HANGZHOU, China, May 21, 2026 /PRNewswire/ -- Youdao, Inc. ("Youdao" or the "Company") (NYSE: DAO), an AI solutions provider specializing in learning and advertising, today announced its unaudited financial results for the first quarter ended March 31, 2026.

First Quarter 2026 Financial Highlights

• Total net revenues were RMB1.3 billion (US$195.4 million), representing a 3.8% increase from the same period in 2025.
  - Net revenues from learning services were RMB627.5 million (US$91.0 million), representing a 4.2% increase from the same period in 2025.
  - Net revenues from smart devices were RMB109.4 million (US$15.9 million), representing a 42.6% decrease from the same period in 2025.
  - Net revenues from online marketing services were RMB611.1 million (US$88.6 million), representing a 20.9% increase from the same period in 2025.
• Gross margin was 44.7%, compared with 47.3% for the same period in 2025. 
• Income from operations was RMB57.5 million (US$8.3 million), representing a 44.7% decrease from the same period in 2025.
• Basic and diluted net income per American depositary share ("ADS") attributable to ordinary shareholders were RMB0.33 (US$0.05) and RMB0.32 (US$0.05), respectively, compared with RMB0.65 and RMB0.64 for the same period of 2025. Non-GAAP basic and diluted net income per ADS attributable to ordinary shareholders were RMB0.38 (US$0.06) and RMB0.37 (US$0.05), respectively, compared with RMB0.69 and RMB0.68 for the same period of 2025.

"We entered 2026 with solid momentum, delivering our fourth consecutive quarter of year-over-year revenue growth and seventh consecutive quarter of operating profitability. Our operating margin improved sequentially, and operating cash flow strengthened significantly. At the same time, our strategic initiatives continued to gain traction, with both Youdao Lingshi gross billings and online marketing services revenue growing over 20% year-over-year. We also expanded our AI Agent matrix with the launches of LobsterAI and Youdao Baoku, extending the capabilities of our proprietary Confucius LLM across learning and productivity scenarios," said Dr. Feng Zhou, Chief Executive Officer and Director of Youdao.

"Looking ahead, we remain firmly committed to our AI-Native Strategy. By continuously refining our vertical large language models for learning and advertising, and by expanding our portfolio of AI-native agents, we are enhancing how users learn, work and market. We will continue to improve user experience while driving sustainable progress in profitability and cash flow throughout the year," Dr. Zhou concluded.

First Quarter 2026 Financial Results

Net Revenues 

Net revenues for the first quarter of 2026 were RMB1.3 billion (US$195.4 million), representing a 3.8% increase from RMB1.3 billion for the same period of 2025.

Net revenues from learning services were RMB627.5 million (US$91.0 million) for the first quarter of 2026, representing a 4.2% increase from RMB602.4 million for the same period of 2025.

Net revenues from smart devices were RMB109.4 million (US$15.9 million) for the first quarter of 2026, representing a 42.6% decrease from RMB190.5 million for the same period of 2025, primarily due to a decline in demand for smart learning devices in the first quarter of 2026.

Net revenues from online marketing services were RMB611.1 million (US$88.6 million) for the first quarter of 2026, representing a 20.9% increase from RMB505.4 million for the same period of 2025. The year-over-year increase was mainly attributable to increased demand for performance-based advertisements through third parties' internet properties, which was driven by Youdao's continued investments in AI technology.

Gross Profit and Gross Margin

Gross profit for the first quarter of 2026 was RMB602.3 million (US$87.3 million), largely flat compared with RMB614.2 million for the same period of 2025. Gross margin was 44.7% for the first quarter of 2026, compared with 47.3% for the same period of 2025. The decrease was mainly due to the decline in gross profit margin of smart devices.

Gross margin for learning services was 60.2% for the first quarter of 2026, compared with 59.8% for the same period of 2025.

Gross margin for smart devices was 39.9% for the first quarter of 2026, compared with 52.3% for the same period of 2025. The decrease was mainly attributable to increased bill of materials cost for smart devices.

Gross margin for online marketing services was 29.6% for the first quarter of 2026, compared with 30.5% for the same period of 2025.

Operating Expenses

Total operating expenses for the first quarter of 2026 were RMB544.8 million (US$79.0 million), compared with RMB510.2 million for the same period of last year.

Sales and marketing expenses for the first quarter of 2026 were RMB382.2 million (US$55.4 million), representing an increase of 6.9% from RMB357.6 million for the same period of 2025. This increase was primarily driven by increasing sales and marketing efforts, as well as increased payroll-related expenses and outsourcing labor service fees associated with learning services in the first quarter of 2026.

