Cover Page
Cover Page | 9 Months Ended |
Sep. 30, 2020 | |
Document Information [Line Items] | |
Document Type | 6-K |
Amendment Flag | false |
Document Period End Date | Sep. 30, 2020 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q3 |
Entity Registrant Name | Youdao, Inc. |
Entity Central Index Key | 0001781753 |
Current Fiscal Year End Date | --12-31 |
INTERIM CONDENSED CONSOLIDATED
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($) | Dec. 31, 2019CNY (¥) |
Current assets: | |||
Cash and cash equivalents | ¥ 77,975 | $ 11,484 | ¥ 173,328 |
Time deposits | 817,475 | 120,401 | 1,325,737 |
Short-term investments | 237,418 | 34,968 | 121,126 |
Accounts receivable, net | 334,329 | 49,241 | 200,675 |
Inventories, net | 91,938 | 13,541 | 73,225 |
Amounts due from NetEase Group | 5,728 | 844 | 14,930 |
Prepayment and other current assets | 200,584 | 29,544 | 120,891 |
Total current assets | 1,765,447 | 260,023 | 2,029,912 |
Non-current assets: | |||
Property and equipment, net | 39,488 | 5,816 | 24,551 |
Operating lease right-of-use assets, net | 83,463 | 12,293 | 23,873 |
Other assets, net | 26,776 | 3,943 | 8,128 |
Total non-current assets | 149,727 | 22,052 | 56,552 |
Total assets | 1,915,174 | 282,075 | 2,086,464 |
Current liabilities: | |||
Accounts payables | 119,175 | 17,553 | 62,675 |
Payroll payable | 97,045 | 14,293 | 94,488 |
Amounts due to NetEase Group | 38,116 | 5,614 | 48,126 |
Contract liabilities | 1,065,563 | 156,940 | 456,805 |
Taxes payable | 35,501 | 5,229 | 25,977 |
Accrued liabilities and other payables | 583,497 | 85,940 | 192,643 |
Short-term loans from NetEase Group | 878,000 | 129,315 | 878,000 |
Total current liabilities | 2,816,897 | 414,884 | 1,758,714 |
Non-current liabilities: | |||
Long-term lease liabilities | 65,279 | 9,615 | 21,206 |
Other non-current liabilities | 4,394 | 647 | 5,517 |
Total non-current liabilities | 69,673 | 10,262 | 26,723 |
Total liabilities | 2,886,570 | 425,146 | 1,785,437 |
Contingencies (Note 14) | |||
Shareholders' equity/(deficit): | |||
Additional paid-in capital | 2,284,677 | 336,497 | 2,232,841 |
Accumulated deficit | (3,200,000) | (475,008) | (1,920,081) |
Accumulated other comprehensive loss | (33,993) | (5,007) | (14,527) |
Statutory reserves | 1,786 | 263 | 1,786 |
Noncontrolling interests | 1,177 | 173 | 936 |
Total shareholders' equity/(deficit) | (971,396) | (143,071) | 301,027 |
Total liabilities and shareholders' equity/(deficit) | 1,915,174 | 282,075 | 2,086,464 |
Class A ordinary shares [Member] | |||
Shareholders' equity/(deficit): | |||
Ordinary shares | 17 | 3 | 16 |
Total shareholders' equity/(deficit) | 17 | 16 | |
Class B ordinary shares [Member] | |||
Shareholders' equity/(deficit): | |||
Ordinary shares | 56 | $ 8 | 56 |
Total shareholders' equity/(deficit) | ¥ 56 | ¥ 56 |
INTERIM CONDENSED CONSOLIDATE_2
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Class A ordinary shares [Member] | ||
Ordinary shares, par value | $ 0.0001 | |
Ordinary shares authorized | 200,000,000 | 200,000,000 |
Ordinary shares issued | 24,622,785 | 22,635,396 |
Ordinary shares outstanding | 24,622,785 | 22,635,396 |
Class B ordinary shares [Member] | ||
Ordinary shares, par value | $ 0.0001 | |
Ordinary shares authorized | 100,000,000 | 100,000,000 |
Ordinary shares issued | 89,132,360 | 89,132,360 |
Ordinary shares outstanding | 89,132,360 | 89,132,360 |
INTERIM CONDENSED CONSOLIDATE_3
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS ¥ in Thousands, $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020CNY (¥)¥ / sharesshares | Sep. 30, 2020USD ($)$ / sharesshares | Sep. 30, 2019CNY (¥)¥ / sharesshares | |
Net revenues: (include transactions with related parties of RMB29,100 and RMB23,639 for the nine months ended September 30, 2019 and 2020, respectively) | |||
Net revenues | ¥ 2,060,719 | $ 303,511 | ¥ 894,451 |
Cost of revenues: (include transactions with related parties of RMB24,597 and RMB83,337 for the nine months ended September 30, 2019 and 2020, respectively) | |||
Cost of revenues | (1,131,902) | (166,711) | (646,259) |
Gross profit | 928,817 | 136,800 | 248,192 |
Operating expenses: | |||
