omniture
from common-pcom:html:key:en_segment_includes_overall_segment_header_shtml
PR Newswire: news distribution, targeting and monitoring
Home Page > News Releases > Global

Youdao Reports Second Quarter 2022 Unaudited Financial Results

2022-08-18 16:30

HANGZHOU, China, Aug. 18, 2022 /PRNewswire/ -- Youdao, Inc. ("Youdao" or the "Company") (NYSE: DAO), a leading technology-focused intelligent learning company in China, today announced its unaudited financial results for the second quarter ended June 30, 2022.

Second Quarter 2022 Financial Highlights[1]

  • Total net revenues were RMB956.2 million (US$142.8 million), representing a 2.4% decrease from the same period in 2021.
    - Net revenues from learning services were RMB563.6 million (US$84.1 million), representing a 7.3% decrease from the same period in 2021.
    - Net revenues from smart devices were RMB239.9 million (US$35.8 million), representing a 16.3% increase from the same period in 2021.
    - Net revenues from online marketing services were RMB152.8 million (US$22.8 million), representing an 8.0% decrease from the same period in 2021.
  • Gross margin was 42.8%, compared to 51.0% for the same period in 2021.

"Despite the short-term challenges by the pandemic, our business demonstrated resilience. On one hand, operating cash inflow reached RMB104 million in Q2, mainly due to the strong sales performance of our new services and smart devices. On the other hand, we narrowed our net loss to RMB461 million in Q2, a 12.3% improvement year-over-year," said Dr. Feng Zhou, Chief Executive Officer and a Director of Youdao.

"We recently launched a series of new products, such as Youdao Dictionary Pen X5 and Youdao Smart Learning Pad, as well as new products in STEAM courses and vocational education courses. We have completed the transformation of our business and products in response to regulatory changes last year and entered a new stage of organic growth. Looking ahead, we will stick to upgrading products and services with the support of technology and innovation, navigate the short-term macro challenges, build up and strengthen the long-term franchise. We are on the right track and confident in the second half of this year boosted by the new products and services," Dr. Zhou concluded.

[1] As previously disclosed, in compliance with applicable regulatory requirements, the Company had ceased to offer the after-school tutoring services on academic subjects in China's compulsory education system (the "Academic AST Business") at the end of December 2021. The Academic AST Business met the criteria of discontinued operations. Retrospective adjustments to the historical statement of operations have also been made to provide a consistent basis of comparison for the financial results of the continuing operations. The financial information and non-GAAP financial information included in this press release is presented on a continuing operations basis, unless otherwise specifically stated.

Second Quarter of 2022 Financial Results

Net Revenues 

Net revenues for the second quarter of 2022 were RMB956.2 million (US$142.8 million), representing a 2.4% decrease from RMB979.9 million for the same period of 2021.

Net revenues from learning services were RMB563.6 million (US$84.1 million) for the second quarter of 2022, representing a 7.3% decrease from RMB607.7 million for the same period of 2021. The decrease was mainly attributable to the decline in revenues from adult courses resulting from the decrease in demand due to the resurgence of COVID-19.

Net revenues from smart devices were RMB239.9 million (US$35.8 million) for the second quarter of 2022, representing a 16.3% increase from RMB206.3 million for the same period of 2021, primarily driven by the popularity of the newly launched products since last year.

Net revenues from online marketing services were RMB152.8 million (US$22.8 million) for the second quarter of 2022, representing an 8.0% decrease from RMB166.0 million for the same period of 2021. The decrease was mainly attributable to the curtailed advertising budgets of partial advertising customers.

Gross Profit and Gross Margin

Gross profit for the second quarter of 2022 was RMB409.7 million (US$61.2 million), representing an 18.1% decrease from RMB500.2 million for the same period of 2021. Gross margin decreased to 42.8% for the second quarter of 2022 from 51.0% for the same period of 2021.

Gross margin for learning services decreased to 52.2% for the second quarter of 2022 from 58.8% for the same period of 2021. The decrease was mainly resulted from the decline in economic scales due to the decreased learning revenues in the second quarter of 2022.

Gross margin for smart devices decreased to 30.6% for the second quarter of 2022 from 43.0% for the same period of 2021. The decrease was due to a larger proportion of sales contributed from offline distributors, which have a lower gross margin.

