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Youdao (DAO)
NYSE:DAO
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Youdao
(NYSE:DAO)
Rating:52Neutral
Price Target:
$8.50
▼(-5.24% Downside)
Youdao (DAO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.07B
Dividend YieldN/A
Average Volume (3M)101.94K
Price to Earnings (P/E)33.6
Beta (1Y)0.80
Revenue Growth-1.66%
EPS GrowthN/A
CountryUS
Employees3,750
SectorConsumer Defensive
Sector Strength48
IndustryEducation & Training Services
Share Statistics
EPS (TTM)-0.02
Shares Outstanding31,280,890
10 Day Avg. Volume102,437
30 Day Avg. Volume101,938
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.11
Enterprise Value/Revenue0.22
Enterprise Value/Gross Profit0.44
Enterprise Value/Ebitda4.86
Forecast
1Y Price Target
$10.00Price Target Upside11.48% Upside
Rating ConsensusHold
Number of Analyst Covering0
Youdao Business Overview & Revenue Model
Company DescriptionYoudao (DAO) is a leading technology-driven education company based in China, specializing in intelligent learning products and services. It operates primarily in the educational technology sector, providing a range of services including online learning platforms, language translation applications, and smart learning devices. Youdao's core products encompass Youdao Dictionary, Youdao Cloud, and various online courses that cater to students from primary to higher education levels, as well as lifelong learners.
How the Company Makes MoneyYoudao generates revenue through multiple streams, including subscription fees from its online learning services, sales of its smart learning devices, and advertising revenue from its digital platforms. The subscription model allows users to access premium content and personalized learning experiences. Additionally, Youdao partners with educational institutions and corporate clients, providing tailored learning solutions that contribute to its earnings. The company also benefits from strategic collaborations with technology firms and educational organizations, enhancing its product offerings and market reach.
Youdao Earnings Call Summary
Earnings Call Date:Aug 14, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 13, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance with the first profitable second quarter and significant growth in online marketing services, especially in the gaming sector. However, there were challenges such as a decline in operating cash inflow and smart devices revenue. Despite these lowlights, the strategic focus on AI innovations and profitable growth suggests a positive outlook.Q2-2025 Updates
Positive Updates
First Profitable Second Quarter
Youdao achieved its first profitable second quarter with an operating income of RMB 28.8 million compared to an operating loss of RMB 72.6 million in the same period last year.
Revenue Growth
Net revenues reached RMB 1.4 billion, a 7.2% increase year-over-year. Online Marketing Services net revenues grew by 23.8% year-over-year, driven by strong demand from the gaming industry and Chinese clients expanding overseas.
Successful Launch of New AI Features
The AI Essay Grading feature and other AI-driven services like Mr. P AI Tutor and Scholar AI have been launched, achieving high user retention rates and receiving positive feedback.
Gaming Ad Revenue Growth
Gaming ad revenue grew by more than 50% year-over-year, bolstered by collaborations with NetEase Games and other advertisers.
Negative Updates
Decrease in Operating Cash Inflow
Operating cash inflow was RMB 185 million, down 26.1% year-over-year, primarily due to the strategic scaling back of certain STEAM and adult courses.
Smart Devices Revenue Decline
Net revenues from smart devices declined by 23.9% year-over-year to RMB 126.8 million due to high-end Dictionary Pen models nearing the end of their product life cycles and reduced marketing expenditure.
Decrease in Gross Profit
Total gross profit was RMB 609.4 million, representing a 4.3% decrease from the same period of 2024.
