Revenue growth has decelerated to 3.2% YoY in 2026Q2, while operating margin recovered to 7.6% but remains below the 8.0% peak achieved in 2025Q1 on lower revenue, indicating limited operating leverage.
Youdao, Inc. (DAO) annual income statement — 9-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 |
|---|
| Sales/Revenue | 6.07B | 5.91B | 5.63B | 5.39B | 5.01B | 4.02B | 2.53B | 1.21B | 731.6M | 455.75M |
| Revenue Growth % | 9.78% | 5.03% | 4.39% | 7.5% | 24.84% | 58.93% | 109.27% | 65.04% | 60.53% | - |
| Cost of Goods Sold | 3.36B | 3.29B | 2.88B | 2.62B | 2.43B | 2.03B | 1.42B | 872.37M | 515.13M | 293.81M |
| COGS % of Revenue | - | 55.71% | 51.15% | 48.65% | 48.41% | 50.47% | 56.17% | 72.25% | 70.41% | 64.47% |
| Gross Profit | 2.72B | 2.62B | 2.75B | 2.77B | 2.59B | 1.99B | 1.11B | 335.05M | 216.47M | 161.94M |
| Gross Margin % | 44.74% | 44.29% | 48.85% | 51.35% | 51.59% | 49.53% | 43.83% | 27.75% | 29.59% | 35.53% |
| Gross Profit Growth % | - | -4.79% | -0.69% | 7% | 30.05% | 79.59% | 230.53% | 54.78% | 33.67% | - |
| Operating Expenses | 2.48B | 2.39B | 2.59B | 3.2B | 3.27B | 2.84B | 1.96B | 794.88M | 435.6M | 291.98M |
| OpEx % of Revenue | - | 40.43% | 45.99% | 59.4% | 65.3% | 70.68% | 77.52% | 65.83% | 59.54% | 64.07% |
| Selling, General & Admin | 1.95B | 1.88B | 2.06B | 2.49B | 2.56B | 2.27B | 1.59B | 524.99M | 251.58M | 158.89M |
| SG&A % of Revenue | - | 31.84% | 36.61% | 46.21% | 51.01% | 56.48% | 62.8% | 43.48% | 34.39% | 34.86% |
| Research & Development | 540.4M | 514.23M | 540M | 743.36M | 803.79M | 607.37M | 372.18M | 269.89M | 184.02M | 133.09M |
| R&D % of Revenue | - | 8.7% | 9.6% | 13.79% | 16.03% | 15.12% | 14.73% | 22.35% | 25.15% | 29.2% |
| Other Operating Expenses | -1000K | -6.51M | -12.04M | -32.79M | -87.47M | -36.85M | 0 | 0 | 0 | 0 |
| Operating Income | 235.32M | 227.81M | 160.86M | -433.54M | -687.21M | -849.62M | -851.46M | -459.84M | -219.14M | -130.04M |
| Operating Margin % | 3.87% | 3.86% | 2.86% | -8.04% | -13.71% | -21.16% | -33.7% | -38.08% | -29.95% | -28.53% |
| Operating Income Growth % | - | 41.63% | 137.1% | 36.91% | 19.12% | 0.22% | -85.16% | -109.84% | -68.51% | - |
| EBITDA | 174.08M | 251.22M | 189.81M | -403.9M | -645M | -819.52M | -836M | -449.31M | -212.74M | -126.71M |
| EBITDA Margin % | 2.87% | 4.25% | 3.37% | -7.49% | -12.87% | -20.41% | -33.09% | -37.21% | -29.08% | -27.8% |
| EBITDA Growth % | -22.33% | 32.36% | 146.99% | 37.38% | 21.3% | 1.97% | -86.06% | -111.2% | -67.89% | - |
| D&A (Non-Cash Add-back) | 0 | 23.41M | 28.95M | 29.64M | 42.21M | 30.1M | 15.46M | 10.53M | 6.4M | 3.33M |
| EBIT | 174.08M | 176.6M | 154.32M | -469.56M | -680.33M | -887.79M | -764.88M | -427.71M | -166.15M | -130.04M |
| Net Interest Income | -55.67M | -58.89M | -70.15M | -61.12M | -33.27M | -12.7M | -5.38M | -18.12M | -28.93M | -28.56M |
| Interest Income | 2.8M | 2.36M | 3.97M | 8.35M | 13.13M | 18.54M | 24.13M | 12.03M | 9.07M | 222.26K |
| Interest Expense | 58.46M | 61.26M | 74.13M | 69.46M | 46.41M | 31.23M | 29.51M | 30.15M | 38M | 28.78M |
| Other Income/Expense | -120.18M | -114.18M | -79.62M | -105.49M | -38.72M | -69.82M | 55.36M | 1.9M | 21.14M | -28.73M |
| Pretax Income | 115.14M | 113.63M | 81.23M | -539.03M | -725.93M | -919.44M | -796.1M | -457.94M | -198M | -158.77M |
| Pretax Margin % | 1.9% | 1.92% | 1.44% | -10% | -14.48% | -22.9% | -31.51% | -37.93% | -27.06% | -34.84% |
| Income Tax | 18.3M | 16.59M | 6.01M | 11.09M | 13.84M | 6.65M | 2.93M | 2.43M | 11.29M | 5.16M |
| Effective Tax Rate % | 15.89% | 14.6% | 7.4% | -2.06% | -1.91% | -0.72% | -0.37% | -0.53% | -5.7% | -3.25% |
| Net Income | 104.18M | 107.35M | 82.21M | -549.93M | -727.03M | -995.65M | -1.75B | -601.5M | -208.91M | -133.58M |
| Net Margin % | 1.72% | 1.82% | 1.46% | -10.2% | -14.5% | -24.79% | -69.37% | -49.82% | -28.56% | -29.31% |
| Net Income Growth % | -28.9% | 30.57% | 114.95% | 24.36% | 26.98% | 43.2% | -191.4% | -187.92% | -56.4% | - |
| Net Income (Continuing) | 96.85M | 97.04M | 75.23M | -550.12M | -739.78M | -926.09M | -799.02M | -460.38M | -209.29M | -163.93M |
| Discontinued Operations | 0 | 0 | 0 | 0 | -6.11M | -100.27M | -954.33M | -141.08M | 0 | 0 |
| Minority Interest | 37.9M | 39.96M | 50.65M | 57.63M | 57.81M | 76.67M | 997K | 936K | 888K | -243.08M |
| EPS (Diluted) | 0.86 | 0.90 | 0.70 | -4.53 | -6.55 | -7.36 | -15.54 | -6.30 | -2.12 | -1.35 |
| EPS Growth % | -29.43% | 28.57% | 115.45% | 30.84% | 11.01% | 52.64% | -146.67% | -197.17% | -57.04% | - |
