Youdao Reports Fourth Quarter and Fiscal Year 2023 Unaudited Financial Results
HANGZHOU, China, Feb. 29, 2024 /PRNewswire/ -- 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 fourth quarter and fiscal year ended December 31, 2023.
Fourth Quarter 2023 Financial Highlights
-- Total net revenues were RMB1.5 billion (US$208.5 million), representing
a 1.8% increase from the same period in 2022.- Net revenues from
learning services were RMB784.0 million (US$110.4 million), representing
a 2.8% decrease from the same period in 2022.- Net revenues from smart
devices were RMB222.4 million (US$31.3 million), representing a 45.3%
decrease from the same period in 2022.- Net revenues from online
marketing services were RMB474.1 million (US$66.8 million), representing
a 96.9% increase from the same period in 2022.
-- Gross margin was 49.9%, compared with 53.3% for the same period in 2022.
Fiscal Year 2023 Financial Highlights
-- Total net revenues were RMB5.4 billion (US$759.1 million), representing
a 7.5% increase from 2022.- Net revenues from learning services were
RMB3.1 billion (US$443.4 million), representing a 2.1% increase from
2022.- Net revenues from smart devices were RMB909.2 million (US$128.1
million), representing a 27.6% decrease from 2022.- Net revenues from
online marketing services were RMB1.3 billion (US$187.6 million),
representing a 98.1% increase from 2022.
-- Gross margin was 51.4%, keeping flat as compared with 51.6% for 2022.
"Our financial performance was solid in the fourth quarter, producing all-time high income from operations and operating cash inflow. In terms of business operations, since the introduction of AI writing refinement, we have efficiently and effectively provided over 25,000 tailored recommendations. The integration of AI technology has further empowered our online marketing services, expanding the application of RTA (Real-Time API) technology and broadening our customer base, resulting in record high net revenues of this segment and over 50% year-over-year growth for five consecutive quarters. Additionally, the launch of the Mr. P AI Tutor, powered by our proprietary large language model Ziyue, has been well received by our users. In 2023, Youdao's fundamentals strengthened, with key financial indicators improving on a year-over-year basis," said Dr. Feng Zhou, Chief Executive Officer and Director of Youdao.
"Looking ahead, I am confident in the further improvement of our fundamentals and long-term development. We will continue to leverage our AI advantages and upgrade our large language model Ziyue, further exploring applications in the areas of learning services, smart devices, and online marketing services. By accelerating the implementation of our products and applications, we are committed to better assisting users in enhancing their learning and work efficiency and effectiveness," Dr. Zhou concluded.
Fourth Quarter 2023 Financial Results
Net Revenues
Net revenues for the fourth quarter of 2023 were RMB1.5 billion (US$208.5 million), slightly increased compared with the same period of 2022.
Net revenues from learning services were RMB784.0 million (US$110.4 million) for the fourth quarter of 2023, representing a 2.8% decrease from RMB806.3 million for the same period of 2022.
Net revenues from smart devices were RMB222.4 million (US$31.3 million) for the fourth quarter of 2023, representing a 45.3% decrease from RMB407.0 million for the same period of 2022, primarily due to our continuous efforts to streamline marketing channels with low return on investment for intelligent learning products in the fourth quarter of 2023.
Net revenues from online marketing services were RMB474.1 million (US$66.8 million) for the fourth quarter of 2023, representing a 96.9% increase from RMB240.8 million for the same period of 2022. The year-over-year increase in revenues from online marketing services was mainly attributable to the increased demand for performance-based advertisements through third parties' internet properties.
Gross Profit and Gross Margin
Gross profit for the fourth quarter of 2023 was RMB738.8 million (US$104.1 million), representing a 4.6% decrease from RMB774.7 million for the same period of 2022. Gross margin decreased to 49.9% for the fourth quarter of 2023 from 53.3% for the same period of 2022.
Gross margin for learning services was 63.6% for the fourth quarter of 2023, largely flat as compared with 64.1% for the same period of 2022.
Gross margin for smart devices decreased to 38.3% for the fourth quarter of 2023 from 46.2% for the same period of 2022, which was mainly attributable to a lower revenue base of smart devices.
Gross margin for online marketing services increased to 32.7% for the fourth quarter of 2023, from 29.2% for the same period of 2022. The increase was mainly attributable to improved gross margin profile of performance-based advertisements through third parties' internet properties compared with the same period of last year.
Operating Expenses
Total operating expenses for the fourth quarter of 2023 were RMB662.5 million (US$93.3 million), compared with RMB750.0 million for the same period of last year.