Sales and marketing expenses (include transactions with related parties of RMB9,902 and RMB8,832 for the nine months ended September 30, 2019 and 2020, respectively) | (1,892,237) | (278,696) | (417,111) |
Research and development expenses (include transactions with related parties of RMB14,234 and RMB18,168 for the nine months ended September 30, 2019 and 2020, respectively) | (296,513) | (43,672) | (186,113) |
General and administrative expenses (include transactions with related parties of RMB3,467 and RMB10,787 for the nine months ended September 30, 2019 and 2020, respectively) | (93,080) | (13,709) | (41,856) |
Total operating expenses | (2,281,830) | (336,077) | (645,080) |
Loss from operations | (1,353,013) | (199,277) | (396,888) |
Interest (expense)/income, net (include interest expenses charged by related party of RMB 22,379 and RMB 23,369 for the nine months ended September 30, 2019 and 2020, respectively) | (1,518) | (224) | (16,433) |
Others, net | 51,547 | 7,592 | 17,192 |
Loss before tax | (1,302,984) | (191,909) | (396,129) |
Income tax expenses | (2,434) | (358) | (2,441) |
Net loss | (1,305,418) | (192,267) | (398,570) |
Net (income)/loss attributable to noncontrolling interests | 383 | 56 | (935) |
Net loss attributable to the Company | (1,305,035) | (192,211) | (399,505) |
Accretions of convertible redeemable preferred shares to redemption value | ¥ | (32,209) | ||
Net loss attributable to ordinary shareholders of the Company | (1,305,035) | (192,211) | (431,714) |
Net loss | (1,305,418) | (192,267) | (398,570) |
Other comprehensive income: | |||
Foreign currency translation adjustment | (19,466) | (2,867) | 55 |
Total other comprehensive income/(loss) | (19,466) | (2,867) | 55 |
Total comprehensive loss | (1,324,884) | (195,134) | (398,515) |
Comprehensive (income)/loss attributable to noncontrolling interests | 383 | 56 | (935) |
Comprehensive loss attributable to the Company | (1,324,501) | (195,078) | (399,450) |
Accretions of convertible redeemable preferred shares to redemption value | ¥ | (32,209) | ||
Comprehensive loss attributable to ordinary shareholders of the Company | ¥ (1,324,501) | $ (195,078) | ¥ (431,659) |
Net loss per ordinary share/ADS | |||
Basic | (per share) | ¥ (11.60) | $ (1.71) | ¥ (4.69) |
Diluted | (per share) | ¥ (11.60) | $ (1.71) | ¥ (4.69) |
Weighted average number of ordinary shares/ADSs | |||
Basic | shares | 112,517,299 | 112,517,299 | 92,000,000 |
Diluted | shares | 112,517,299 | 112,517,299 | 92,000,000 |
Learning services [Member] | |||
Net revenues: (include transactions with related parties of RMB29,100 and RMB23,639 for the nine months ended September 30, 2019 and 2020, respectively) | |||
Net revenues | ¥ 1,423,025 | $ 209,589 | ¥ 454,980 |
Cost of revenues: (include transactions with related parties of RMB24,597 and RMB83,337 for the nine months ended September 30, 2019 and 2020, respectively) | |||
Cost of revenues | (673,331) | (99,171) | (341,558) |
Learning products [Member] | |||
Net revenues: (include transactions with related parties of RMB29,100 and RMB23,639 for the nine months ended September 30, 2019 and 2020, respectively) | |||
Net revenues | 302,647 | 44,575 | 84,977 |
Cost of revenues: (include transactions with related parties of RMB24,597 and RMB83,337 for the nine months ended September 30, 2019 and 2020, respectively) | |||
Cost of revenues | (212,425) | (31,287) | (58,477) |
Online marketing services [Member] | |||
Net revenues: (include transactions with related parties of RMB29,100 and RMB23,639 for the nine months ended September 30, 2019 and 2020, respectively) | |||
Net revenues | 335,047 | 49,347 | 354,494 |
Cost of revenues: (include transactions with related parties of RMB24,597 and RMB83,337 for the nine months ended September 30, 2019 and 2020, respectively) | |||
Cost of revenues | ¥ (246,146) | $ (36,253) | ¥ (246,224) |
INTERIM CONDENSED CONSOLIDATE_4
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - CNY (¥) ¥ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Related party transaction, net revenue | ¥ 23,639 | ¥ 29,100 |
Interest expense, related party | 23,369 | 22,379 |
Cost of revenues [Member] | ||
