To The Moon

Youdao, Inc. (NYSE: DAO) today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2022.

Fourth Quarter 2022 Financial Highlights[1]

lTotal net revenues were RMB1.5 billion (US$210.8 million), representing a 38.6% increase from the same period in 2021.

• Net revenues from learning services were RMB806.3 million (US$116.9 million), representing a 39.2% increase from the same period in 2021.
• Net revenues from smart devices were RMB407.0 million (US$59.0 million),representinga28.1% increase from the same period in 2021.
• Net revenues from online marketing serviceswereRMB240.8 million (US$34.9 million),representinga58.6%increase from the same period in 2021.

Gross margin was 53.3%, compared with 42.5% for the same period in 2021.

Fiscal Year 2022 Financial Highlights

Total net revenues were RMB5.0 billion (US$726.8 million), representing a 24.8% increase from 2021.

• Net revenues from learning services were RMB3.1 billion (US$447.2 million),representinga26.3% increase from 2021.
• Net revenues from smart devices were RMB1.3 billion (US$182.2 million),representinga28.2% increase from 2021.
• Net revenues from online marketing services were RMB672.4 million (US$97.5 million),representinga13.2%increase from 2021.

Gross margin was 51.6%, compared with 49.5% for 2021.

“Our ongoing investment in AI technology facilitated our ability to consistently introduce and broaden our digital content services and smart device offerings throughout 2022. In both the third and fourth quarters, the net revenues from our digital content services covered its costs and operating expenses, showing the improved health of our business. Our new smart devices launched in the second half of 2022, including upgraded dictionary pens and smart learning pads, were highly recognized by customers, which led to strong sales growth during the November 11 Shopping Festival. As a result of the solid performance of our new services and smart devices, we achieved record-high net revenues and our first-ever income from operations in the fourth quarter. Our improved financial and operating indicators demonstrate that we have the right strategy in place to support our growth trajectory,” said Dr. Feng Zhou, Chief ExecutiveOfficerand Director of Youdao.

“Years of experience have taught us that the full value of AI cannot be realized on its own. To effectively support users, technologies must be integrated with sound business scenarios. Looking ahead, we will continue to prioritize our users. By leveraging our advanced technology and innovation, we will continue to introduce additional high-quality educational products and services to meet users’ diverse and personalized demands.” Dr. Zhou concluded.