Gross margin for online marketing services was 27.7% for the second quarter of 2022, compared with 32.7% for the same period of 2021. The decrease was mainly attributable to the increased portion in performance-based advertisements through third parties' internet properties, which typically have a lower gross margin profile.

Operating Expenses

Total operating expenses for the second quarter of 2022 were RMB864.9 million (US$129.1 million), compared with RMB755.1 million for the same period of last year.

Sales and marketing expenses for the second quarter of 2022 were RMB596.0 million (US$89.0 million), representing an increase of 7.4% from RMB555.1 million for the same period of 2021. This increase was due to the growth in compensation expenses of the expanded sales and marketing team for learning services and smart devices.

Research and development expenses for the second quarter of 2022 were RMB208.4 million (US$31.1 million), representing an increase of 42.9% from RMB145.8 million for the same period of 2021. The increase was primarily due to higher payroll-related expenses associated with a larger number of development and technology professionals in smart devices and education digitalization solutions.

General and administrative expenses for the second quarter of 2022 were RMB60.5 million (US$9.0 million), representing an increase of 11.6% from RMB54.2 million for the same period of 2021. The increase was mainly attributable to the increased provision for the credit losses allowance on the receivables, which was RMB6.9 million in the second quarter of 2022, compared to RMB3.4 million for the same period of 2021.

Loss from Operations

Loss from operations for the second quarter of 2022 was RMB455.2 million (US$68.0 million), compared with RMB254.9 million for the same period in 2021. The margin of loss from operations was 47.6%, compared with 26.0% for the same period of last year.

Net Loss from Continuing Operations Attributable to Youdao's Ordinary Shareholders

Net loss from continuing operations attributable to Youdao's ordinary shareholders for the second quarter of 2022 was RMB453.9 million (US$67.8 million), compared with RMB234.9 million for the same period of last year. Non-GAAP net loss from continuing operations attributable to Youdao's ordinary shareholders for the second quarter of 2022 was RMB435.8 million (US$65.1 million), compared with RMB215.0 million for the same period of last year.

Basic and diluted net loss per American depositary shares ("ADSs") of the Company from continuing operations attributable to ordinary shareholders for the second quarter of 2022 was RMB3.67 (US$0.55), compared with RMB1.92 for the same period of 2021. Non-GAAP basic and diluted net loss from continuing operations per ADS attributable to ordinary shareholders was RMB3.52 (US$0.53), compared with RMB1.76 for the same period of 2021.

Balance Sheet

As of June 30, 2022, Youdao's cash, cash equivalents, restricted cash, time deposits and short-term investments totaled RMB1.3 billion (US$188.1 million), compared with RMB1.6 billion as of December 31, 2021. For the second quarter of 2022, net cash provided by continuing operating activities was RMB104.2 million (US$15.6 million), capital expenditures totaled RMB46.7 million (US$7.0 million), and depreciation and amortization expenses amounted to RMB10.7 million (US$1.6 million). Youdao's ability to continue as a going concern is dependent on management's ability to implement an effective business plan in future periods in light of the changing regulatory environment, generate operating cash flows and continue to be able to obtain outside sources of financing as necessary for Youdao's future development. As of the date of this release, Youdao has received various financial support from the NetEase Group, including, among others, RMB878.0 million short-term loans and US$70.0 million long-term loans with maturity dated March 31, 2024 drawn down under the US$300.0 million revolving loan facility. In support of Youdao's future business, NetEase Group has agreed to provide financial support for Youdao's continuing operations.

As of June 30, 2022, the Company's contract liabilities, which mainly consisted of deferred revenues generated from Youdao's learning services, were RMB1.1 billion (US$168.1 million), compared with RMB1.1 billion as of December 31, 2021.

Conference Call

Youdao's management team will host a teleconference call with simultaneous webcast at 6:00 a.m. Eastern Time on Thursday, August 18, 2022 (Beijing/Hong Kong Time: 6:00 p.m., Thursday, August 18, 2022). Youdao's management will be on the call to discuss the financial results and answer questions.

Dial-in details for the earnings conference call are as follows:

United States (toll free):

+1-888-346-8982

International:

+1-412-902-4272

Mainland China (toll free):

400-120-1203

Hong Kong (toll free): 

800-905-945

Hong Kong:

+852-3018-4992

Conference ID:

5366490

A live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.youdao.com.

