Youdao (NYSE: DAO), a leading provider of intelligent solutions, saw its stock soar 5.19% in Friday's trading session following the release of its impressive third-quarter 2025 financial results. The company's strong performance, driven by its AI-Native strategy, has sparked investor enthusiasm and bolstered confidence in its growth trajectory.
The financial report revealed that Youdao's net revenue reached RMB 1.6 billion (approximately US$200 million) in Q3 2025. More notably, the company's operating profit climbed to RMB 28.3 million (US$3.93 million), with the operating profit for the first three quarters surging by nearly 150% year-over-year. This marks the fifth consecutive quarter of profitability for Youdao, underlining the company's improved financial health.
A standout feature of the Q3 results was the exceptional performance of Youdao's AI-driven advertising services. Advertising revenue skyrocketed to RMB 0.74 billion (US$101 million), representing a staggering 51.1% year-over-year growth. For the first time, advertising has emerged as Youdao's largest revenue segment, showcasing the success of the company's AI integration across its advertising value chain. The company's overseas business also demonstrated robust growth, with revenue more than doubling compared to the same period last year. Youdao's CEO, Feng Zhou, expressed confidence in achieving sustained improvement in operating profit and reaching annual operating cash-flow breakeven for the first time, further fueling investor optimism and contributing to the stock's upward movement.
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