Chinese edtech firm Youdao's Q3 revenue rises on strong marketing growth

Youdao

20/11/2025 08:39

Overview

Youdao Q3 2025 total net revenue grows 3.6% yr/yr, driven by online marketing services

Company's gross margin declines to 42.2%, mainly due to lower margins in marketing services

Income from operations falls 73.7% yr/yr, reflecting increased strategic investments

Outlook

Company remains confident in meeting full-year targets, including operating cash-flow breakeven

Youdao to deepen AI-Native Strategy, focusing on large language model Confucius

Result Drivers

ONLINE MARKETING GROWTH - Revenue from online marketing services rose 51.1% yr/yr, driven by demand from NetEase group and overseas markets

LEARNING SERVICES DECLINE - Revenue from learning services fell 16.2% yr/yr due to strategic focus on high ROI engagements

SMART DEVICES DEMAND DROP - Revenue from smart devices decreased 22.1% yr/yr due to declined demand for smart learning devices

Key Details

Metric
Beat/Miss
Actual
Consensus Estimate
Q3 Revenue
RMB 1.63 bln
Q3 Adjusted EPS
RMB 0.08
Q3 Gross Margin
42.20%
Q3 Gross Profit
RMB 687.90 mln
Q3 Income from Operations
RMB 28.30 mln
Q3 Operating Expenses
RMB 659.6 mln


Analyst Coverage

The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 6 "strong buy" or "buy", 2 "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 is $12.20, about 20.1% above its November 19 closing price of $9.75

The stock recently traded at 31 times the next 12-month earnings vs. a P/E of 29 three months ago

Press Release: ID:nPncgvmfJa

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(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.)