Youdao (DAO) investor relations material

Executive summary

• Fourth quarter 2025 net revenues rose 16.8% year-over-year to RMB 1.6 billion, driven by learning services and online marketing, with all business segments contributing.

• Full year 2025 net revenues reached RMB 5.9 billion, up 5% year-over-year, and income from operations increased 48.7% to RMB 221.3 million.

• Achieved first-ever full year net cash inflow from operating activities, totaling RMB 55.2 million.

• AI-driven strategy accelerated growth across learning, marketing, and smart device businesses, with a focus on sustainable growth and vertical large language models.

• Achieved sixth consecutive quarter of operating profitability in 2025, supported by growth in AI-driven subscription products and online marketing services.

Financial highlights

• Q4 2025 net revenues were RMB 1,564.7 million, up from RMB 1,339.8 million in Q4 2024.

• Q4 2025 gross profit was RMB 705.4 million, with a gross margin of 45.1%; full year gross margin was 44.3%.

• Q4 2025 net income attributable to ordinary shareholders was RMB 48.2 million; full year 2025 net income was RMB 107.3 million, up 30.6%.

• Q4 2025 net cash provided by operating activities was RMB 184.2 million; year-end cash, cash equivalents, and short-term investments totaled RMB 743.2 million.

• Q4 2025 operating profit was RMB 60.2 million, up 113% quarter-over-quarter but down 28.5% year-over-year.

Outlook and guidance

• 2026 focus is on sustainable growth, leveraging AI-native strategy and generative AI applications across learning services and advertising.

• Online marketing services to deploy new AI solutions and target high-growth sectors like AI apps, gaming, and short-form drama.

• Learning services expected to return to double-digit year-over-year growth in 2026, with continued innovation in AI-driven products and planned launch of AI-powered English essay grading.

• Smart devices segment to focus on core products and STEM learning scenarios.