Youdao Maintains Profitability for Five Consecutive Quarters, Operating Profit for the First Three Quarters of 2025 Grows Nearly 150% Year-over-Year
BEIJING, Nov. 20, 2025 /PRNewswire/ -- On November 20, 2025, Youdao (NYSE: DAO), a subsidiary of NetEase and a leading provider of intelligent learning solutions, announced its unaudited financial results for the third quarter of 2025. The report reveals that, driven by its "AI-Native" strategy, the company has maintained profitability for five consecutive quarters, with operating profit for the first three quarters of 2025 growing nearly 150% year-over-year. Both net revenue from online marketing services and sales from AI-driven subscription services reached record highs.
In Q3 2025, Youdao reported net revenue of RMB 1.6 billion, marking a year-over-year increase of 3.6%. Operating profit stood at RMB 28.3 million, and operating cash outflow narrowed by 31.4% compared to the same period of the previous year, reflecting continued improvement in the company's operating efficiency and liquidity position. Youdao's Chief Executive Officer Feng Zhou stated, "We are confident in achieving the rapid improvement in operating profit set at the beginning of the year and annual operating cash-flow breakeven for the first time."
Additionally, Youdao has been included in the "2026 GSV 150" list, recognizing the company as one of the most transformative innovators in the global digital learning sector.
Learning Services and AI Subscription Services Performance
In Q3 2025, Youdao's net revenue from learning services reached RMB 0.64 billion. AI subscription service sales totaled nearly RMB 100 million, setting a new record and growing over 40% year-over-year. During the reporting period, Youdao Dictionary further completed its AI-driven upgrade, integrating several new AI features, including AI simultaneous interpretation, AI photo translation, and AI document translation. The AI simultaneous interpretation feature saw a nearly 200% increase in sales, with total users surpassing 20 million, becoming the primary driver of Youdao Dictionary's membership revenue growth.
Youdao posted RMB 0.25 billion in Q3 net revenue from its smart device business, which continued to show operational improvement. In August this year, the company introduced the next-generation AI-powered tutoring pen, SpaceX. Focused on providing instant answers, the solution helps solve difficult problems across nine subjects for primary, middle and high school students anytime, anywhere, providing an essential tool for science-related question-solving.
Online Marketing Services Becomes Youdao's Largest Revenue Segment
Empowered by AI, Youdao's online marketing services revenue rose to RMB 0.74 billion in Q3 2025, reflecting a 51.1% year-over-year increase and establishing it as the company's largest business segment.
During the reporting period, Youdao further strengthened its collaboration with NetEase Group, resulting in a year-over-year revenue increase of over 50% in the gaming vertical for its online marketing services. Additionally, revenue from overseas operations grew by over 100% year-over-year in Q3. Most notably, Youdao's WonderLife campaign with BYD won the Brands & Creators award at YouTube Works Awards China.
Youdao stated that the sustained growth of its online marketing services is fueled by the company's ongoing investment in AI, which has facilitated the end-to-end intelligence enhancement of the business. The company has developed three key AI engines: iMagicBox, which enables advertisers to efficiently generate high-quality creative materials; the influencer (KOL) platform, which automates the "analysis-to-transaction" process for marketers; and the AI Ad Placement Optimizer, which supports decision-making throughout the entire campaign lifecycle, from pre-campaign planning to post-campaign optimization.
As the capabilities of large language models continue to evolve, Youdao has achieved significant technological breakthroughs in high-value applications. For instance, in the field of translation, the company introduced the "Confucius 3.0" translation model, which supports real-time translation across 38 languages and boasts multimodal deep understanding capabilities. Despite using fewer parameters, this model delivers superior translation quality compared to large general-purpose models.
"Looking ahead, Youdao will further deepen its AI-native strategy, focusing on the continued application and innovation of the Confucius large model in both learning and advertising scenarios, consistently delivering value to our users," concluded Dr. Zhou.
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SOURCE Youdao