DAO.US (DAO.US) released 2025Q1 financial report: Driven by the “native AI” strategy, operating profit increased 247.7% year-on-year

The Zhitong Finance App learned that on May 15, NetEase Youdao (DAO.US) released an unaudited financial report for the first quarter of 2025. During the reporting period, while deepening the “AI native” strategy, the company continued to increase core product development and model upgrades to promote the further implementation of big model technology in education and advertising scenarios. Among them, the advertising business maintained steady performance, providing stable support for the company's overall profit structure.

Financial reports show that in the first quarter of 2025, Youdao achieved net revenue of 1.3 billion yuan (unit: RMB, same below), and operating profit of 104 million yuan hit a record high in the first quarter, up 247.7% year on year; net operating cash outflow narrowed 34.7% year on year, and financial efficiency improved markedly.

Zhou Feng, CEO of Youdao, said, “Following the first full-year profit in 2024, the company has a strategic advantage and can maintain this positive development trend. In 2025, we will accelerate the deployment of the 'Ziyue' model in both education and advertising to bring users a better experience.”

The enabling effect of AI has been unleashed, and business profitability continues to increase

In the first quarter of 2025, Youdao continued to promote the deepening application of AI technology in the field of learning services, and promoted intelligent product upgrading based on the “Ziyue” model. The net revenue of learning services in the first quarter reached 602 million yuan. In the first quarter, thanks to the iterative upgrade of AI college planners, YoudaoShi's sales increased by more than 25% year-on-year, driving a recent increase in student renewal rates; the programming learning product YouDao Turing also performed well, benefiting from strong demand for the Chinese Computer Society Programming Proficiency Level Certification (GESP), and its sales increased by more than 40% year over year.

In addition, Youdao's AI subscription service also achieved strong growth, achieving sales of nearly 70 million yuan in the first quarter, an increase of more than 40% over the previous year. During the reporting period, Youdao accelerated iterative AI applications, such as YouDao Xiaopp, added multi-modal visual capabilities, and increased the accuracy of questions to 92% in the K12 field; and launched two new AI native applications, including “Youdao Document FM”, which supports one-click generation of podcasts in the form of files, text, and links, which were recommended by the Apple App Store; and the AI paper inspection system “YouDao”, which can assist in academic paper writing and improve content standardization and writing efficiency.

In the first quarter, Youdao's net revenue from online marketing services reached 505 million yuan, an increase of 2.6% over the previous year. This increase is mainly due to customer expansion and AI-driven process optimization for YouDao advertising, and the number of effective advertisers increased by more than 20% over the same period last year. In terms of overseas advertising, Youdao Ads recently officially passed Google partner certification to provide full-cycle solutions for overseas companies. Furthermore, the deep cooperation with NetEase Group has not only boosted the growth of advertising revenue for game customers, but also further expanded advertising scenarios.

Technological innovation has brought new growth opportunities to the Youdao advertising business. Relying on the “Ziyue” model, Youdao launched MagicBox (visual magic box), which can help advertisers independently generate high-quality materials such as images, videos, and dynamic templates, improve content production efficiency, and further strengthen the differentiated competitiveness of the advertising business.

Net revenue from the smart hardware business reached 190 million yuan, an increase of 5.1% over the previous year. The new AI question-answering pen, SpaceOne, combines the capabilities of the DeepSeek-R1 dual model and supports various forms of interaction such as image scanning and recognition, AI photography, and voice dictation. After launch, it received strong reactions from the market, and the first batch of inventory was sold out within 10 days. Furthermore, in the first quarter, the new Youdao Dictionary Pen, the S7 Pro, was launched, setting a new benchmark in the mid-price industry with features such as an oversized eye protection screen and the first AI camera.

Adhere to “self-development+embrace open source” to accelerate application implementation efficiency

In 2025, you will continue to explore the application value of large models in vertical scenarios. Recently, in the “2025 World's Top Education Technology Companies” list recently selected by “Times” (Times), Youdao ranked second in the world due to its rapid progress and performance in implementing big models.

During the reporting period, Youdao focused on the development and iteration of self-developed models, and launched the first domestic open source inference model “Ziyue-o1” in the first quarter. The model performed well in the K12 field, and had convenient deployment and cost advantages; Ziyue Translation Big Model 2.0 improved translation performance and increased user usage rate through large model fusion technology and online DPO (online direct preference optimization) training. In April, its average daily processing volume exceeded 1.5 billion tokens (that is, the smallest unit for processing text in language models), with an average daily increase of more than 100% over the first quarter.

At the same time, the company is speeding up the implementation of self-hosting and deploying DeepSeek R1 full-blood inference service within the product, further optimizing stability and cost control. It plans to achieve deeper integration between “Ziyue” and DeepSeek, improve application implementation efficiency, and promote business growth.

“The big model competition has entered the second half of application development. With its leading edge in the vertical field, Youdao is accelerating the implementation of technology in the two major scenarios of education and advertising; we expect to launch more innovative AI products during the year to continue to drive industry transformation.” Zhou Feng said.