Youdao Reports Strong Q4 2025 Financial Results
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
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Should l Buy NTES?
Source: PRnewswire
- Revenue Growth: In Q4 2025, Youdao reported net revenues of RMB 1.6 billion (approximately USD 223.7 million), reflecting a 16.8% year-over-year increase, which underscores the company's strong performance in learning services and online marketing, further solidifying its market position.
- Learning Services Performance: The net revenue from learning services reached RMB 727.2 million (approximately USD 104.0 million), marking a 17.7% increase year-over-year, primarily driven by robust sales of AI-driven subscription services, indicating ongoing innovation in the ed-tech sector.
- Operating Profit Decline: The operating income for Q4 was RMB 60.2 million (approximately USD 8.6 million), down 28.5% from RMB 84.2 million in the same period last year, with the operating margin decreasing from 6.3% to 3.8%, mainly due to a decline in gross margin from online marketing services.
- Cash Flow Improvement: For the full year 2025, net cash provided by operating activities was RMB 55.2 million (approximately USD 7.9 million), a significant improvement compared to a negative cash flow in 2024, demonstrating enhanced financial management and operational efficiency.
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Analyst Views on NTES
Wall Street analysts forecast NTES stock price to rise
6 Analyst Rating
5 Buy
1 Hold
0 Sell
Strong Buy
Current: 118.500
Low
135.00
Averages
157.33
High
166.00
Current: 118.500
Low
135.00
Averages
157.33
High
166.00
About NTES
NetEase Inc is a company principally engaged in the gaming business. The Company operates through four segments. Games and Related Value-Added Services segment is engaged in the development and sale of mobile games, game operations, and other value-added services, including in-game virtual items and prepaid credits. Youdao segment provides learning services, smart devices, and online marketing services. The segment's products and services include online courses and digital content services. NetEase Cloud Music segment provides online music services, social entertainment services, and other services through the sale of membership subscriptions for various content and service packages, primarily through the sale of virtual items. Innovative Businesses and Others segment provides rigorous selection, advertising services, email, and other value-added services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Historical Performance Review: Over the past two years, NetEase has beaten EPS and revenue estimates 38% of the time, indicating a degree of volatility in its financial performance.
- Expectation Revision Dynamics: In the last three months, EPS estimates have seen 2 upward revisions and 6 downward revisions, while revenue estimates have experienced 5 upward and 6 downward revisions, reflecting market caution regarding the company's future performance.
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- AI-Driven Transformation: The company has comprehensively integrated AI into its internal workflows, utilizing proprietary tools like CodeMaker and DreamMaker to accelerate development and reduce costs, which enhances product quality and efficiency, indicating a significant shift in future game development.
- Global Product Milestones: The game
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- Dividend and Cash Flow: The board approved a dividend of 23.2 cents per share, up from 11.4 cents in Q3, demonstrating robust cash flow with $2.12 billion generated in operating cash flow for the quarter, which enhances shareholder return confidence.
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- User Engagement Increase: The DAU/MAU ratio exceeded 30% in 2025, driven by enhanced user experience and brand awareness, which contributed to steady growth in user engagement and solidified the platform's position among young users.
- Diverse Content Ecosystem: The company expanded its copyrighted music library and actively promoted original music, with over 1 million independent artists contributing 5.6 million tracks, enriching the platform's content and enhancing user stickiness and appeal.
- Innovative Product Features: In 2025, NetEase Cloud Music introduced the AI recommendation model Climber and several innovative features like the
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- Dividend Yield: The forward yield of 3.76% not only provides a steady return for investors but may also attract more income-seeking investors to consider NetEase's stock.
- Financial Performance Overview: Despite NetEase's non-GAAP EPADS of $1.58 in Q3 2025 missing expectations by $0.46 and revenue of $3.9 billion falling short by $250 million, the company continues to maintain its dividend payments, demonstrating financial resilience.
- Future Outlook: With the Q4 2025 earnings report approaching, investors will closely monitor how NetEase addresses the decline in revenue and operating profit to assess its long-term growth potential and dividend sustainability.
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