The Hangzhou-based firm reported total net revenues of RMB 1.5 billion, a 3.5% year-over-year increase. Growth was anchored by the learning services division, which saw revenue jump 20.9% to RMB 795.6 million, bolstered by the company’s push into AI-driven subscription products and the Confucius 4 model. CEO Dr. Feng Zhou attributed the performance to the eighth consecutive quarter of operating profitability, noting that AI is increasingly becoming a tangible driver of business results.
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Youdao Posts Profit Surge as AI Strategy Gains Traction
Youdao recorded a sharp financial turnaround in the second quarter of 2026, with operating income climbing to RMB 111.5 million—nearly triple the figure from the same period last year—as the company pivoted toward AI-integrated learning services and disciplined marketing strategies.
While learning services thrived, the company saw a 31.5% decline in smart device revenue to RMB 86.8 million, reflecting a broader cooling in demand for hardware. Concurrently, online marketing services dipped 7.7% as Youdao deliberately shifted focus toward higher-ROI engagements to improve operational efficiency. The company also announced a management shuffle, with Jinhai Chen, formerly of Tencent, joining the Board of Directors following the resignation of William Lei Ding.
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