Investment Rating - The investment rating for the social services industry is "Positive" (maintained) [1] Core Insights - The social services sector has shown a decline in performance, with the A-share social service index underperforming the market, ranking 27th among 31 primary industries [8] - The tea beverage industry is experiencing significant growth, with major players like Mixue Ice City and Gu Ming rapidly expanding their store numbers [44][48] - The beauty sector is witnessing a rise in domestic brands, with strong performance during the 618 shopping festival, indicating a shift towards local products [56][57] Summary by Relevant Sections 1. Trend in Toy Industry - In April 2025, online sales in the toy and animation category reached 1.314 billion yuan, marking a 48% year-on-year increase [16] - The blind box and ACG peripheral products showed strong growth, with sales increasing by 105% and 116% respectively [17][21] 2. Tea Beverage Industry - As of April 2025, there are 486,000 tea beverage stores in operation, with a net increase of 7,600 stores in the first four months of the year [44][48] - Major brands like Mixue Ice City and Gu Ming have significantly increased their store counts, with Mixue reaching 38,337 stores [51] 3. Education Sector - Youdao reported a revenue of 1.3 billion yuan in Q1 2025, a decrease of 6.72% year-on-year, but achieved a record operating profit of 104 million yuan, up 247.7% [52][54] - The company is focusing on AI-driven educational services, which have shown promising growth [52] 4. Beauty Industry - The 618 shopping festival saw a strong performance from domestic beauty brands, with significant sales growth compared to previous years [56][57] - The hair care market is experiencing steady growth, particularly through online channels, with Douyin becoming a major contributor [56]

Market Capitalization Overview - The market capitalization of TAL Education Group is 14.95 billion, while Vipshop Holdings has a market cap of 9.21 billion [2] - Other companies such as Miniso and Qifu Technology have market caps of 7.77 billion and 6.33 billion respectively [2] - The market cap of various companies shows a range from 5.22 million to 149.53 billion, indicating a diverse market landscape [2] Stock Performance - TAL Education Group's stock increased by 1.64 (+1.55%), while Vipshop's stock rose by 0.07 (+1.88%) [2] - Miniso's stock saw a significant increase of 1.24 (+6.99%), indicating strong market performance [2] - Companies like Huya and Yiren Digital experienced slight declines in their stock prices, with decreases of -0.03 (-0.81%) and -0.10 (-0.96%) respectively [2] Comparative Analysis - The comparison of market caps shows that TAL Education Group leads with 14.95 billion, followed by Vipshop and Miniso [2] - The performance of stocks varies significantly, with some companies like Miniso showing robust growth compared to others that faced declines [2] - The data indicates a competitive environment among these companies, with varying degrees of market success and stock performance [2]

Core Viewpoint - NetEase Youdao (NYSE: DAO) reported its Q1 2025 unaudited financial results, showing a decline in net revenue but significant growth in operating and net profits, indicating continued improvement in profitability after achieving full-year profitability in 2024 [2][4]. Financial Performance - In Q1 2025, NetEase Youdao achieved net revenue of 1.3 billion RMB, a year-on-year decrease of 6.7% [2]. - Operating profit reached 104 million RMB, marking a year-on-year increase of 247.7% [2]. - Net profit was 77.6 million RMB, reflecting a year-on-year growth of 435.7% [2]. Business Segment Analysis - The main business segments include learning services, smart hardware, and online marketing, with the learning services segment experiencing a decline due to ongoing adjustments [4]. - Learning services net revenue was 602 million RMB, down 16.1% year-on-year, but the decline rate narrowed by approximately 5 percentage points compared to the previous quarter [4]. - Smart hardware revenue was 190 million RMB, showing a year-on-year increase of 5.1%, ending a previous trend of negative growth [6]. - Online marketing services net revenue reached 505 million RMB, with a year-on-year growth of 2.6%, entering a phase of stable growth after previous rapid increases [6]. Strategic Initiatives - The company is focusing on user demand and growth potential by adjusting its learning services segment, with expectations to complete these adjustments in the second half of the year [5]. - NetEase Youdao has emphasized the development of educational large model technology, launching the first domestic open-source inference model "Ziyue-o1" and the Ziyue translation model 2.0, which has seen a daily processing volume exceeding 1.5 billion tokens, more than doubling from the previous quarter [6]. - The integration of the self-developed educational large model with DeepSeek has improved the speed and detail of answers provided, with a similar usage ratio for both models among users [6].

