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1、 For investor and media inquiries,please contact:In China:Jeffrey Wang Youdao,Inc.Tel:+86-10-8255-8163 ext.89980 E-mail:IR Piacente Financial Communications Helen Wu Tel:+86-10-6508-0677 E-mail: In the United States:Piacente Financial Communications Brandi Piacente Tel:+1-212-481-2050 E-mail: Youdao

2、 Reports Second Quarter 2024 Unaudited Financial Results Hangzhou,China August 22,2024 Youdao,Inc.(“Youdao”or the“Company”)(NYSE:DAO),an intelligent learning company with industry-leading technology in China,today announced its unaudited financial results for the second quarter ended June 30,2024.Se

3、cond Quarter 2024 Financial Highlights Total net revenues were RMB1.3 billion(US$181.9 million),representing a 9.5%increase from the same period in 2023.o Net revenues from learning services were RMB643.8 million(US$88.6 million),representing a 5.5%decrease from the same period in 2023.o Net revenue

4、s from smart devices were RMB166.7 million(US$22.9 million),representing a 25.0%decrease from the same period in 2023.o Net revenues from online marketing services were RMB511.2 million(US$70.3 million),representing a 68.4%increase from the same period in 2023.Gross margin was 48.2%,compared with 47

5、.0%for the same period in 2023.“In the second quarter,our financial performance was robust,with operating cash inflow reaching an all-time high and operating loss narrowing significantly year-over-year.Leveraging our advanced large language model capabilities and data advantages,we upgraded our coll

6、ege admission consultation services in Youdao Lingshi to AI-based College Admission Advisers,enhancing both the timeliness and personalization of our services.Driven by RTA(Real-Time API)and AI tools advertising,our online marketing services achieved record net revenues of RMB511.2 million in the se

7、cond quarter,an increase of 68.4%year-over-year.AI-driven subscription services continued to expand,with the introduction of new applications,including Mr.P AI Tutor,marking a nearly 200%year-over-year increase of total sales in the second quarter.Overall,in the first half of this year,our strategic

8、 focus on digital content services,online marketing services,and AI-driven subscription services has yielded significant results,with major financial indicators showing year-over-year improvement,”said Dr.Feng Zhou,Chief Executive Officer and Director of Youdao.“Looking ahead,with our teams continue

9、d execution and barring unexpected market changes,we expect the business to achieve full-year positive operating income in the near future.Youdaos strength lies in our unique ability to advance AI empowerment across business lines,combining technical strength with operational excellence.The rapid de

10、velopment of our online marketing and AI subscription services proves this and will continue to drive our growth.Our online courses,underpinned by high-quality content and differentiated services,are another pillar of our future growth.In the long term,the future of AI+education looks incredibly bri

11、ght and we will strive to lead the charge,”Dr.Zhou concluded.Second Quarter 2024 Financial Results Net Revenues Net revenues for the second quarter of 2024 were RMB1.3 billion(US$181.9 million),representing a 9.5%increase from RMB1.2 billion for the same period of 2023.Net revenues from learning ser

12、vices were RMB643.8 million(US$88.6 million)for the second quarter of 2024,representing a 5.5%decrease from RMB680.9 million for the same period of 2023.Net revenues from smart devices were RMB166.7 million(US$22.9 million)for the second quarter of 2024,representing a 25.0%decrease from RMB222.2 mil

13、lion for the same period of 2023,which was mainly attributable to the decreased unit price due to the change of product mix.Net revenues from online marketing services were RMB511.2 million(US$70.3 million)for the second quarter of 2024,representing a 68.4%increase from RMB303.6 million for the same

14、 period of 2023.The year-over-year increase in revenues from online marketing services was primarily due to the increase in the sales of performance-based advertisements through third parties internet properties,which was driven by our continued investments in cutting-edge AI technology.Gross Profit

15、 and Gross Margin Gross profit for the second quarter of 2024 was RMB636.8 million(US$87.6 million),representing a 12.3%increase from RMB567.2 million for the same period of 2023.Gross margin was 48.2%for the second quarter of 2024,compared with 47.0%for the same period of 2023.Gross margin for lear

16、ning services was 60.0%for the second quarter of 2024,compared with 57.4%for the same period of 2023.Gross margin for smart devices was 30.3%for the second quarter of 2024,compared with 35.8%for the same period of 2023.The decrease was mainly attributable to a lower revenue base of smart devices.Gro

17、ss margin for online marketing services was 39.1%for the second quarter of 2024,compared with 31.9%for the same period of 2023.The increase was mainly attributable to the improved gross margin profile of performance-based advertisements through third parties internet properties compared with the sam

