Q1 2026 Youdao Inc Earnings Call Transcript
Key Points
- Youdao Inc (DAO) reported a 3.8% year-over-year increase in net revenues, reaching RMB1.3 billion.
- The company achieved its seventh consecutive quarter of operating profitability with an operating profit of RMB57.5 million.
- Successful AI product launches, including Confucius 4 and EmotiVoice 2, are driving business growth and enhancing learning experiences.
- Online marketing services saw a significant 20.9% year-over-year revenue increase, driven by performance-based advertising and AI technology investments.
- AI-driven subscription services experienced robust growth, with total sales exceeding RMB100 million, representing over 70% year-over-year growth.
- Year-over-year operating profit declined by 44.7%, primarily due to proactive investments in strategic initiatives and a high comparison base from the previous year.
- Net revenue from smart devices decreased by 42.6% year-over-year, reflecting a decline in demand.
- Gross margin for smart devices dropped to 39.9% from 52.3% in the same period of the previous year.
- Operating income margin decreased to 4.3% from 8% in the same period last year.
- Net income attributable to ordinary shareholders fell to RMB38.6 million from RMB76.7 million in the same period last year.
Good day and welcome to Youdao's first quarter 2026 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jeffrey Wang, Investor Relations Director of Youdao. Please go ahead.
Thank you, operator. Please note that the discussion today will contain forward-looking statements related to the future performance of the Company, which are intended to qualify for the Safe Harbor from liability as established by the US Private Securities Litigation Reform Act. Such statements are not guarantees of the future performance and are subject to certain risks and uncertainties, assumptions, and other factors.
Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect Youdao's business and financial results is included in certain company filings with the US Securities and
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