Youdao Experiences Second Quarter 2022 Unaudited Monetary Outcomes

HANGZHOU, China, Aug. 18, 2022 /PRNewswire/ — Youdao, Inc. (“Youdao” or the “Firm”) (NYSE: DAO), a number one technology-focused clever studying firm in China, immediately introduced its unaudited monetary outcomes for the second quarter ended June 30, 2022.

Second Quarter 2022 Monetary Highlights[1]

• Whole internet revenues had been RMB956.2 million (US$142.Eight million), representing a 2.4% lower from the identical interval in 2021.
  – Web revenues from studying companies had been RMB563.6 million (US$84.1 million), representing a 7.3% lower from the identical interval in 2021.
  – Web revenues from good units had been RMB239.9 million (US$35.Eight million), representing a 16.3% enhance from the identical interval in 2021.
  – Web revenues from on-line advertising companies had been RMB152.Eight million (US$22.Eight million), representing an 8.0% lower from the identical interval in 2021.
• Gross margin was 42.8%, in comparison with 51.0% for a similar interval in 2021.

“Regardless of the short-term challenges by the pandemic, our enterprise demonstrated resilience. On one hand, working money influx reached RMB104 million in Q2, primarily as a result of sturdy gross sales efficiency of our new companies and good units. Alternatively, we narrowed our internet loss to RMB461 million in Q2, a 12.3% enchancment year-over-year,” mentioned Dr. Feng Zhou, Chief Government Officer and a Director of Youdao.

“We just lately launched a collection of latest merchandise, comparable to Youdao Dictionary Pen X5 and Youdao Sensible Studying Pad, in addition to new merchandise in STEAM programs and vocational training programs. We now have accomplished the transformation of our enterprise and merchandise in response to regulatory modifications final 12 months and entered a brand new stage of natural development. Trying forward, we’ll follow upgrading services with the help of know-how and innovation, navigate the short-term macro challenges, construct up and strengthen the long-term franchise. We’re heading in the right direction and assured within the second half of this 12 months boosted by the brand new services,” Dr. Zhou concluded.

[1] As beforehand disclosed, in compliance with relevant regulatory necessities, the Firm had ceased to supply the after-school tutoring companies on educational topics in China’s obligatory training system (the “Tutorial AST Enterprise”) on the finish of December 2021. The Tutorial AST Enterprise met the standards of discontinued operations. Retrospective changes to the historic assertion of operations have additionally been made to offer a constant foundation of comparability for the monetary outcomes of the persevering with operations. The monetary data and non-GAAP monetary data included on this press launch is offered on a unbroken operations foundation, except in any other case particularly acknowledged.

Second Quarter of 2022 Monetary Outcomes

Web Revenues 

Web revenues for the second quarter of 2022 had been RMB956.2 million (US$142.Eight million), representing a 2.4% lower from RMB979.9 million for a similar interval of 2021.

Web revenues from studying companies had been RMB563.6 million (US$84.1 million) for the second quarter of 2022, representing a 7.3% lower from RMB607.7 million for a similar interval of 2021. The lower was primarily attributable to the decline in revenues from grownup programs ensuing from the lower in demand as a result of resurgence of COVID-19.

Web revenues from good units had been RMB239.9 million (US$35.Eight million) for the second quarter of 2022, representing a 16.3% enhance from RMB206.Three million for a similar interval of 2021, primarily pushed by the recognition of the newly launched merchandise since final 12 months.

Web revenues from on-line advertising companies had been RMB152.Eight million (US$22.Eight million) for the second quarter of 2022, representing an 8.0% lower from RMB166.Zero million for a similar interval of 2021. The lower was primarily attributable to the curtailed promoting budgets of partial promoting prospects.

Gross Revenue and Gross Margin

Gross revenue for the second quarter of 2022 was RMB409.7 million (US$61.2 million), representing an 18.1% lower from RMB500.2 million for a similar interval of 2021. Gross margin decreased to 42.8% for the second quarter of 2022 from 51.0% for a similar interval of 2021.

