenges is rewarded with achievement badges, and users are always encouraged to keep reaching for the next level. Engaged learners are far more likely to continue studying, and many have made Duolingo lessons a daily habit.

It took some time to effectively monetize the rapidly growing user base. But the company is now approaching the $1 billion annual revenue threshold. That income flows from multiple tributaries: monthly subscriptions, advertising, English proficiency test fees, and in-app purchases.

The Duolingo user base has seen exponential growth over the past five years and now stands at 130 million. One-third of those users log in daily for lessons. The pool of daily active users (DAUs) has expanded by 50% over the past year and grew by 6 million last quarter alone – record enrollment.

Most visitors sign up for the free version, but the paid-subscriber penetration rate has ticked up to 9%. There has been strong adoption for a new premium tier called Duo Max, which aside from eliminating ads allows users to practice conversing with an AI-driven chat partner named Lily.

After a decade of growth, fixed overhead expenses are finally starting to scale and profitability has reached a tipping point. Operating leverage drove net income to $88 million last year, a seven-fold increase. And with minimal capital expenditures, the business churns out buckets of free cash flow – more than $100 million last quarter alone.

Subscription bookings are now running at an annualized pace of $1.1+ billion. Needless to say, this performance has been well rewarded. Even after a recent pullback, the stock has more than doubled over the past 12 months, climbing from below $200 to nearl $400.

The current valuation isn’t for the faint of heart, with the business trading at more than 60 times forward EBITDA. Inevitably, DAU growth has also begun to decelerate in recent months from 50% to 40%. But operating efficiencies are driving margins upward. More importantly, Duolingo has barely tapped into a much larger addressable market.

Aside from the core foreign language content, the company is branching out into adjacent areas: music, math, even chess. One research firm is forecasting the game-based learning market to triple in size to $18 billion by 2030, and Duolingo has the inside track.