Sales and marketing expenses for the fourth quarter of 2023 were RMB441.4 million (US$62.2 million), representing a decrease of 14.4% from RMB515.9 million for the same period of 2022. This decrease was attributable to the reduced marketing expenditures in learning services and smart devices in the fourth quarter of 2023.
Research and development expenses for the fourth quarter of 2023 were RMB168.1 million (US$23.7 million), representing a decrease of 6.3% from RMB179.5 million for the same period of 2022. The decrease was primarily due to the decreased headcount for research and development employees, which led to payroll-related cost savings in the fourth quarter of 2023.
General and administrative expenses for the fourth quarter of 2023 were RMB53.0 million (US$7.5 million), representing a decrease of 2.9% from RMB54.6 million for the same period of 2022.
Income from Operations
As a result of the foregoing, income from operations for the fourth quarter of 2023 was RMB76.3 million (US$10.7 million), compared with RMB24.7 million for the same period of 2022. The margin of income from operations was 5.2%, compared with 1.7% for the same period of last year.
Others, Net
Others, net for the fourth quarter of 2023 were RMB2.6 million (US$0.4 million) net loss, compared with RMB3.8 million net gain for the same period of 2022. Others, net for the fourth quarter of 2023 mainly included an impairment loss of long-term investments of RMB10.0 million (US$1.4 million), partially offset by the gains from government grants. The gain for the same period of last year was mainly from government grants.
Net Income from Continuing Operations Attributable to Youdao's Ordinary Shareholders
Net income from continuing operations attributable to Youdao's ordinary shareholders for the fourth quarter of 2023 was RMB56.5 million (US$8.0 million), compared with RMB12.3 million for the same period of last year. Non-GAAP net income from continuing operations attributable to Youdao's ordinary shareholders for the fourth quarter of 2023 was RMB69.3 million (US$9.8 million), compared with RMB31.1 million for the same period of last year.
Basic and diluted net income from continuing operations per American depositary share ("ADS") attributable to ordinary shareholders for the fourth quarter of 2023 was RMB0.47 (US$0.07), compared with RMB0.10 for the same period of 2022. Non-GAAP basic and diluted net income from continuing operations per ADS attributable to ordinary shareholders was RMB0.58 (US$0.08), compared with RMB0.25 for the same period of 2022.
Other Information
As of December 31, 2023, Youdao's cash, cash equivalents, restricted cash, time deposits and short-term investments totaled RMB527.1 million (US$74.2 million), compared with RMB1.0 billion as of December 31, 2022. For the fourth quarter of 2023, net cash provided by continuing operating activities was RMB160.6 million (US$22.6 million), capital expenditures totaled RMB5.9 million (US$0.8 million). Youdao's ability to continue as a going concern is dependent on management's ability to implement an effective business plan in future periods in light of the changing regulatory environment, generate operating cash flows and continue to be able to obtain outside sources of financing as necessary for Youdao's future development. In support of Youdao's future business, NetEase Group has agreed to provide financial support for Youdao's continuing operations. As of the date of this release, Youdao has received various financial support from the NetEase Group, including, among others, RMB878.0 million short-term loans, and US$94.0 million long-term loans with maturity dated March 31, 2027 drawn down under the US$300.0 million revolving loan facility.
As of December 31, 2023, the Company's contract liabilities, which mainly consisted of deferred revenues generated from Youdao's learning services, were RMB1.1 billion (US$148.3 million), keeping stable as compared with RMB1.1 billion as of December 31, 2022.
Fiscal Year 2023 Financial Results(([1]))
Net Revenues
Net revenues for 2023 were RMB5.4 billion (US$759.1 million), representing a 7.5% increase from RMB5.0 billion for 2022.
Net revenues from learning services were RMB3.1 billion (US$443.4 million) for 2023, keeping flat as compared with RMB3.1 billion for 2022.
Net revenues from smart devices were RMB909.2 million (US$128.1 million) for 2023, representing a 27.6% decrease from RMB1.3 billion for 2022. The decrease was primarily due to our continuous efforts to streamline marketing channels with low return on investment for intelligent learning products starting from the second half of 2023.
Net revenues from online marketing services were RMB1.3 billion (US$187.6 million) for 2023, representing a 98.1% increase from RMB672.4 million for 2022. The increase was mainly attributable to the increased demand for performance-based advertisements through third parties' internet properties.
Gross Profit and Gross Margin
Gross profit for 2023 was RMB2.8 billion (US$389.8 million), compared with RMB2.6 billion for 2022. Gross margin for 2023 was 51.4%, compared with 51.6% for 2022.
Gross margin for learning services was 63.2% for 2023, compared with 62.0% for 2022.
Gross margin for smart devices was 39.2% for 2023, compared with 39.1% for 2022.