Gross margin for studying companies decreased to 52.2% for the second quarter of 2022 from 58.8% for a similar interval of 2021. The lower was primarily resulted from the decline in financial scales as a result of decreased studying revenues within the second quarter of 2022.

Gross margin for good units decreased to 30.6% for the second quarter of 2022 from 43.0% for a similar interval of 2021. The lower was as a consequence of a bigger proportion of gross sales contributed from offline distributors, which have a decrease gross margin.

Gross margin for on-line advertising companies was 27.7% for the second quarter of 2022, in contrast with 32.7% for a similar interval of 2021. The lower was primarily attributable to the elevated portion in performance-based ads by way of third events’ web properties, which usually have a decrease gross margin profile.

Working Bills

Whole working bills for the second quarter of 2022 had been RMB864.9 million (US$129.1 million), in contrast with RMB755.1 million for a similar interval of final 12 months.

Gross sales and advertising bills for the second quarter of 2022 had been RMB596.Zero million (US$89.Zero million), representing a rise of seven.4% from RMB555.1 million for a similar interval of 2021. This enhance was as a result of development in compensation bills of the expanded gross sales and advertising workforce for studying companies and good units.

Analysis and improvement bills for the second quarter of 2022 had been RMB208.Four million (US$31.1 million), representing a rise of 42.9% from RMB145.Eight million for a similar interval of 2021. The rise was primarily as a consequence of larger payroll-related bills related to a bigger variety of improvement and know-how professionals in good units and training digitalization options.

Common and administrative bills for the second quarter of 2022 had been RMB60.5 million (US$9.Zero million), representing a rise of 11.6% from RMB54.2 million for a similar interval of 2021. The rise was primarily attributable to the elevated provision for the credit score losses allowance on the receivables, which was RMB6.9 million within the second quarter of 2022, in comparison with RMB3.Four million for a similar interval of 2021.

Loss from Operations

Loss from operations for the second quarter of 2022 was RMB455.2 million (US$68.Zero million), in contrast with RMB254.9 million for a similar interval in 2021. The margin of loss from operations was 47.6%, in contrast with 26.0% for a similar interval of final 12 months.

Web Loss from Persevering with Operations Attributable to Youdao’s Odd Shareholders

Web loss from persevering with operations attributable to Youdao’s extraordinary shareholders for the second quarter of 2022 was RMB453.9 million (US$67.Eight million), in contrast with RMB234.9 million for a similar interval of final 12 months. Non-GAAP internet loss from persevering with operations attributable to Youdao’s extraordinary shareholders for the second quarter of 2022 was RMB435.Eight million (US$65.1 million), in contrast with RMB215.Zero million for a similar interval of final 12 months.

Primary and diluted internet loss per American depositary shares (“ADSs”) of the Firm from persevering with operations attributable to extraordinary shareholders for the second quarter of 2022 was RMB3.67 (US$0.55), in contrast with RMB1.92 for a similar interval of 2021. Non-GAAP primary and diluted internet loss from persevering with operations per ADS attributable to extraordinary shareholders was RMB3.52 (US$0.53), in contrast with RMB1.76 for a similar interval of 2021.

Steadiness Sheet

As of June 30, 2022, Youdao’s money, money equivalents, restricted money, time deposits and short-term investments totaled RMB1.Three billion (US$188.1 million), in contrast with RMB1.6 billion as of December 31, 2021. For the second quarter of 2022, internet money offered by persevering with working actions was RMB104.2 million (US$15.6 million), capital expenditures totaled RMB46.7 million (US$7.Zero million), and depreciation and amortization bills amounted to RMB10.7 million (US$1.6 million). Youdao’s means to proceed as a going concern depends on administration’s means to implement an efficient marketing strategy in future intervals in gentle of the altering regulatory setting, generate working money flows and proceed to have the ability to receive outdoors sources of financing as mandatory for Youdao’s future improvement. As of the date of this launch, Youdao has obtained varied monetary help from the NetEase Group, together with, amongst others, RMB878.Zero million short-term loans and US$70.Zero million long-term loans with maturity dated March 31, 2024 drawn down underneath the US$300.Zero million revolving mortgage facility. In help of Youdao’s future enterprise, NetEase Group has agreed to offer monetary help for Youdao’s persevering with operations.

