Youdao (NYSE:DAO) Announces Quarterly Earnings Results, Beats Estimates By $0.03 EPS

Youdao (NYSE:DAO) issued its quarterly earnings results on Wednesday. The company reported $0.07 EPS for the quarter, topping the consensus estimate of $0.04 by $0.03, FiscalAI reports. Youdao had a net margin of 2.47% and a negative return on equity of 8.10%. The firm had revenue of $223.64 million for the quarter, compared to analysts’ expectations of $211.46 million.

Here are the key takeaways from Youdao’s conference call:

• Youdao reported improving profitability and cash generation — Q4 net revenue was RMB 1.6 billion (+16.8% YoY), full-year revenue RMB 5.9 billion (+5% YoY), operating profit rose to RMB 221.3 million for 2025, and the company achieved its first-ever full year net operating cash inflow of RMB 55.2 million.
• Learning services returned to growth with Q4 revenue of RMB 727.2 million (+17.7% YoY); flagship Youdao Lingshi saw >40% revenue growth and >75% retention, while AI-driven subscription sales approached ~CNY 400 million for 2025 (record growth), supported by new products and a Turnitin partnership.
• Online marketing delivered strong top-line momentum — Q4 revenue RMB 660.9 million (+37.2% YoY, full-year +28.5%) driven by NetEase and overseas KOL demand and AI tools like the ad placement optimizer, but segment gross margin fell year‑over‑year to 27.8% even as it improved sequentially.
• Smart devices remain a weak spot, with Q4 revenue down 26.6% YoY to RMB 176.5 million and full-year revenue down 18.2% to RMB 739.6 million, though management is refocusing on the Dictionary Pen and Tutoring Pen to restore segment health.
• Management’s 2026 plan doubles down on an AI‑native strategy — aiming for double‑digit learning growth, broader rollout of AI agents, and international programmatic/KOL expansion — but these forward-looking initiatives carry execution and timing uncertainty.

Youdao Trading Down 2.5%

NYSE:DAO traded down $0.24 during trading hours on Thursday, hitting $9.24. 93,136 shares of the company traded hands, compared to its average volume of 103,522. Youdao has a twelve month low of $6.30 and a twelve month high of $12.95. The firm has a 50-day moving average of $10.30 and a 200 day moving average of $9.86. The stock has a market capitalization of $1.10 billion, a price-to-earnings ratio of 54.18 and a beta of 0.36.

Institutional Inflows and Outflows

A hedge fund recently raised its stake in Youdao stock. Public Employees Retirement System of Ohio boosted its holdings in shares of Youdao, Inc. Unsponsored ADR (NYSE:DAO) by 35.9% in the third quarter, according to its most recent filing with the Securities and Exchange Commission (SEC). The institutional investor owned 29,286 shares of the company’s stock after purchasing an additional 7,729 shares during the period. Public Employees Retirement System of Ohio’s holdings in Youdao were worth $291,000 as of its most recent SEC filing. Hedge funds and other institutional investors own 21.91% of the company’s stock.

Analyst Upgrades and Downgrades

DAO has been the topic of a number of research reports. Weiss Ratings reaffirmed a “sell (d+)” rating on shares of Youdao in a research note on Monday, December 22nd. Wall Street Zen cut Youdao from a “buy” rating to a “hold” rating in a research report on Sunday, November 30th. Finally, Citigroup raised Youdao from a “neutral” rating to a “buy” rating in a research report on Thursday. One investment analyst has rated the stock with a Buy rating and one has assigned a Sell rating to the company’s stock. Based on data from MarketBeat.com, the stock presently has an average rating of “Hold”.

Youdao Company Profile

Youdao, Inc (NYSE: DAO), established in 2006 as a subsidiary of NetEase, is headquartered in Beijing, China. The company went public on the New York Stock Exchange in October 2019, marking a significant milestone in its development as an intelligent learning and knowledge service provider. Since its inception, Youdao has combined cloud computing, artificial intelligence and big data analytics to create an adaptive learning ecosystem designed to meet the needs of individual learners and organizations.

At the core of Youdao’s offerings is its suite of digital dictionaries and translation tools, including the flagship Youdao Dictionary app and translation engine.