Company Guidance
In the Youdao 2025 Second Quarter Earnings Conference Call, the company reported significant financial improvements driven by strategic initiatives. The second quarter marked Youdao's first profitable quarter, with an operating income of RMB 28.8 million, a notable turnaround from a loss of RMB 72.6 million in the same period last year. Net revenues rose by 7.2% year-over-year to RMB 1.4 billion, though operating cash inflow declined by 26.1% due to a strategic scaling back of certain courses. Learning services revenues increased by 2.2% to RMB 657.8 million, while online marketing services surged 23.8% to RMB 632.9 million, bolstered by robust demand from the gaming industry and international markets. However, the smart devices segment saw a revenue decline of 23.9% to RMB 126.8 million. The company highlighted its AI-driven advancements, including the AI Essay Grading feature and the launch of Confucius 3-Math, which have driven user engagement and retention rates to over 75%. Despite a decrease in total gross profit by 4.3% year-over-year, Youdao reduced operating expenses significantly, resulting in a net loss of RMB 17.8 million, down from RMB 99.5 million the previous year, and a non-GAAP net income of RMB 12.5 million. The management expressed confidence in achieving operating cash flow breakeven for the year, supported by improvements in profitability and strategic investments in AI technology.Youdao Financial Statement Overview
Summary
Youdao demonstrates revenue growth and gross profitability, but faces challenges in net profitability, high leverage, and cash flow generation. The negative equity and cash flow issues present potential risks despite operational improvements.Income Statement
Youdao has shown a consistent revenue growth over the years, with the most recent annual increase of 4.39% from 2023 to 2024. The gross profit margin for 2024 stands at 48.86%, indicating a healthy profitability at the gross level. However, despite improving from a net loss in previous years, the net profit margin is 1.46% in 2024, showing that profitability at the net level remains a challenge. The EBIT and EBITDA margins are low but show a positive trend, reflecting operational improvements.65
Positive
Balance Sheet
The company's balance sheet reflects high leverage, with a negative stockholders' equity of -$2.14 billion, resulting in an uncalculated debt-to-equity ratio. This indicates potential financial instability. The equity ratio is also negative due to the negative equity. Despite these concerns, the company has substantial cash reserves of $655.79 million, offering some liquidity cushion.50
Neutral
Cash Flow
The cash flow statement reveals challenges in cash generation, with operating cash flow and free cash flow both at $0 for 2024, indicating potential operational inefficiencies. Earlier years show negative free cash flow, highlighting consistent cash outflows. The lack of positive free cash flow growth and operating cash flow to net income ratio raises concerns about the company's ability to generate cash sustainably.40
Negative
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.53B | 5.63B | 5.39B | 5.01B | 4.02B | 3.17B |
| Gross Profit | 2.68B | 2.75B | 2.77B | 2.59B | 1.99B | 1.45B |
| EBITDA | 244.73M | 178.46M | -439.92M | -680.33M | -856.37M | -749.42M |
| Net Income | 146.52M | 82.21M | -549.93M | -739.78M | -926.09M | -1.75B |
Balance Sheet | ||||||
| Total Assets | 1.54B | 1.81B | 1.67B | 2.28B | 2.63B | 2.07B |
| Cash, Cash Equivalents and Short-Term Investments | 418.28M | 655.78M | 526.66M | 1.02B | 826.88M | 1.19B |
| Total Debt | 1.82B | 1.85B | 1.60B | 1.44B | 1.21B | 957.75M |
| Total Liabilities | 3.54B | 3.90B | 3.80B | 3.75B | 3.36B | 3.48B |
| Stockholders Equity | -2.05B | -2.14B | -2.19B | -1.54B | -807.07M | -1.41B |
Cash Flow | ||||||
| Free Cash Flow | 0.00 | -79.70M | -456.00M | -672.88M | -1.41B | -358.42M |
| Operating Cash Flow | 0.00 | -67.91M | -438.14M | -603.12M | -1.35B | -321.56M |
| Investing Cash Flow | 0.00 | -13.59M | 125.57M | 125.82M | 47.07M | 760.97M |
| Financing Cash Flow | 0.00 | 228.51M | -18.94M | 184.65M | 1.78B | 26.56M |
Youdao Technical Analysis
Negative
8.97
Price Trends
8.84
Negative
8.74
Negative
8.17
Positive
Market Momentum
-0.01
Positive
40.16
Neutral
17.98
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DAO, the sentiment is Negative. The current price of 8.97 is below the 20-day moving average (MA) of 9.02, above the 50-day MA of 8.84, and above the 200-day MA of 8.17, indicating a neutral trend. The MACD of -0.01 indicates Positive momentum. The RSI at 40.16 is Neutral, neither overbought nor oversold. The STOCH value of 17.98 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $1.37B | 11.35 | 15.50% | <0.01% | 1.02% | 9.06% | |
73 Outperform | $1.88B | ― | -8.40% | ― | 7.10% | 49.18% | |
64 Neutral | $1.03B | ― | -12.62% | ― | 3.93% | 63.52% | |
63 Neutral | $20.41B | 14.67 | -2.93% | 3.10% | 2.04% | -6.12% | |
56 Neutral | $947.54M | ― | -32.95% | ― | 56.38% | -16.84% | |
52 Neutral | $1.07B | 33.57 | 25.15% | ― | -1.66% | ― | |
52 Neutral | $849.31M | 35.79 | -10.31% | ― | 3.85% | -208.51% |
* Consumer Defensive Sector Average
Performance Comparison
DAO
Youdao
8.45
5.32
169.97%
GOTU
Gaotu Techedu
3.78
0.74
24.34%
AFYA
Afya
15.03
-1.55
-9.35%
COUR
Coursera
11.05
3.19
40.59%
UDMY
Udemy Inc
6.76
-1.34
-16.54%
KLC
KinderCare Learning Companies Inc
6.99
-21.05
-75.07%
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.