Gross margin for online marketing services increased to 31.7% for 2023 from 27.4% for 2022. The increase was mainly attributable to improved gross margin profile of performance-based advertisements through third parties' internet properties compared with last year.
Operating Expenses
Total operating expenses for 2023 were RMB3.2 billion (US$455.5 million), representing a decrease of 3.8%, compared with RMB3.4 billion for 2022.
Sales and marketing expenses for 2023 were RMB2.3 billion (US$319.5 million), keeping stable as compared with RMB2.3 billion for 2022.
Research and development expenses for 2023 were RMB743.4 million (US$104.7 million), representing a decrease of 7.5%, compared with RMB803.8 million for 2022. The decrease was primarily due to the decreased headcount for research and development employees, which led to payroll-related cost savings in 2023.
General and administrative expenses for 2023 were RMB222.0 million (US$31.3 million), representing a decrease of 3.1%, compared with RMB229.2 million for 2022.
Loss from Operations
Loss from operations for 2023 was RMB466.3 million (US$65.7 million), compared with RMB774.7 million for 2022. The margin of loss from operations was 8.7%, compared with 15.5% for 2022.
Others, Net
Others, net for 2023 were RMB11.6 million (US$1.6 million) net loss, compared with RMB81.4 million net gain for 2022. Others, net for 2023 mainly included impairment losses of long-term investments of RMB43.7 million (US$6.2 million), partially offset by the gains from government grants. The gain for last year was mainly from government grants.
Net Loss from Continuing Operations Attributable to Youdao's Ordinary Shareholders
Net loss from continuing operations attributable to Youdao's ordinary shareholders for 2023 was RMB549.9 million (US$77.5 million), compared with RMB720.9 million for 2022. Non-GAAP net loss from continuing operations attributable to Youdao's ordinary shareholders for 2023 was RMB475.4 million (US$67.0 million), compared with RMB639.9 million for 2022.
Basic and diluted net loss from continuing operations per American depositary share ("ADS") attributable to ordinary shareholders for 2023 was RMB4.53 (US$0.64), compared with RMB5.83 for 2022. Non-GAAP basic and diluted net loss from continuing operations per ADS attributable to ordinary shareholders was RMB3.92 (US$0.55), compared with RMB5.18 for 2022.
Operating Cash Flow from Continuing Operations
For 2023, net cash used in continuing operating activities was RMB438.1 million (US$61.7 million) and capital expenditures totaled RMB17.9 million (US$2.5 million).
[1] As previously disclosed, in compliance with applicable regulatory requirements, the Company had ceased to offer the after-school tutoring services on academic subjects in China's compulsory education system (the "Academic AST Business") at the end of December 2021. The Academic AST Business met the criteria of discontinued operations. Retrospective adjustments to the historical statement of operations have also
been made to provide a consistent basis of comparison for the financial results of the continuing operations. The financial information and non-GAAP financial information included in this press release are presented on a continuing operations basis, unless otherwise specifically stated.
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 Class 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 December 31, 2023, the Company has accumulatively repurchased an aggregate of approximately 5.2 million ADSs for approximately US$24.8 million in the open market under the share repurchase program.
Conference Call
Youdao's management team will host a teleconference call with simultaneous webcast at 5:00 a.m. Eastern Time on Thursday, February 29, 2024 (Beijing/Hong Kong Time: 6:00 p.m., Thursday, February 29, 2024). Youdao's management will be on the call to discuss the financial 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: 1578305
A live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.youdao.com.
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 March 7, 2024:
United States: +1-877-344-7529
International: +1-412-317-0088
Replay Access Code: 1578305
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 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 2006 as part of NetEase, Inc. (NASDAQ: NTES; HKEX: 9999), a leading internet technology company in China.
For more information, please visit: http://ir.youdao.com.
Non-GAAP Measures
Youdao considers and uses non-GAAP financial measures, such as non-GAAP net income/(loss) from continuing operations attributable to the Company's ordinary shareholders and non-GAAP basic and diluted net income/(loss) from continuing operations 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 information 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) from continuing operations attributable to the Company's ordinary shareholders as net income/(loss) from continuing operations attributable to the Company's ordinary shareholders excluding share-based compensation expenses and impairment of long-term investments. Non-GAAP net income/(loss) from continuing operations attributable to the Company's ordinary shareholders enables Youdao's management to assess its operating results without considering the impact of these items, which are non-cash charges in nature. Youdao believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating the Company's 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 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 companies, 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 details 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 translations 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 RMB7.0999 to US$1.00, the exchange rate on December 29, 2023 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ 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 harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors 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," "continue," "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 statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding such risks, uncertainties or factors is included in the Company's filings with the SEC. The announced results of the fourth quarter and full year of 2023 are preliminary and subject to adjustments. All information provided 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.
