| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 25 | 73.6x | 17.8x | Bottom tier | |
Growth | 71 | 6.7% | 7.1% | Top tier | |
Quality | 66 | — | 4.5% | Around median | |
Safety | 30 | 3.9x | 2.6x | Bottom tier | |
Capital Return | 89 | — | 2.12% | Top tier | |
Momentum | 86 | 108.3% | 2.9% | Top tier | |
Sentiment | 40 | 3 | 3 | Bottom tier |
Estimates — analyst targets and a simplified DCF, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
Youdao, Inc. operates in three main businesses: learning services, online marketing services, and smart devices, integrating its Confucius language model and artificial intelligence technologies into education, translation, and advertising. In fiscal Q2 2026, learning services generated revenue of Renminbi 795.6 million, representing more than half of reported segment revenue, while online marketing recorded Renminbi 584.4 million and smart devices recorded Renminbi 86.8 million. Revenue drivers include products and services such as Youdao Lingshi, Hi Echo, and AI-powered simultaneous interpretation, alongside advertising tools such as AI Ad Placement Optimizer and Youdao Dictionary Pen devices.
Net revenue reached Renminbi 1.5 billion in fiscal Q2 2026, up 3.5% year over year, while gross profit rose 17.6% to Renminbi 716.9 million. Operating profit reached a record Renminbi 111.5 million, nearly four times its level a year earlier, and the operating margin expanded to 7.6% from 2%. Net income attributable to ordinary shareholders turned positive at Renminbi 73.8 million, compared with a loss of Renminbi 17.8 million in the comparable quarter. Operating cash flow reached Renminbi 334.2 million, up 80.7%, marking the company's eighth consecutive quarter of operating profitability.
On an annual basis, revenue increased from $5.6 billion in fiscal 2024 to $5.9 billion in fiscal 2025, and net income rose from $82.2 million to $107.3 million, while earnings per share increased from $0.7 to $0.9. In contrast, gross profit declined from $2.7 billion to $2.6 billion over the same period, making the improvement in quarterly profitability in fiscal 2026 and the sustainability of margin expansion important factors in assessing the quality of the financial turnaround.
Automated analysis for informational purposes only — not investment advice.
The analyst consensus is "Buy," but the average price target of $6.5 is equal to both the highest and lowest targets, making the available range of estimates extremely narrow. This target is below the 52-week range of $8.3–$18.94, so the target alone does not provide clear valuation support despite the return to profitability and the growth of fiscal 2025 net income to $107.3 million.
Figures in the text are as of 2026-09-01; the live price is shown at the top of the page.
Youdao's net revenue reached approximately Renminbi 1.5 billion, up 3.5% year over year, while gross profit increased 17.6% to Renminbi 716.9 million. The strongest driver was learning services, which grew 20.9% to Renminbi 795.6 million due to momentum in tutoring services and Youdao Lingshi. In contrast, online marketing declined 7.7% to Renminbi 584.4 million, and smart devices fell 31.5% to Renminbi 86.8 million. This mix resulted in record operating profit of Renminbi 111.5 million and an operating margin of 7.6%.
Youdao's AI-powered subscriptions generated sales of approximately Renminbi 100 million in fiscal Q2 2026, an increase of more than 20% year over year. Usage volume for AI English Essay Grading doubled quarter over quarter, and this feature, together with test recommendations and university consulting, helped raise Youdao Lingshi's retention rate to more than 75%. Simultaneous interpretation engagement also rose by approximately 100%, and gross billings for Hi Echo grew by more than 100% year over year. In advertising, the AI application and short-drama businesses recorded revenue growth of more than 50% for the second consecutive quarter.
Youdao launched the Confucius 4 model in fiscal Q2 2026 with improvements in multimodal, voice, and translation capabilities. The model enhanced reasoning for visual mathematics and physics problems, particularly those involving complex diagrams, while the translation acceleration mechanism increased inference speed by approximately 80%. The company also introduced cross-lingual voice-cloning technology that supports 14 languages while preserving the speaker's identity and emotional expression. According to the August 20, 2026 call, management plans to launch several additional model and AI agent products in September 2026.
The company recorded net income attributable to ordinary shareholders of Renminbi 73.8 million in fiscal Q2 2026, compared with a loss of Renminbi 17.8 million a year earlier. Non-GAAP profit reached Renminbi 90.6 million, compared with Renminbi 12.5 million in the comparable period. Operating cash flow rose 80.7% to Renminbi 334.2 million, and total cash and cash equivalents, restricted cash, and short-term investments reached Renminbi 849.3 million on June 30, 2026. For the first half of fiscal 2026, operating cash flow reached Renminbi 241.1 million, compared with an outflow of Renminbi 70.5 million a year earlier.
Smart devices revenue declined 31.5% in fiscal Q2 2026 due to weaker demand for learning devices, and the segment's margin fell to 32.8% from 41.5%. Management also attributed the margin pressure to higher memory costs and weaker economies of scale, with the devices margin reaching approximately 37% in the first half of fiscal 2026. Online marketing revenue also declined 7.7% after the company prioritized higher-return and more profitable contracts. In addition, operating expenses rose to Renminbi 605.3 million, making spending discipline and continued margin improvement critical factors.
The analyst consensus rates the stock a "Buy," with an average price target of $6.5. Both the highest and lowest targets are $6.5, so there is no spread among the available estimates to reflect differing scenarios. The target is below the lower end of the 52-week range of $8.3 and substantially below the upper end of $18.94. In contrast, operating profitability for eight consecutive quarters and the growth of fiscal 2025 net income to $107.3 million support the improvement in the financial foundation, but contraction in marketing and devices remains a fundamental part of the valuation assessment.