Research and development expenses for the first quarter of 2026 were RMB115.4 million (US$16.7 million), remaining stable with the same period of 2025.

General and administrative expenses for the first quarter of 2026 were RMB47.2 million (US$6.8 million), representing an increase of 27.4% from RMB37.1 million for the same period of 2025. The increase was mainly attributable to an increase in expected credit losses on the Company's accounts receivables in the first quarter of 2026.

Income from Operations

As a result of the foregoing, income from operations for the first quarter of 2026 was RMB57.5 million (US$8.3 million), compared with RMB104.0 million for the same period in 2025. The margin of income from operations was 4.3%, compared with 8.0% for the same period of last year.

Net Income Attributable to Youdao's Ordinary Shareholders

Net income attributable to Youdao's ordinary shareholders for the first quarter of 2026 was RMB38.6 million (US$5.6 million), compared with RMB76.7 million for the same period of last year. Non-GAAP net income attributable to Youdao's ordinary shareholders for the first quarter of 2026 was RMB44.9 million (US$6.5 million), compared with RMB81.7 million for the same period of last year.

Basic and diluted net income per ADS attributable to ordinary shareholders for the first quarter of 2026 were RMB0.33 (US$0.05) and RMB0.32 (US$0.05), respectively, compared with RMB0.65 and RMB0.64 for the same period of 2025. Non-GAAP basic and diluted net income per ADS attributable to ordinary shareholders were RMB0.38 (US$0.06) and RMB0.37 (US$0.05), respectively, compared with RMB0.69 and RMB0.68 for the same period of 2025.

Other Information

As of March 31, 2026, Youdao's cash, cash equivalents, current and non-current restricted cash, and short-term investments totaled RMB515.2 million (US$74.7 million), compared with RMB743.2 million as of December 31, 2025. For the first quarter of 2026, net cash used in operating activities was RMB93.1 million (US$13.5 million). Youdao's ability to continue as a going concern is dependent on management's ability to implement an effective business plan amid a changing regulatory environment, generate operating cash flows, and secure external financing for future development. As of March 31, 2026, Youdao has received various forms of financial support from NetEase Group, including, among others, RMB878.0 million in short-term loan, and US$118.0 million in long-term loans maturing on March 31, 2027, drawn from a US$300.0 million revolving loan facility. In April 2026, the Company and NetEase Group both approved an extension of the maturity date of the aforementioned US$300.0 million revolving loan facility to March 31, 2030, including the loans already drawn from it.

As of March 31, 2026, the Company's contract liabilities, which mainly consisted of deferred revenues generated from Youdao's learning services, were RMB667.0 million (US$96.7 million), compared with RMB847.7 million as of December 31, 2025.

Share Repurchase Program

On November 17, 2022, the Company announced that its Board of Directors had authorized the Company to adopt a share repurchase program in accordance with applicable laws and regulations for up to US$20.0 million of its Class A ordinary shares (including in the form of ADSs) during a period of up to 36 months beginning on November 18, 2022. This amount was subsequently increased to US$40.0 million in August 2023. In November 2025, the Board approved an amendment to this Program to extend its original expiration date by one year to November 17, 2026. As of March 31, 2026, the Company had repurchased a total of approximately 7.5 million ADSs in the open market under the share repurchase program for a total consideration of approximately US$33.8 million.

Conference Call

Youdao's management team will host a teleconference call with a simultaneous webcast at 6:00 a.m. Eastern Time on Thursday, May 21, 2026 (Beijing/Hong Kong Time: 6:00 p.m., Thursday, May 21, 2026). Youdao's management will be on the call to discuss the financial results and answer questions.

Dial-in details for the earnings conference call are as follows:

United States (toll free):	+1-888-346-8982
International:	+1-412-902-4272
Mainland China (toll free):	400-120-1203
Hong Kong (toll free):	800-905-945
Conference ID:	5620376

A live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.youdao.com.

A replay of the conference call will be accessible by phone one hour after the conclusion of the live call at the following numbers, until May 28, 2026:

United States:	+1-855-669-9658
International:	+1-412-317-0088
Replay Access Code:	5620376

About Youdao, Inc. 