18、e period of last year.Operating Expenses Total operating expenses for the second quarter of 2024 were RMB709.3 million(US$97.6 million),compared with RMB856.3 million for the same period of last year.Sales and marketing expenses for the second quarter of 2024 were RMB515.7 million(US$71.0 million),r

19、epresenting a decrease of 12.2%from RMB587.7 million for the same period of 2023.This decrease was attributable to the reduced marketing expenditures and outsourcing labor service fees in learning services in the second quarter of 2024.Research and development expenses for the second quarter of 2024

20、 were RMB153.0 million(US$21.1 million),representing a decrease of 25.4%from RMB205.1 million for the same period of 2023.The decrease was primarily due to the decreased headcount for research and development employees,leading to payroll savings in the second quarter of 2024.General and administrati

21、ve expenses for the second quarter of 2024 were RMB40.6 million(US$5.6 million),representing a decrease of 36.1%from RMB63.6 million for the same period of 2023.The decrease was primarily due to decreased expected credit losses on our accounts receivables,as well as the decreased headcount for gener

22、al and administrative employees,leading to payroll savings in the second quarter of 2024.Loss from Operations As a result of the foregoing,loss from operations for the second quarter of 2024 was RMB72.6 million(US$10.0 million),compared with RMB289.1 million for the same period in 2023.The margin of

23、 loss from operations was 5.5%,compared with 24.0%for the same period of last year.Net Loss Attributable to Youdaos Ordinary Shareholders Net loss attributable to Youdaos ordinary shareholders for the second quarter of 2024 was RMB99.5 million(US$13.7 million),compared with RMB299.2 million for the

24、same period of last year.Non-GAAP net loss attributable to Youdaos ordinary shareholders for the second quarter of 2024 was RMB96.0 million(US$13.2 million),compared with RMB283.6 million for the same period of last year.Basic and diluted net loss per American depositary share(“ADS”)attributable to

25、ordinary shareholders for the second quarter of 2024 was RMB0.85(US$0.12),compared with RMB2.45 for the same period of 2023.Non-GAAP basic and diluted net loss per ADS attributable to ordinary shareholders was RMB0.82(US$0.11),compared with RMB2.32 for the same period of 2023.Other Information As of

26、 June 30,2024,Youdaos cash,cash equivalents,current and non-current restricted cash,time deposits and short-term investments totaled RMB568.5 million(US$78.2 million),compared with RMB527.1 million as of December 31,2023.For the second quarter of 2024,net cash provided by operating activities was RM

27、B250.2 million(US$34.4 million),capital expenditures totaled RMB3.8 million(US$0.5 million).Youdaos ability to continue as a going concern is dependent on managements ability to implement an effective business plan amid a changing regulatory environment,generate operating cash flows,and secure exter

28、nal financing for future development.To support Youdaos future business,NetEase Group has agreed to provide financial support for ongoing operations.As of June 30,2024,Youdao has received various financial support from the NetEase Group,including,among others,RMB878.0 million short-term loans,and US

29、$126.5 million long-term loans with maturity dated March 31,2027 drawn down under the US$300.0 million revolving loan facility.As of June 30,2024,the Companys contract liabilities,which mainly consisted of deferred revenues generated from Youdaos learning services,were RMB1.0 billion(US$142.9 millio

30、n),compared with RMB1.1 billion as of December 31,2023.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 Cla

31、ss A ordinary shares(including in the form of ADSs)during a period of up to 36 months.This amount was subsequently increased to US$40.0 million in August 2023.As of June 30,2024,the Company had repurchased a total of approximately 7.5 million ADSs for around US$33.8 million in the open market under

32、the share repurchase program.Conference Call Youdaos management team will host a teleconference call with simultaneous webcast at 6:00 a.m.Eastern Time on Thursday,August 22,2024(Beijing/Hong Kong Time:6:00 p.m.,Thursday,August 22,2024).Youdaos management will be on the call to discuss the financial

33、 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 Hong Kong:+852-3018-4992 Conference ID:8395069 A live and archi

34、ved webcast of the conference call will be available on the Companys investor relations website at http:/.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 August 29,2024:United States:+1-877-344-7529 Internation

35、al:+1-412-317-0088 Replay Access Code:8395069 About Youdao,Inc.Youdao,Inc.(NYSE:DAO)is an intelligent learning company with industry-leading technology in China dedicated to developing and using technologies to provide learning content,applications and solutions to users of all ages.Building on the

36、popularity of its online knowledge tools such as Youdao Dictionary and Youdao Translation,Youdao now offers smart devices,STEAM courses,adult and vocational courses,and education digitalization solutions.In addition,Youdao has developed a variety of interactive learning apps.Youdao was founded in 20