For investor and media inquiries, please contact:
In China:
Jeffrey Wang
Youdao, Inc.
Tel: +86-10-8255-8163 ext. 89980
E-mail: IR@rd.netease.com
Piacente Financial Communications
Helen Wu
Tel: +86-10-6508-0677
E-mail: youdao@thepiacentegroup.com
In the United States:
Piacente Financial Communications
Brandi Piacente
Tel: +1-212-481-2050
E-mail: youdao@thepiacentegroup.com
YOUDAO, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(RMB and USD in thousands)
As of December 31, As of December 31, As of December 31,
2022 2023 2023
RMB RMB USD
(1)
Assets
Current assets:
Cash and cash equivalents 783,611 454,536 64,020
Time deposits 273 277 39
Restricted cash 873 395 56
Short-term investments 232,152 71,848 10,120
Accounts receivable, net 405,139 354,006 49,861
Inventories 232,260 217,067 30,573
Amounts due from NetEase Group 7,888 26,117 3,679
Prepayment and other current assets 207,777 175,705 24,747
Total current assets 1,869,973 1,299,951 183,095
Non-current assets:
Property, equipment and software, net 92,116 70,906 9,987
Operating lease right-of-use assets, net 78,405 89,022 12,538
Long-term investments 90,703 51,396 7,239
Goodwill 109,944 109,944 15,485
Other assets, net 35,015 44,976 6,335
Total non-current assets 406,183 366,244 51,584
Total assets 2,276,156 1,666,195 234,679
Liabilities, Mezzanine Equity and Shareholders' Deficit
Current liabilities:
Accounts payables 282,354 159,005 22,395
Payroll payable 266,340 282,679 39,815
Amounts due to NetEase Group 68,809 82,430 11,610
Contract liabilities 1,067,285 1,052,622 148,259
Taxes payable 50,908 52,781 7,434
Accrued liabilities and other payables 564,922 591,770 83,349
Short-term loans from NetEase Group 878,000 878,000 123,664
Total current liabilities 3,178,618 3,099,287 436,526
Non-current liabilities:
Long-term lease liabilities 43,635 49,337 6,949
Long-term loans from NetEase Group 522,345 630,360 88,784
Other non-current liabilities 8,832 16,314 2,298
Total non-current liabilities 574,812 696,011 98,031
Total liabilities 3,753,430 3,795,298 534,557
Mezzanine equity 64,571 37,961 5,347
Shareholders' deficit:
Youdao's shareholders' deficit (1,535,089) (2,186,736) (307,996)
Noncontrolling interests (6,756) 19,672 2,771
Total shareholders' deficit (1,541,845) (2,167,064) (305,225)
Total liabilities, mezzanine equity and shareholders' deficit 2,276,156 1,666,195 234,679
Note 1:
The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of
USD1.00=RMB7.0999
on the last trading day
of
December
(December
29, 2023) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.
YOUDAO, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(RMB and USD in thousands, except share and per ADS data)
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31, December 31,
2022 2023 2023 2023 2022 2023
RMB RMB RMB USD
(1) RMB RMB
Net revenues:
Learning services 806,270 950,761 784,012 110,426 3,084,375 3,148,114
Smart devices 406,956 251,879 222,407 31,325 1,256,446 909,192
Online marketing services 240,756 336,143 474,102 66,776 672,361 1,331,902
Total net revenues 1,453,982 1,538,783 1,480,521 208,527 5,013,182 5,389,208
Cost of revenues (2) (679,295) (679,147) (741,720) (104,469) (2,426,766) (2,621,746)
Gross profit 774,687 859,636 738,801 104,058 2,586,416 2,767,462
Operating expenses:
Sales and marketing expenses (2) (515,944) (674,173) (441,399) (62,170) (2,328,095) (2,268,428)
Research and development expenses (2) (179,474) (187,328) (168,130) (23,681) (803,791) (743,364)
General and administrative expenses (2) (54,597) (55,822) (52,989) (7,463) (229,210) (221,996)
Total operating expenses (750,015) (917,323) (662,518) (93,314) (3,361,096) (3,233,788)
Income/(Loss) from operations 24,672 (57,687) 76,283 10,744 (774,680) (466,326)
Interest income 3,072 2,167 1,733 244 12,908 8,348
Interest expense (14,643) (17,753) (18,869) (2,658) (45,607) (69,472)
Others, net 3,767 (21,097) (2,589) (364) 81,445 (11,578)
