Youdao Reports Profitable Growth in 2025 with 150% Profit Surge

Youdao Achieves Sustained Profitability with Remarkable Growth

On November 20, 2025, Youdao (NYSE: DAO), a key subsidiary of NetEase focusing on innovative learning technologies, unveiled its impressive financial performance for the third quarter of 2025. Amidst an evolving educational landscape driven by advancements in Artificial Intelligence, Youdao has successfully maintained profitability for five consecutive quarters, with operating profit soaring by nearly 150% year-over-year for the first three quarters of this year.

Financial Highlights

In the third quarter alone, Youdao reported net revenue amounting to RMB 1.6 billion, marking an annual growth of 3.6%. This growth reflects the company's robust operational efficiency and improved liquidity position, as evidenced by a significant reduction in operating cash outflows by 31.4% year-over-year. The CEO, Feng Zhou, expressed optimism regarding the company’s trajectory towards rapid growth and achieving operating cash-flow breakeven for the first time this year.

Learning and AI Subscription Service Performance

The core of Youdao's accomplishment can be attributed to its strategic focus on AI-driven services. In Q3, the company's net revenue from learning services reached RMB 0.64 billion, while sales from its AI subscription services hit nearly RMB 100 million, with a notable year-over-year growth exceeding 40%. Noteworthy is the AI-enhanced Youdao Dictionary, which integrated cutting-edge features like simultaneous interpretation and advanced translation, significantly boosting its membership revenue. The simultaneous interpretation feature alone experienced an impressive sales surge of nearly 200%, driven by its efficacy and user-friendly design, amassing over 20 million users.

Recently, Youdao also launched the SpaceX tutoring pen, a next-generation AI-powered device that provides immediate solutions for diverse subjects, specifically tailored for primary to high school students. This device marks a crucial step in making educational resources more accessible and effective.

Dominance in Online Marketing Services

In addition to its educational offerings, Youdao has firmly positioned itself in the online marketing sector. Reporting RMB 0.74 billion in revenue from marketing services in Q3 2025, a whopping 51.1% increase year-over-year, this segment has now become the largest source of revenue for the company. The strengthened partnership with NetEase Group contributed to more than a 50% rise in revenue from the gaming sector. Furthermore, international earnings saw an explosive growth of over 100%, showcasing the potential of Youdao's marketing capabilities on a global scale. A significant accolade was achieved as Youdao's collaboration with BYD on their WonderLife campaign earned the prestigious Brands Creators award at the YouTube Works Awards China.

Technological Innovation and Future Prospects

Youdao has heavily invested in AI technology, which has been a critical enabler for its continued growth. The company developed various AI engines, including the iMagicBox for creative content output, an influencer marketing platform, and an AI Ad Placement Optimizer, designed to streamline marketing processes. As the company continues to push the boundaries of AI application, it has achieved notable breakthroughs, particularly in translation through the introduction of the