Youdao Reports Fourth Quarter and Fiscal Year 2020 Unaudited Financial Results

·28 min read

HANGZHOU, China, Feb. 25, 2021 /PRNewswire/ -- Youdao, Inc. ("Youdao" or the "Company") (NYSE: DAO), a leading intelligent learning company in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2020.

Fourth Quarter 2020 Financial Highlights

  • Total net revenues were RMB1.1 billion (US$169.6 million), representing a 169.7% increase from the same period in 2019.
    - Net revenues from learning services were RMB731.6 million (US$112.1 million), representing a 198.8% increase from the same period in 2019.
    - Net revenues from learning products were RMB237.3 million (US$36.4 million), representing a 253.8% increase from the same period in 2019.
    - Net revenues from online marketing services were RMB137.8 million (US$21.1 million), representing a 39.9% increase from the same period in 2019.

  • Gross billings of online courses[1] increased by 222.8% year-over-year to RMB1.1 billion (US$171.5 million) and gross billings of Youdao Premium Courses[2] increased by 268.8% year-over-year to RMB1.0 billion (US$158.8 million).

  • Gross margin was 47.5%, compared with 29.8% for the same period in 2019.

  • Deferred revenue from online courses was RMB1.4 billion (US$207.8 million), compared with RMB407.9 million as of December 31, 2019.

[1] Gross billings is a non-GAAP financial measure. Gross billings for a specific period refers to the total amount of consideration for Youdao's online courses sold on Youdao Premium Courses, NetEase Cloud Classroom and China University MOOC, net of the total amount of refunds, in such period. See "Non-GAAP Measures" and "Unaudited Reconciliation of GAAP and non-GAAP Results" at the end of this press release.

[2] Youdao Premium Courses are Youdao's flagship online learning offerings primarily focused on K-12 students, covering a wide spectrum of subject matters, learning goals and areas of interest.

Fourth Quarter 2020 Key Operating and Financial Data


For the three months
ended December 31



(in millions, RMB)

2019


2020


% of Change

Gross billings of online courses

346.7


1,119.3


222.8%


Gross billings of Youdao Premium Courses

281.0


1,036.4


268.8%






Paid student enrollments of Youdao Premium Courses (in thousands)

258.3


796.2


208.2%

K-12 paid student enrollments

161.1


659.2


309.3%

Adult paid student enrollments

97.2


137.0


40.8%






Gross billings per paid student enrollment of Youdao Premium Courses(in RMB)

1,088


1,302


19.7%





Fiscal Year 2020 Financial Highlights

  • Total net revenues were RMB3.2 billion (US$485.4 million), representing a 142.7% increase from 2019.
    - Net revenues from learning services were RMB2.2 billion (US$330.2 million), representing a 207.9% increase from 2019.
    - Net revenues from learning products were RMB540.0 million (US$82.8 million), representing a 255.1% increase from 2019.
    - Net revenues from online marketing services were RMB472.9 million (US$72.5 million), representing a 4.4% increase from 2019.

  • Gross billings of online courses increased by 233.7% year-over-year to RMB3.1 billion (US$480.5 million) and gross billings of Youdao Premium Courses increased by 275.9% year-over-year to RMB2.8 billion (US$431.7 million).

  • Gross margin was 45.9%, compared with 28.4% for 2019.

Fiscal Year 2020 Key Operating and Financial Data


For the year ended
December 31



(in millions, RMB)

2019


2020


% of Change

Gross billings of online courses

939.5


3,135.4


233.7%







Gross billings of Youdao Premium Courses

749.4


2,816.8


275.9%







Paid student enrollments of Youdao Premium Courses (in thousands)

833.4


2,096.9


151.6%

K-12 paid student enrollments

358.8


1,639.6


357.0%

Adult paid student enrollments

474.6


457.3


-3.6%







Gross billings per paid student enrollment of Youdao Premium Courses (in RMB)

899


1,343


49.4%

"2020 was a banner year for Youdao. We made great financial and operational strides across our business, closing the year with excellent top line growth and positive operating cash flow in Q1, Q2 and Q4," said Dr. Feng Zhou, Chief Executive Officer and Director of Youdao. "Our learning services and learning products segments prospered in the fourth quarter, led by our robust K-12 segment. Total gross billings of online courses climbed to RMB1.1 billion in the fourth quarter, up by 223% year-over-year and 17% quarter-over-quarter. We also introduced our Youdao Dictionary Pen 3.0, driving our total learning products sales to RMB237.3 million in the fourth quarter, up by 254% year-over-year.

