According to the Zhitong Finance APP, on May 15, Youdao (DAO.US) announced its unaudited financial report for the first quarter of 2025. During the reporting period, the company deepened its &#34;AI-native&#34; strategy while continuously increasing investment in core product research and development and model upgrades, promoting the further implementation of large model technology in education and advertising scenarios. Among them, the advertising business maintained a stable performance, providing stable support for the company's overall profit structure.
The financial report shows that in the first quarter of 2025, Youdao achieved net revenue of 1.3 billion yuan (in RMB, the same below), with operating profit of 104 million yuan reaching a historical high for the first quarter, a year-on-year increase of 247.7%; operating cash net outflow narrowed by 34.7% year-on-year, significantly improving financial efficiency.
Youdao CEO Zhou Feng stated: &#34;After achieving full-year profitability for the first time in 2024, the company has established strategic advantages and can maintain this positive development trend. In 2025, we will accelerate the deployment of the 'ZiYue' large model in both education and advertising fields to provide users with a better experience.&#34;
AI Empowerment Effect Released, Business Profitability Continues to Strengthen
In the first quarter of 2025, Youdao continued to promote the in-depth application of AI technology in the learning service field, driving product intelligent upgrades based on the &#34;ZiYue&#34; large model. The net revenue of learning services reached 602 million yuan in the first quarter. In the first quarter, with the iterative upgrade of the AI college planning tool, Youdao's leading sales increased by over 25% year-on-year, boosting the recent student re-enrollment rate; the programming learning product Youdao XiaoTuring also performed well, benefiting from the strong demand for the China Computer Federation's programming ability level certification (GESP), with sales increasing by over 40% year-on-year.
In addition, Youdao's AI subscription service also achieved strong growth, with sales reaching nearly 70 million yuan in the first quarter, a year-on-year increase of over 40%. During the reporting period, Youdao accelerated the iteration of AI applications, such as Youdao XiaoP, which added multimodal visual capabilities and can achieve precise image recognition, while the answer accuracy rate in the K12 field improved to 92%; two new AI-native applications were launched, including &#34;Youdao Document FM,&#34; which supports one-click generation of podcasts in formats such as files, text, and links, and was recommended by the Apple App Store upon launch; and the AI paper detection system &#34;Youdao Academic Cha,&#34; which assists in academic paper writing, improving content standardization and writing efficiency.
In the first quarter, Youdao's online marketing service net revenue reached 505 million yuan, a year-on-year increase of 2.6%. This growth mainly came from the expansion of Youdao's advertising clients and AI-driven process optimization, with the number of performance advertising clients increasing by over 20% year-on-year. In terms of overseas advertising, Youdao Ads recently officially passed Google Partner certification, providing full-cycle solutions for overseas enterprises. In addition, the deep cooperation with NetEase Group not only promoted the growth of advertising revenue from game clients but also further expanded advertising placement scenarios.
Technological innovation has brought new growth opportunities for Youdao's advertising business. Relying on the &#34;ZiYue&#34; large model, Youdao launched MagicBox (Visual Magic Box), which helps advertisers autonomously generate high-quality materials such as images, videos, and dynamic templates, improving content production efficiency and further strengthening the differentiated competitiveness of the advertising business
The net income from the smart hardware business reached 190 million yuan, a year-on-year increase of 5.1%. The new AI Q&amp;A pen SpaceOne integrates the capabilities of &#34;ZiYue&#34; and DeepSeek-R1 dual models, supporting various interactive forms such as image scanning recognition, AI photography, and voice dictation. After its launch, it received a strong market response, with the first batch of inventory sold out within 10 days. In addition, in the first quarter, the Youdao Dictionary Pen new product S7 Pro was launched, setting a new benchmark in the mid-price segment of the industry with features such as a super-large eye-protecting screen and the first AI camera.
Adhering to &#34;Self-Research + Embracing Open Source&#34; to Accelerate Application Implementation Efficiency
By 2025, Youdao will continue to explore the application value of large models in vertical scenarios. Recently, Youdao was ranked second globally in the latest list of &#34;Top Global EdTech Companies 2025&#34; selected by Times magazine, thanks to its rapid progress and performance in large model implementation.
During the reporting period, Youdao focused on the research and iteration of self-developed models, launching the country's first open-source inference model &#34;ZiYue-o1&#34; in the first quarter. This model performed excellently in the K12 field, offering deployment convenience and cost advantages. The ZiYue translation large model 2.0 improved translation performance and user usage rates through large model integration technology and Online DPO (online direct preference optimization) training. In April, its daily processing volume exceeded 1.5 billion tokens (the smallest unit of text processed by the language model), an increase of over 100% compared to the average daily level in the first quarter.
At the same time, the company is accelerating the implementation of self-hosted deployment of the DeepSeek R1 full-version inference service within its products, further optimizing stability and cost control. It plans to achieve deeper integration of &#34;ZiYue&#34; and DeepSeek to enhance application implementation efficiency and drive business growth.
&#34;The competition in large models has entered the second half of application deepening. With its leading advantage in vertical fields, Youdao is accelerating the implementation of technology in the education and advertising sectors. We expect to launch more innovative AI products within the year to continue driving industry transformation,&#34; said Zhou Feng

NetEase Youdao released its Q1 2025 financial report on May 15, with net revenue reaching 1.3 billion yuan and operating profit of 104 million yuan, a year-on-year increase of 247.7%. The company is deepening its "AI-native" strategy, promoting the application of large model technology in the education and advertising sectors, with robust performance in its advertising business. CEO Zhou Feng stated that the company has strategic advantages and will accelerate the deployment of the "ZiYue" large model to enhance user experience. The AI applications in the learning services sector continue to advance, with significant sales growth

Zhitong

Youdao released its Q1 2025 financial report: "AI-native" strategy drives operating profit growth of 247.7% year-on-year