Youdao (NYSE:DAO) Issues Quarterly Earnings Results

Youdao (NYSE:DAO) issued its quarterly earnings data on Wednesday. The company reported $0.07 earnings per share for the quarter, beating analysts’ consensus estimates of $0.04 by $0.03, FiscalAI reports. The company had revenue of $223.64 million during the quarter, compared to analysts’ expectations of $211.46 million. Youdao had a negative return on equity of 6.40% and a net margin of 1.81%.

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 Stock Performance

DAO traded up $0.22 during trading on Friday, reaching $9.27. The company’s stock had a trading volume of 56,484 shares, compared to its average volume of 108,284. Youdao has a 52-week low of $6.30 and a 52-week high of $12.95. The company’s fifty day moving average price is $10.29 and its 200-day moving average price is $9.86. The company has a market capitalization of $1.11 billion, a price-to-earnings ratio of 71.16 and a beta of 0.36.

Institutional Inflows and Outflows

An institutional investor recently raised its position in Youdao stock. Public Employees Retirement System of Ohio increased its position in shares of Youdao, Inc. Unsponsored ADR (NYSE:DAO) by 35.9% in the 3rd quarter, according to the company in its most recent disclosure with the SEC. The fund owned 29,286 shares of the company’s stock after purchasing an additional 7,729 shares during the quarter. Public Employees Retirement System of Ohio’s holdings in Youdao were worth $291,000 as of its most recent filing with the SEC. Hedge funds and other institutional investors own 21.91% of the company’s stock.

Wall Street Analysts Forecast Growth

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

About Youdao

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.