HANGZHOU, China, Aug. 5, 2024 /PRNewswire/ -- Youdao, Inc. ("Youdao" or the "Company") (NYSE: DAO), an intelligent learning company with industry-leading technology in China, today announced that it will report its second quarter 2024 financial results on Thursday, August 22, 2024, before the open of the U.S. markets.The earnings teleconference call with simultaneous webcast will take place at 6:00 a.m. Eastern Time on Thursday, August 22, 2024 (Beijing/Hong Kong Time: 6:00 p.m., Thursday, August 22, 2024). ...

HANGZHOU, China, July 11, 2024 /PRNewswire/ --Youdao introduced its latest smart device, the Youdao Dictionary Pen X7, at the World AI Conference on July 4, 2024, in Shanghai. This launch marks a significant step forward in the field of integrated tutoring, utilizing artificial intelligence to expand educational opportunities.At the Youdao booth, a series of impressive and innovative products were displayed. These included Youdao Listening Pod E6 Pro, serving both as a listening device and a language coach; ...

Investment Rating - The investment rating for the company is "Buy" with a current price of $3.69 and a fair value of $7.13 [1][2]. Core Insights - The company achieved its first consecutive profitable quarters, with Q1 2024 revenue of 1.392 billion RMB, a year-on-year increase of 19.65%, and a net profit of 12 million RMB, marking a turnaround from losses [2][12]. - Digital content services showed steady growth, while online marketing services experienced significant momentum, with a 125.89% year-on-year revenue increase in Q1 2024 [2][12]. - The company has improved cost control, with a sales expense ratio of 32.7%, down 15.9 percentage points year-on-year [2][12]. - AI technology has empowered all business lines, with AI-driven subscription services achieving over 140% year-on-year sales growth in Q1 2024 [2][12]. Financial Performance Summary - For 2024-2026, the company is projected to generate revenues of 6.058 billion RMB, 6.984 billion RMB, and 7.890 billion RMB, respectively, with net profits of -140 million RMB, 86 million RMB, and 199 million RMB [2][15]. - The learning services segment is expected to generate revenues of 3.463 billion RMB, 3.913 billion RMB, and 4.422 billion RMB from 2024 to 2026 [12][15]. - The smart devices segment is projected to achieve revenues of 864 million RMB, 907 million RMB, and 979 million RMB during the same period [12][15]. - The online marketing services are anticipated to generate revenues of 1.731 billion RMB, 2.164 billion RMB, and 2.489 billion RMB from 2024 to 2026 [12][15].

Core Insights - Youdao, Inc. reported strong financial results for Q1 2024, driven by its dual-drive strategy of "AI + education content," leading to steady growth across multiple financial metrics [1][2] Financial Performance - Total net revenues for Q1 2024 reached RMB 1.4 billion, a 19.7% increase year-over-year [2] - Income from operations was RMB 29.9 million, marking the first time Youdao has posted two consecutive quarters of profitability [2] - Non-GAAP net income attributable to ordinary shareholders was RMB 20.3 million, a positive shift compared to the same period last year [2] - Net cash used in operating activities improved by 10.5% year-over-year [2] Revenue Breakdown - Net revenues from learning services were RMB 718.0 million, remaining largely unchanged from the previous year [4] - Digital content services generated RMB 500 million in net revenues, an 11.0% year-on-year increase [4] - Online marketing services reached a record high of RMB 492.7 million, increasing by 125.9% year-over-year, marking six consecutive quarters of over 50% growth [4] - Net revenues from smart devices totaled RMB 181.2 million, with significant sales from the latest Dictionary Pen iterations [6] AI and Product Development - Youdao's generative AI applications are being rapidly commercialized, focusing on three major application scenarios with high growth potential [6] - AI-driven subscription services, including Youdao Dictionary and Youdao Desktop Translation, saw total sales approach RMB 50 million, increasing by over 140% year-on-year [8] - The number of monthly active users for Youdao Desktop Translation exceeds 100 million, solidifying its position as a leader in the domestic dictionary translation market [8] International Expansion - Youdao has launched several apps based on LLM capabilities in international markets, with total sales of international apps doubling year-over-year [9] - The audio transcription app iRecord ranks among the top two in North American audio recording tracks [9] Strategic Focus - The company aims to concentrate on businesses and products with high growth potential and significant competitive advantages [9] - Consumer-facing products represent the largest growth opportunity for AI, with a focus on accelerating product reach and increasing user subscriptions [9]

