Youdao (NYSE:DAO) Announces Quarterly Earnings Results, Beats Expectations By $0.09 EPS

Youdao (NYSE:DAO) posted its quarterly earnings results on Thursday. The company reported $0.11 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.02 by $0.09, FiscalAI reports. The business had revenue of $215.91 million for the quarter, compared to analyst estimates of $229.02 million. Youdao had a negative return on equity of 4.51% and a net margin of 1.19%.

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

• Profitability and cash flow improved sharply: Q2 operating profit reached RMB 111.5 million, nearly four times higher year over year, marking the eighth consecutive profitable quarter. Operating cash inflow rose 80.7% to RMB 334.2 million.
• Learning services revenue increased 20.9% to RMB 795.6 million, supported by Youdao Lingshi and AI-powered features such as essay grading, personalized recommendations, and college-admission advising. Lingshi and programming courses each reported retention above 75%, while AI-driven subscription sales grew more than 20% year over year.
• Management plans multiple AI model and agent launches in September, with a focus on voice, multilingual translation, mathematics, and advertising. HiEcho billings and simultaneous-interpretation engagement each grew more than 100% year over year, while Confucius 4 delivered improved reasoning and lower inference costs.
• Smart-device revenue fell 31.5% year over year to RMB 86.8 million, pressured by weaker demand, higher memory costs, and reduced hardware scale. Online marketing revenue also declined 7.7% as Youdao deliberately exited lower-ROI opportunities, although margins improved and management expects further improvement in Q3.

Youdao Price Performance

DAO opened at $16.80 on Friday. The firm has a market capitalization of $2.02 billion, a price-to-earnings ratio of 186.67 and a beta of 0.59. Youdao has a one year low of $8.30 and a one year high of $18.94. The business has a 50 day simple moving average of $14.51 and a two-hundred day simple moving average of $12.03.

Institutional Trading of Youdao

An institutional investor recently raised its stake in Youdao stock. Public Employees Retirement System of Ohio raised its stake in shares of Youdao, Inc. Unsponsored ADR (NYSE:DAO) by 35.9% during the third quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission. The firm 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 at the end of the most recent reporting period. 21.91% of the stock is owned by institutional investors.

Wall Street Analysts Forecast Growth

A number of research firms have recently weighed in on DAO. Weiss Ratings raised Youdao from a “sell (d)” rating to a “sell (d+)” rating in a research note on Friday, July 17th. Wall Street Zen cut shares of Youdao from a “buy” rating to a “hold” rating in a report on Saturday, May 23rd. One analyst has rated the stock with a Buy rating and one has assigned a Sell rating to the stock. Based on data from MarketBeat.com, the company 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.