Gross margins have trended downward from a peak of 55.9% in 2023Q3 to 45.1% in 2025Q4, reflecting the dilutive impact of lower-margin hardware sales on the company's overall profitability profile.
| Sales/Revenue | 5.91B | 5.63B | 5.39B | 5.01B | 4.02B | 2.53B | 1.21B | 731.6M | 455.75M |
| Revenue Growth % | 5.03% | 4.39% | 7.5% | 24.84% | 58.93% | 109.27% | 65.04% | 60.53% | - |
| Cost of Goods Sold | 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 | 2.62B | 2.75B | 2.77B | 2.59B | 1.99B | 1.11B | 335.05M | 216.47M | 161.94M |
| Gross Margin % | 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 | 2.39B | 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 | 1.88B | 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 | 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 | -6.51M | -12.04M | -32.79M | -87.47M | -36.85M | 0 | 0 | 0 | 0 |
| Operating Income | 227.81M | 160.86M | -433.54M | -687.21M | -849.62M | -851.46M | -459.84M | -219.14M | -130.04M |
| Operating Margin % | 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 | 251.22M | 189.81M | -403.9M | -645M | -819.52M | -836M | -449.31M | -212.74M | -126.71M |
| EBITDA Margin % | 4.25% | 3.37% | -7.49% | -12.87% | -20.41% | -33.09% | -37.21% | -29.08% | -27.8% |
| EBITDA Growth % | 32.36% | 146.99% | 37.38% | 21.3% | 1.97% | -86.06% | -111.2% | -67.89% | - |
| D&A (Non-Cash Add-back) | 23.41M | 28.95M | 29.64M | 42.21M | 30.1M | 15.46M | 10.53M | 6.4M | 3.33M |
| EBIT | 176.6M | 154.32M | -469.56M | -680.33M | -887.79M | -764.88M | -427.71M | -166.15M | -130.04M |
| Net Interest Income | -58.89M | -70.15M | -61.12M | -33.27M | -12.7M | -5.38M | -18.12M | -28.93M | -28.56M |
| Interest Income | 2.36M | 3.97M | 8.35M | 13.13M | 18.54M | 24.13M | 12.03M | 9.07M | 222.26K |
| Interest Expense | 61.26M | 74.13M | 69.46M | 46.41M | 31.23M | 29.51M | 30.15M | 38M | 28.78M |
| Other Income/Expense | -114.18M | -79.62M | -105.49M | -38.72M | -69.82M | 55.36M | 1.9M | 21.14M | -28.73M |
| Pretax Income | 113.63M | 81.23M | -539.03M | -725.93M | -919.44M | -796.1M | -457.94M | -198M | -158.77M |
| Pretax Margin % | 1.92% | 1.44% | -10% | -14.48% | -22.9% | -31.51% | -37.93% | -27.06% | -34.84% |
| Income Tax | 16.59M | 6.01M | 11.09M | 13.84M | 6.65M | 2.93M | 2.43M | 11.29M | 5.16M |
| Effective Tax Rate % | 14.6% | 7.4% | -2.06% | -1.91% | -0.72% | -0.37% | -0.53% | -5.7% | -3.25% |
| Net Income | 107.35M | 82.21M | -549.93M | -727.03M | -995.65M | -1.75B | -601.5M | -208.91M | -133.58M |
| Net Margin % | 1.82% | 1.46% | -10.2% | -14.5% | -24.79% | -69.37% | -49.82% | -28.56% | -29.31% |
| Net Income Growth % | 30.57% | 114.95% | 24.36% | 26.98% | 43.2% | -191.4% | -187.92% | -56.4% | - |
| Net Income (Continuing) | 97.04M | 75.23M | -550.12M | -739.78M | -926.09M | -799.02M | -460.38M | -209.29M | -163.93M |
| Discontinued Operations | 0 | 0 | 0 | -6.11M | -100.27M | -954.33M | -141.08M | 0 | 0 |
| Minority Interest | 39.96M | 50.65M | 57.63M | 57.81M | 76.67M | 997K | 936K | 888K | -243.08M |
| EPS (Diluted) | 0.90 | 0.70 | -4.53 | -6.55 | -7.36 | -15.54 | -6.30 | -2.12 | -1.35 |
| EPS Growth % | 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 | 119.85M | 118.17M | 121.38M | 112.86M | 121.65M | 112.86M | 95.45M | 98.81M | 98.81M |
| Basic Shares Outstanding | 118.08M | 117.45M | 121.38M | 112.86M | 121.65M | 112.86M | 95.45M | 98.81M | 98.81M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - |
Regulatory and consumption sensitivity
According to reported quarterly data, Youdao's revenue growth has fluctuated significantly, ranging from a 9.5% contraction in 2024Q4 to a 16.8% expansion in 2025Q4, suggesting that the company's transition toward hardware and vocational services has yet to establish a stable, predictable top-line trajectory.
The volatility in year-over-year growth figures indicates that the company remains highly susceptible to seasonal academic cycles and shifting consumer demand for smart devices. Investors should monitor whether the recent 16.8% growth in 2025Q4 represents a sustainable pivot or merely a temporary recovery driven by promotional activity.
As reported in financial statements, Youdao's gross margin has trended downward from a peak of 55.9% in 2023Q3 to 45.1% in 2025Q4, reflecting the increasing weight of lower-margin hardware sales within the company's overall revenue mix compared to its legacy digital service offerings.
This margin erosion suggests that the company's pivot toward smart devices is inherently less profitable than its previous pure-play digital tutoring model. The inability to maintain gross margins above 50% implies that competitive pricing pressures in the hardware segment may be limiting the company's ability to capture premium value.
Based on Youdao's reported figures, operating margins have swung from a negative 5.5% in 2024Q2 to a positive 8.0% in 2025Q1, highlighting a lack of consistent operating leverage as SG&A expenses frequently fluctuate in response to marketing intensity and R&D investment requirements.
The inconsistent relationship between gross profit and operating income suggests that management has struggled to achieve meaningful economies of scale. The high variability in operating expenses warrants further investigation into whether the company is prioritizing market share acquisition over the achievement of sustainable, long-term operational efficiency.
Analysis of recent SEC filings reveals that Youdao's net income is frequently impacted by non-operating items and significant quarterly fluctuations, with net margins oscillating between a negative 7.5% and a positive 6.2% over the last ten quarters, complicating the assessment of core profitability.
The frequent swings between profitability and loss suggest that the company's bottom line is highly sensitive to accounting adjustments and the timing of large-scale marketing campaigns. Investors should be cautious of relying on quarterly EPS figures, as they appear to be heavily influenced by non-recurring factors rather than stable operational performance.
Data from recent income statements suggests that Youdao's reliance on high SG&A spending to drive revenue growth may be unsustainable, as evidenced by the sharp 42.9% decline in EPS during 2025Q4 despite a 16.8% increase in top-line revenue compared to the prior year.
This divergence between revenue growth and bottom-line performance may indicate that the cost of acquiring new users is rising faster than the lifetime value of those customers. Skeptics might argue that the current business model is trapped in a cycle of high-cost growth that fails to generate meaningful shareholder value.
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.