"Retention rates remain strong. We continue to invest in our business and make great endeavors to drive sustainable and healthy growth. As we move into 2021, we will continue to refine the content of our online courses, upgrade our online learning products, and offer better and more comprehensive user experiences for our customers," Dr. Zhou concluded.

Fourth Quarter 2020 Financial Results

Net Revenues

Net revenues for the fourth quarter of 2020 were RMB1.1 billion (US$169.6 million), representing a 169.7% increase from RMB410.4 million for the same period of 2019.

Net revenues from learning services were RMB731.6 million (US$112.1 million) for the fourth quarter of 2020, representing a 198.8% increase from RMB244.8 million for the same period of 2019. The year-over-year growth from learning services was primarily attributable to the increased revenues generated from online courses, which were further driven by a substantial increase in both the paid student enrollments for K-12 courses of Youdao Premium Courses and gross billings per paid student enrollment of Youdao Premium Courses. The paid student enrollments for K-12 courses of Youdao Premium Courses increased by 309.3% year-over-year to 659,200 in the fourth quarter of 2020. Gross billings per paid student enrollment of Youdao Premium Courses increased by 19.7% year-over-year to RMB1,302 in the fourth quarter of 2020.

Net revenues from learning products were RMB237.3 million (US$36.4 million) for the fourth quarter of 2020, a 253.8% increase from RMB67.1 million for the same period in 2019, which was primarily driven by the substantially increased sales volume of Youdao Dictionary Pen.

Net revenues from online marketing services were RMB137.8 million (US$21.1 million) for the fourth quarter of 2020, representing a 39.9% increase from RMB98.5 million for the same period in 2019. The year-over-year increase in revenues from online marketing services was attributable to the increase in performance-based advertisement through third parties' internet properties.

Gross Profit and Gross Margin

Gross profit for the fourth quarter of 2020 was RMB525.5 million (US$80.5 million), representing a 329.2% increase from RMB122.4 million for the same period of 2019. Gross margin increased to 47.5% for the fourth quarter of 2020 from 29.8% for the same period of 2019.

Gross margin for learning services increased to 53.9% for the fourth quarter of 2020 from 30.0% for the same period of 2019. The increase was due to improved economies of scale and the continuous optimization of Youdao's faculty compensation structure.

Gross margin for learning products increased to 39.5% for the fourth quarter of 2020 from 26.7% for the same period of 2019. The improvement was mainly attributable to the substantially increased sales volume of Youdao Dictionary Pen, which carry a higher gross margin profile than other learning products.

Gross margin for online marketing services was 26.9% for the fourth quarter of 2020, compared with 31.6% for the same period of 2019. The decrease was mainly attributable to the increase in performance-based advertisements through third parties' internet properties, which typically have a lower gross margin profile.

Operating Expenses

Total operating expenses for the fourth quarter of 2020 were RMB978.2 million (US$149.9 million), representing an increase of 199.7%, compared with RMB326.5 million for the same period of last year.

Sales and marketing expenses for the fourth quarter of 2020 were RMB804.8 million (US$123.3 million), representing an increase of 291.1%, compared with RMB205.8 million for the same period of 2019. This increase was mainly driven by intensified sales and marketing efforts associated with student acquisition and branding enhancement, as well as increased compensation expenses incurred due to the expansion of the sales and marketing team for Youdao's online courses.

Research and development expenses for the fourth quarter of 2020 were RMB128.1 million (US$19.6 million), representing an increase of 43.5%, compared with RMB89.3 million for the same period of 2019. The increase was primarily due to increased payroll-related expenses including share-based compensation expenses associated with an increased number of course development and technology professionals, as well as increased server and technical expenses due to the increased scale of online courses.