A replay of the conference call will be accessible by phone one hour after the conclusion of the live call at the following numbers, until August 25, 2022:

United States: 

+1-877-344-7529

International:

+1-412-317-0088

Replay Access Code:

5366490

About Youdao, Inc. 

Youdao, Inc. (NYSE: DAO) is a leading technology-focused intelligent learning company in China dedicated to developing and using technologies to provide learning content, applications and solutions to users of all ages. Building on the popularity of its online knowledge tools such as Youdao Dictionary and Youdao Translation, Youdao now offers smart devices, STEAM courses, adult and vocational courses, and education digitalization solutions. In addition, Youdao has developed a variety of interactive learning apps. Youdao was founded in 2006 as part of NetEase, Inc. (NASDAQ: NTES; HKEX: 9999), a leading internet technology company in China.

For more information, please visit: http://ir.youdao.com.

Non-GAAP Measures

Youdao considers and uses non-GAAP financial measures, such as non-GAAP net income/(loss) from continuing operations attributable to the Company's ordinary shareholders and non-GAAP basic and diluted income/(loss) from continuing operations per ADS, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Youdao defines non-GAAP net income/(loss) from continuing operations attributable to the Company's ordinary shareholders as net income/(loss) from continuing operations attributable to the Company's ordinary shareholders excluding share-based compensation expenses and impairment of long-term investment. Non-GAAP net income/(loss) from continuing operations attributable to the Company's shareholders enables Youdao's management to assess its operating results without considering the impact of these items, which are non-cash charges in nature. Youdao believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating the Company's current operating performance and prospects in the same manner as management does, if they so choose.

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools, which possibly do not reflect all items of expense that affect our operations. In addition, the non-GAAP financial measures Youdao uses may differ from the non-GAAP measures uses by other companies, including peer companies, and therefore their comparability may be limited.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Unaudited Reconciliation of GAAP and non-GAAP Results" set forth at the end of this release.

The accompanying tables have more details on the reconciliations between our GAAP financial measures that are most directly comparable to non-GAAP financial measures. Youdao encourages you to review its financial information in its entirety and not rely on a single financial measure. 

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.6981 to US$1.00, the exchange rate on June 30, 2022 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding such risks, uncertainties or factors is included in the Company's filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.

For investor and media inquiries, please contact:

In China:
Jeffrey Wang
Youdao, Inc.
Tel: +86-10-8255-8163 ext. 89980
E-mail: IR@rd.netease.com

The Piacente Group, Inc.
Emilie Wu
Tel: +86-21-6039-8363
E-mail: youdao@thepiacentegroup.com

In the United States:
The Piacente Group, Inc. 
Brandi Piacente
Tel: +1-212-481-2050
E-mail: youdao@thepiacentegroup.com

 

 

YOUDAO, INC.







UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS







(RMB and USD in thousands)























As of December 31,


As of June 30,


As of June 30,



2021


2022


2022



RMB


RMB


USD (1)








Assets







Current assets:







Cash and cash equivalents


322,777


687,191


102,595

Time deposits


268


273


41

Restricted cash


749,770


551,472


82,333

Short-term investments


503,831


21,071


3,146

Accounts receivable, net


248,339


335,911


50,150

Inventories, net


255,411


212,351


31,703

Amounts due from NetEase Group


6,192


16,609


2,480

Prepayment and other current assets


182,577


198,200


29,589

Assets held for sale


497


-


-

Total current assets


2,269,662


2,023,078


302,037








Non-current assets:







Property, equipment and software, net


80,315


108,928


16,263

Operating lease right-of-use assets, net


118,104


88,453


13,206

Long-term investments


32,518


70,542


10,532

Goodwill


109,944


109,944


16,414

Other assets, net


22,436


37,199


5,554

Assets held for sale


1,088


-


-

Total non-current assets


364,405


415,066


61,969








Total assets


2,634,067


2,438,144


364,006








Liabilities, Mezzanine Equity and Shareholders' Deficit







Current liabilities:







Accounts payables


161,006


151,812


22,665

Payroll payable


277,383


228,248


34,077

Amounts due to NetEase Group


83,041


67,009


10,004

Contract liabilities


1,065,639


1,126,065


168,117

Taxes payable


53,323


28,959


4,323

Accrued liabilities and other payables


515,567


697,050


104,068

Short-term loans from NetEase Group


878,000


878,000


131,082

Total current liabilities


3,033,959


3,177,143


474,336








Non-current liabilities:







