Revenue
$50.00M
2021
Valuation
$395.00M
2022
Growth Rate (y/y)
51%
2022
Funding
$143.81M
2023
Revenue
Note: Preply’s revenue estimated using publicly available data.
Preply made $50M in 2021, up 39% from last year. Its revenue grew 4X in 2020, driven both by the shift to digital learning due to COVID lockdowns and from Preply’s expansion into the United States. As of last year, United States clients made up a third of Preply’s total revenue.
Duolingo, in comparison, increased revenue 100% in 2020 to hit $160M. It was growing faster at Preply’s scale, going from $38M in 2018 to $80M in 2019, a 110% increase (Duolingo S-1).
Valuation
Note: Data for Udemy, Duolingo, and Thinkific gathered from S-1/10K docs. For other companies, valuation, revenue, and growth rate are based on SEC disclosures, Delaware filings, Sacra estimates, and reports from TechCrunch. Bubble size corresponds to company valuation. Vertical axis has a log scale. Estimates are up-to-date for July 2022.
Preply has raised $100M from Hoxton Ventures, Owl Ventures, Evli Growth Partners, and others. It was valued at $395M in March 2022 with a valuation-to-revenue multiple of 8x.
One of its closest competitors, GoStudent, is valued at $3.5B and has raised $685M. Duolingo, the largest language learning app globally, has a market cap of $3.1B with a valuation to revenue multiple of 12x.
Business Model
Preply is an online gig marketplace for live language learning. There are two big notable aspects to their business model: verticalization around the core use case of learning English as a second language, and the geographical arbitrage of labor.
Where marketplaces like Upwork or Fiverr went broad (Upwork offers 500+ categories of different gigs), Preply went highly vertical, designing specifically for helping people acquire English as a second language.
That focus has gotten them tens of thousands of tutors on the platform and made them one of the biggest online marketplaces for language learning. While horizontal marketplaces like Upwork can attract a larger overall number of service providers and seekers, they lack the specific features to make repeated engagements on the platform easier or more efficient—whereas Preply has brought video calls and lesson plans in-app to help tutors and clients work together over the long-term.
We’re seeing these same dynamics play out across different categories of work: legal, IT, design, accounting, HR, and engineering. Across every major vertical of freelance work, we’re seeing verticalized marketplaces emerge that can provide a better user experience for the supply and demand side both.
Key to the growth cycle of Preply’s marketplace is how it enables geographical labor arbitrage both for clients and for students.
People who want to learn a new language don’t have to do it from someone in their own country—they can do it from someone in the country they want to visit, and potentially pay much less than they would for a domestic teacher.
At the same time, that tutor can get much more money than they likely would teaching English to someone in their home country.
Vertical marketplaces like Preply require more specialized supply and demand, which means they may grow slower than more horizontal marketplaces like Upwork, but once they get going, network effects can make them just as formidable.
Every new tutor on Preply adds value for Preply users; every new user adds a new source of billable hours for the tutors in the marketplace.
Key to the design of Preply’s marketplace are how it facilitates connections between clients and teachers, how it takes work off tutors’ plates, and how it creates liquidity in the marketplace by embedding a concept of trust.
Connecting clients and teachers
Before Preply, tutors looking for work teaching language skills could either search for clients locally (through newspapers and classified ads, as well as localized platforms like Facebook) or via generalized online, public marketplaces like Craigslist. Either way, tutors would have to manage all aspects of their business themselves, from searching for new clients to booking them time to managing their calendar.
Preply’s marketplace brings in a stream of new clients (of which there are 800,000 as of 2022) and offers tutors a place to manage all their existing relationships with clients, book new projects of discrete length and time commitment, and via a video interface called Preply Classroom, run the sessions themselves.
For students, Preply provides another kind of value proposition. Traditionally, your average client interested in learning another language would likely end up taking classes with someone in their home country who knows the target language. Preply offers the ability to lower the cost of language learning by providing access to teachers in other countries who can speak both languages—a client’s home language and their desired language.