General and administrative expenses for the fourth quarter of 2020 were RMB45.4 million (US$7.0 million), representing an increase of 44.4%, compared with RMB31.4 million for the same period of 2019. The increase was mainly attributable to the increase in employee headcount and related expenses in the fourth quarter of 2020.

Loss from Operations

Loss from operations for the fourth quarter of 2020 was RMB452.8 million (US$69.4 million), compared with RMB204.0 million for the same period in 2019. The margin of loss from operations was 40.9%, compared with 49.7% for the same period of last year.

Net Loss Attributable to Youdao's Ordinary Shareholders

Net loss attributable to Youdao's ordinary shareholders for the fourth quarter of 2020 was RMB447.8 million (US$68.6 million), compared with RMB205.7 million for the same period of last year. Non-GAAP net loss attributable to Youdao's ordinary shareholders for the fourth quarter of 2020 was RMB433.1 million (US$66.4 million), compared with RMB186.1 million for the same period of last year.

Basic and diluted net loss per American Depositary Share ("ADS") attributable to ordinary shareholders for the fourth quarter of 2020 was RMB3.93 (US$0.60), compared with RMB1.95 for the same period of 2019. Non-GAAP basic and diluted net loss per ADS attributable to ordinary shareholders was RMB3.80 (US$0.58), compared with RMB1.76 for the same period of 2019.

Balance Sheet

As of December 31, 2020, Youdao's cash, cash equivalents, time deposits and short-term investments totaled RMB1.2 billion (US$183.1 million), compared with RMB1.6 billion as of December 31, 2019. For the fourth quarter of 2020, net cash provided by operating activities was RMB129.2 million (US$19.8 million), capital expenditures totaled RMB15.9 million (US$2.4 million), and depreciation and amortization expenses amounted to RMB4.8 million (US$0.7 million).

As of December 31, 2020, the Company's contract liabilities, which mainly consisted of deferred revenues generated from Youdao's online courses, were RMB1.4 billion (US$220.8 million), representing an increase of 215.3% from RMB456.8 million as of December 31, 2019.

Fiscal Year 2020 Financial Results

Net Revenues

Net revenues for 2020 were RMB3.2 billion (US$485.4 million), representing a 142.7% increase from RMB1.3 billion for 2019.

Net revenues from learning services were RMB2.2 billion (US$330.2 million) for 2020, representing a 207.9% increase from RMB699.8 million for 2019. The increase was primarily attributable to the increased revenues generated from online courses, which were further driven by a substantial increase in both the paid student enrollments for K-12 courses of Youdao Premium Courses and gross billings per paid student enrollment of Youdao Premium Courses. The paid student enrollments for K-12 courses of Youdao Premium Courses increased by 357.0% year-over-year to 1.6 million in 2020. Gross billings per paid student enrollment of Youdao Premium Courses increased by 49.4% year-over-year to RMB1,343 in 2020.

Net revenues from learning products were RMB540.0 million (US$82.8 million) for 2020, representing a 255.1% increase from RMB152.0 million for 2019. The increase was primarily attributable to the significant increase in sales volume of Youdao Dictionary Pen due to its growing popularity.

Net revenues from online marketing services were RMB472.9 million (US$72.5 million) for 2020, representing a 4.4% increase from RMB453.0 million for 2019.

Gross Profit and Gross Margin

Gross profit for 2020 was RMB1.5 billion (US$222.9 million), compared with RMB370.6 million for 2019. Gross margin for 2020 was 45.9%, compared with 28.4% for 2019.

Gross margin for learning services increased to 53.1% for 2020 from 26.7% for 2019, primarily attributable to improved economies of scale and faculty compensation structure optimization.

Gross margin for learning products increased to 34.1% for 2020 from 29.2% for 2019, primarily attributable to more revenue arising from the sales of Youdao Dictionary Pen, which carried a higher gross margin profile than other products.

Gross margin for online marketing services was 26.6% for 2020, compared with 30.8% for 2019. The decrease was mainly attributable to the distribution of advertisements through third parties' internet properties, which had a lower gross margin than last year.

