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

Youdao (NYSE:DAO) posted its earnings results on Thursday. The company reported $0.11 earnings per share for the quarter, topping analysts’ consensus estimates 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 net margin of 1.19% and a negative return on equity of 4.51%.

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 Stock Up 0.9%

Shares of DAO opened at $16.80 on Friday. The firm has a fifty day simple moving average of $14.51 and a two-hundred day simple moving average of $12.03. Youdao has a twelve month low of $8.30 and a twelve month high of $18.94. The stock has a market capitalization of $2.02 billion, a P/E ratio of 186.67 and a beta of 0.59.

Wall Street Analyst Weigh In

A number of brokerages have recently issued reports on DAO. Wall Street Zen downgraded Youdao from a “buy” rating to a “hold” rating in a research report on Saturday, May 23rd. Weiss Ratings raised Youdao from a “sell (d)” rating to a “sell (d+)” rating in a research note on Friday, July 17th. One analyst has rated the stock with a Buy rating and one has issued a Sell rating to the company. According to MarketBeat.com, the stock has a consensus rating of “Hold”.

Institutional Trading of Youdao

A hedge fund recently raised its position in Youdao stock. Public Employees Retirement System of Ohio grew its stake in Youdao, Inc. Unsponsored ADR (NYSE:DAO) by 35.9% in the 3rd quarter, according to its most recent filing with the Securities and Exchange Commission. The institutional investor 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 quarter. 21.91% of the stock is owned by institutional investors.

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.