Youdao, Inc. (NYSE:DAO) Q4 2023 Results Conference Call February 29, 2024 5:00 AM ET Company Participants Jeffrey Wang - Director, Investor Relations Feng Zhou - Chief Executive Officer Peng Su - Vice President, Strategies and Capital Markets Lei Jin - President Yongwei Li - VP of Finance & Senior Financial Controller Conference Call Participants Brian Gong - Citi Group Caini Wang - CICC Thomas Chong - Jefferies Operator Good day, and welcome to the Youdao 2023 Fourth Quarter and Full Year Earnings Conferen ...

[Form 6-K Filing](index=1&type=section&id=Form%206-K%20Filing) This Form 6-K, filed by Youdao, Inc. in April 2024, details registrant information, an exhibit index, and the official signature [Registrant Information](index=1&type=section&id=Registrant%20Information) This Form 6-K was filed by Youdao, Inc., a foreign issuer with its principal executive offices in Hangzhou, People's Republic of China - The registrant is **Youdao, Inc.**, a foreign issuer based in Hangzhou, China[1](index=1&type=chunk) - The report was filed for the month of **April 2024**[1](index=1&type=chunk) - The company files its annual reports under **Form 20-F**[1](index=1&type=chunk) [Exhibit Index](index=2&type=section&id=Exhibit%20Index) The filing includes a single exhibit, Exhibit 99.1, identified as a Press Release - The report contains one exhibit, **Exhibit 99.1**, which is a Press Release[2](index=2&type=chunk) [Signature](index=3&type=section&id=Signature) The report was signed and authorized on April 25, 2024, by Feng Zhou, Chief Executive Officer and Director of Youdao, Inc - The report was signed on **April 25, 2024**[3](index=3&type=chunk) - The signatory is **Feng Zhou**, the company's Chief Executive Officer and Director[3](index=3&type=chunk)

Investment Rating - The report assigns a "Buy" rating to the company, with a market price of $3.96 and an initial rating of "No Rating" [1]. Core Insights - The company, Youdao, is a technology-driven leading education firm that has fully integrated AI large models into its learning services and hardware products. The report highlights the company's strong focus on AI in education and its diverse offerings in learning services, smart hardware, and online marketing [4][5]. - Youdao's learning services cover a wide range, with a focus on quality education and high school courses. The company has developed various programs in humanities, chess, programming, and more, utilizing AI technology to enhance user experience [5][28]. - The report emphasizes Youdao's leading position in the smart hardware market, particularly with its flagship product, the Youdao Dictionary Pen, which incorporates advanced technologies such as OCR, NMT, and TTS [5][19]. - The online marketing segment has seen rapid revenue growth, with a year-on-year increase of 80%-100% in Q1-Q3 2023, attributed to enhanced AI applications in advertising [5][19]. Summary by Sections Company Overview - Youdao was established in 2006 and launched its flagship product, Youdao Dictionary, in 2007. The company has since expanded its offerings to include learning content services, smart hardware, and online marketing [5][14]. - As of March 31, 2023, NetEase holds a 55.0% stake in Youdao, with a management team composed of individuals with strong backgrounds in computer science [5][16]. Financial Performance - In Q3 2023, Youdao achieved a record revenue of 1.54 billion RMB, a year-on-year increase of 9.72% and a quarter-on-quarter increase of 27.53%. The company is nearing profitability, with a significant reduction in net losses [19][25]. - The revenue breakdown for Q3 2023 includes 950 million RMB from learning services, 250 million RMB from smart hardware, and 340 million RMB from online advertising, showcasing diverse income streams [19][25]. Market Position and Strategy - Youdao's strategy focuses on leveraging AI technology to enhance educational services and products. The company has launched several AI-driven products, including the "1+3+1" AI product matrix, which features new models and applications [19][28]. - The report notes the growing demand for quality education and the expansion of the quality education market in China, projected to exceed 600 billion RMB in 2023 [31][32].

Core Viewpoint - Youdao, Inc. will report its fourth quarter and fiscal year 2023 financial results on February 29, 2024, before the U.S. markets open [1] Group 1: Financial Results Announcement - The earnings teleconference call will occur at 5:00 a.m. Eastern Time on February 29, 2024, with management discussing quarterly results and answering questions [1] - A live and archived webcast of the conference call will be available on the Company's investor relations website [2] - Dial-in details for the earnings conference call include toll-free numbers for Mainland China and Hong Kong, as well as international access numbers [2][3] Group 2: Company Overview - Youdao, Inc. is an intelligent learning company in China, focusing on developing technologies for learning content, applications, and solutions for users of all ages [4] - The company offers a range of products including online knowledge tools, smart devices, STEAM courses, and education digitalization solutions [4] - Youdao was founded in 2006 as part of NetEase, Inc., a leading internet technology company in China [4]

Core Insights - The core focus of the article is on the advancements and applications of AI in the education sector, particularly through the launch of NetEase Youdao's upgraded educational AI model "Ziyue" 2.0 and its associated products [1][3][4]. Group 1: AI Model and Applications - NetEase Youdao has released the "Ziyue" 2.0 version, which significantly enhances the accuracy of responses by utilizing Retrieval Augmented Generation technology, thereby reducing hallucination issues [1][3]. - The company has introduced three new AI applications: AI home tutor "Xiao P Teacher," Youdao Speed Reading, and virtual speaking tutor Hi Echo 2.0, following the launch of six major AI applications in July [3][4]. - Hi Echo, a virtual speaking tutor, operates on a subscription model with pricing set at 68 yuan/month or 698 yuan/year, and has nearly one million registered users [4]. Group 2: Market Strategy and Consumer Behavior - The company aims to reshape consumer perceptions regarding software payment, noting a strong willingness among users to pay for effective AI products [4][5]. - The AI learning machine X20, which integrates the "Ziyue" model and other AI applications, is positioned to assist parents in tutoring their children, addressing a significant market demand [4][5]. - Despite a decline in revenue from smart hardware in Q3 2023 due to marketing channel adjustments, the company remains optimistic about technological innovation driving hardware sales growth [4][6]. Group 3: Competitive Landscape and Future Outlook - The competitive edge of NetEase Youdao lies in its comprehensive capabilities, including educational training experience, software, and hardware design [6][7]. - The company emphasizes the importance of practical applications of large models in education, predicting that 2024 will be a pivotal year for AI super applications in the sector [7]. - The integration of high-quality data with foundational models is crucial for enhancing educational outcomes, as demonstrated by the improved performance of the AI applications [6].