Youdao, Inc. (NYSE: DAO) is strategically positioned as an AI solutions provider specializing in learning and advertising. Youdao mainly offers learning services, online marketing services and smart devices – all powered by advanced technologies. Youdao was founded in 2006 as part of NetEase, Inc. (NASDAQ: NTES; HKEX: 9999), a leading internet technology company in China.

For more information, please visit: http://ir.youdao.com.

Non-GAAP Measures

Youdao considers and uses non-GAAP financial measures, such as non-GAAP net income attributable to the Company's ordinary shareholders and non-GAAP basic and diluted net income per ADS, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Youdao defines non-GAAP net income attributable to the Company's ordinary shareholders as net income attributable to the Company's ordinary shareholders excluding share-based compensation expenses, gain from fair value change of long-term investment and adjustment for GAAP to non-GAAP reconciling item for the (income)/loss attributable to noncontrolling interests. Non-GAAP net income attributable to the Company's ordinary shareholders enables Youdao's management to assess its operating results without considering the impact of these items, which are non-cash charges in nature. Youdao believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating the Company's current operating performance and prospects in the same manner as management does, if they so choose.

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools, which possibly do not reflect all items of expense that affect our operations. In addition, the non-GAAP financial measures Youdao uses may differ from the non-GAAP measures uses by other companies, including peer companies, and therefore their comparability may be limited.

For more information on these non-GAAP financial measures, please see the table captioned "Unaudited Reconciliation of GAAP and Non-GAAP Results" set forth at the end of this release.

The accompanying table has more details on the reconciliation between our GAAP financial measures that are mostly directly comparable to non-GAAP financial measures. Youdao encourages you to review its financial information in its entirety and not rely on a single financial measure.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.8980 to US$1.00, the exchange rate on March 31, 2026 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred to could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Further information regarding such risks, uncertainties or factors is included in the Company's filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.

For investor and media inquiries, please contact:

In China:
Jeffrey Wang
Youdao, Inc.
Tel: +86-10-8255-8163 ext. 89980
E-mail: IR@rd.netease.com 

Piacente Financial Communications
Helen Wu
Tel: +86-10-6508-0677
E-mail: youdao@thepiacentegroup.com 

In the United States:
Piacente Financial Communications
Brandi Piacente
Tel: +1-212-481-2050
E-mail: youdao@thepiacentegroup.com 

 

YOUDAO, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(RMB and USD in thousands)
		As of December 31,		As of March 31,		As of March 31,
		2025		2026		2026
		RMB		RMB		USD (1)
Assets
Current assets:
Cash and cash equivalents		439,731		315,226		45,698
Restricted cash		1,990		1,846		268
Short-term investments		298,290		194,923		28,258
Accounts receivable, net		381,243		326,381		47,315
Inventories		140,776		116,763		16,927
Amounts due from NetEase Group		321,359		315,795		45,781
Prepayment and other current assets		139,117		149,084		21,612
Total current assets		1,722,506		1,420,018		205,859
Non-current assets:
Property, equipment and software, net		44,603		41,850		6,067
Operating lease right-of-use assets, net		46,943		49,797		7,219
Long-term investments		19,811		21,141		3,065
Goodwill		109,944		109,944		15,939
Other assets, net		31,238		30,233		4,382
Total non-current assets		252,539		252,965		36,672
Total assets		1,975,045		1,672,983		242,531
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payables		110,003		83,510		12,106
Payroll payable		294,824		162,205		23,515
Amounts due to NetEase Group		22,818		32,770		4,751
Contract liabilities		847,707		666,968		96,690
Taxes payable		43,515		86,528		12,544
Accrued liabilities and other payables		738,045		803,955		116,549
Short-term loan from NetEase Group		878,000		878,000		127,283
Total current liabilities		2,934,912		2,713,936		393,438
Non-current liabilities:
Long-term lease liabilities		18,840		21,372		3,098
Long-term loans from NetEase Group		926,588		814,866		118,131
Other non-current liabilities		28,802		24,475		3,548
Total non-current liabilities		974,230		860,713		124,777
Total liabilities		3,909,142		3,574,649		518,215
Shareholders' deficit:
Youdao's shareholders' deficit		(1,974,058)		(1,935,937)		(280,652)
Noncontrolling interests		39,961		34,271		4,968
Total shareholders' deficit		(1,934,097)		(1,901,666)		(275,684)
Total liabilities and shareholders' deficit		1,975,045		1,672,983		242,531
Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.8980 on the last trading day of March (March 31, 2026) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

 