37、06 as part of NetEase,Inc.(NASDAQ:NTES;HKEX:9999),a leading internet technology company in China.For more information,please visit:http:/.Non-GAAP Measures Youdao considers and uses non-GAAP financial measures,such as non-GAAP net income/(loss)attributable to the Companys ordinary shareholders and n

38、on-GAAP basic and diluted net income/(loss)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 informa

39、tion 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/(loss)attributable to the Companys ordinary shareholders as net income/(loss)attributable to the Companys ordinary shareholders exclu

40、ding share-based compensation expenses and impairment of long-term investments.Non-GAAP net income/(loss)attributable to the Companys ordinary shareholders enables Youdaos management to assess its operating results without considering the impact of these items,which are non-cash charges in nature.Yo

41、udao believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating the Companys 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

42、 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 co

43、mpanies,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 detail

44、s 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 tra

45、nslations 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 RMB7.2672 to US$1.00,the exchange rate on June 28,2024 set forth in the H.10 statistical release of the

46、 Federal Reserve Board.The Company makes no representation that the RMB or US$amounts referred could be converted into US$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 h

47、arbor”provisions of the U.S.Private Securities Litigation Reform Act of 1995.Statements that are not historical facts,including statements about the Companys beliefs and expectations,are forward-looking statements.Forward-looking statements involve inherent risks and uncertainties,and a number of fa

48、ctors 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,”“contin

49、ue,”“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

50、 statements made by its officers,directors or employees to third parties.Further information regarding such risks,uncertainties or factors is included in the Companys filings with the SEC.The announced results of the second quarter of 2024 are preliminary and subject to adjustments.All information p

51、rovided 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.YOUDAO,INC.UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(RMB and USD in thousands)As of December 31,As of June 30,As

52、of June 30,202320242024RMBRMBUSD(1)AssetsCurrent assets:Cash and cash equivalents 454,536 500,811 68,914Time deposits 277 282 39Restricted cash 395 1,719 237Short-term investments 71,848 62,501 8,600Accounts receivable,net 354,006 393,111 54,094Inventories 217,067 195,726 26,933Amounts due from NetE

53、ase Group 26,117 68,104 9,371Prepayment and other current assets 175,705 176,881 24,340Total current assets 1,299,951 1,399,135 192,528Non-current assets:Property,equipment and software,net 70,906 59,513 8,189Operating lease right-of-use assets,net 89,022 89,252 12,281Long-term investments 51,396 77

54、,469 10,660Goodwill 109,944 109,944 15,129Other assets,net 44,976 46,196 6,357Total non-current assets 366,244 382,374 52,616Total assets 1,666,195 1,781,509 245,144Liabilities,Mezzanine Equity and Shareholders DeficitCurrent liabilities:Accounts payables 159,005 110,644 15,225Payroll payable 282,67

55、9 194,622 26,781Amounts due to NetEase Group 82,430 74,164 10,205Contract liabilities 1,052,622 1,038,676 142,927Taxes payable 52,781 47,482 6,534Accrued liabilities and other payables 591,770 743,511 102,310Short-term loans from NetEase Group 878,000 878,000 120,817Total current liabilities 3,099,2

56、87 3,087,099 424,799Non-current liabilities:Long-term lease liabilities 49,337 42,265 5,816Long-term loans from NetEase Group 630,360 905,553 124,608Other non-current liabilities 16,314 16,879 2,323Total non-current liabilities 696,011 964,697 132,747Total liabilities 3,795,298 4,051,796 557,546Mezz

57、anine equity 37,961 38,532 5,302Shareholders deficit:Youdaos shareholders deficit (2,186,736)(2,329,034)(320,486)Noncontrolling interests 19,672 20,215 2,782Total shareholders deficit (2,167,064)(2,308,819)(317,704)Total liabilities,mezzanine equity and shareholders deficit 1,666,195 1,781,509 245,1

58、44Note 1:The conversion of Renminbi(RMB)into United States dollars(USD)is based on the noon buying rate of USD1.00=RMB7.2672 on the last trading day of June(June28,2024)as set forth in the H.10 statistical release of the U.S.Federal Reserve Board.YOUDAO,INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENT

59、S OF OPERATIONS(RMB and USD in thousands,except share and per ADS data)Three Months EndedSix Months EndedJune 30,March 31,June 30,June 30,June 30,June 30,202320242024202420232024RMBRMBRMBUSD(1)RMBRMBNet revenues:Learning services 680,920 717,996 643,762 88,585 1,413,341 1,361,758Smart devices 222,15

60、7 181,198 166,722 22,942 434,906 347,920Online marketing services 303,557 492,665 511,237 70,348 521,657 1,003,902Total net revenues 1,206,634 1,391,859 1,321,721 181,875 2,369,904 2,713,580Cost of revenues(2)(639,459)(710,356)(684,942)(94,251)(1,200,879)(1,395,298)Gross profit 567,175 681,503 636,7