| EPS (Basic) | - | 0.91 | 0.70 | -4.53 | -6.55 | -7.36 | -15.54 | -6.30 | -2.12 | -1.35 |
| Diluted Shares Outstanding | 120.63M | 119.85M | 118.17M | 121.38M | 112.86M | 121.65M | 112.86M | 95.45M | 98.81M | 98.81M |
| Basic Shares Outstanding | 118.91M | 118.08M | 117.45M | 121.38M | 112.86M | 121.65M | 112.86M | 95.45M | 98.81M | 98.81M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - | - |
Quick answers to the most common questions about buying DAO stock.
For fiscal year 2025, Youdao, Inc. (DAO) reported total revenue of $5.91B. This represents a 1196.6% increase compared to $455.7M in 2017.
Youdao, Inc. (DAO) is profitable, generating $107.3M in net income for the fiscal year ending 2025 with a net profit margin of 1.8%.
Youdao, Inc. (DAO) reported an operating income of $227.8M, resulting in an operating profit margin of 3.9%. This margin reflects the operational efficiency of the business before interest and taxes.
Youdao, Inc. (DAO) generated $2.62B in gross profit for the year, representing a gross profit margin of 44.3%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Margin compression from cost pressures
Growth Momentum Fading Rapidly
Revenue growth has decelerated sharply to 3.2% YoY in 2026Q2, a stark contrast to the 19.7% growth seen in 2024Q1, suggesting the company's expansion is losing significant momentum.
The trend shows a clear deceleration from double-digit growth in early 2024 to low single digits by mid-2026, indicating potential market saturation or increased competition in its core segments. This slowdown warrants close monitoring of whether it represents a cyclical dip or a structural shift in the company's growth trajectory.
Gross Margin Recovery Masks Structural Weakness
Gross margin improved to 48.9% in 2026Q2 from a low of 42.2% in 2025Q3, yet remains below the 50.2% peak in 2024Q3, suggesting pricing power is not fully restored despite the recovery.
The margin recovery appears driven by a more favorable product mix or cost control rather than a durable structural improvement, as it still trails the 2024 high. This indicates the company's blended margin profile remains vulnerable to shifts between its lower-margin hardware and higher-margin digital services.
Operating Leverage Remains Elusive
Operating income scaled to $111.5M on $1.5B revenue in 2026Q2, but the operating margin of 7.6% is still below the 8.0% achieved in 2025Q1 on lower revenue, indicating limited operating leverage.
The inability to translate revenue growth into proportionally higher operating income suggests persistent overhead or cost pressures, likely from SG&A which consumed 30.8% of revenue in the latest quarter. This implies that scaling the business does not automatically improve profitability, pointing to a need for more disciplined expense management.
SG&A Dominates Cost Structure
SG&A expenses of $462.0M in 2026Q2 represent 30.8% of revenue, consistently dwarfing R&D spend and indicating that sales and administrative overhead is the primary driver of margin compression.
The persistent high SG&A ratio suggests that the company's customer acquisition and operational support costs are structurally high, potentially due to its reliance on marketing within the NetEase ecosystem. This cost structure leaves little room for error and makes the path to sustainable profitability heavily dependent on controlling these overheads.
2024Q2 Loss Marks a Critical Pivot Point
The significant operating loss of -$72.6M in 2024Q2 appears to be a key inflection point, after which the company implemented cost discipline leading to a return to profitability in subsequent quarters.
This loss likely forced a strategic reassessment, as evidenced by the subsequent reduction in SG&A and R&D expenses relative to revenue. The lasting impact is a more focused cost structure, though the recent growth deceleration suggests this pivot may have come at the expense of top-line expansion.
Profitability Gains May Be Unsustainable
The recent improvement in operating margin to 7.6% could be challenged by a re-acceleration in SG&A spending or a downturn in the higher-margin Learning Services segment, which would quickly erode profitability.
Short-sellers would focus on the fact that the company's net margin remains a thin 5.0% and that its operating profitability is highly sensitive to the mix of revenue between segments. Any strategic push to regain growth through increased marketing spend could immediately reverse the recent margin gains, highlighting the fragility of the current earnings profile.