The following is a summary of the Youdao, Inc. (DAO) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Youdao reported Q3 2024 net revenues of RMB1.57 billion, a 2.2% increase year-over-year.

• Income from operations reached RMB107.3 million compared to a loss of RMB57.7 million in the same period last year, marking the first profitable third quarter.

• Net income attributable to ordinary shareholders was RMB86.3 million compared with a net loss of RMB102.9 million for the same period last year.

Business Progress:

• Achieved first profitable Q3 and on track to achieve first full-year operational profitability with AI integrated smart devices and AI-driven subscription services.

• Launched new AI translation upgrades in Youdao Dictionary and products like Hi Echo and Mr. P AI Tutor received positive market reception.

Opportunities:

• Expanded into new high ROI customer segments and sectors like gaming, AI tools, automotive, and international markets.

• Introduced advanced AI features into learning and dictionary tools, expecting continued strong demand for AI-driven services and online learning.

• Overseas advertising showed potential with growth, leveraging TikTok and other partnerships.

Risks:

• Experience potential short-term challenges like high AD revenue bases to maintain, growing adversity due to unpredictable international macro factors affecting overseas advertising performance.

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