Long-term lease liabilities


73,070


48,536


7,246

Long-term loans from NetEase Group


255,028


469,798


70,139

Other non-current liabilities


2,411


14,095


2,104

Total non-current liabilities


330,509


532,429


79,489








Total liabilities


3,364,468


3,709,572


553,825








Mezzanine equity


78,592


73,475


10,970








Shareholders' deficit:







Youdao's shareholders' deficit


(807,067)


(1,340,700)


(200,162)

Noncontrolling interests


(1,926)


(4,203)


(627)

Total shareholders' deficit


(808,993)


(1,344,903)


(200,789)








Total liabilities, mezzanine equity and shareholders' deficit


2,634,067


2,438,144


364,006


Note 1:

The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.6981 on the last trading day of June

(June 30, 2022) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

 

 

 

 

YOUDAO, INC.













UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS











(RMB and USD in thousands, except share and per ADS data)




























Three Months Ended


Six Months Ended



June 30,


March 31,


June 30,


June 30,


June 30,


June 30,



2021


2022


2022


2022


2021


2022



RMB


RMB


RMB


USD (1)


RMB


RMB

Net revenues:













Learning services


607,680


826,011


563,601


84,143


1,214,640


1,389,612

Smart devices


206,290


253,160


239,850


35,809


408,209


493,010

Online marketing services


165,979


121,370


152,774


22,809


305,073


274,144

Total net revenues


979,949


1,200,541


956,225


142,761


1,927,922


2,156,766














Cost of revenues (2)


(479,738)


(558,719)


(546,498)


(81,590)


(931,276)


(1,105,217)

Gross profit


500,211


641,822


409,727


61,171


996,646


1,051,549














Operating expenses:













Sales and marketing expenses (2)


(555,050)


(506,385)


(595,997)


(88,980)


(1,103,794)


(1,102,382)

Research and development expenses (2)


(145,803)


(202,980)


(208,411)


(31,115)


(273,501)


(411,391)

General and administrative expenses (2)


(54,234)


(57,561)


(60,532)


(9,038)


(88,573)


(118,093)

Total operating expenses


(755,087)


(766,926)


(864,940)


(129,133)


(1,465,868)


(1,631,866)

Loss from operations


(254,876)


(125,104)


(455,213)


(67,962)


(469,222)


(580,317)














Interest income


6,735


2,034


3,769


563


9,809


5,803

Interest expense


(7,764)


(8,585)


(10,102)


(1,508)


(15,381)


(18,687)

Others, net


23,366


36,053


1,567


234


23,720


37,620

Loss before tax


(232,539)


(95,602)


(459,979)


(68,673)


(451,074)


(555,581)














Income tax expense


(2,999)


(566)


(553)


(83)


(4,614)


(1,119)

Net loss from continuing operations


(235,538)


(96,168)


(460,532)


(68,756)


(455,688)


(556,700)

Net loss from discontinued operations


(289,496)


(6,105)


-


-


(396,004)


(6,105)

Net loss


(525,034)


(102,273)


(460,532)


(68,756)


(851,692)


(562,805)

Net loss attributable to noncontrolling interests


681


748


6,646


992


1,548


7,394

Net loss attributable to ordinary shareholders of the Company


(524,353)


(101,525)


(453,886)


(67,764)


(850,144)


(555,411)

Including:













Net loss from continuing operations attributable to ordinary shareholders of the
Company


(234,857)


(95,420)


(453,886)


(67,764)


(454,140)


(549,306)

Net loss from discontinued operations attributable to ordinary shareholders of the
Company


(289,496)


(6,105)


-


-


(396,004)


(6,105)














Basic net loss per ADS


(4.29)


(0.82)


(3.67)


(0.55)


(7.07)


(4.50)

-Continuing operations


(1.92)


(0.77)


(3.67)


(0.55)


(3.77)


(4.45)

-Discontinued operations


(2.37)


(0.05)


-


-


(3.30)


(0.05)














Diluted net loss per ADS


(4.29)


(0.82)


(3.67)


(0.55)


(7.07)


(4.50)

-Continuing operations


(1.92)


(0.77)


(3.67)


(0.55)


(3.77)


(4.45)

-Discontinued operations


(2.37)


(0.05)


-


-


(3.30)


(0.05)














Shares used in computing basic net loss per ADS


122,332,306


123,330,958


123,703,353


123,703,353


120,325,943


123,518,179

Shares used in computing diluted net loss per ADS


122,332,306


123,330,958


123,703,353


123,703,353


120,325,943


123,518,179



























Note 1:

The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.6981 on the last trading day of June (June 30, 2022) as set forth in the H.10
statistical release of the U.S. Federal Reserve Board.



