Operating Expenses

Total operating expenses for 2020 were RMB3.3 billion (US$499.6 million), compared with RMB971.5 million for 2019.

Sales and marketing expenses for 2020 were RMB2.7 billion (US$413.3 million), compared with RMB622.9 million for 2019. The increase was mainly driven by intensified sales and marketing efforts associated with student acquisition and branding enhancement, as well as increased compensation expenses incurred by the expansion of the sales and marketing team for Youdao's online courses.

Research and development expenses for 2020 were RMB424.6 million (US$65.1 million), an increase of 54.2%, compared with RMB275.4 million for 2019. The increase was primarily due to increased payroll-related expenses including share-based compensation expenses, as well as rental and facility expenses associated with an increased number of course development and technology professionals.

General and administrative expenses for 2020 increased to RMB138.5 million (US$21.2 million) from RMB73.3 million for 2019. The increase was mainly attributable to increased payroll-related expenses, fees paid to third-party professional service providers and increased credit losses allowance on accounts receivable.

Loss from Operations

Loss from operations for 2020 was RMB1.8 billion (US$276.7 million), compared with RMB600.9 million for 2019. The margin of loss from operations was 57.0%, compared with 46.1% for 2019.

Net Loss Attributable to Youdao's Ordinary Shareholders

Net loss attributable to Youdao's ordinary shareholders for 2020 was RMB1.8 billion (US$268.6 million), compared with RMB637.4 million for 2019. Non-GAAP net loss attributable to Youdao's ordinary shareholders for 2020 was RMB1.7 billion (US$262.3 million), compared with RMB612.3 million for 2019.

Basic and diluted net loss per ADS attributable to ordinary shareholders for 2020 was RMB15.53 (US$2.38), compared with RMB6.68 for 2019. Non-GAAP basic and diluted net loss per ADS attributable to ordinary shareholders was RMB15.16 (US$2.32), compared with RMB6.42 for 2019.

Operating Cash Flow

For 2020, net cash used in operating activities was RMB321.6 million (US$49.3 million), capital expenditures totaled RMB36.9 million (US$5.6 million), and depreciation and amortization expenses amounted to RMB16.1 million (US$2.5 million).

Completion of public offering of ADSs

The Company completed a public offering of 7,000,000 ADSs with a total net proceeds of approximately US$232 million after deducting the underwriter commissions and relevant offering expenses in February 2021.

Change in Segment Reporting

To better reflect management's perspective and match the segment presentation with recent business developments, the Company changed its segment disclosure to separately report the results of its learning products business. As a result, since the fourth quarter of 2020 the Company has reported the following segments: learning services, learning products and online marketing services. The Company has retrospectively revised prior period segment information to conform to current period presentation. This change in segment reporting aligns with the manner in which the Company's chief operating decision maker ("CODM") currently receives and uses financial information to allocate resources and evaluate the performance of the Company's reporting segments.

Notes to Unaudited Financial Information

The unaudited financial information disclosed in this press release is preliminary. The audit of the financial statements and related notes to be included in the Company's annual report on Form 20-F for the year ended December 31, 2020 is still in progress. In addition, because an audit of the Company's internal controls over financial reporting in connection with section 404 of the Sarbanes-Oxley Act of 2002 has not yet been completed, the Company makes no representation as to the effectiveness of those internal controls as of the end of fiscal year 2020.

Adjustments to the financial statements may be identified when the audit work is completed, which could result in differences between the Company's audited financial statements and this preliminary unaudited financial information.

Conference Call

Youdao's management team will host a teleconference call with simultaneous webcast at 6:00 a.m. Eastern Time on Thursday, February 25, 2021 (Beijing/Hong Kong Time: 7:00 p.m., Thursday, February 25, 2021). Youdao's management will be on the call to discuss the financial results and answer questions.

Dial-in details for the earnings conference call are as follows:

United States (toll free):

+1-888-346-8982

International:

+1-412-902-4272

Mainland China (toll free):

400-120-1203

Hong Kong (toll free):

800-905-945

Hong Kong:

+852-3018-4992

Conference ID:

10151994

A live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.youdao.com.

