BEIJING, Nov. 21, 2025 /PRNewswire/ -- Youdao (NYSE: DAO), a leading provider of intelligent solutions, today announced its unaudited financial results for the third quarter of 2025. The report indicates that, driven by its "AI-Native" Strategy, the company has maintained profitability for five consecutive quarters, with a continued strengthening of the company's financial position. Notably, AI-powered advertising services delivered exceptional performance and emerged as a new engine of growth for the company.

Q3 Financial and Operational Highlights:

Net revenue was RMB 1.6 billion (approx. US$200 million).
Operating profit reached RMB 28.3 million (approx. US$3.93 million), with operating profit for the first three quarters increasing by nearly 150% year-over-year.
Operating cash outflow narrowed by 31.7% year-over-year, reflecting ongoing improvements in operational efficiency.

Advertising Becomes Youdao's Largest Revenue Segment

In Q3 2025, advertising revenue reached a record high of RMB 0.74 billion (approx. US$101 million), representing a significant year-over-year growth of 51.1%.

Advertising revenue surpassed all other business segments for the first time, becoming the company's largest source of income. This leap was driven by the deep application of Youdao's proprietary AI technology across the entire advertising value chain:

Intelligent Creative Generation: Youdao iMagicBox integrates capabilities such as image-to-video conversion and digital human presenters, directly connecting with global advertising systems to create a "production-placement" closed-loop that enhances efficiency and optimizes costs.
AI-Driven Campaign Strategy: The AI Ad Placement Optimizer provides end-to-end decision support, from strategy development to post-campaign review, significantly improving return on investment.

Youdao Ads Supports Global Expansion

Youdao's overseas business reported strong performance in Q3 2025, with revenue growing by over 100% year-over-year. Youdao Ads continued to evolve, utilizing its powerful AI capabilities to offer an integrated solution for the company's global expansion, from influencer matching and AI-enabled content creation to precise ad placement and data analytics. The platform now connects with nearly 30 million influencers worldwide.

During the quarter, Youdao Ads introduced AI-driven and self-service enhancements to influencer (KOL) marketing. Through AI agents (AI-driven automation modules), the platform can automatically analyze customer requirements and recommend the most suitable influencers, while also generating a customized explanation for each recommendation. In addition, it provides real-time comment insights and sentiment analysis to help brands dynamically monitor campaign performance.

In supporting NetEase Games with the international promotion of its blockbuster title Where Winds Meet, the platform deployed an integrated marketing strategy that utilized AI-powered influencer collaboration, resulting in over 500 million video views.

Youdao's Chief Executive Officer Feng Zhou stated, "The Q3 performance validates the success of our AI-Native strategy. We will continue to deepen the innovative applications of the Confucius large model in learning and advertising scenarios. We remain confident in achieving sustained improvement in operating profit and annual operating cash-flow breakeven for the first time."

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SOURCE Youdao

Youdao Q3 2025 Financial Report: AI-Driven Advertising Revenue Soars, Becoming the Largest Source of Income