Youdao Q2 2026: Operating Profit Nearly Triples, Eighth Straight Profitable Quarter

summarizeSummary

Youdao reported Q2 2026 revenue of RMB1.5 billion (US$216.2 million), up 3.5% YoY, with operating income nearly tripling to RMB111.5 million. The company also announced a director change and extended its share repurchase program.

check_boxKey Events · Earnings and Guidance · DAO

• Operating Profit Nearly Triples

  Income from operations reached RMB111.5 million (US$16.4 million) in Q2 2026, up nearly 2.9x from RMB28.8 million a year earlier, marking the eighth consecutive quarter of operating profitability.

• Learning Services Drives Growth

  Learning services revenue grew 20.9% YoY to RMB795.6 million (US$117.3 million), while smart devices fell 31.5% and online marketing services declined 7.7%.

• Gross Margin Expands to 48.9%

  Overall gross margin improved to 48.9% from 43.0% a year ago, driven by learning services margin rising to 65.5% from 59.8%.

• Net Income Swings to Profit

  Net income attributable to ordinary shareholders was RMB73.8 million (US$10.9 million), compared with a net loss of RMB17.8 million in Q2 2025. Non-GAAP net income surged over sevenfold to RMB90.6 million.

auto_awesomeAnalysis · DAO · Trade & Services

Youdao delivered its eighth consecutive quarter of operating profitability, with income from operations surging nearly 2.9x to RMB111.5 million (US$16.4 million) on a 3.5% revenue increase. Learning services grew 20.9% while smart devices and online marketing declined, but gross margin expanded to 48.9% from 43.0%. The company also announced a director change and extended its share repurchase program. The results show a clear shift toward higher-margin AI-driven learning products, though the company still carries a shareholders' deficit and relies on NetEase Group financial support.