Youdao (DAO)
NYSE:DAO
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Youdao
(NYSE:DAO)
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Rating:55Neutral
Price Target:
$10.00
▼(-20.70% Downside)
Action:ReiteratedDate:01/13/26
The score is held back primarily by financial quality concerns (negative equity and weak cash flow) and a high valuation (P/E 76.52). Technicals are supportive with a strong uptrend, but momentum appears overextended (RSI ~72, Stoch ~91). The latest earnings call was mixed, with strong online marketing growth and improved cash outflow offset by a sharp operating profit decline and weakness in Learning Services and Smart Devices.
Positive Factors
Healthy Gross Margin
A near-49% gross margin on core products indicates durable unit economics for digital and software offerings. This margin provides structural cushion to absorb SG&A and R&D spending, supporting sustainable investment in AI and product development while preserving long-term profitability potential.
Negative Factors
Negative Shareholders' Equity
A large negative equity balance signals accumulated losses or balance sheet impairment, limiting financial flexibility and borrowing capacity. This structural weakness raises refinancing risk and constrains ability to fund strategic investments without dilutive or costly external financing.
Read all positive and negative factors
Positive Factors
Negative Factors
Healthy Gross Margin
A near-49% gross margin on core products indicates durable unit economics for digital and software offerings. This margin provides structural cushion to absorb SG&A and R&D spending, supporting sustainable investment in AI and product development while preserving long-term profitability potential.
Read all positive factors
Youdao (DAO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.15B
Dividend YieldN/A
Average Volume (3M)128.14K
Price to Earnings (P/E)77.5
Beta (1Y)0.66
Revenue Growth-1.51%
EPS Growth155.73%
CountryUS
Employees3,750
SectorConsumer Defensive
Sector Strength42
IndustryEducation & Training Services
Share Statistics
EPS (TTM)0.06
Shares Outstanding31,280,890
10 Day Avg. Volume111,582
30 Day Avg. Volume128,141
Financial Highlights & Ratios
PEG Ratio2.58
Price to Book (P/B)-4.22
Price to Sales (P/S)1.41
P/FCF Ratio0.00
Enterprise Value/Market Cap8.06
Enterprise Value/Revenue1.58
Enterprise Value/Gross Profit3.57
Enterprise Value/Ebitda50.09
Forecast
1Y Price Target
$12.00Price Target Upside-4.84% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)1.4
Revenue Forecast (FY)$6.57B
Youdao Business Overview & Revenue Model
Company Description
Youdao, Inc., an internet technology company, provides online services in the field of content, community, communication, and commerce in China. It operates through three segments: Learning Services, Smart Devices, and Online Marketing Services. T...
How the Company Makes Money
Youdao generates revenue through multiple streams, including subscription fees from its online education services and language learning apps. The company also earns money through the sale of its educational software products and digital content. A...
Youdao Key Performance Indicators (KPIs)
Youdao Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 26, 2026
Earnings Call Sentiment Positive
The call conveyed clear positive momentum: strong Q4 revenue growth (+16.8%), record improvements in AI-driven subscription and online marketing businesses (many lines growing ~30–50% YoY), and the important milestone of the company's first full-year positive operating cash flow. Management emphasized an AI-native strategy, product innovation, global expansion of marketing services, and an expectation of continued growth in 2026 (including double-digit growth guidance for Learning Services). Headwinds include a notable decline in Smart Devices revenues (-26.6% Q4, -18.2% FY), margin pressure in online marketing (gross margin down YoY), and lower Q4 net income and operating income margin versus prior year. Overall, the positives — diversified revenue growth, improving cash generation, strong AI subscription and advertising performance, and clear strategic direction — outweigh the challenges, indicating constructive momentum going into 2026.Positive Updates
Quarterly Revenue Growth
Total net revenues for Q4 2025 reached RMB 1.6 billion, a 16.8% year-over-year increase, driven by the return-to-growth in Learning Services and strong Online Marketing performance.
Negative Updates
Smart Devices Decline
Smart Devices Q4 net revenues were RMB 176.5 million, down 26.6% YoY; full-year smart devices revenue declined 18.2% to RMB 739.6 million, reflecting weaker demand for smart learning devices.
Read all updates
Q4-2025 Updates
Positive
Negative
Quarterly Revenue Growth
Total net revenues for Q4 2025 reached RMB 1.6 billion, a 16.8% year-over-year increase, driven by the return-to-growth in Learning Services and strong Online Marketing performance.
