Abstract
Youdao will release its fourth-quarter 2025 results on February 11, 2026 Pre-Market; this preview summarizes recent results, market forecasts for revenue, margins, and EPS, and compiles analyst sentiment over the past six months.
Market Forecast
Consensus tracking for Youdao’s current quarter points to revenue of 1.48 billion USD, with an estimated adjusted EPS of 0.25 and EBIT of 53.32 million USD; the revenue forecast implies 1.98% year-over-year growth, while EPS implies a contraction of 76.29% year-over-year. Model-based projections embed a cautious margin profile for this quarter, with no explicit gross margin or net margin consensus disclosed; management and external models imply continued gross margin normalization, while net profitability remains fragile.
The company’s main business is learning services and products and online marketing services; the outlook emphasizes steady demand in core paid learning services with selective growth initiatives.
The segment with the strongest growth potential remains learning services and products, which generated 888.87 million USD last quarter; the strategic focus is on subscription retention and premium content to stabilize year-over-year growth.
Last Quarter Review
In the previous quarter, Youdao reported revenue of 1.63 billion USD, a gross profit margin of 42.24%, net profit attributable to the parent company of 0.12 million USD with a net margin of 0.01%, and adjusted EPS of 0.08; revenue grew 3.56% year over year, while EPS declined 89.47% year over year.
Quarter-on-quarter net profit rose by 100.68%, reflecting cost discipline and a favorable mix shift despite thin absolute profitability.
Main business highlights: learning services and products contributed 888.87 million USD, while online marketing services contributed 739.66 million USD, with the mix indicating balanced top-line support between subscription-driven learning and advertising-linked marketing services.
Current Quarter Outlook
Main business: Learning services and products
Learning services and products remains the core revenue engine for Youdao, supported by continued paid subscription adoption and the durability of flagship offerings. The estimate framework for the quarter suggests modest year-over-year revenue growth and management emphasis on content quality, user retention, and pricing discipline. Gross margin resilience near the low 40.00% range last quarter indicates that product mix and platform efficiencies have offset promotional intensity. With a forecast EPS of 0.25 and EBIT of 53.32 million USD, the model implies operating leverage is sensitive to scale in this segment; if paid enrollments and renewal rates track well through late-quarter promotions, incremental margins could outperform the implied cautious stance. Conversely, if marketing ROI tightens or content amortization steps up, earnings flow-through could lag the revenue line, reinforcing the downshift embedded in the EPS forecast.
Most promising business: Subscription-driven premium learning
Within the learning services umbrella, subscription-based premium offerings present the greatest opportunity for structural growth, given recurring revenue visibility and the ability to layer AI-enabled features. The prior quarter’s 888.87 million USD contribution underscores the scale of the monetizable user base; with the current quarter’s consolidated revenue forecast at 1.48 billion USD, even a small uplift in subscription ARPU can materially influence EBIT. Execution will likely center on incremental cross-sell of upgraded plans, deeper curriculum breadth, and enhanced personalized learning journeys to reduce churn. A measured price strategy can aid margin expansion without impairing user growth if value delivery—through pedagogy improvements and adaptive modules—remains tangible to learners and parents.
Stock-price drivers this quarter
Investors will concentrate on three levers: margin trajectory, revenue mix, and cost efficiency. Margin trajectory will be read through gross margin relative to the prior quarter’s 42.24% level; sustaining or expanding this level could offset the forecast EPS contraction if operating costs stay contained. Revenue mix between learning services and online marketing services will matter, as a higher share of subscription revenue typically supports more stable conversion to EBIT, while advertising-linked revenue can be cyclical. Cost efficiency, including user acquisition expenses and content production amortization, will dictate whether incremental revenue converts to profit; commentary around marketing ROI, cohort profitability, and product development cadence will shape expectations for the next two quarters.
Analyst Opinions
Across recent institutional commentary, the balance of views skews cautious rather than outright bullish, reflecting the projected compression in adjusted EPS despite stable top-line expectations. Analysts highlight the gap between modest revenue growth of 1.98% year over year and the forecast decline in earnings metrics, implying that cost discipline and product mix must improve to reflate profitability. Coverage notes the durability of the learning services franchise, but contends that the near-term setup is sensitive to execution on subscription retention and the payback on marketing investments. The majority view holds that while the revenue base appears steady, confirmation of margin stabilization is required to support a re-rating, making guidance on gross margin and operating cost trends a critical read-through for the rest of 2026.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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