As of June 30, 2022, the Firm’s contract liabilities, which primarily consisted of deferred revenues generated from Youdao’s studying companies, had been RMB1.1 billion (US$168.1 million), in contrast with RMB1.1 billion as of December 31, 2021.

Convention Name

Youdao’s administration workforce will host a teleconference name with simultaneous webcast at 6:00 a.m. Jap Time on Thursday, August 18, 2022 (Beijing/Hong Kong Time: 6:00 p.m., Thursday, August 18, 2022). Youdao’s administration might be on the decision to debate the monetary outcomes and reply questions.

Dial-in particulars for the earnings convention name are as follows:

United States (toll free):	+1-888-346-8982
Worldwide:	+1-412-902-4272
Mainland China (toll free):	400-120-1203
Hong Kong (toll free):	800-905-945
Hong Kong:	+852-3018-4992
Convention ID:	5366490

A reside and archived webcast of the convention name might be accessible on the Firm’s investor relations web site at http://ir.youdao.com.

A replay of the convention name might be accessible by telephone one hour after the conclusion of the reside name on the following numbers, till August 25, 2022:

United States:	+1-877-344-7529
Worldwide:	+1-412-317-0088
Replay Entry Code:	5366490

About Youdao, Inc. 

Youdao, Inc. (NYSE: DAO) is a number one technology-focused clever studying firm in China devoted to creating and utilizing applied sciences to offer studying content material, purposes and options to customers of all ages. Constructing on the recognition of its on-line data instruments comparable to Youdao Dictionary and Youdao Translation, Youdao now provides good units, STEAM programs, grownup and vocational programs, and training digitalization options. As well as, Youdao has developed quite a lot of interactive studying apps. Youdao was based in 2006 as a part of NetEase, Inc. (NASDAQ: NTES; HKEX: 9999), a number one web know-how firm in China.

For extra data, please go to: http://ir.youdao.com.

Non-GAAP Measures

Youdao considers and makes use of non-GAAP monetary measures, comparable to non-GAAP internet revenue/(loss) from persevering with operations attributable to the Firm’s extraordinary shareholders and non-GAAP primary and diluted revenue/(loss) from persevering with operations per ADS, as supplemental metrics in reviewing and assessing its working efficiency and formulating its marketing strategy. The presentation of non-GAAP monetary measures is just not supposed to be thought of in isolation or as an alternative to the monetary data ready and offered in accordance with accounting rules typically accepted in the US of America (“U.S. GAAP”).

Youdao defines non-GAAP internet revenue/(loss) from persevering with operations attributable to the Firm’s extraordinary shareholders as internet revenue/(loss) from persevering with operations attributable to the Firm’s extraordinary shareholders excluding share-based compensation bills and impairment of long-term funding. Non-GAAP internet revenue/(loss) from persevering with operations attributable to the Firm’s shareholders allows Youdao’s administration to evaluate its working outcomes with out contemplating the affect of these things, that are non-cash fees in nature. Youdao believes that these non-GAAP monetary measures present helpful data to traders in understanding and evaluating the Firm’s present working efficiency and prospects in the identical method as administration does, in the event that they so select.

Non-GAAP monetary measures usually are not outlined underneath U.S. GAAP and usually are not offered in accordance with U.S. GAAP. Non-GAAP monetary measures have limitations as analytical instruments, which probably don’t mirror all gadgets of expense that have an effect on our operations. As well as, the non-GAAP monetary measures Youdao makes use of could differ from the non-GAAP measures makes use of by different corporations, together with peer corporations, and due to this fact their comparability could also be restricted.

