Significant reduction in losses! Youdao, a subsidiary of NetEase, achieved a net operating cash flow of 250 million yuan in Q2 2024, an 88.2% year-on-year increase | Financial Report Insights

On the 22nd, Youdao released its financial report for the second quarter of 2024, showing a record net cash inflow from operating activities of 250 million yuan, an 88.2% year-on-year increase, and a significant 74.9% year-on-year narrowing of operating losses.

1) Key Financial Data

○ Net revenue was 1.3 billion yuan (181.9 million U.S. dollars), a 9.5% increase from the same period in 2023.

○ Gross profit was 636.8 million yuan (87.6 million U.S. dollars), a 12.3% increase from 567.2 million yuan in the same period of 2023. The gross profit margin was 48.2%, compared to 47.0% in the same period of 2023.

○ Total operating expenses were 709.3 million yuan (97.6 million U.S. dollars), compared to 856.3 million yuan in the same period last year.

○ Net cash provided by operating activities was 250.2 million yuan (34.4 million U.S. dollars), with a total capital expenditure of 3.8 million yuan (0.5 million U.S. dollars).

2) Business Revenue Data

○ Net revenue from learning services was 643.8 million yuan (88.6 million U.S. dollars), a 5.5% decrease from the same period in 2023.

○ Net revenue from smart devices was 166.7 million yuan (22.9 million U.S. dollars), a 25.0% decrease from the same period in 2023.

○ Net revenue from online marketing services was 511.2 million yuan (70.3 million U.S. dollars), a 68.4% increase from the same period in 2023.

In the first half of this year, Youdao's net revenue reached 2.71 billion yuan, a 14.5% year-on-year increase. While maintaining revenue growth, key financial indicators such as operating losses and net cash flow from operations have also significantly improved year-on-year, further enhancing the company's overall profitability.

Youdao CEO Zhou Feng stated that over the past six months, the close integration of large-scale model technology with the company's business has not only driven comprehensive business progress but also significantly improved key financial indicators. The company will continue to make every effort to promote the application of large-scale models and use technological innovation to support personalized education.

Regarding products, Zhou Feng mentioned in a conference call that not adopting a low-price strategy previously was the right decision based on performance. "Our product prices are generally 50-100 yuan higher than competitors, and we will not engage in price wars in the future. However, with further improvement in supply chain capabilities, a 40% gross margin will be a reasonable range."

After the financial report was released, Youdao's U.S. stock rose more than 2.45% in pre-market trading on the 22nd, but fluctuated and fell after the market opened, ultimately closing down 8.9% at $3.35.