61、79 87,624 1,169,025 1,318,282Operating expenses:Sales and marketing expenses(2)(587,651)(455,440)(515,711)(70,965)(1,152,856)(971,151)Research and development expenses(2)(205,076)(146,723)(152,987)(21,052)(387,906)(299,710)General and administrative expenses(2)(63,579)(49,416)(40,634)(5,591)(113,185

62、)(90,050)Total operating expenses (856,306)(651,579)(709,332)(97,608)(1,653,947)(1,360,911)(Loss)/Income from operations (289,131)29,924 (72,553)(9,984)(484,922)(42,629)Interest income 2,154 975 917 126 4,448 1,892Interest expense (17,087)(20,334)(20,816)(2,864)(32,850)(41,150)Others,net 5,730 2,892

63、 (909)(125)12,108 1,983(Loss)/Income before tax (298,334)13,457 (93,361)(12,847)(501,216)(79,904)Income tax(expenses)/benefits (4,890)1,028 (7,053)(970)(8,091)(6,025)Net(loss)/income (303,224)14,485 (100,414)(13,817)(509,307)(85,929)Net loss/(income)attributable to noncontrolling interests 4,065 (2,

64、053)939 129 5,795 (1,114)Net(loss)/income attributable to ordinary shareholders of the Company (299,159)12,432 (99,475)(13,688)(503,512)(87,043)Basic net(loss)/income per ADS (2.45)0.11 (0.85)(0.12)(4.12)(0.74)Diluted net(loss)/income per ADS (2.45)0.10 (0.85)(0.12)(4.12)(0.74)Shares used in computi

65、ng basic net(loss)/income per ADS 122,247,009 118,317,220 117,173,272 117,173,272 122,257,874 117,745,253Shares used in computing diluted net(loss)/income per ADS 122,247,009 118,928,848 117,173,272 117,173,272 122,257,874 117,745,253Note 2:Share-based compensation in each category:Cost of revenues

66、1,049 778 727 100 2,308 1,505Sales and marketing expenses 2,416 1,136 337 46 3,547 1,473Research and development expenses 5,618 3,503 939 129 10,403 4,442General and administrative expenses 3,261 2,479 1,506 208 6,582 3,985Note 1:The conversion of Renminbi(RMB)into United States dollars(USD)is based

67、 on the noon buying rate of USD1.00=RMB7.2672 on the last trading day of June(June 28,2024)as set forth in the H.10 statistical release of the U.S.Federal Reserve Board.YOUDAO,INC.UNAUDITED ADDITIONAL INFORMATION(RMB and USD in thousands)Three Months EndedSix Months EndedJune 30,March 31,June 30,Jun

68、e 30,June 30,June 30,202320242024202420232024RMBRMBRMBUSDRMBRMBNet revenuesLearning services 680,920 717,996 643,762 88,585 1,413,341 1,361,758Smart devices 222,157 181,198 166,722 22,942 434,906 347,920Online marketing services 303,557 492,665 511,237 70,348 521,657 1,003,902Total net revenues 1,20

69、6,634 1,391,859 1,321,721 181,875 2,369,904 2,713,580Cost of revenuesLearning services 290,155 264,759 257,482 35,431 568,280 522,241Smart devices 142,544 122,060 116,274 16,000 271,132 238,334Online marketing services 206,760 323,537 311,186 42,820 361,467 634,723Total cost of revenues 639,459 710,

70、356 684,942 94,251 1,200,879 1,395,298Gross marginLearning services57.4%63.1%60.0%60.0%59.8%61.6%Smart devices35.8%32.6%30.3%30.3%37.7%31.5%Online marketing services31.9%34.3%39.1%39.1%30.7%36.8%Total gross margin47.0%49.0%48.2%48.2%49.3%48.6%YOUDAO,INC.UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP

71、RESULTS(RMB and USD in thousands,except per ADS data)Three Months EndedSix Months EndedJune 30,March 31,June 30,June 30,June 30,June 30,202320242024202420232024RMBRMBRMBUSDRMBRMBNet(loss)/income attributable to ordinary shareholders of the Company (299,159)12,432 (99,475)(13,688)(503,512)(87,043)Add

72、:share-based compensation 12,344 7,896 3,509 483 22,840 11,405 impairment of long-term investment 3,240 -3,240 -Non-GAAP net(loss)/income attributable to ordinary shareholders of theCompany (283,575)20,328 (95,966)(13,205)(477,432)(75,638)Non-GAAP basic net(loss)/income per ADS (2.32)0.17 (0.82)(0.11)(3.91)(0.64)Non-GAAP diluted net(loss)/income per ADS (2.32)0.17 (0.82)(0.11)(3.91)(0.64)