Core Insights - Youdao, Inc. reported strong financial results for Q1 2024, driven by its dual-drive strategy of "AI + education content," leading to significant growth in various financial metrics [1][2]. Financial Performance - Total net revenues for Q1 2024 reached RMB 1.4 billion, a 19.7% increase year-over-year [2]. - Income from operations was RMB 29.9 million, marking the first time Youdao has posted two consecutive quarters of profitability [2]. - Non-GAAP net income attributable to ordinary shareholders was RMB 20.3 million, a positive shift compared to the same period last year [2]. - Net cash used in operating activities improved by 10.5% year-over-year [2]. Revenue Breakdown - Net revenues from learning services were RMB 718.0 million, remaining largely unchanged from the previous year [4]. - Digital content services generated RMB 500 million in net revenues, an 11.0% increase year-over-year [4]. - Online marketing services reached a record high of RMB 492.7 million, increasing by 125.9% year-over-year, marking six consecutive quarters of over 50% growth [4]. Product and Service Development - Youdao launched the first large language model for education in China, "Ziyue," accelerating its commercial deployment in education and advertising [3]. - The company introduced a one-stop overseas marketing platform to support its online marketing services customers [5]. - Net revenues from smart devices were RMB 181.2 million, with the Dictionary Pen leading in innovation and sales [6]. AI-Driven Services - AI-driven subscription services saw total sales approaching RMB 50 million, increasing by over 140% year-over-year [8]. - Youdao's Desktop Translation has over 100 million monthly active users, making it a leader in the domestic dictionary translation market [8]. - International app sales doubled compared to the same period last year, with notable success in audio transcription and translation [9]. Strategic Focus - The company is concentrating on three primary segments: digital content services, online marketing services, and AI-driven subscription services, with a focus on high growth potential areas [9]. - Youdao aims to accelerate product reach and scale, increase user subscriptions, and improve returns on investments [9].

Financial Data and Key Metrics Changes - Net revenues for Q1 2024 reached RMB 1.4 billion, marking a 19.7% year-over-year growth [6][19] - Income from operations amounted to RMB 29.9 million, a significant turnaround from a loss of RMB 195.8 million in the same period last year, marking the first profitable first quarter [6][19] - Total gross profit was RMB 681.5 million, representing a 13.2% increase from Q1 2023 [20] - Net income attributable to ordinary shareholders was RMB 12.4 million, compared to a net loss of RMB 204.4 million for the same period last year [22] Business Line Data and Key Metrics Changes - Learning Services revenue reached RMB 718 million, largely flat compared to the same period last year [7][19] - Digital content services within Learning Services generated net revenues of RMB 499.8 million, marking an 11% year-over-year growth [7][19] - Online marketing services achieved net revenues of RMB 492.7 million, representing a 125.9% year-over-year growth [12][20] - Smart devices segment net revenues were RMB 181.2 million, reflecting a 14.8% year-over-year decline, though the rate of decline has narrowed [14][19] Market Data and Key Metrics Changes - The online marketing services segment has sustained over 50% year-over-year growth for six consecutive quarters, driven by strong performance in Real-Time API (RTA) and domestic KOL advertising [12][20] - The total sales of AI-driven subscription services reached approximately RMB 50 million, representing a year-over-year increase of over 140% [10][19] Company Strategy and Development Direction - The company is focusing on three key areas: digital content services, online marketing services, and AI-driven subscription services [15][16] - The strategy includes maintaining financial discipline and focusing on high-growth businesses with strong competitive advantages [15][16] - The company aims to leverage industry trends and strengthen collaboration with the NetEase Group to enhance advertising placements and customer acquisition [13][16] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving sustainable profitability and highlighted the importance of integrating online and offline services to enhance customer reach [30][49] - The outlook for 2024 includes a focus on improving profitability in digital content services and expanding AI-driven subscription services [49][51] - Management emphasized the need for continuous technological improvements and customer acquisition strategies to sustain growth in online marketing services [31][35] Other Important Information - The company has launched new products and expanded sales channels in the smart devices segment, which is expected to stabilize and recover [14][46] - The gross margin for learning services improved to 63.1% in Q1 2024, compared to 62% in the same period of 2023 [20] Q&A Session Summary Question: What are the primary factors driving future growth in digital content services? - Management highlighted strong market demand and unique value propositions from AI capabilities as key growth drivers [24][25][26] Question: How can online marketing services achieve sustainable growth? - Management identified continued technological improvements, customer acquisition expansion, and overseas marketing as key factors for sustainable growth [31][33][37] Question: What are the main products for AI-driven subscription services? - Major products include Youdao Dictionary, Youdao Desktop Translation, and Hi Echo, with significant growth expected due to improved AI capabilities [38][39][42] Question: How does the company view the future development of the smart devices segment? - Management noted a strategic exit from low ROI sales channels and the introduction of new products, leading to a narrowed decline in revenues [44][46] Question: What is the outlook for 2024? - Management expects continued focus on digital content services, online marketing, and AI-driven subscriptions, with an emphasis on profitability and operational efficiency [49][51]

Exhibit 99.1 For investor and media inquiries, please contact: In China: Jeffrey Wang Youdao, Inc. Tel: +86-10-8255-8163 ext. 89980 E-mail: IR@rd.netease.com Piacente Financial Communications Helen Wu Tel: +86-10-6508-0677 E-mail: youdao@thepiacentegroup.com In the United States: Piacente Financial Communications Brandi Piacente Tel: +1-212-481-2050 E-mail: youdao@thepiacentegroup.com Youdao Reports First Quarter 2024 Unaudited Financial Results Hangzhou, China – May 23, 2024 – Youdao, Inc. ("Youdao" or the ...

