China's Youdao Inc Q2 revenue rises on learning services growth

Youdao

20/08/2026 10:26

Overview
China AI learning and advertising provider's Q2 revenue rose 3.5% yr/yr, led by learning services
Operating profit nearly tripled yr/yr, with improved gross margin
Company repurchased 7.5 mln ADSs under buyback program; new director appointed to board

Outlook
Company did not provide specific guidance for the current quarter or full year in the press release

Result Drivers
LEARNING SERVICES GROWTH - Co said learning services revenue rose 20.9% yr/yr, driven by strong momentum in tutoring services and expansion of AI-driven subscription products
SMART DEVICES DECLINE - Co said smart devices revenue fell 31.5% yr/yr, mainly due to lower demand for smart learning devices
ONLINE MARKETING STRATEGY - Co said online marketing services revenue fell 7.7% yr/yr as it focused on higher ROI engagements, which it said improved operational efficiency

Company press release: ID:nPn9Kbcqha

Key Details
Metric
Beat/Miss
Actual
Consensus Estimate
Q2 Gross Margin
 
48.90%
 
Q2 Gross Profit
 
RMB 716.90 mln
 
Q2 Income from Operations
 
RMB 111.50 mln
 
Q2 Operating Expenses
 
RMB 605.30 mln
 

Analyst Coverage
The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 6 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"
Wall Street's median 12-month price target for Youdao Inc is $13.50, about 18.9% below its August 19 closing price of $16.65
The stock recently traded at 46 times the next 12-month earnings vs. a P/E of 37 three months ago

Reuters Recommended Reads
Aug 20 - China's Sunlands Technology Q2 revenue falls 25% as enrollments drop
Aug 19 - China short video platform Kuaishou Q2 profit hit by higher costs, revenue inches up
Aug 19 - China East Education H1 profit rises on increased student enrollment

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.

(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.)