Income/(Loss) before tax 16,868 (94,370) 56,558 7,966 (725,934) (539,028)
Income tax expenses (13,833) (2,557) (441) (62) (13,844) (11,089)
Net income/(loss) from continuing operations 3,035 (96,927) 56,117 7,904 (739,778) (550,117)
Net loss from discontinued operations (6,105)
Net income/(loss) 3,035 (96,927) 56,117 7,904 (745,883) (550,117)
Net loss/(income) attributable to noncontrolling interests 9,263 (5,978) 365 51 18,851 182
Net income/(loss) attributable to ordinary shareholders of 12,298 (102,905) 56,482 7,955 (727,032) (549,935)
the Company
Including:
Net income/(loss) from continuing operations attributable to ordinary 12,298 (102,905) 56,482 7,955 (720,927) (549,935)
shareholders of the Company
Net loss from discontinued operations attributable to ordinary (6,105)
shareholders of the Company
Basic net income/(loss) per ADS 0.10 (0.85) 0.47 0.07 (5.88) (4.53)
-Continuing operations 0.10 (0.85) 0.47 0.07 (5.83) (4.53)
-Discontinued operations (0.05)
Diluted net income/(loss) per ADS 0.10 (0.85) 0.47 0.07 (5.88) (4.53)
-Continuing operations 0.10 (0.85) 0.47 0.07 (5.83) (4.53)
-Discontinued operations (0.05)
Shares used in computing basic net income/(loss) per ADS 123,584,460 121,275,391 119,764,891 119,764,891 123,597,604 121,381,857
Shares used in computing diluted net income/(loss) per ADS 124,345,717 121,275,391 120,426,624 120,426,624 123,597,604 121,381,857
Note 1:
The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate
of
USD1.00=RMB7.0999
on the last trading day of
December
(
December 29
, 2023) as set forth in the
H.10 statistical release of the U.S. Federal Reserve Board.
Note 2:
Share-based compensation in each category:
Cost of revenues 1,231 2,312 (2,975) (419) 5,984 1,645
Sales and marketing expenses 3,249 1,659 865 122 12,669 6,071
Research and development expenses 5,702 (2,071) (312) (44) 30,578 8,020
General and administrative expenses 6,845 3,255 5,224 736 21,478 15,061
YOUDAO, INC.
UNAUDITED ADDITIONAL INFORMATION
(RMB and USD in thousands)
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31, December 31,
2022 2023 2023 2023 2022 2023
RMB RMB RMB USD RMB RMB
Net revenues
Learning services 806,270 950,761 784,012 110,426 3,084,375 3,148,114
Smart devices 406,956 251,879 222,407 31,325 1,256,446 909,192
Online marketing services 240,756 336,143 474,102 66,776 672,361 1,331,902
Total net revenues 1,453,982 1,538,783 1,480,521 208,527 5,013,182 5,389,208
Cost of revenues
Learning services 289,829 305,694 285,383 40,195 1,172,703 1,159,357
Smart devices 218,969 144,528 137,150 19,317 765,641 552,810
Online marketing services 170,497 228,925 319,187 44,957 488,422 909,579
Total cost of revenues 679,295 679,147 741,720 104,469 2,426,766 2,621,746
Gross margin
Learning services 64.1 % 67.8 % 63.6 % 63.6 % 62.0 % 63.2 %
Smart devices 46.2 % 42.6 % 38.3 % 38.3 % 39.1 % 39.2 %
Online marketing services 29.2 % 31.9 % 32.7 % 32.7 % 27.4 % 31.7 %
Total gross margin 53.3 % 55.9 % 49.9 % 49.9 % 51.6 % 51.4 %
YOUDAO, INC.
UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS
(RMB and USD in thousands, except per ADS data)
Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31, December 31,
2022 2023 2023 2023 2022 2023
RMB RMB RMB USD RMB RMB
Net income/(loss) from continuing operations attributable to ordinary 12,298 (102,905) 56,482 7,955 (720,927) (549,935)
shareholders of the Company
Add: share-based compensation 17,027 5,155 2,802 395 70,709 30,797
impairment of long-term investments 1,800 30,500 10,000 1,408 10,300 43,740
Non-GAAP net income/(loss) from continuing operations attributable to 31,125 (67,250) 69,284 9,758 (639,918) (475,398)
ordinary shareholders of the Company
Non-GAAP basic net income/(loss) from continuing operations per ADS 0.25 (0.55) 0.58 0.08 (5.18) (3.92)
Non-GAAP diluted net income/(loss) from continuing operations per ADS 0.25 (0.55) 0.58 0.08 (5.18) (3.92)
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SOURCE Youdao, Inc.
