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

Youdao (NYSE:DAO) announced its earnings results on Thursday. The company reported $0.11 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 the consensus estimate 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 Trading Up 0.9%

NYSE DAO opened at $16.80 on Friday. Youdao has a 12 month low of $8.30 and a 12 month high of $18.94. The stock has a 50-day simple moving average of $14.51 and a 200 day simple moving average of $12.03. The company has a market capitalization of $2.02 billion, a PE ratio of 186.67 and a beta of 0.59.

Institutional Trading of Youdao

A hedge fund 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% during the 3rd quarter, according to its most recent filing with the Securities and Exchange Commission (SEC). The fund owned 29,286 shares of the company’s stock after acquiring 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 SEC filing. 21.91% of the stock is currently owned by institutional investors.

Wall Street Analysts Forecast Growth

Several brokerages have 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 upgraded Youdao from a “sell (d)” rating to a “sell (d+)” rating in a report on Friday, July 17th. One research analyst has rated the stock with a Buy rating and one has assigned a Sell rating to the stock. According to MarketBeat.com, the stock 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.