YOUDAO, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(RMB and USD in thousands, except share and per ADS data)
		Three Months Ended
		March 31,		December 31,		March 31,		March 31,
		2025		2025		2026		2026
		RMB		RMB		RMB		USD (1)
Net revenues:
Learning services		602,414		727,233		627,477		90,965
Smart devices		190,498		176,545		109,405		15,860
Online marketing services		505,350		660,914		611,140		88,597
Total net revenues		1,298,262		1,564,692		1,348,022		195,422
Cost of revenues (2)		(684,035)		(859,314)		(745,729)		(108,108)
Gross profit		614,227		705,378		602,293		87,314
Operating expenses:
Sales and marketing expenses (2)		(357,641)		(437,143)		(382,183)		(55,405)
Research and development expenses (2)		(115,474)		(142,645)		(115,371)		(16,725)
General and administrative expenses (2)		(37,071)		(65,387)		(47,238)		(6,848)
Total operating expenses		(510,186)		(645,175)		(544,792)		(78,978)
Income from operations		104,041		60,203		57,501		8,336
Interest income		517		825		935		136
Interest expense		(16,104)		(14,919)		(13,609)		(1,973)
Others, net		(960)		(10,665)		3,483		504
Income before tax		87,494		35,444		48,310		7,003
Income tax (expenses)/benefits		(9,895)		510		(4,497)		(652)
Net income		77,599		35,954		43,813		6,351
Net (income)/loss attributable to noncontrolling interests		(856)		12,292		(5,236)		(759)
Net income attributable to ordinary shareholders of the Company		76,743		48,246		38,577		5,592
Basic net income per ADS		0.65		0.41		0.33		0.05
Diluted net income per ADS		0.64		0.40		0.32		0.05
Shares used in computing basic net income per ADS		117,594,976		118,601,505		118,671,804		118,671,804
Shares used in computing diluted net income per ADS		119,504,097		120,288,530		120,444,180		120,444,180
Note 1:
The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.8980 on the last trading day of March (March 31, 2026) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.
Note 2: Share-based compensation in each category:
Cost of revenues		612		362		300		43
Sales and marketing expenses		728		792		1,300		188
Research and development expenses		2,352		9,723		4,781		693
General and administrative expenses		1,538		2,647		2,241		326

 

 

YOUDAO, INC.
UNAUDITED ADDITIONAL INFORMATION
(RMB and USD in thousands)
		Three Months Ended
		March 31,		December 31,		March 31,		March 31,
		2025		2025		2026		2026
		RMB		RMB		RMB		USD
Net revenues
Learning services		602,414		727,233		627,477		90,965
Smart devices		190,498		176,545		109,405		15,860
Online marketing services		505,350		660,914		611,140		88,597
Total net revenues		1,298,262		1,564,692		1,348,022		195,422
Cost of revenues
Learning services		242,111		272,528		250,027		36,247
Smart devices		90,851		109,291		65,713		9,526
Online marketing services		351,073		477,495		429,989		62,335
Total cost of revenues		684,035		859,314		745,729		108,108
Gross margin
Learning services		59.8 %		62.5 %		60.2 %		60.2 %
Smart devices		52.3 %		38.1 %		39.9 %		39.9 %
Online marketing services		30.5 %		27.8 %		29.6 %		29.6 %
Total gross margin		47.3 %		45.1 %		44.7 %		44.7 %

 

 

YOUDAO, INC.
UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS
(RMB and USD in thousands, except share and per ADS data)
		Three Months Ended
		March 31,		December 31,		March 31,		March 31,
		2025		2025		2026		2026
		RMB		RMB		RMB		USD
Net income attributable to ordinary shareholders of the Company		76,743		48,246		38,577		5,592
Add: share-based compensation		5,230		13,524		8,622		1,250
Less: gain from fair value change of long-term investment		-		-		(1,339)		(194)
Less: GAAP to non-GAAP reconciling item for the (income)/loss attributable to noncontrolling interests		(297)		(3,024)		(970)		(141)
Non-GAAP net income attributable to ordinary shareholders of the Company		81,676		58,746		44,890		6,507
Non-GAAP basic net income per ADS		0.69		0.50		0.38		0.06
Non-GAAP diluted net income per ADS		0.68		0.49		0.37		0.05
Shares used in computing non-GAAP basic net income per ADS		117,594,976		118,601,505		118,671,804		118,671,804
Shares used in computing non-GAAP diluted net income per ADS		119,504,097		120,288,530		120,444,180		120,444,180

 

Source: Youdao, Inc. Related Stocks: NYSE:DAO