A replay of the conference call will be accessible by phone one hour after the conclusion of the live call at the following numbers, until March 4, 2021:

United States:

+1-877-344-7529

International:

+1-412-317-0088

Replay Access Code:

10151994

About Youdao, Inc.

Youdao, Inc. (NYSE: DAO) is a leading intelligent learning company in China dedicated to developing and using technologies to provide learning content, applications and solutions to users of all ages. Building on the popularity of its online knowledge tools such as Youdao Dictionary and Youdao Translation, Youdao now offers online courses covering a wide spectrum of age groups, subject matters, learning goals and areas of interest. In addition, Youdao has developed a variety of interactive learning apps and smart learning devices. Youdao was founded in 2006 as part of NetEase, Inc. (NASDAQ: NTES; HKEX: 9999), a leading internet technology company in China.

For more information, please visit: http://ir.youdao.com.

Non-GAAP Measures

Youdao considers and uses non-GAAP financial measures, such as gross billings and non-GAAP net income/(loss) attributable to the Company's ordinary shareholders and non-GAAP basic and diluted earnings/(loss) per ADS, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Youdao defines gross billings for a specific period as the total amount of consideration for online courses sold on Youdao Premium Courses, NetEase Cloud Classroom and China University MOOC, net of the total amount of refunds, in such period. The management uses gross billings as a performance measurement because the Company generally bills students for the entire course tuition at the time of sale of the courses and recognizes revenue proportionally over an average of the learning periods of different online courses. Youdao defines non-GAAP net income/(loss) attributable to the Company's ordinary shareholders as net income/(loss) attributable to the Company's ordinary shareholders excluding share-based compensation expenses. Non-GAAP net income/(loss) attributable to the Company's shareholders enables Youdao's management to assess its operating results without considering the impact of share-based compensation expenses, which are non-cash charges. Youdao believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating the Company's current operating performance and prospects in the same manner as management does, if they so choose.

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools, which possibly does not reflect all items of expense that affect our operations. Share-based compensation expenses have been and may continue to be incurred in our business and are not reflected in the presentation of non-GAAP net income/(loss) attributable to the Company's ordinary shareholders. In addition, the non-GAAP financial measures Youdao uses may differ from the non-GAAP measures uses by other companies, including peer companies, and therefore their comparability may be limited.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Unaudited Reconciliation of GAAP and non-GAAP Results" set forth at the end of this release.

The accompanying tables have more details on the reconciliations between our GAAP financial measures that are most directly comparable to non-GAAP financial measures. Youdao encourages you to review its financial information in its entirety and not rely on a single financial measure.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.5250 to US$1.00, the exchange rate on December 31, 2020 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding such risks, uncertainties or factors is included in the Company's filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.

For investor and media inquiries, please contact:

In China:
Jeffrey Wang
Youdao, Inc.
Tel: +86-10-8255-8963
E-mail: IR@rd.netease.com

The Piacente Group, Inc.
Emilie Wu
Tel: +86-21-6039-8363
E-mail: youdao@thepiacentegroup.com

In the United States:
The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
E-mail: youdao@thepiacentegroup.com

YOUDAO, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(RMB and USD in thousands)










As of December 31,


As of December 31,


As of December 31,



2019


2020


2020



RMB


RMB


USD(1)








Assets







Current assets:







Cash and cash equivalents


173,328


609,199


93,364

Time deposits


1,325,737


263


40

Short-term investments


121,126


584,999


89,655

Accounts receivable, net


200,675


268,830


41,200

Inventories, net


73,225


148,662


22,783

Amounts due from NetEase Group


14,930


4,081


625

Prepayment and other current assets


120,891


235,532


36,098

Total current assets


2,029,912


1,851,566


283,765








Non-current assets:







Property and equipment, net


24,551


45,636


6,994

Operating lease right-of-use assets, net


23,873


105,865


16,225

Other assets, net


8,128


67,181


10,295

Total non-current assets


56,552


218,682


33,514








Total assets


2,086,464


2,070,248


317,279








Liabilities and Shareholders' Equity/(Deficit)







