Youdao Inc. (NYSE: DAO) experienced a sharp pre-market decline of 11.29% on Thursday, following the release of its first-quarter 2026 financial results.
The stock's drop comes after the company reported adjusted earnings of 0.37 Chinese renminbi ($0.05) per American depositary share, a significant decrease from 0.68 renminbi per share in the same period last year. Total net revenue for the quarter rose 3.8% year-over-year to 1.35 billion renminbi but fell short of the 1.39 billion renminbi analysts surveyed by FactSet had anticipated.
Further pressuring investor sentiment, the company's income from operations plummeted 44.7% to 57.5 million renminbi, while gross margin contracted to 44.7% from 47.3% a year earlier. A steep 42.6% decline in revenue from smart devices also contributed to the weaker-than-expected quarterly performance.
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