The presentation of those non-GAAP monetary measures is just not supposed to be thought of in isolation from or as an alternative to the monetary data ready and offered in accordance with GAAP. For extra data on these non-GAAP monetary measures, please see the desk captioned “Unaudited Reconciliation of GAAP and non-GAAP Outcomes” set forth on the finish of this launch.

The accompanying tables have extra particulars on the reconciliations between our GAAP monetary measures which might be most instantly corresponding to non-GAAP monetary measures. Youdao encourages you to evaluation its monetary data in its entirety and never depend on a single monetary measure. 

Trade Price Data

This announcement comprises translations of sure RMB quantities into U.S. {dollars} (“US$”) at specified charges solely for the comfort of the reader. Until in any other case acknowledged, all translations from RMB to US$ had been made on the fee of RMB6.6981 to US$1.00, the alternate fee on June 30, 2022 set forth within the H.10 statistical launch of the Federal Reserve Board. The Firm makes no illustration that the RMB or US$ quantities referred may very well be transformed into US$ or RMB, because the case could also be, at any explicit fee or in any respect.

Protected Harbor Assertion

This press launch comprises forward-looking statements. These statements are made underneath the “secure harbor” provisions of the U.S. Personal Securities Litigation Reform Act of 1995. Statements that aren’t historic info, together with statements concerning the Firm’s beliefs and expectations, are forward-looking statements. Ahead-looking statements contain inherent dangers and uncertainties, and numerous components may trigger precise outcomes to vary materially from these contained in any forward-looking assertion. In some circumstances, forward-looking statements will be recognized by phrases or phrases comparable to “could,” “will,” “count on,” “anticipate,” “goal,” “goal,” “estimate,” “intend,” “plan,” “consider,” “potential,” “proceed,” “is/are prone to” or different comparable expressions. The Firm might also make written or oral forward-looking statements in its stories filed with, or furnished to, the U.S. Securities and Trade Fee, in its annual stories to shareholders, in press releases and different written supplies and in oral statements made by its officers, administrators or workers to 3rd events. Statements that aren’t historic info, together with statements concerning the Firm’s beliefs and expectations, are forward-looking statements. Ahead-looking statements contain inherent dangers and uncertainties. Additional data concerning such dangers, uncertainties or components is included within the Firm’s filings with the SEC. All data offered on this press launch is as of the date of this press launch, and the Firm doesn’t undertake any responsibility to replace such data, besides as required underneath relevant regulation.

For investor and media inquiries, please contact:

In China:
Jeffrey Wang
Youdao, Inc.
Tel: +86-10-8255-8163 ext. 89980
E-mail: [email protected]

The Piacente Group, Inc.
Emilie Wu
Tel: +86-21-6039-8363
E-mail: [email protected]

In the US:
The Piacente Group, Inc. 
Brandi Piacente
Tel: +1-212-481-2050
E-mail: [email protected]

