Youdao (NYSE:DAO) Releases Quarterly Earnings Results, Beats Estimates By $0.09 EPS

Youdao (NYSE:DAO) issued its earnings results on Thursday. The company reported $0.11 earnings per share for the quarter, topping analysts’ consensus estimates of $0.02 by $0.09, FiscalAI reports. Youdao had a net margin of 2.71% and a negative return on equity of 8.38%. The firm had revenue of $215.91 million during the quarter, compared to analyst estimates of $229.02 million.

Here are the key takeaways from Youdao’s conference call:

• Profitability and cash flow improved sharply: Q2 operating profit reached RMB 111.5 million, nearly four times higher year over year, marking the eighth consecutive profitable quarter. Operating cash inflow rose 80.7% to RMB 334.2 million.
• Learning services revenue increased 20.9% to RMB 795.6 million, supported by Youdao Lingshi and AI-powered features such as essay grading, personalized recommendations, and college-admission advising. Lingshi and programming courses each reported retention above 75%, while AI-driven subscription sales grew more than 20% year over year.
• Management plans multiple AI model and agent launches in September, with a focus on voice, multilingual translation, mathematics, and advertising. HiEcho billings and simultaneous-interpretation engagement each grew more than 100% year over year, while Confucius 4 delivered improved reasoning and lower inference costs.
• Smart-device revenue fell 31.5% year over year to RMB 86.8 million, pressured by weaker demand, higher memory costs, and reduced hardware scale. Online marketing revenue also declined 7.7% as Youdao deliberately exited lower-ROI opportunities, although margins improved and management expects further improvement in Q3.

Youdao Trading Up 8.5%

Shares of DAO opened at $18.30 on Friday. The company’s fifty day simple moving average is $14.65 and its 200-day simple moving average is $12.07. The company has a market cap of $2.20 billion, a P/E ratio of 91.50 and a beta of 0.59. Youdao has a twelve month low of $8.30 and a twelve month high of $18.94.

Analyst Upgrades and Downgrades

Several equities research analysts recently weighed in on DAO shares. Weiss Ratings upgraded shares of Youdao from a “sell (d)” rating to a “sell (d+)” rating in a research report on Friday, July 17th. Wall Street Zen raised shares of Youdao from a “hold” rating to a “buy” rating in a report on Saturday. One equities research analyst has rated the stock with a Buy rating and one has given a Sell rating to the company’s stock. According to MarketBeat, the company presently has an average rating of “Hold”.

Institutional Trading of Youdao

An institutional investor recently raised its position in Youdao stock. Public Employees Retirement System of Ohio raised its holdings in shares of Youdao, Inc. Unsponsored ADR (NYSE:DAO) by 35.9% in the 3rd quarter, according to its most recent Form 13F filing with the Securities and Exchange Commission (SEC). The firm owned 29,286 shares of the company’s stock after buying an additional 7,729 shares during the period. Public Employees Retirement System of Ohio’s holdings in Youdao were worth $291,000 at the end of the most recent reporting period. 21.91% of the stock is owned by hedge funds and other institutional investors.

Youdao Company Profile

Youdao, Inc (NYSE: DAO), established in 2006 as a subsidiary of NetEase, is headquartered in Beijing, China. The company went public on the New York Stock Exchange in October 2019, marking a significant milestone in its development as an intelligent learning and knowledge service provider. Since its inception, Youdao has combined cloud computing, artificial intelligence and big data analytics to create an adaptive learning ecosystem designed to meet the needs of individual learners and organizations.

At the core of Youdao’s offerings is its suite of digital dictionaries and translation tools, including the flagship Youdao Dictionary app and translation engine.