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Youdao, Inc. (NYSE: DAO) is a prominent internet technology company in China that specializes in providing a wide range of innovative online services catering to content, community, communication, and commerce. Founded in 2006 as part of NetEase, Inc., Youdao has grown to be a key player in the e-learning market, driven by its industry-leading technology and commitment to enhancing learning experiences.
Core Offerings and Segments
- Learning Services: Youdao offers an extensive range of educational content and online courses tailored for various age groups, from pre-school and K-12 students to college students and adult learners. Key platforms include Youdao Premium Courses, NetEase Cloud Classroom, and China University MOOC.
- Smart Devices: The company produces advanced educational tools like the Youdao Smart Pen, Youdao Dictionary Pen, and Youdao Pocket Translator, designed to assist learners in their educational journey.
- Online Marketing Services: Utilizing cutting-edge AI technology, Youdao delivers performance-based advertisements, significantly boosting its revenue streams.
Recent Achievements and Financial Performance
In 2023, Youdao achieved notable milestones, including the introduction of AI-driven products like the Mr. P AI Tutor, powered by the proprietary large language model Ziyue. This innovation has been well-received, contributing to a substantial increase in revenues from online marketing services by over 50% year-over-year for five consecutive quarters. The company reported RMB1.5 billion (US$208.5 million) in net revenues for Q4 2023, with significant growth in online marketing services despite a decrease in smart device sales.
For the fiscal year 2023, Youdao reported net revenues of RMB5.4 billion (US$759.1 million), a 7.5% increase from 2022. The company continues to streamline its operations and leverage strategic partnerships, such as those within the NetEase Group, to secure financial stability and support future growth.
Future Outlook
Looking forward, Youdao is committed to further enhancing its AI capabilities and expanding the applications of its Ziyue language model. The company aims to explore new opportunities in learning services, smart devices, and online marketing to support user efficiency and effectiveness in both learning and work environments.
For more information, visit Youdao Investor Relations.
Youdao launched the Youdao Dictionary Pen X7 at the World AI Conference on July 4, 2024, in Shanghai. This device is a key step in AI-integrated tutoring, featuring an in-built camera and access to a 72 million-word database for efficient language learning and translation. The Dictionary Pen X7 utilizes Ziyue, China's first educational large language model (LLM), and offers comprehensive educational support across subjects like Chinese, math, and physics.
Additionally, Youdao showcased other innovations such as the Youdao Listening Pod E6 Pro, Hi Echo—the first digital human language coach—and Youdao Fun Sports, an intelligent sports terminal. Hi Echo, which now includes IELTS speaking preparation, has surpassed one million users. Youdao Translation, boasting over one billion users, introduced AI-enhanced features for translation and productivity. The LLM Ziyue's applications now extend beyond education into healthcare, media, and more, underscoring Youdao's commitment to AI-driven innovation.
Youdao (NYSE: DAO), an intelligent learning company in China, announced its unaudited financial results for Q1 2024. Total net revenues rose 19.7% YoY to RMB1.4 billion (US$192.8 million). Revenue from online marketing services surged by 125.9%, while learning services and smart devices saw declines of 2.0% and 14.8%, respectively. Gross margin decreased to 49.0%, down from 51.7% in Q1 2023. Operating expenses dropped significantly by 18.3%. The company reported a net income of RMB12.4 million (US$1.7 million) compared to a loss of RMB204.4 million in Q1 2023. As of March 31, 2024, cash and short-term investments totaled RMB326.0 million (US$45.2 million). The company executed a share repurchase program, buying back approximately 6.6 million ADSs worth US$30.4 million.
NetEase (NASDAQ: NTES and HKEX: 9999) reported an increase in net revenues of 7.2% YoY to RMB26.9 billion (US$3.7 billion) for Q1 2024. Games and related services saw a 7.0% rise, reaching RMB21.5 billion (US$3.0 billion). Youdao's net revenues grew by 19.7% to RMB1.4 billion (US$192.8 million), and Cloud Music posted a 3.6% increase, hitting RMB2.0 billion (US$281.1 million). Gross profit was up by 14.2% YoY to RMB17.0 billion (US$2.4 billion), but operating expenses surged by 22.4% to RMB9.4 billion (US$1.3 billion). Net income attributable to shareholders was RMB7.6 billion (US$1.1 billion), while non-GAAP net income was RMB8.5 billion (US$1.2 billion). Basic net income per share stood at US$0.33 (US$1.65 per ADS), with non-GAAP basic net income at US$0.37 (US$1.84 per ADS).
Key operational highlights included continued success in established game franchises, strong performances from new game releases, and expanded regional launches. NetEase renewed its publishing agreement with Blizzard and enhanced its collaboration with Microsoft Gaming. Youdao achieved its first sequential quarter of positive net income, and Cloud Music focused on its core business, implementing a comprehensive product upgrade.
NetEase showcased over 40 game franchises and products at its 2024 annual product launch event on May 20 in Hangzhou, China. The 120-minute online event highlighted a diversified range of gaming offerings across various genres and platforms. Key announcements included new game titles like 'Where Winds Meet,' 'NARAKA: BLADEPOINT Mobile,' 'Once Human,' 'Ashfall,' and 'Lost Light.' NetEase also revealed plans for expansions, crossovers, and new events for established titles such as 'Fantasy Westward Journey,' 'Westward Journey,' 'Justice,' 'Eggy Party,' 'Racing Master,' and 'Identity V.' Additionally, the event featured insights into ongoing collaborations with global partners, including behind-the-scenes stories from the producer of 'Marvel Snap.'
NetEase, a leading internet and game services provider, will report its financial results for the 2024 first quarter on May 23, 2024. The earnings call will take place at 7:00 a.m. Eastern Time on the same day. Interested parties can participate by dialing 1-914-202-3258 with conference ID: 10038664. A replay will be available by dialing 1-855-883-1031 and entering PIN: 10038664. The webcast and replay will be accessible on NetEase's Investor Relations website.
Youdao, Inc. will report its first quarter 2024 financial results on May 23. The earnings teleconference call will take place at 6:00 a.m. ET on the same day. Youdao's management will discuss the results and answer questions.
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