Related party transaction, cost of revenues and operating expenses | 83,337 | 24,597 |
Sales and marketing expenses [Member] | ||
Related party transaction, cost of revenues and operating expenses | 8,832 | 9,902 |
Research and development expenses [Member] | ||
Related party transaction, cost of revenues and operating expenses | 18,168 | 14,234 |
General and administrative expenses [Member] | ||
Related party transaction, cost of revenues and operating expenses | ¥ 10,787 | ¥ 3,467 |
INTERIM CONDENSED CONSOLIDATE_5
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' (DEFICIT)/EQUITY ¥ in Thousands, $ in Thousands | CNY (¥) | USD ($) | Class A ordinary shares [Member]CNY (¥)shares | Class B ordinary shares [Member]CNY (¥)shares | Additional paid-in capital [Member]CNY (¥) | Statutory reserves [Member]CNY (¥) | Accumulated deficit [Member]CNY (¥) | Accumulated other comprehensive income/(loss) [Member]CNY (¥) | Non-controlling interests [Member]CNY (¥) | Pre-IPO ordinary shares [Member]CNY (¥)shares |
Balance at Dec. 31, 2018 | ¥ (1,141,433) | ¥ 138,024 | ¥ 292 | ¥ (1,281,191) | ¥ 496 | ¥ 888 | ¥ 58 | |||
Balance (Shares) at Dec. 31, 2018 | shares | 92,000,000 | |||||||||
Net loss | (398,570) | (399,505) | 935 | |||||||
Share-based compensation expenses | 5,498 | 5,498 | ||||||||
Foreign currency translation adjustment | 55 | 55 | ||||||||
Deemed contribution related to acquisition of businesses under common control | 69,603 | 69,603 | ||||||||
Accretions of convertible redeemable preferred shares | (32,209) | (32,209) | ||||||||
Balance at Sep. 30, 2019 | (1,497,056) | 213,125 | 292 | (1,712,905) | 551 | 1,823 | ¥ 58 | |||
Balance (Shares) at Sep. 30, 2019 | shares | 92,000,000 | |||||||||
Balance at Dec. 31, 2019 | 301,027 | ¥ 16 | ¥ 56 | 2,232,841 | 1,786 | (1,920,081) | (14,527) | 936 | ||
Balance (Shares) at Dec. 31, 2019 | shares | 22,635,396 | 89,132,360 | ||||||||
Net loss | (1,305,418) | $ (192,267) | (1,305,035) | (383) | ||||||
Issuance of ordinary shares pursuant to incentive plans (Shares) | shares | 1,987,389 | |||||||||
Issuance of ordinary shares pursuant to incentive plans | 26,996 | ¥ 1 | 26,995 | |||||||
Share-based compensation expenses | 26,901 | 26,901 | ||||||||
Deemed distribution to NetEase | (2,060) | (2,060) | ||||||||
Noncontrolling interests arising from business combination | 624 | 624 | ||||||||
Foreign currency translation adjustment | (19,466) | (2,867) | (19,466) | |||||||
Balance at Sep. 30, 2020 | ¥ (971,396) | $ (143,071) | ¥ 17 | ¥ 56 | ¥ 2,284,677 | ¥ 1,786 | ¥ (3,225,116) | ¥ (33,993) | ¥ 1,177 | |
Balance (Shares) at Sep. 30, 2020 | shares | 24,622,785 | 89,132,360 |
INTERIM CONDENSED CONSOLIDATE_6
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($) | Sep. 30, 2019CNY (¥) | |
Cash flows from operating activities: | |||
Net loss | ¥ (1,305,418) | $ (192,267) | ¥ (398,570) |
Depreciation and amortization | 11,320 | 1,667 | 7,328 |
Share-based compensation | 26,901 | 3,962 | 5,498 |
Fair value changes of short-term investments | (3,292) | (485) | (800) |
Provision for allowance for doubtful accounts | 9,794 | 1,443 | 22 |
Reversal of inventory allowance | (3,162) | (466) | |
Loss on disposal of property and equipment | 3 | 173 | |
Unrealized exchange (gain)/loss | 3,843 | 566 | (4,179) |
Changes in operating assets and liabilities, net of acquisition: | |||
Accounts receivable | (143,224) | (21,095) | (84,933) |
Inventories | (15,551) | (2,290) | (28,983) |
Prepayment and other current assets | (79,712) | (11,740) | (61,022) |
Amounts due from NetEase Group | 9,202 | 1,355 | (3,721) |
Operating lease right-of-use assets | 6,742 | 993 | 565 |
Other assets | (2,150) | (317) | 660 |
Contract liabilities | 608,758 | 89,660 | 166,080 |
Accounts payables | 56,500 | 8,322 | 12,954 |
Payroll payable | 2,501 | 368 | (25,482) |
Taxes payable | 9,517 | 1,402 | 5,460 |
Accrued liabilities and other payables | 392,093 | 57,749 | 72,186 |
Amounts due to NetEase Group | (12,070) | (1,778) | (3,204) |
Long-term lease liabilities | (22,259) | (3,278) | (2,902) |
Other non-current liabilities | (1,123) | (165) | |
Net cash used in operating activities | (450,800) | (66,394) | (342,870) |
Cash flows from investing activities: | |||