大家下午好首先感谢大家这个时间今天有机会跟大家做一个面对面的交流我是友调投资者关系团队的负责人蒙德扬 接下来我先结合我们前不久刚刚发布三季度公司业绩的情况来结合我们业务的一个最新的进展以及在财务这边的进展来跟大家做一个交流接下来如果大家有哪些具体的问题欢迎大家提出来然后咱们再可以做一个更加深度的一个互动 有道其实是2006年成立成立之初就是网易集团的一个板块就是网易的教育科技板块截止到我们前不久刚刚发布三级报的时候网易依然是我们的控股股东从业务资金等等方面其实给予了有道非常大的且是一个长期的支持 从业务来看,如果大家看我们的财务报表从收入这个维度来看其实可以分为三个板块一个是学习服务,也就是课程和相关的服务 然后其他还包括我们的智能硬件和广告的业务这一页列出来其实是我们主要的一些亮点比如说有道其实为什么说是教育科技公司而不是传统的只是做教培的教培公司呢 其实一方面是说我们从CEO周峰周博士的背景其实就是一个资深的AI方面的专家我们其实在今年7月份的时候率先推出了国内在教育这个领域或者锤类里面首个大语言模型子约从子约推出到现在其实一方面来看我们是已经拿到了国家网信办的相关的一个备案 同时我们在产品和应用的落地也 ...

Youdao, Inc. (NYSE:DAO) Q3 2023 Earnings Call November 16, 2023 5:00 AM ET Company Participants Jeffrey Wang - Director, Investor Relations Feng Zhou - Chief Executive Officer Peng Su - Vice President, Strategies and Capital Markets Lei Jin - President Conference Call Participants Brian Gong - Citigroup Caini Wang - CICC Thomas Chong - Jefferies Yuchen Zhan - Citi Operator Good day and welcome to the Youdao 2023 Third Quarter Earnings Conference Call. Today’s conference is being recorded. At this time, I wo ...

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 Third Quarter 2023 Unaudited Financial Results Hangzhou, China – November 16, 2023 – Youdao, Inc. ("Youdao" o ...

Financial Data and Key Metrics Changes - In Q2 2023, net revenues reached RMB1.2 billion, a year-over-year increase of 26.2% [7][17] - Loss from operations narrowed to RMB289.1 million, marking a year-over-year improvement of 36.5% [7] - Net cash provided by continuing operating activities stood at RMB133 million, reflecting growth of 27.6% year-over-year [7] - Total net revenues for the first half of the year amounted to RMB2.4 billion, indicating an increase of 9.9% year-over-year [8] Business Segment Data and Key Metrics Changes - Learning services segment saw Q2 sales of digital content exceed RMB800 million, with customer retention rates over 60% [9] - Online marketing services achieved net revenues of RMB303.6 million in Q2, representing a 98.7% increase year-over-year [9][18] - Smart devices revenues were down by 7.4% in Q2 year-over-year, primarily due to sluggish consumer spending [12][18] Market Data and Key Metrics Changes - The Ministry of Education's new policy to add programming courses in primary and secondary schools is expected to expand demand for programming content [11] - The market size for learning devices is projected to grow significantly, from RMB24.9 billion in 2019 to an estimated RMB43.1 billion in 2022 [35] Company Strategy and Development Direction - The company is focusing on driving healthy growth through high-quality digital content services and accelerating the integration of generative AI into products [16] - Plans to launch more AI applications in Q4 2023, leveraging proprietary large language models for educational applications [13][26] - The company aims to enhance user satisfaction and profitability in the smart devices segment while managing costs effectively [33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term prospects of learning devices despite current market challenges [35] - The integration of AI technology is expected to enhance product offerings and drive future growth [57] - Management is committed to achieving profitability while optimizing R&D investments [57] Other Important Information - The company announced an amendment to extend the maturity date of a US$300 million revolving loan facility until March 31, 2027 [16] - An additional US$20 million has been authorized for share repurchase, reflecting confidence from management and support from NetEase [16] Q&A Session Summary Question: Plans on AIGC technology and its impact - Management discussed the launch of six AI applications, including a digital human language coach named Echo, which is expected to drive business growth [22][23][24] Question: Update on smart devices and long-term confidence - Management provided positive feedback on new products like the Dictionary Pen X6 Pro, noting a year-over-year increase in activations [30][33] Question: Driving factors behind online marketing revenue growth - Management attributed growth to advancements in AI technology and enhanced data capabilities of the ad platform [40][41] Question: Focus areas for learning services in the second half - Management highlighted the success of digital content services and plans for STEAM courses and adult education products [45][46][49] Question: R&D investment and AI applications - Management confirmed a prudent approach to R&D investment, focusing on effective applications of AI technology without significant increases in overall expenses [53][57]

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 Second Quarter 2023 Unaudited Financial Results Hangzhou, China – August 24, 2023 – Youdao, Inc. ("Youdao" or the "Company ...