Current liabilities:







Accounts payables


62,675


141,304


21,656

Payroll payable


94,488


209,603


32,123

Amounts due to NetEase Group


48,126


67,230


10,303

Contract liabilities


456,805


1,440,489


220,765

Taxes payable


25,977


54,895


8,413

Accrued liabilities and other payables


192,643


602,044


92,267

Short-term loans from NetEase Group


878,000


878,000


134,559

Total current liabilities


1,758,714


3,393,565


520,086








Non-current liabilities:







Long-term lease liabilities


21,206


79,748


12,222

Other non-current liabilities


5,517


4,043


620

Total non-current liabilities


26,723


83,791


12,842








Total liabilities


1,785,437


3,477,356


532,928








Shareholders' equity/(deficit):







Youdao's shareholders' equity/(deficit)


300,091


(1,408,105)


(215,802)

Noncontrolling interests


936


997


153

Total shareholders' equity/(deficit)


301,027


(1,407,108)


(215,649)








Total liabilities and shareholders' equity/(deficit)


2,086,464


2,070,248


317,279








Note 1:







The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.5250 on the last trading
day of December (December 31, 2020) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.








YOUDAO, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(RMB and USD in thousands, except share and per ADS data)
















Three Months Ended


Year Ended



December 31,


September 30,


December 31,


December 31,


December 31,


December 31,



2019


2020


2020


2020


2019


2020



RMB


RMB


RMB


USD(1)


RMB


RMB

Net revenues:













Learning services


244,846


600,350


731,644


112,130


699,826


2,154,669

Learning products


67,067


163,106


237,315


36,370


152,044


539,962

Online marketing services


98,519


132,585


137,837


21,124


453,013


472,884

Total net revenues


410,432


896,041


1,106,796


169,624


1,304,883


3,167,515














Cost of revenues (2):


(288,002)


(484,488)


(581,327)


(89,092)


(934,261)


(1,713,229)

Gross profit


122,430


411,553


525,469


80,532


370,622


1,454,286














Operating expenses:













Sales and marketing expenses (2)


(205,773)


(1,147,927)


(804,781)


(123,338)


(622,884)


(2,697,018)

Research and development expenses (2)


(89,254)


(120,991)


(128,080)


(19,629)


(275,367)


(424,593)

General and administrative expenses (2)


(31,433)


(36,639)


(45,379)


(6,955)


(73,289)


(138,459)

Total operating expenses


(326,460)


(1,305,557)


(978,240)


(149,922)


(971,540)


(3,260,070)

Loss from operations


(204,030)


(894,004)


(452,771)


(69,390)


(600,918)


(1,805,784)














Interest (expense)/income, net


(1,736)


(1,217)


(4,173)


(640)


(18,169)


(5,691)

Others, net


2,872


17,352


9,505


1,457


20,064


61,052

Loss before tax


(202,894)


(877,869)


(447,439)


(68,573)


(599,023)


(1,750,423)














Income tax benefit/(expense)


9


(240)


(495)


(76)


(2,432)


(2,929)

Net loss


(202,885)


(878,109)


(447,934)


(68,649)


(601,455)


(1,753,352)

Net loss/(income) attributable to noncontrolling interests


887


304


180


28


(48)


563

Net loss attributable to the Company


(201,998)


(877,805)


(447,754)


(68,621)


(601,503)


(1,752,789)

Accretions of convertible redeemable preferred shares to redemption value


(3,684)


-


-


-


(35,893)


-

Net loss attributable to ordinary shareholders of the Company


(205,682)


(877,805)


(447,754)


(68,621)


(637,396)


(1,752,789)














Basic net loss per ADS


(1.95)


(7.73)


(3.93)


(0.60)


(6.68)


(15.53)

Diluted net loss per ADS


(1.95)


(7.73)


(3.93)


(0.60)


(6.68)


(15.53)














Shares used in computing basic net loss per ADS


105,671,559


113,495,422


113,898,308


113,898,308


95,445,982


112,864,452

Shares used in computing diluted net loss per ADS


105,671,559


113,495,422


113,898,308


113,898,308


95,445,982


112,864,452








































Note 1:

The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.5250 on the last trading day of December (December 31,

2020) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.



