Read all positive updates
Company Guidance
Management's 2026 guidance targets a return to around double‑digit year‑over‑year growth in Learning Services (building on Q4 Learning Services revenue of RMB727.2m, +17.7% YoY and full‑year learning revenue of RMB2.6bn), continued acceleration of Online Marketing from 2025's RMB2.5bn (+28.5% YoY; Q4 RMB660.9m, +37.2% YoY) through AI Ad Placement Optimizer v2, iMagic Box, programmatic ads and international KOL scale (reach >30m influencers, >1,000 top‑tier exclusives, campaigns in >50 countries) with the goal of improving advertising efficiency and margins (Q4 online marketing gross margin 27.8%, +2pp sequential), and a push to grow operating profit and operating cash flow beyond 2025's operating profit of RMB221.3m (+48.7% YoY) and full‑year operating cash inflow of RMB55.2m (Q4 operating cash inflow RMB184.2m); they also expect to expand fast‑growing AI subscription sales (≈RMB400m in 2025, >50% YoY; Q4 AI subscriptions >RMB100m, +80% YoY), sustain Youdao Lingshi retention >75% (≈+5pp), and deploy AI agents and new products (AI Essay grading, English grading, Youdao Lobster AI) while maintaining disciplined capital allocation.Youdao Financial Statement Overview
Summary
Income Statement
65
Positive
Balance Sheet
50
Neutral
Cash Flow
40
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.91B | 5.71B | 5.39B | 5.10B | 3.96B |
| Gross Profit | 2.62B | 2.79B | 2.77B | 2.63B | 1.96B |
| EBITDA | 250.26M | 185.71M | -440.06M | -649.49M | -852.57M |
| Net Income | 107.35M | 83.38M | -549.86M | -739.80M | -982.76M |
Balance Sheet | |||||
| Total Assets | 1.98B | 1.81B | 1.67B | 2.28B | 2.63B |
| Cash, Cash Equivalents and Short-Term Investments | 738.02M | 655.78M | 526.66M | 1.02B | 826.88M |
| Total Debt | 1.82B | 1.85B | 1.60B | 1.48B | 1.25B |
| Total Liabilities | 3.91B | 3.90B | 3.80B | 3.75B | 3.36B |
| Stockholders Equity | -1.97B | -2.14B | -2.19B | -1.54B | -807.07M |
Cash Flow | |||||
| Free Cash Flow | 0.00 | -79.70M | -456.00M | -672.88M | -1.41B |
| Operating Cash Flow | 0.00 | -67.91M | -438.14M | -603.12M | -1.35B |
| Investing Cash Flow | 0.00 | -13.59M | 125.57M | 125.82M | 47.07M |
| Financing Cash Flow | 0.00 | 228.51M | -18.94M | 184.65M | 1.78B |
Youdao Technical Analysis
Neutral
12.61
Price Trends
9.93
Negative
10.06
Negative
9.77
Positive
Market Momentum
-0.11
Positive
48.07
Neutral
40.71
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DAO, the sentiment is Neutral. The current price of 12.61 is above the 20-day moving average (MA) of 9.93, above the 50-day MA of 9.93, and above the 200-day MA of 9.77, indicating a neutral trend. The MACD of -0.11 indicates Positive momentum. The RSI at 48.07 is Neutral, neither overbought nor oversold. The STOCH value of 40.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DAO.
Youdao Risk Analysis
Youdao disclosed 97 risk factors in its most recent earnings report. Youdao reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Youdao Peers Comparison
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $1.41B | 10.35 | 16.24% | <0.01% | 3.48% | 12.63% | |
67 Neutral | $973.55M | -23.64 | -8.12% | ― | 8.10% | 43.35% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
60 Neutral | $672.76M | 227.74 | 1.74% | ― | 2.53% | 95.79% | |
55 Neutral | $1.15B | 77.54 | -5.25% | ― | -1.51% | 155.73% | |
49 Neutral | $353.88M | -4.36 | -12.92% | ― | 2.20% | -229.99% | |
41 Neutral | $465.22M | -18.93 | -20.60% | ― | 48.81% | 61.64% |
* Consumer Defensive Sector Average
DAO
Youdao
9.82
2.54
34.89%
GOTU
Gaotu Techedu
1.93
-0.83
-30.07%
AFYA
Afya
15.46
-1.71
-9.96%
COUR
Coursera
5.94
-1.03
-14.78%
UDMY
Udemy Inc
4.75
-1.46
-23.51%
KLC
KinderCare Learning Companies Inc
3.00
-8.35
-73.57%
Youdao Corporate Events
Youdao, Inc. Announces Annual General Meeting for December 2025
Nov 20, 2025
Youdao, Inc. announced it will hold its annual general meeting of shareholders on December 16, 2025, in Beijing, China. The meeting will serve as an open forum for shareholders and beneficial owners of the Company’s American Depositary Share...
Youdao Reports Q3 2025 Financial Results with Growth in Online Marketing
Nov 20, 2025
Youdao, Inc. reported its unaudited financial results for the third quarter of 2025, showing a 3.6% increase in total net revenues compared to the same period in 2024, reaching RMB1,628.5 million. Despite a decline in revenues from learning servic...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.