Exhibit 99.1 For investor and media inquiries, please contact: In China: Jeffrey Wang Youdao, Inc. Tel: +86-10-8255-8163 ext. 89980 E-mail: IR@rd.netease.com Piacente Financial Communications Helen Wu Tel: +86-10-6508-0677 E-mail: youdao@thepiacentegroup.com In the United States: Piacente Financial Communications Brandi Piacente Tel: +1-212-481-2050 E-mail: youdao@thepiacentegroup.com Youdao Reports First Quarter 2024 Unaudited Financial Results Hangzhou, China – May 23, 2024 – Youdao, Inc. ("Youdao" or the ...

Core Viewpoint - Youdao, Inc. reported its first-ever profitable first quarter and consecutive two quarters of profitability, driven by strong growth in online marketing services and AI-driven subscription services [1][4]. Financial Highlights - Total net revenues for Q1 2024 were RMB1.4 billion (US$192.8 million), a 19.7% increase from RMB1.2 billion in Q1 2023 [2][18]. - Net revenues from learning services decreased by 2.0% to RMB718.0 million (US$99.4 million) [2][18]. - Net revenues from smart devices decreased by 14.8% to RMB181.2 million (US$25.1 million) [2][18]. - Net revenues from online marketing services increased by 125.9% to RMB492.7 million (US$68.2 million) [2][18]. Gross Profit and Margin - Gross profit for Q1 2024 was RMB681.5 million (US$94.4 million), a 13.2% increase from RMB601.9 million in Q1 2023 [3][18]. - Gross margin for Q1 2024 was 49.0%, down from 51.7% in Q1 2023 [3][18]. - Gross margin for learning services was 63.1%, while for smart devices it decreased to 32.6% [3][18]. Operating Expenses - Total operating expenses for Q1 2024 were RMB651.6 million (US$90.2 million), down from RMB797.6 million in Q1 2023 [4][18]. - Sales and marketing expenses decreased by 19.4% to RMB455.4 million (US$63.1 million) [4][18]. - Research and development expenses decreased by 19.7% to RMB146.7 million (US$20.3 million) [4][18]. Income and Net Income - Income from operations for Q1 2024 was RMB29.9 million (US$4.1 million), compared to a loss of RMB195.8 million in Q1 2023 [4][18]. - Net income attributable to ordinary shareholders for Q1 2024 was RMB12.4 million (US$1.7 million), compared to a net loss of RMB204.4 million in Q1 2023 [4][18]. Cash and Financial Support - As of March 31, 2024, Youdao's cash and equivalents totaled RMB326.0 million (US$45.2 million), down from RMB527.1 million at the end of 2023 [6][18]. - Youdao has received financial support from NetEase Group, including RMB878.0 million in short-term loans and US$123.7 million in long-term loans [6][18]. Share Repurchase Program - The company has repurchased approximately 6.6 million ADSs for around US$30.4 million under its share repurchase program, which was authorized for up to US$40.0 million [7][18]. Future Strategy - The company plans to focus on digital content services, online marketing services, and AI-driven subscription services, leveraging its AI capabilities to enhance educational applications [1][4].

Investment Rating - The report maintains a "Buy" rating for the company, with a target price adjusted from $5.30 to $5.10, indicating a potential upside of 42.1% from the current price of $3.59 [1][2][9]. Core Insights - The company is expected to achieve revenue growth of 16% year-on-year in Q1 2024, reaching 1.35 billion RMB, aligning with previous expectations and slightly above market forecasts [1]. - The adjusted net loss for Q1 2024 is projected to be 46 million RMB, significantly better than prior expectations of 97 million RMB and market estimates of 87 million RMB, indicating improved business health and a continued decline in marketing expenses as a percentage of revenue [1][2]. - The strategic focus is on reducing losses while emphasizing growth in high school and advertising segments, with expectations of a 25%-30% growth in high school business for the year [2]. - The introduction of the updated large model "ZiYue" 2.0 and new hardware products is anticipated to enhance product competitiveness and long-term commercialization potential [2]. Financial Summary - Revenue is projected to grow from 5,013 million RMB in 2022 to 6,177 million RMB in 2024, reflecting a compound annual growth rate (CAGR) of approximately 14.6% [3][10]. - The company is expected to reach breakeven in adjusted net profit by 2024, with a forecasted net profit of 2 million RMB, transitioning from a net loss of 640 million RMB in 2022 [3][10]. - The gross profit margin is expected to stabilize around 49% in 2024, with operational efficiency improving as the company scales its high school business [3][10].