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Youdao (DAO)
NYSE:DAO
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Youdao
(NYSE:DAO)
54Neutral
Youdao (DAO) vs. S&P 500 (SPY)
Market Cap
$874.88M
Dividend YieldN/A
Average Volume (3M)159.06K
Price to Earnings (P/E)74.9
Beta (1Y)1.07
Revenue Growth3.01%
EPS GrowthN/A
CountryUS
Employees4,364
SectorTechnology
Sector Strength51
IndustryEducation & Training Services
Share Statistics
EPS (TTM)0.10
Shares Outstanding31,230,583
10 Day Avg. Volume152,690
30 Day Avg. Volume159,062
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.61
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$8.10Price Target Upside11.26% Upside
Rating ConsensusHold
Number of Analyst Covering0
Youdao Business Overview & Revenue Model
Company DescriptionYoudao, Inc., an internet technology company, provides online services in the field of content, community, communication, and commerce in China. It operates through three segments: Learning Services, Smart Devices, and Online Marketing Services. The company provides various learning content, applications, and solutions, which cover topics and target people from various age groups for their learning needs through its websites and mobile applications. It offers online knowledge tools, which include Youdao and other dictionaries and translation tools; learning services consisting of tutoring, fee-based premium, and other services; STEAM courses, adult and vocational courses, and other courses, such as China University MOOC; smart devices, such as Youdao Dictionary Pen, Youdao Listening Pod, Youdao Smart Lamp, Youdao Pocket Translator, and Youdao Super Dictionary; education digitalization solutions comprising technologies and solutions licensed to schools or enterprise customers, such as Youdao Smart Learning Terminal, and Youdao Smart Cloud; and online marketing services. In addition, the company provides online courses comprising Youdao Premium Courses and NetEase Cloud Classroom, as well as technical support to the variable interest entities (VIEs). Youdao, Inc. was founded in 2006 and is headquartered in Hangzhou, China. Youdao, Inc. is a subsidiary of NetEase, Inc.
How the Company Makes MoneyYoudao makes money through a diversified revenue model primarily centered around its online education services. Key revenue streams include the sale of Youdao Premium Courses, which are paid educational programs offering various subjects and skill development. The company also generates income through advertising services on its platforms and the sale of smart learning devices, such as electronic dictionaries and translation pens. Additionally, Youdao benefits from strategic partnerships with educational institutions and content creators to expand its offerings and user base.
Youdao Financial Statement Overview
Summary
Youdao shows a mixed financial performance with strengths in revenue growth and gross profitability, yet faces significant challenges in net profitability, leverage, and cash flow generation. While the operational improvements are promising, the negative equity and cash flow issues present potential risks that need addressing for long-term financial health.Income Statement
Youdao has shown a consistent revenue growth over the years, with the most recent annual increase of 4.39% from 2023 to 2024. The gross profit margin for 2024 stands at 48.86%, indicating a healthy profitability at the gross level. However, despite improving from a net loss in previous years, the net profit margin is 1.46% in 2024, showing that profitability at the net level remains a challenge. The EBIT and EBITDA margins are low but show a positive trend, reflecting operational improvements.65
Positive
Balance Sheet
The company's balance sheet reflects high leverage, with a negative stockholders' equity of -$2.14 billion, resulting in an uncalculated debt-to-equity ratio. This indicates potential financial instability. The equity ratio is also negative due to the negative equity. Despite these concerns, the company has substantial cash reserves of $655.79 million, offering some liquidity cushion.50
Neutral
Cash Flow
The cash flow statement reveals challenges in cash generation, with operating cash flow and free cash flow both at $0 for 2024, indicating potential operational inefficiencies. Earlier years show negative free cash flow, highlighting consistent cash outflows. The lack of positive free cash flow growth and operating cash flow to net income ratio raises concerns about the company's ability to generate cash sustainably.40
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.63B | 5.39B | 5.01B | 4.02B | 3.17B |
| Gross Profit | ||||
| 2.75B | 2.77B | 2.59B | 1.99B | 1.45B |
| EBIT | ||||
| 148.82M | -466.33M | -774.68M | -886.47M | -1.81B |
| EBITDA | ||||
| 178.46M | -439.92M | -680.33M | -856.37M | -749.42M |
| Net Income Common Stockholders | ||||
| 82.21M | -549.93M | -739.78M | -926.09M | -1.75B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 655.78M | 526.66M | 1.02B | 826.88M | 1.19B |
| Total Assets | ||||
