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Youdao Inc. Reports Fourth Quarter and Yearly Financials for 2024

On February 20, 2025, Youdao, Inc. (NYSE: DAO), an innovative educational technology company based in China, unveiled its unaudited financial performance for the fourth quarter and the entire fiscal year ending December 31, 2024. This update showcases significant developments, challenges, and future prospects for the company.

Financial Highlights for Q4 2024

In Q4 2024, Youdao recorded total net revenues of RMB 1.3 billion (approximately US$183.6 million), reflecting a 9.5% decrease compared to the same quarter in 2023. Breaking it down:

• - Learning services: Revenue from this segment fell to RMB 617.7 million (US$84.6 million), marking a steep 21.2% drop.
• - Smart devices: In contrast, revenue from smart devices experienced a modest growth of 8.1%, totaling RMB 240.4 million (US$32.9 million).
• - Online marketing services: This segment saw an uptick, reaching RMB 481.7 million (US$66 million), a small increase compared to the prior year.

The gross margin for Q4 stood at 47.8%, a dip from 49.9% in the same quarter last year. This slight decline can be attributed to various operational factors outlined in the company’s financial assessment.

Operational Income and Net Profit

Youdao reported an operational income of RMB 84.2 million (US$11.5 million), which is a 10.3% increase from last year’s RMB 76.3 million. The net income attributable to ordinary shareholders reached RMB 83.0 million (US$11.4 million), representing a substantial 47% increase from RMB 56.5 million year-over-year.

Notably, the basic and diluted net income per share attributable to ordinary shareholders improved to RMB 0.71 (US$0.10) from RMB 0.47 in the previous year. Non-GAAP net income showed an impressive growth, climbing to RMB 91.8 million (US$12.6 million), up 32.5% from RMB 69.3 million.

Annual Financial Performance for FY 2024

Looking back at the entire fiscal year, Youdao’s total net revenues amounted to RMB 5.6 billion (US$770.7 million), indicating a 4.4% increase from the previous year's figures. However, there were distinct variances across segments:

• - Learning services generated RMB 2.7 billion (US$376.4 million), down by 12.7%.
• - Similar to Q4 results, smart devices revenue remained stable at RMB 903.7 million (US$123.8 million).
• - Remarkably, online marketing services surged by 48.3% to RMB 2.0 billion (US$270.6 million).

Throughout the year, Youdao achieved an operational income of RMB 148.8 million (US$20.4 million), reversing the operational loss of RMB 466.3 million in 2023. Net income attracted attention with a return to the positive zone at RMB 82.2 million (US$11.3 million), compared to a loss of RMB 549.9 million the year before. This improvement in profitability highlights the company’s successful strategies and customer engagement efforts.

Future Directions

As Youdao moves forward, the management team is aligning with a forward-thinking 'AI Native' strategy, focusing on more robust integration of AI technologies across product lines. CEO Dr. Feng Zhou highlighted that this strategy will advance operations, including automating advertising platforms and enhancing tutoring services powered by AI. With a talent retention rate surpassing 70% noted in the fourth quarter for Youdao Lingshi—a key educational platform—there is significant optimism for sustaining growth and continued innovation in 2025 and beyond.

Youdao's resilience is further supported by financial backing from NetEase Group, securing critical operational financing for the near future. This collaboration focuses on strengthening different business segments, particularly online marketing services that have shown explosive growth.

In summary, while 2024 presented challenges, Youdao's strategic pivots and focus on innovation have positioned the company not just for survival, but for a path toward sustainable growth. Stakeholders can look forward to engaging efficiently with new offerings as Youdao embraces an AI-driven learning ecosystem.