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Youdao
(NYSE:DAO)
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Rating:55Neutral
Price Target:
$10.00
▼(-20.70% Downside)
Action:Reiterated
Date:01/13/26
The score is held back primarily by financial quality concerns (negative equity and weak cash flow) and a high valuation (P/E 76.52). Technicals are supportive with a strong uptrend, but momentum appears overextended (RSI ~72, Stoch ~91). The latest earnings call was mixed, with strong online marketing growth and improved cash outflow offset by a sharp operating profit decline and weakness in Learning Services and Smart Devices.
Positive Factors
Healthy Gross Margin
A near-49% gross margin on core products indicates durable unit economics for digital and software offerings. This margin provides structural cushion to absorb SG&A and R&D spending, supporting sustainable investment in AI and product development while preserving long-term profitability potential.
Negative Factors
Negative Shareholders' Equity
A large negative equity balance signals accumulated losses or balance sheet impairment, limiting financial flexibility and borrowing capacity. This structural weakness raises refinancing risk and constrains ability to fund strategic investments without dilutive or costly external financing.
Read all positive and negative factors
Positive Factors
Negative Factors
Healthy Gross Margin
A near-49% gross margin on core products indicates durable unit economics for digital and software offerings. This margin provides structural cushion to absorb SG&A and R&D spending, supporting sustainable investment in AI and product development while preserving long-term profitability potential.
Read all positive factors
Youdao Key Performance Indicators (KPIs)
Any
Gross Profit by Segment
Measures profit after direct costs for each business line, highlighting which segments deliver higher margins and which are cost-heavy. Differences in gross profit reveal where the company has pricing power and scalable advantages versus areas that may need cost control, helping investors judge whether revenue growth will translate into sustainable earnings.
Measures profit after direct costs for each business line, highlighting which segments deliver higher margins and which are cost-heavy. Differences in gross profit reveal where the company has pricing power and scalable advantages versus areas that may need cost control, helping investors judge whether revenue growth will translate into sustainable earnings.
Data provided by:
The Fly
The FlyYoudao (DAO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.33B
Dividend YieldN/A
Average Volume (3M)128.14K
Price to Earnings (P/E)129.9
Beta (1Y)0.75
Revenue Growth9.41%
EPS Growth-51.90%
CountryUS
Employees3,750
SectorConsumer Defensive
Sector Strength42
IndustryEducation & Training Services
Share Statistics
EPS (TTM)0.90
Shares Outstanding32,646,270
10 Day Avg. Volume111,582
30 Day Avg. Volume128,141
Financial Highlights & Ratios
PEG Ratio2.58
Price to Book (P/B)-4.22
Price to Sales (P/S)1.41
P/FCF Ratio0.00
Enterprise Value/Market Cap8.01
Enterprise Value/Revenue1.80
Enterprise Value/Gross Profit4.06
Enterprise Value/Ebitda60.15
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)1.49
Revenue Forecast (FY)$6.59B
Youdao Business Overview & Revenue Model
Company Description
Youdao, Inc. is a Chinese internet technology company that delivers online services focused on content, community engagement, communication platforms, and e-commerce. Its operations are structured into three core divisions: Learning Services, Smar...
How the Company Makes Money
Youdao generates revenue through multiple streams, including subscription fees from its online education services and language learning apps. The company also earns money through the sale of its educational software products and digital content. A...
Youdao Earnings Call Summary
Earnings Call Date:May 21, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 13, 2026
Earnings Call Sentiment Neutral
The call presented a mixed picture: solid top-line growth driven by online marketing and AI-enabled learning products, continuing operational milestones (7 consecutive profitable quarters), strong AI product launches and external recognition. However, meaningful year-over-year declines in operating profit and net income, a sharp contraction in the smart devices business, higher operating expenses, and reduced deferred revenue temper near-term financial strength. Management emphasized AI strategy, product traction, and a path to improved profitability and cash flow in H2, suggesting cautious optimism but balanced near-term risks.Positive Updates
Overall Revenue Growth
Total net revenues of RMB 1.3 billion, up 3.8% year-over-year, signaling top-line expansion despite macro and seasonal headwinds.
Negative Updates
Decline in Operating Profit and Net Income YoY
Operating profit declined 44.7% year-over-year. Net income attributable to ordinary shareholders was RMB 38.6 million versus RMB 76.7 million a year ago (down ~49.7%); non-GAAP net income also fell to RMB 44.9 million from RMB 81.7 million (down ~45%).
Read all updates
Q1-2026 Updates
Positive
Negative
Overall Revenue Growth
Total net revenues of RMB 1.3 billion, up 3.8% year-over-year, signaling top-line expansion despite macro and seasonal headwinds.