Core Viewpoint - Huatai Securities maintains a "buy" rating for NetEase Youdao (NYSE: DAO) with a target price of $11.41, expressing confidence in the company's AI capabilities accelerating commercialization in education and marketing sectors [1] Financial Performance - In Q1 2025, NetEase Youdao reported a net revenue of 1.3 billion RMB, with operating profit reaching 104 million RMB, marking a historical high for the quarter and a year-on-year increase of 247.7%, significantly surpassing market expectations [3] - Operating cash flow net outflow narrowed by 34.7% year-on-year, indicating improved financial efficiency [3] Business Strategy and Growth - The company's "AI-native" strategy is driving sustained profitability, with core business showing robust growth [3] - Youdao's learning services focus on high-demand scenarios, with sales of Youdao Ling Shi increasing over 25% year-on-year in Q1 [3] - AI subscription services generated nearly 70 million RMB in sales in Q1, with a year-on-year growth rate exceeding 40% [3] - Online marketing services are expanding both domestically and internationally, with deeper collaborations with Google and NetEase Group expected to yield accelerated effects in the second half of the year [3] AI Development and Innovation - As one of the earliest companies to develop vertical large models in education, Youdao combines self-research with open-source technology [4] - The company launched the open-source educational reasoning model "ZiYue-o1" in January, which significantly enhances GPU efficiency compared to general large models [4] - The "ZiYue" model is being integrated into the company's learning services, AI subscriptions, and smart hardware, solidifying its leading position in the domestic education large model sector [4] Future Outlook - The CEO of NetEase Youdao stated that after achieving full-year profitability in 2024, the company is positioned for strategic advantages and aims to accelerate the deployment of the "ZiYue" model in both education and advertising sectors in 2025 [4] - Huatai Securities forecasts that NetEase Youdao's operating profit for 2025 could reach 216 million RMB, a year-on-year increase of 45% [4] - The company’s projected net profit under non-GAAP for 2025-2027 is estimated to be 173 million, 243 million, and 343 million RMB respectively [4] Industry Recognition - NetEase Youdao was ranked second in the "2025 Global Top Education Technology Companies" list by Times magazine, reflecting its rapid progress in large model implementation and performance [5]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of $11.41 [5][6]. Core Insights - The company's Q1 2025 performance showed revenue of 1.3 billion RMB, a year-over-year decrease of 6.7%, while operating profit reached 100 million RMB, a significant increase of 247.7%, marking a historical high for Q1 [1]. - The "AI-native" strategy is driving continuous improvement in profitability, focusing on high-demand scenarios and accelerating the commercialization of AI capabilities in education and marketing [1]. - The company is expected to achieve an operating profit of 216 million RMB for the full year 2025, representing a year-over-year increase of 45% due to accelerated AI commercialization and ongoing cost reduction measures [3]. Revenue Breakdown - In Q1 2025, the company's learning services, smart hardware, and online marketing businesses generated revenues of 602 million RMB, 190 million RMB, and 505 million RMB, respectively, with learning services experiencing a year-over-year decline of 16.1% [2]. - The AI enrollment planner has been upgraded, leading to an increase in renewal rates, while AI subscription services saw sales of nearly 70 million RMB, with a growth rate exceeding 40% [2]. Profitability and Cost Management - The operating profit margin for Q1 2025 was 8%, with significant reductions in sales, R&D, and management expenses, which decreased by 21%, 21%, and 25% year-over-year, respectively [3]. - The report anticipates that the company's profitability will continue to improve as it implements further cost optimization strategies [3]. Financial Forecast and Valuation - The report maintains the Non-GAAP net profit forecasts for 2025-2027 at 173 million RMB, 243 million RMB, and 343 million RMB, respectively [4]. - Using the SOTP valuation method, the company is assigned a PE of 23.22x for K12 business and 26.69x for smart hardware, with a target price adjustment to $11.41 based on comparable company valuation changes [4][10].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of $11.41 [5][6][10] Core Insights - The company's Q1 revenue was 1.3 billion RMB, a year-over-year decrease of 6.7%, while operating profit reached 100 million RMB, a significant increase of 247.7%, marking a historical high for Q1 [1][3] - The "AI-native" strategy is driving continuous improvement in profitability by focusing on high-demand scenarios and accelerating the commercialization of AI capabilities in education and marketing [1][2] - The company is expected to achieve an annual operating profit of 216 million RMB in 2025, a year-over-year increase of 45%, supported by accelerated AI commercialization and ongoing cost reduction measures [3] Revenue Breakdown - In Q1, the company's learning services, smart hardware, and online marketing businesses generated revenues of 602 million RMB, 190 million RMB, and 505 million RMB, respectively, with learning services experiencing a year-over-year decline of 16.1% [2] - The AI enrollment planner has been upgraded, leading to an increase in renewal rates, while AI subscription services saw sales of nearly 70 million RMB, with a growth rate exceeding 40% [2] Profitability and Cost Management - The operating profit margin for Q1 was 8%, with significant reductions in sales, R&D, and management expenses, which decreased by 21%, 21%, and 25% year-over-year, respectively [3] - The report anticipates that the company's profitability will continue to improve as it implements further cost optimization strategies [3] Financial Forecast and Valuation - The report maintains the Non-GAAP net profit forecasts for 2025-2027 at 173 million RMB, 243 million RMB, and 343 million RMB, respectively [4] - Using the SOTP valuation method, the company is assigned a PE of 23.22x for K12 business and 26.69x for smart hardware, with a target price adjustment based on comparable company valuation changes [4][10]