Note 2:













Share-based compensation in each category:













Cost of revenues


1,815


2,180


1,775


265


3,257


3,955

Sales and marketing expenses


3,053


3,090


3,451


515


5,043


6,541

Research and development expenses


10,004


8,862


8,428


1,259


17,399


17,290

General and administrative expenses


4,962


5,384


4,448


664


8,610


9,832

 

 

 

YOUDAO, INC.













UNAUDITED ADDITIONAL INFORMATION













(RMB and USD in thousands)




























Three Months Ended


Six Months Ended



June 30,


March 31,


June 30,


June 30,


June 30,


June 30,



2021


2022


2022


2022


2021


2022



RMB


RMB


RMB


USD


RMB


RMB














Net revenues













Learning services


607,680


826,011


563,601


84,143


1,214,640


1,389,612

Smart devices


206,290


253,160


239,850


35,809


408,209


493,010

Online marketing services


165,979


121,370


152,774


22,809


305,073


274,144

Total net revenues


979,949


1,200,541


956,225


142,761


1,927,922


2,156,766














Cost of revenues













Learning services


250,422


298,297


269,491


40,234


472,724


567,788

Smart devices


117,671


167,804


166,503


24,858


230,585


334,307

Online marketing services


111,645


92,618


110,504


16,498


227,967


203,122

Total cost of revenues


479,738


558,719


546,498


81,590


931,276


1,105,217














Gross margin













Learning services


58.8 %


63.9 %


52.2 %


52.2 %


61.1 %


59.1 %

Smart devices


43.0 %


33.7 %


30.6 %


30.6 %


43.5 %


32.2 %

Online marketing services


32.7 %


23.7 %


27.7 %


27.7 %


25.3 %


25.9 %

Total gross margin


51.0 %


53.5 %


42.8 %


42.8 %


51.7 %


48.8 %

 

 

 

YOUDAO, INC.














UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS












(RMB and USD in thousands, except per ADS data)






























Three Months Ended


Six Months Ended




June 30,


March 31,


June 30,


June 30,


June 30,


June 30,




2021


2022


2022


2022


2021


2022




RMB


RMB


RMB


USD


RMB


RMB
















Net loss from continuing operations attributable to ordinary shareholders of the
Company


(234,857)


(95,420)


(453,886)


(67,764)


(454,140)


(549,306)


Add: share-based compensation


19,834


19,516


18,102


2,703


34,309


37,618


         impairment of long-term investment


-


5,000


-


-


-


5,000


Non-GAAP net loss from continuing operations attributable to ordinary
shareholders of the Company


(215,023)


(70,904)


(435,784)


(65,061)


(419,831)


(506,688)






























Non-GAAP basic net loss from continuing operations per ADS


(1.76)


(0.57)


(3.52)


(0.53)


(3.49)


(4.10)


Non-GAAP diluted net loss from continuing operations per ADS


(1.76)


(0.57)


(3.52)


(0.53)


(3.49)


(4.10)


 

 

 

Cision View original content:https://www.prnewswire.com/news-releases/youdao-reports-second-quarter-2022-unaudited-financial-results-301608345.html

Source: Youdao, Inc.

Related stocks: NYSE:DAO

from common-pcom:html:key:en_segment_includes_releases_right_column_video_module_shtml

Featured Video

Banking/Financial Service Recent Releases

Computer Software Recent Releases

Computer/Electronics Recent Releases

Education Recent Releases

Internet Technology Recent Releases

Telecommunications Recent Releases

from common-pcom:html:key:en_segment_includes_overall_segment_footer_shtml
Advanced Search
Search
  
  1. Products & Services
  2. News Releases
  3. Knowledge Center
  4. Journalists & Media
  5. Multimedia Theater
  6. Contact Us