Note 2:













Share-based compensation in each category:













Cost of revenues


2,960


1,665


2,016


309


4,407


5,892

Sales and marketing expenses


1,419


2,071


2,078


318


2,107


5,868

Research and development expenses


8,371


5,418


9,321


1,429


9,432


20,898

General and administrative expenses


6,826


2,917


1,262


193


9,128


8,920














YOUDAO, INC.

UNAUDITED ADDITIONAL INFORMATION

(RMB and USD in thousands)
















Three Months Ended


Year Ended



December 31,


September 30,


December 31,


December 31,


December 31,


December 31,



2019


2020


2020


2020


2019


2020



RMB


RMB


RMB


USD


RMB


RMB














Net revenues













Learning services


244,846


600,350


731,644


112,130


699,826


2,154,669

Learning products


67,067


163,106


237,315


36,370


152,044


539,962

Online marketing services


98,519


132,585


137,837


21,124


453,013


472,884

Total net revenues


410,432


896,041


1,106,796


169,624


1,304,883


3,167,515














Cost of revenues













Learning services


171,502


276,568


337,033


51,653


513,060


1,010,364

Learning products


49,132


114,469


143,545


21,999


107,609


355,970

Online marketing services


67,368


93,451


100,749


15,440


313,592


346,895

Total cost of revenues


288,002


484,488


581,327


89,092


934,261


1,713,229














Gross margin













Learning services


30.0%


53.9%


53.9%


53.9%


26.7%


53.1%

Learning products


26.7%


29.8%


39.5%


39.5%


29.2%


34.1%

Online marketing services


31.6%


29.5%


26.9%


26.9%


30.8%


26.6%

Total gross margin


29.8%


45.9%


47.5%


47.5%


28.4%


45.9%

YOUDAO, INC.

UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(RMB and USD in thousands, except per ADS data)
















Three Months Ended


Year Ended



December 31,


September 30,


December 31,


December 31,


December 31,


December 31,



2019


2020


2020


2020


2019


2020



RMB


RMB


RMB


USD


RMB


RMB














Net revenues of online courses


215,946


567,044


692,279


106,096


607,568


2,009,719

Add: value-added tax


19,627


54,083


63,356


9,710


53,178


177,474

Add: ending deferred revenue


407,861


992,393


1,356,041


207,822


407,861


1,356,041

Less: beginning deferred revenue


(296,693)


(658,052)


(992,393)


(152,091)


(129,144)


(407,861)

Non-GAAP gross billings of online courses


346,741


955,468


1,119,283


171,537


939,463


3,135,373














Net revenues of Youdao Premium Courses


164,125


496,508


617,706


94,668


471,943


1,747,941

Add: value-added tax


15,906


49,643


58,663


8,990


42,416


159,442

Add: ending deferred revenue


344,111


893,517


1,253,527


192,111


344,111


1,253,527

Less: beginning deferred revenue


(243,128)


(562,643)


(893,517)


(136,937)


(109,105)


(344,111)

Non-GAAP gross billings of Youdao Premium Courses


281,014


877,025


1,036,379


158,832


749,365


2,816,799














Net loss attributable to ordinary shareholders of the Company


(205,682)


(877,805)


(447,754)


(68,621)


(637,396)


(1,752,789)

Add: share-based compensation


19,576


12,071


14,677


2,249


25,074


41,578

Non-GAAP net loss attributable to ordinary shareholders of the

Company


(186,106)


(865,734)


(433,077)


(66,372)


(612,322)


(1,711,211)



























Non-GAAP basic net loss per ADS


(1.76)


(7.63)


(3.80)


(0.58)


(6.42)


(15.16)

Non-GAAP diluted net loss per ADS


(1.76)


(7.63)


(3.80)


(0.58)


(6.42)


(15.16)

Cision
Cision

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SOURCE Youdao, Inc.