| 1.81B | 1.67B | 2.28B | 2.63B | 2.07B |
| Total Debt | ||||
| 1.82B | 1.60B | 1.44B | 1.21B | 957.75M |
| Net Debt | ||||
| 1.22B | 1.14B | 660.37M | 883.32M | 348.55M |
| Total Liabilities | ||||
| 3.90B | 3.80B | 3.75B | 3.36B | 3.48B |
| Stockholders Equity | ||||
| -2.14B | -2.19B | -1.54B | -807.07M | -1.41B |
| Cash Flow | Free Cash Flow | |||
| 0.00 | -456.00M | -672.88M | -1.41B | -358.42M |
| Operating Cash Flow | ||||
| 0.00 | -438.14M | -603.12M | -1.35B | -321.56M |
| Investing Cash Flow | ||||
| 0.00 | 125.57M | 125.82M | 47.07M | 760.97M |
| Financing Cash Flow | ||||
| 0.00 | -18.94M | 184.65M | 1.78B | 26.56M |
Youdao Technical Analysis
Neutral
7.28
Price Trends
8.49
Negative
7.69
Negative
5.84
Positive
Market Momentum
-0.39
Positive
44.51
Neutral
45.85
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DAO, the sentiment is Neutral. The current price of 7.28 is below the 20-day moving average (MA) of 7.52, below the 50-day MA of 8.49, and above the 200-day MA of 5.84, indicating a neutral trend. The MACD of -0.39 indicates Positive momentum. The RSI at 44.51 is Neutral, neither overbought nor oversold. The STOCH value of 45.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $801.18M | 30.25 | 6.70% | ― | -0.05% | 23.22% | |
68 Neutral | $1.10B | ― | -13.11% | ― | 9.27% | 34.66% | |
62 Neutral | $701.96M | ― | -41.45% | ― | 51.50% | -70812.50% | |
62 Neutral | $812.19M | 378.53 | 3.87% | ― | 29.74% | ― | |
58 Neutral | $11.04B | 9.83 | -6.56% | 3.16% | 7.59% | -10.43% | |
55 Neutral | $908.73M | ― | -30.77% | ― | 7.91% | 22.07% | |
54 Neutral | $874.88M | 74.90 | 25.15% | ― | 3.01% | ― |
* Technology Sector Average
Performance Comparison
DAO
Youdao
7.28
3.40
87.63%
GOTU
Gaotu Techedu
2.76
-3.12
-53.06%
DSP
Viant Technology
13.14
4.28
48.31%
COUR
Coursera
6.97
-5.01
-41.82%
VMEO
Vimeo, Inc.
4.75
1.15
31.94%
UDMY
Udemy, Inc.
6.21
-3.76
-37.71%
Youdao Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -30.20% | Next Earnings Date: May 27, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive developments and challenges. The company achieved record profitability and strong growth in AI-driven services and smart devices, but faced revenue declines in learning services and overall Q4 revenue. The strategic focus on AI and operational efficiency suggests a positive outlook.Highlights
Record Profitability Achieved
For the first time, Youdao achieved full-year operating profitability with an income from operations of RMB148.8 million, a turnaround from a loss of RMB466.3 million in 2023.
AI-Driven Subscription Services Growth
AI-driven subscription services generated sales of over RMB200 million, representing an increase of over 130% year-over-year.
Smart Devices Segment Performance
Net revenues from smart devices reached RMB240.4 million in Q4, marking an 8.1% year-over-year increase, driven by the success of the Youdao Dictionary Pen.
Online Marketing Services Growth
Net revenues from online marketing services were up 48.3% year-over-year to RMB2 billion for the full year.
Successful Launch of New AI Model
The rollout of Confucius-o1, a reasoning model, supports deployment on consumer-grade GPUs and is notable for being open-sourced, encouraging innovation in the education sector.
Lowlights
Learning Services Revenue Decline
Net revenues from learning services reached RMB617.7 million in Q4, down by 21.2% year-over-year, contributing to a full-year decline of 12.7%.
Total Revenue Decrease in Q4
Total net revenues were RMB1.3 billion in Q4, representing a 9.5% decrease from the same period of 2023.
Reduced Gross Margin in Learning Services
Gross margin for learning services was 60% for Q4 2024, compared with 63.6% for the same period of 2023.
Company Guidance
During the Youdao 2024 Fourth Quarter and Full-Year Earnings Conference Call, the company provided detailed guidance on its financial performance and strategic direction. In Q4 2024, Youdao reported net revenues of RMB1.3 billion, marking a 9.5% year-over-year decline, primarily due to decreased revenues from learning services, which fell 21.2% to RMB617.7 million. Despite this, the company achieved a 10.3% increase in income from operations, reaching RMB84.2 million. For the full year, net revenues grew by 4.4% to RMB5.6 billion, with a significant turnaround in operational performance, achieving a profit of RMB148.8 million compared to a loss of RMB466.3 million in 2023. Operating cash outflow improved by 84.5% to RMB67.9 million. Key strategic focuses included leveraging cutting-edge AI technologies in education and online marketing, enhancing products like the Youdao Dictionary Pen, and expanding global advertising efforts. The company also highlighted its AI-driven subscription services, which saw an over 130% increase in sales, and its commitment to innovation with the launch of Confucius-o1, a reasoning model for educational use. For 2025, Youdao aims for moderate revenue growth with a continued focus on profitability, driven by advancements in AI integration across its business lines.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.