Overview

* Youdao Q2 2025 revenue rises 7.2% yr/yr to RMB 1.4 bln

* Company achieves first-ever profitable Q2 with RMB 28.8 mln income from operations

* Revenue from online marketing services up 23.8%, driven by gaming and overseas demand

Outlook

* Company aims to advance AI Native Strategy through scenario-driven optimization

* Youdao ( DAO ) plans to boost learner productivity and advertising ROI

* Company committed to sustainable customer value creation

* Youdao ( DAO ) focuses on strengthening financial metrics

Result Drivers

* AI STRATEGY - Strong execution of AI Native Strategy, including release of Confucius 3, drove financial results, per CEO Dr. Feng Zhou

* ONLINE MARKETING - 23.8% revenue increase driven by gaming industry and overseas demand, supported by AI investments

* SMART DEVICES - 23.9% revenue decline due to decreased consumer electronics demand

Key Details

Metric Beat/Mis Actual Consensu

s s

Estimate

Q2 RMB 1.40

Revenue bln

Q2 Gross 43.0%

Margin

Q2 Gross RMB

Profit 609.40

mln

Q2 RMB

Income 28.80

from mln

Operatio

ns

Q2 RMB

Operatin 580.60

g mln

Expenses

Analyst Coverage

* The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 5 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

* The average consensus recommendation for the software peer group is "buy"

* Wall Street's median 12-month price target for Youdao Inc ( DAO ) is $11.71, about 24.1% above its August 13 closing price of $8.88

* The stock recently traded at 29 times the next 12-month earnings vs. a P/E of 37 three months ago

Press Release:

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)