Financial Data and Key Metrics Changes - In Q3 2025, net revenues reached RMB 1.6 billion, up 3.6% year-over-year, while operating profit was RMB 28.3 million, a decline of 73.7% year-over-year due to increased investments and a high comparison base from the previous year [4][16][19] - For the first nine months of 2025, operating profit reached RMB 161.1 million, representing a substantial 149.2% year-over-year increase [5] - Operating cash outflow for the quarter was RMB 58.6 million, an improvement of 31.4% year-over-year [5][20] Business Line Data and Key Metrics Changes - Learning services segment net revenues were RMB 643.1 million, down 16.2% year-over-year, reflecting a strategic approach to customer acquisition [6][16] - Online marketing services net revenues reached RMB 739.7 million, a record increase of 51.1% year-over-year, driven by demand from the NetEase Group and overseas markets [10][17] - Smart devices segment net revenues were RMB 245.8 million, down 22.1% year-over-year, due to disciplined marketing expenditures [14][17] Market Data and Key Metrics Changes - Youdao Ling Shi achieved over 40% year-over-year growth in gross billings, with a retention rate exceeding 75% [7][28] - The online marketing services segment saw advertising revenues from the gaming industry grow by over 50% year-over-year [11] Company Strategy and Development Direction - The company is focused on deepening the application of AI technologies across both learning and advertising businesses to create value for customers [15][28] - A commitment to maintaining disciplined operations while achieving full-year targets, including robust year-over-year operating profit growth and reaching annual operational cash flow break-even for the first time [15][19] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year cash flow break-even despite cumulative net operating cash outflow in the first three quarters, citing significant improvements in cash flow performance [50][52] - The company anticipates strong revenue growth in both learning and advertising segments, with a focus on AI-driven services [26][28] Other Important Information - Youdao was included in the 2026 GSV 150, highlighting its position as a transformational growth company in digital learning [7] - The company launched several new AI-driven products, including an AI tutor for programming classes and an upgraded Youdao Dictionary app, which received positive user feedback [9][10] Q&A Session Summary Question: Will online marketing services become more important than learning services in the future? - Management sees growth opportunities in both areas, with online marketing services currently experiencing higher growth due to advanced ad tech and AI capabilities [24][25] Question: What plans are in place to recover online marketing gross margins? - Management aims to improve gross margins through initiatives like the iMagicBox creative production platform and optimizing the data management platform [32][35] Question: What is the potential for operating profit rebound in Q4? - Management is optimistic about achieving operating profit improvement in Q4, supported by strong performance in Youdao Ling Shi and advertising growth [39][41] Question: Should we expect any change to the full-year break-even target given the cash outflow? - Management remains confident in achieving the full-year cash flow break-even target, citing significant year-over-year improvements and expected strong performance in Q4 [48][52]