An English and Spanish speaker in Colombia can teach Spanish to an American living in New York City, enabling them to earn a higher salary than they would teaching English in-country, and giving the student on the other side of the transaction a more affordable way to learn the language.
In addition to being more affordable, this model also means that Preply can serve the long tail of “language connections” not available in the subscription-app model of companies like Duolingo.
Even native Telugu, Uzbek or Kazakh speakers have 10+ options for English tutors on Preply’s platform.
Managing payments
When transacting on a generalized marketplace or in the physical world, both tutors and their clients have to come up with answers to questions like how much they should charge, how they know they’ll get paid, and how they should handle any disputes.
What verticalized marketplaces like Preply do to make them more attractive than finding a tutor through Upwork or a Facebook group is provide specific guidance and tooling around these kinds of thorny questions.
Preply helps tutors manage the back-office tasks of the job like setting a rate, collecting payments, and getting paid. Preply tutors choose how much they want to get paid, and payments accrue on the platform until tutors withdraw them using Payoneer, PayPal, or Skrill (for withdrawals in US dollars) or Wise (for withdrawals in other currency).
On Preply, tutors can see what other tutors in their area are charging to teach similar subjects, and adjust accordingly if they need more clients—or if they find out they’re not charging enough.
Additionally, Preply provides its tutors with data collected from the platform to help their tutors learn about things like what subjects are experiencing high demand and how they can increase their retention and bookings.
The same way Uber has worked to make payouts available to its drivers as soon as possible after conducting a ride, Preply sends tutors payment to their internal Preply wallet as soon as a lesson has been conducted and confirmed by the student.
Preply takes a 100% commission on the first lesson a student takes with a tutor, and on subsequent lessons, they take between 18% and 33% commission depending on the number of hours a tutor has completed across the platform (Preply FAQ).
Reputation and trust
Reputation and trust are critical to nail for a marketplace looking to create liquidity—a continually replenishing supply of people on both the supply and demand side of the ecosystem.
On Craigslist, Facebook, and local sources for language learning like classified ads, the reputation of a tutor may hinge on little more than what the tutor themselves has written in their ad.
One of the most important functions of marketplaces, from Airbnb to Preply, is how they’re able to instantiate the reputation of a certain listing. Airbnb upended short-term housing by taking Craigslist’s model and introducing the concept of reviews that could tell a potential renter what was special about a property. They also started taking professional photographs of hosts’ properties, replacing user-generated images—and in response, saw listings’ popularity grow considerably.
Similarly, Preply shows a tutor’s number of active students, rating, past reviews, as well as specific types of instruction for which that coach is best suited. This helps potential clients sort from amongst the many tutors who might be available in their particular desired language configuration (target and originating language) as well as zero in on the right tutor when it comes to consideration of quality vs. cost.
Product
Preply started as a website for ACT and SAT preparation in 2012, but quickly pivoted to English tutoring in 2013. It achieved product-market fit through a combination of three strategic decisions:
- Instead of competing with large tutoring companies in the US, it started with less competitive markets of Poland, Ukraine, Russia, Spain, and Germany in Europe, and Brazil and Mexico in the Americas.
- Many people in these countries learn English as a life skill to build business relations or collaborate with colleagues, rather than a hobby. Preply connected them with native English speakers who taught how to conduct business in English rather than generic conversational skills.
- Preply spent heavily on online marketing to acquire tutors. Within three years of launch, by 2016, it had 25,000 tutors registered on its marketplace.
Tutors on Preply are free to set any rates. What they make varies between $10 to $39 per hour, depending on the subjects and their experience. A tutor's average earning is $18.30 per hour, with an English tutor making $19.4 hourly. Rates for non-language subjects are typically more than languages.
Tutor’s profile page
Tutor’s performance dashboard
Students can search for tutors using several criteria: tutor’s language, price per lesson, location, learning context, and time preference. After selecting a tutor, students can view their profile and chat with them.
Preply’s online classroom