Group 1: Company Performance - NetEase-S (09999) saw a significant increase of 10.89% in stock price after reporting Q1 2025 net revenue of RMB 28.8285 billion, a year-on-year increase of 7.4%, and gross profit of RMB 18.5 billion, up 8.6% [1] - H&H International Holdings (01112) rose over 8% as the market speculated on the ergotamine concept, with its Swisse brand showing strong performance in high-growth segments [2] - China Gold International (02099) experienced a stock price increase of over 5% after reporting a 351% rise in Q1 revenue to USD 273 million [2] Group 2: Clinical and Pharmaceutical Developments - Shandong Xinhua Pharmaceutical (00719) surged over 14% as COVID-19 infections showed an upward trend, with the company preparing for Phase II clinical trials of OAB-14 [1] - Innovent Biologics (01801) rose nearly 3% after announcing the completion of the first patient dosing in the Phase III clinical study of Ma Shidu peptide for obesity [1] - Kangxi Biologics (06185) increased over 3% after receiving approval from the Indonesian drug regulatory authority for its inhaled tuberculosis vaccine clinical trial [1] Group 3: Market Trends and Reactions - The Nasdaq Golden Dragon China Index fell over 2%, with notable declines in popular Chinese stocks such as Tiger Brokers (TIGR.US) down over 8% and Beike (BEKE.US) down over 5% [3] - UnitedHealth Group (UNH.US) experienced a significant drop of over 15% following reports of a U.S. Department of Justice investigation into potential insurance fraud [3] - Bitcoin-related stocks declined, with CleanSpark (CLSK.US) down nearly 6% and Coinbase (COIN.US) down over 7%, as Bitcoin itself fell over 1.5% [3]

Group 1 - Beijing universities will establish a curriculum ideological and political education demonstration center to promote theoretical research and teaching practices [1] - The demonstration centers aim to guide universities in serving national strategies and the functional positioning of Beijing as a "four-center" city [1] - The centers are expected to generate valuable experiences and high-quality research outcomes to effectively advance ideological education at various levels within schools [1] Group 2 - The Beijing-Tianjin-Hebei psychological education community has been launched, with 38 schools from the region as initial members [2] - Member schools include institutions from Beijing, Tianjin, and Hebei, indicating a collaborative effort in psychological education [2] Group 3 - Gaotu reported a revenue of approximately 1.5 billion yuan for Q1 2025, marking a nearly 58% year-on-year increase [3] - The company achieved an operating profit of about 34.8 million yuan and a net profit exceeding 120 million yuan, with a net profit margin of 9.2% [3] Group 4 - NetEase Youdao announced a net income of 1.3 billion yuan for Q1 2025, with an operating profit of 104 million yuan, representing a 247.7% year-on-year growth [4] - This operating profit is noted as the highest for the first quarter in the company's history [4] Group 5 - Jiafa Education announced the termination of a share transfer agreement involving its controlling shareholder and other significant stakeholders [5] - The termination of the agreement will not affect the company's control structure or governance [5]

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 2025 Unaudited Financial Results Hangzhou, China – May 15, 2025 – Youdao, Inc. ("Youdao" or the ...

Core Viewpoint - The integration of AI in education is becoming increasingly diverse, driving revenue growth for education companies, as evidenced by NetEase Youdao's Q1 2025 financial results [2][3]. Financial Performance - NetEase Youdao reported Q1 2025 net revenue of 1.3 billion yuan, a decrease of 6.7% compared to the same period in 2024 [2]. - The net profit attributable to ordinary shareholders for Q1 was 76.7 million yuan, a significant increase of 518.5% year-over-year [2]. - Total operating expenses for Q1 were 510 million yuan, down 21.7% year-over-year [2]. Business Segments - Learning services net revenue for Q1 was 602 million yuan, a decline of 16.1% year-over-year, but the rate of decline narrowed by approximately 5 percentage points compared to the previous quarter [2]. - The company plans to focus on high-potential services like Youdao Ling Shi while reducing non-core business activities [2]. - Smart device revenue for Q1 was 190 million yuan, an increase of 5.1% year-over-year, driven by strong sales of the Youdao dictionary pen [2]. - Online marketing services net revenue for Q1 was 510 million yuan, a growth of 2.6% year-over-year, with expectations for stronger growth in the second half of the year [3]. Strategic Initiatives - Youdao is accelerating overseas advertising expansion, with ongoing collaboration with Google expected to contribute significantly to revenue in the second half of the year [3]. - The integration of DeepSeek into self-developed large models and Youdao Xiao P has achieved 99.9% availability, lower latency, and higher cost efficiency [3]. - The company is also expediting the deployment of self-hosted DeepSeek R1 inference services to enhance stability and cost control [3]. Industry Trends - More online education companies are integrating products with DeepSeek, with notable players like Xueersi, Yuanfudao, and Zuoyebang announcing similar initiatives [4]. - The AI contribution rate in the online education market is projected to increase from 7% in 2023 to 16% by 2027 [4].