Babbel Sees Fast Growth Despite Scrapped IPO

Babbel Postpones IPO Amidst Market Volatility

The Berlin-based language learning platform, Babbel, had initially planned an IPO on the Frankfurt stock exchange in September. However, the company decided to withdraw its plans just days before the listing. This decision was prompted by concerns surrounding the unfolding Evergrande debt crisis and its impact on global stock markets.

A new date for the IPO has not yet been announced. Babbel’s CEO, Arne Schepker, indicated that the company is continuously assessing market conditions.

Unexpected Setback and Strong Financial Position

The postponement of the IPO was unanticipated. Schepker acknowledged the disappointment felt by the team who had dedicated significant effort to the process.

“We had strong investor interest and positive feedback,” Schepker stated. “However, the Evergrande situation created unfavorable conditions for IPOs, forcing us to make a difficult choice.”

Despite this setback, Babbel maintains a robust financial position. The company is well-funded, possesses substantial cash reserves, and has access to alternative financing options. This allows for continued investment in product development and potential acquisitions.

Growth of Babbel Live and B2B Services

One of Babbel’s key growth areas is its live online classes, which complement its existing app-based learning tools.

Launched earlier in the year, Babbel Live experienced a 300% increase in subscriptions and a 400% rise in revenue during the second half of 2021, compared to the first half.

Currently, Babbel Live hosts 15,000 classes monthly, serving tens of thousands of learners. Approximately 25% of these learners begin their journey with the live platform, while the remaining 75% start with the app.

Babbel Live, alongside the company’s B2B offering, Babbel for Business, now contributes 9% of the company’s total revenue.

Positive Business Performance

Overall business performance remains strong. Billable sales in November exceeded $20 million, representing a 30% increase compared to November 2020.

Schepker attributes this success, in part, to the company’s ability to attract highly qualified teachers. Babbel’s reputation for a high-quality product is a significant draw.

“We strive to integrate the best of both human and artificial intelligence,” he explained. “This approach makes us particularly appealing to educators seeking opportunities in live tutoring.”

Expansion of Babbel for Business

On the B2B front, Babbel onboarded 5,000 new corporate learners in November. The company now collaborates with over 1,000 businesses.

The Babbel for Business service was initially limited to Germany but has recently expanded to Italy. Plans are underway to extend its reach to other European markets and eventually the United States.

Schepker highlighted the substantial potential of the corporate language learning market, which represents approximately one-third of the overall language learning industry.

Future Integrations and a Cohesive Ecosystem

Looking forward, Babbel is focused on enhancing integration between its various platforms. The goal is to enable teachers on Babbel Live to access a student’s progress within the app, providing a more personalized learning experience.

Babbel already offers a diverse range of learning tools, including podcasts and in-app games. The company aims to create a more unified and cohesive platform.

“Learners often combine different learning methods, but this can be fragmented,” Schepker observed. “Our vision is to create a seamless ecosystem where each learning activity informs and enhances the others.”

“This integration will benefit both learners and teachers, accelerating the learning process by connecting all aspects of their language journey.”