YOUDAO, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(RMB and USD in hundreds)
		As of December 31,		As of June 30,		As of June 30,
		2021		2022		2022
		RMB		RMB		USD (1)
Property
Present belongings:
Money and money equivalents		322,777		687,191		102,595
Time deposits		268		273		41
Restricted money		749,770		551,472		82,333
Quick-term investments		503,831		21,071		3,146
Accounts receivable, internet		248,339		335,911		50,150
Inventories, internet		255,411		212,351		31,703
Quantities due from NetEase Group		6,192		16,609		2,480
Prepayment and different present belongings		182,577		198,200		29,589
Property held on the market		497		–		–
Whole present belongings		2,269,662		2,023,078		302,037
Non-current belongings:
Property, gear and software program, internet		80,315		108,928		16,263
Working lease right-of-use belongings, internet		118,104		88,453		13,206
Lengthy-term investments		32,518		70,542		10,532
Goodwill		109,944		109,944		16,414
Different belongings, internet		22,436		37,199		5,554
Property held on the market		1,088		–		–
Whole non-current belongings		364,405		415,066		61,969
Whole belongings		2,634,067		2,438,144		364,006
Liabilities, Mezzanine Fairness and Shareholders’ Deficit
Present liabilities:
Accounts payables		161,006		151,812		22,665
Payroll payable		277,383		228,248		34,077
Quantities as a consequence of 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 different payables		515,567		697,050		104,068
Quick-term loans from NetEase Group		878,000		878,000		131,082
Whole present liabilities		3,033,959		3,177,143		474,336
Non-current liabilities:
Lengthy-term lease liabilities		73,070		48,536		7,246
Lengthy-term loans from NetEase Group		255,028		469,798		70,139
Different non-current liabilities		2,411		14,095		2,104
Whole non-current liabilities		330,509		532,429		79,489
Whole liabilities		3,364,468		3,709,572		553,825
Mezzanine fairness		78,592		73,475		10,970
Shareholders’ deficit:
Youdao’s shareholders’ deficit		(807,067)		(1,340,700)		(200,162)
Noncontrolling pursuits		(1,926)		(4,203)		(627)
Whole shareholders’ deficit		(808,993)		(1,344,903)		(200,789)
Whole liabilities, mezzanine fairness and shareholders’ deficit		2,634,067		2,438,144		364,006
Be aware 1: The conversion of Renminbi (RMB) into United States {dollars} (USD) is predicated on the midday shopping for fee of USD1.00=RMB6.6981 on the final buying and selling day of June (June 30, 2022) as set forth within the H.10 statistical launch of the U.S. Federal Reserve Board.

YOUDAO, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(RMB and USD in hundreds, besides share and per ADS information)
		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
Web revenues:
Studying companies		607,680		826,011		563,601		84,143		1,214,640		1,389,612
Sensible units		206,290		253,160		239,850		35,809		408,209		493,010
On-line advertising companies		165,979		121,370		152,774		22,809		305,073		274,144
Whole internet revenues		979,949		1,200,541		956,225		142,761		1,927,922		2,156,766
Price of revenues (2)		(479,738)		(558,719)		(546,498)		(81,590)		(931,276)		(1,105,217)
Gross revenue		500,211		641,822		409,727		61,171		996,646		1,051,549
Working bills:
Gross sales and advertising bills (2)		(555,050)		(506,385)		(595,997)		(88,980)		(1,103,794)		(1,102,382)
Analysis and improvement bills (2)		(145,803)		(202,980)		(208,411)		(31,115)		(273,501)		(411,391)
Common and administrative bills (2)		(54,234)		(57,561)		(60,532)		(9,038)		(88,573)		(118,093)
Whole working bills		(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)
Curiosity revenue		6,735		2,034		3,769		563		9,809		5,803
Curiosity expense		(7,764)		(8,585)		(10,102)		(1,508)		(15,381)		(18,687)
Others, internet		23,366		36,053		1,567		234		23,720		37,620
Loss earlier than tax		(232,539)		(95,602)		(459,979)		(68,673)		(451,074)		(555,581)
Revenue tax expense		(2,999)		(566)		(553)		(83)		(4,614)		(1,119)
Web loss from persevering with operations		(235,538)		(96,168)		(460,532)		(68,756)		(455,688)		(556,700)
Web loss from discontinued operations		(289,496)		(6,105)		–		–		(396,004)		(6,105)
Web loss		(525,034)		(102,273)		(460,532)		(68,756)		(851,692)		(562,805)
Web loss attributable to noncontrolling pursuits		681		748		6,646		992		1,548		7,394
Web loss attributable to extraordinary shareholders of the Firm		(524,353)		(101,525)		(453,886)		(67,764)		(850,144)		(555,411)
Together with:
Web loss from persevering with operations attributable to extraordinary shareholders of the Firm		(234,857)		(95,420)		(453,886)		(67,764)		(454,140)		(549,306)
Web loss from discontinued operations attributable to extraordinary shareholders of the Firm		(289,496)		(6,105)		–		–		(396,004)		(6,105)
Primary internet loss per ADS		(4.29)		(0.82)		(3.67)		(0.55)		(7.07)		(4.50)
-Persevering with operations		(1.92)		(0.77)		(3.67)		(0.55)		(3.77)		(4.45)
-Discontinued operations		(2.37)		(0.05)		–		–		(3.30)		(0.05)
Diluted internet loss per ADS		(4.29)		(0.82)		(3.67)		(0.55)		(7.07)		(4.50)
-Persevering with operations		(1.92)		(0.77)		(3.67)		(0.55)		(3.77)		(4.45)
-Discontinued operations		(2.37)		(0.05)		–		–		(3.30)		(0.05)
Shares utilized in computing primary internet loss per ADS		122,332,306		123,330,958		123,703,353		123,703,353		120,325,943		123,518,179
Shares utilized in computing diluted internet loss per ADS		122,332,306		123,330,958		123,703,353		123,703,353		120,325,943		123,518,179
Be aware 1: The conversion of Renminbi (RMB) into United States {dollars} (USD) is predicated on the midday shopping for fee of USD1.00=RMB6.6981 on the final buying and selling day of June (June 30, 2022) as set forth within the H.10 statistical launch of the U.S. Federal Reserve Board.
Be aware 2:
Share-based compensation in every class:
Price of revenues		1,815		2,180		1,775		265		3,257		3,955
Gross sales and advertising bills		3,053		3,090		3,451		515		5,043		6,541
Analysis and improvement bills		10,004		8,862		8,428		1,259		17,399		17,290
Common and administrative bills		4,962		5,384		4,448		664		8,610		9,832

