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On the 22nd, Youdao released its financial report for the second quarter of 2024, showing a record operating cash inflow of 250 million yuan, a year-on-year increase of 88.2%, and a significant reduction in operating losses by 74.9% compared to the same period last year.

1) Key Financial Data

- Net revenue was 1.3 billion yuan ($181.9 million), an increase of 9.5% from 1.2 billion yuan in the same period of 2023.

- Gross profit was 636.8 million yuan ($87.6 million), an increase of 12.3% from 567.2 million yuan in the same period of 2023. The gross margin was 48.2%, compared to 47.0% in the same period of 2023.

- Total operating expenses were 709.3 million yuan ($97.6 million), compared to 856.3 million yuan in the same period of the previous year.

- Net cash provided by operating activities was 250.2 million yuan ($34.4 million), with total capital expenditures amounting to 3.8 million yuan ($0.5 million).

2) Business Revenue Data

- Net revenue from learning services was 643.8 million yuan ($88.6 million), a decrease of 5.5% from the same period in 2023.

- Net revenue from smart devices was 166.7 million yuan ($22.9 million), a decrease of 25.0% from the same period in 2023.

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- Net revenue from online marketing services was 511.2 million yuan ($70.3 million), an increase of 68.4% from the same period in 2023.In the first half of this year, NetEase Youdao has achieved a net revenue of 2.71 billion yuan, representing a year-on-year increase of 14.5%. While maintaining revenue growth, the company has also seen significant improvements in key financial indicators such as operating losses and operating cash flow compared to the same period last year, further enhancing its overall profitability.

NetEase Youdao CEO Zhou Feng stated that over the past six months, the close integration of large model technology with the company's business has not only propelled comprehensive business progress but also led to significant improvements in the main financial indicators. The company will continue to fully commit to promoting the application and implementation of large models, leveraging technological innovation to support personalized education.

Regarding the product, Zhou Feng said during a conference call that, in terms of performance, not adopting a low-price strategy before was the right decision. "Our product prices are generally 50-100 yuan higher than those of our peers, and we will not engage in price wars in the future. However, due to further improvements in supply chain capabilities, a gross margin of 40% will be a reasonable range."

After the release, NetEase Youdao's stock price rose by more than 2.45% in pre-market trading on the US stock market on the 22nd, but it fluctuated and fell after the opening, eventually closing down by 8.9% at $3.35.