Read all positive updates
Company Guidance
Management guided to deliver full‑year improvements in profitability and cash flow in 2026, reiterating that H2 should outperform H1 with revenue seasonality peaking in Q3 and advertising remaining the primary contributor to operating profit; they pointed to Q1 starting from total revenue of RMB 1.3 billion (+3.8% YoY), operating profit RMB 57.5 million (operating margin 4.3%, -44.7% YoY), net operating cash outflow narrowed to RMB 93.1 million (down 63.6% YoY), cash and equivalents RMB 515.2 million and contract liabilities RMB 667 million. Key segment metrics underpinning the outlook include learning services revenue RMB 627.5 million (+4.2% YoY) with 60.2% gross margin, Lingshi gross billings >20% YoY and retention >75%, online marketing revenue RMB 611.1 million (+20.9% YoY) with 29.6% gross margin (up 1.8 ppt sequential) and >50% YoY growth in AI and short‑form drama advertising, smart devices RMB 109.4 million (-42.6% YoY) with 39.9% gross margin, plus AI traction (AI subscriptions >RMB100 million, ~10,000 essays AI‑graded, LobsterAI >5,000 GitHub stars, InfunEase ~60,000 influencers) that management expects to drive margin and cash‑flow recovery.Youdao Financial Statement Overview
Summary
Income Statement
65
Positive
Balance Sheet
50
Neutral
Cash Flow
40
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.91B | 5.63B | 5.39B | 5.01B | 4.02B |
| Gross Profit | 2.62B | 2.75B | 2.77B | 2.59B | 1.99B |
| EBITDA | 200.01M | 183.28M | -439.92M | -638.11M | -857.70M |
| Net Income | 107.35M | 82.21M | -549.93M | -727.03M | -995.65M |
Balance Sheet | |||||
| Total Assets | 1.98B | 1.81B | 1.67B | 2.28B | 2.63B |
| Cash, Cash Equivalents and Short-Term Investments | 738.02M | 655.78M | 526.66M | 1.02B | 826.88M |
| Total Debt | 1.85B | 1.85B | 1.60B | 1.48B | 1.25B |
| Total Liabilities | 3.91B | 3.90B | 3.80B | 3.75B | 3.36B |
| Stockholders Equity | -1.97B | -2.14B | -2.19B | -1.54B | -807.07M |
Cash Flow | |||||
| Free Cash Flow | 0.00 | -79.70M | -456.00M | -672.88M | -1.41B |
| Operating Cash Flow | 0.00 | -67.91M | -438.14M | -603.12M | -1.35B |
| Investing Cash Flow | 0.00 | -13.59M | 125.57M | 125.82M | 47.07M |
| Financing Cash Flow | 0.00 | 228.51M | -18.94M | 184.65M | 1.78B |
Youdao Technical Analysis
Negative
12.61
Price Trends
11.55
Negative
10.74
Positive
10.45
Positive
Market Momentum
-0.12
Positive
46.26
Neutral
25.53
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DAO, the sentiment is Negative. The current price of 12.61 is above the 20-day moving average (MA) of 11.58, above the 50-day MA of 11.55, and above the 200-day MA of 10.45, indicating a neutral trend. The MACD of -0.12 indicates Positive momentum. The RSI at 46.26 is Neutral, neither overbought nor oversold. The STOCH value of 25.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DAO.
Youdao Risk Analysis
Youdao disclosed 97 risk factors in its most recent earnings report. Youdao reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Youdao Peers Comparison
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $1.34B | 9.19 | 16.00% | <0.01% | 13.36% | 15.90% | |
63 Neutral | $1.64B | -15.10 | -10.06% | ― | 9.79% | 8.61% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
58 Neutral | $394.98M | -10.59 | -30.05% | ― | 26.62% | 52.16% | |
55 Neutral | $1.33B | 129.95 | -3.46% | ― | 9.41% | -51.90% | |
50 Neutral | $499.77M | -1.18 | -55.02% | ― | 2.28% | -473.69% |
* Consumer Defensive Sector Average
DAO
Youdao
11.12
2.52
29.30%
GOTU
Gaotu Techedu
1.74
-1.87
-51.80%
AFYA
Afya
14.87
-2.23
-13.06%
COUR
Coursera
5.74
-3.02
-34.47%
KLC
KinderCare Learning Companies Inc
4.22
-5.88
-58.22%
Youdao Corporate Events
Youdao, Inc. Announces Annual General Meeting for December 2025
Nov 20, 2025
Youdao, Inc. announced it will hold its annual general meeting of shareholders on December 16, 2025, in Beijing, China. The meeting will serve as an open forum for shareholders and beneficial owners of the Company’s American Depositary Share...
Youdao Reports Q3 2025 Financial Results with Growth in Online Marketing
Nov 20, 2025
Youdao, Inc. reported its unaudited financial results for the third quarter of 2025, showing a 3.6% increase in total net revenues compared to the same period in 2024, reaching RMB1,628.5 million. Despite a decline in revenues from learning servic...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.