YOUDAO, INC.
UNAUDITED ADDITIONAL INFORMATION
(RMB and USD in hundreds)
		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
Web revenues
Studying companies		607,680		826,011		563,601		84,143		1,214,640		1,389,612
Sensible units		206,290		253,160		239,850		35,809		408,209		493,010
On-line advertising companies		165,979		121,370		152,774		22,809		305,073		274,144
Whole internet revenues		979,949		1,200,541		956,225		142,761		1,927,922		2,156,766
Price of revenues
Studying companies		250,422		298,297		269,491		40,234		472,724		567,788
Sensible units		117,671		167,804		166,503		24,858		230,585		334,307
On-line advertising companies		111,645		92,618		110,504		16,498		227,967		203,122
Whole price of revenues		479,738		558,719		546,498		81,590		931,276		1,105,217
Gross margin
Studying companies		58.8 %		63.9 %		52.2 %		52.2 %		61.1 %		59.1 %
Sensible units		43.0 %		33.7 %		30.6 %		30.6 %		43.5 %		32.2 %
On-line advertising companies		32.7 %		23.7 %		27.7 %		27.7 %		25.3 %		25.9 %
Whole 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 hundreds, besides per ADS information)
		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
Web loss from persevering with operations attributable to extraordinary shareholders of the Firm		(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 funding		–		5,000		–		–		–		5,000
Non-GAAP internet loss from persevering with operations attributable to extraordinary shareholders of the Firm		(215,023)		(70,904)		(435,784)		(65,061)		(419,831)		(506,688)
Non-GAAP primary internet loss from persevering with operations per ADS		(1.76)		(0.57)		(3.52)		(0.53)		(3.49)		(4.10)
Non-GAAP diluted internet loss from persevering with operations per ADS		(1.76)		(0.57)		(3.52)		(0.53)		(3.49)		(4.10)

SOURCE Youdao, Inc.