Youdao Posts More-Than-Expected Revenue In Q3FY21, Stock Activity Surges 1773%

Youdao Posts More-Than-Expected Revenue In Q3FY21, Stock Activity Surges 1773%

Youdao, Inc. , a leading intelligent learning company based in China, released its financial results for the third quarter ended September 30, 2021, on November 16, reporting that net revenues for the fiscal third quarter were US$215.3 million, beating analysts expectations by $10.32 million.

Net revenues from the learning services increased 65.9% year-over-year to US$154.5 million. This growth came in due to an increase in revenues from tutoring services, which were further driven by the increase in paid student enrollments during the period in the second quarter of 2021.

Net revenues from learning products stood at US$39.5 million in the reporting quarter, up 56.0% on a year-over-year basis.  

Following the declaration, investors responded positively, hence Youdao stock rose 17.24%. The social engagement for the stock amongst the users of Twitter and Reddit on the dashboard of Quantale rose about 1773% combined with an increase of about 72% in the trading volume. The stock ended its Tuesday’s intraday at $17.68 per share, up $2.6 apiece from its previous close of $15.08 per piece. Youdao stock today opened its intraday at $17.61. 

Online marketing services attracted a net revenue of US$21.3 million for the third quarter, representing an increase of 3.4% on a year-over-year basis. 

Youdao stock activity

Gross profit for the fiscal third quarter stood at US$121.9 million, up 90.9% increase on a year-over-year basis. The gross margin also increased to 56.6% in the reporting quarter from 45.9% for the same period last year.

Total operating expenses that Youdao bore in the three months settled at US$142.0 million, down 29.9% on a year-over-year basis. 

Sales and marketing expenses fell 43.3% to US$100.9 million during the quarter as the company saw a drop in marketing expenditures in K-12 tutoring services due to the changing regulatory environment in the domestic market. 

Gross billings were down by 33.9% year-over-year to US$98.0 million, and gross billings of Youdao Premium Courses fell by 34.6% year-over-year to US$89.0 million. 

“In the third quarter of this year, our four core pillars, namely learning products, vocational education courses, STEAM courses and education digitization solutions, had strong momentum. We have been making great endeavours to improve the learning efficiency of our users. Besides, we are also taking steps to further fulfil our commitment to society,” said Dr Feng Zhou, Chief Executive Officer and Director of Youdao. 

In a separate announcement Youdao, Inc., on November 17, announced that the Company’s stock will become a part of MSCI China All Shares Small Cap Index, w.e.f market close on November 30, 2021. 

“The inclusion of Youdao in the MSCI China All Shares Small Cap Index reflects the recognition of the Company’s business performance and growth potential by global investors, which will help enhance the Company’s visibility and stock liquidity,” the company said in a statement.