Youdao, Inc. announced its unaudited financial results for the second quarter ended June 30, 2025, reporting an income from operations of RMB28.8 million (US$4.0 million). This marks the company's first-ever profitable second quarter, a significant improvement from an operating loss of RMB72.6 million in Q2 2024.
Net revenues for the second quarter increased by 7.2% year-over-year to RMB1.4 billion (US$197.9 million). This growth was primarily driven by online marketing services, which saw a 23.8% year-over-year increase to RMB632.9 million, fueled by demand from the gaming industry and overseas markets. Learning services also contributed with a 2.2% year-over-year increase in net revenues to RMB657.8 million.
The company continued its AI innovation, releasing its latest Large Language Model (LLM) Confucius 3 and open-sourcing Confucius 3-Math. New AI features, such as the AI Essay Grading function in Youdao Lingshi, led to a historical high retention rate, while the AI Ad Placement Optimizer was released for online marketing services. AI-driven subscription services sales grew approximately 30% year-over-year, further demonstrating the impact of Youdao's AI-native strategy.
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