Purchases of short-term investments | (578,000) | (85,130) | (62,000) |
Proceeds of maturities of short-term investments | 465,000 | 68,487 | 106,882 |
Placements of time deposits | (20,663) | (3,043) | (251,734) |
Proceeds from maturities of time deposits | 510,239 | 75,150 | 498,292 |
Cash paid for business combination, net of cash acquired (Note 4) | (6,398) | (942) | |
Purchase of intangible assets | (29) | ||
Purchases of property and equipment | (20,947) | (3,085) | (13,694) |
Proceeds from disposal of property and equipment | 192 | 28 | 1,667 |
Payment for equity investment | (8,500) | (1,252) | |
Net cash provided by investing activities | 340,923 | 50,213 | 279,384 |
Cash flows from financing activities: | |||
Funding from NetEase Group | 75,643 | ||
Payment of offering expenses | (7,909) | (1,165) | (811) |
Proceeds from issuance of ordinary shares pursuant to incentive plans | 27,043 | 3,983 | |
Net cash provided by financing activities | 19,134 | 2,818 | 74,832 |
Effect of exchange rate changes on cash and cash equivalents | (4,623) | (681) | 1,805 |
Net increase/(decrease) in cash and cash equivalents | (95,353) | (14,044) | 13,151 |
Cash and cash equivalents at beginning of the period | 173,328 | 25,528 | 41,738 |
Cash and cash equivalents at end of the period | 77,975 | 11,484 | 54,889 |
Supplemental disclosures of cash flow information: | |||
Cash paid for income tax expenses | 5,550 | 817 | 3,057 |
Cash paid for interest expenses | 27,298 | 4,021 | 26,205 |
Non-cash investing and financing activities: | |||
Accretions of convertible redeemable preferred shares to redemption value | ¥ 32,209 | ||
Changes in accrued liabilities and other payables related to property and equipment addition | ¥ 6,614 | $ 974 |
Operations and Reorganization
Operations and Reorganization | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Operations and Reorganization | 1. Operations and Reorganization Principal activities and reorganization Youdao, Inc. (“Youdao” or the “Company”) was incorporated in the Cayman Islands on November 27, 2014. Youdao, Inc., its subsidiaries and consolidated variable interest entities (“VIEs”), together are referred to as “the Group” or “Youdao Group”. NetEase, Inc. (the “Parent” or “NetEase”) and its subsidiaries and consolidated VIEs, other than the Company and its subsidiaries and VIEs, are collectively referred to herein as the “NetEase Group”. The Group provides a variety of learning content, applications and solutions, which covers a wide spectrum of topics and targets people from broad age groups for their lifelong learning needs through its websites and mobile applications. The Group generates its revenues from learning services and products as well as online marketing services. The learning services mainly include online courses, fee-based As of September 30, 2020, the Company’s major subsidiaries and consolidated VIE, are as follows: Place and year of incorporation Percentage of direct or indirect economic ownership Principal activities Subsidiaries Youdao (Hong Kong) Limited Hong Kong, China, 2016 100% Holding company NetEase Youdao Information Technology (Beijing) Co., Ltd. (“Youdao Information”) Beijing, China, 2006 100% Providing sales of smart devices and solutions, technical support to the VIEs NetEase Langsheng (Beijing) Technology Development Co., Ltd. (“Youdao Langsheng”) Beijing, China, 2017 85% Providing consulting services NetEase Youdao Information Technology (Hangzhou) Co., Ltd. (“Youdao Hangzhou”) Hangzhou, China, 2019 100% Providing technical support to the VIEs VIE Beijing NetEase Youdao Computer System Co., Ltd. (“Youdao Computer”) Beijing, China, 2007 100% Providing online learning services as well as online marketing services Reorganization The Group started its business in 2006, through Youdao Information. Since the date of inception, Youdao Information was substantially owned by the NetEase Group and several employees and former employees of the Group, as noncontrolling shareholders, including Feng Zhou, Chief Executive Officer of the Company. In May 2019, the Group acquired certain education businesses, including NetEase Cloud Classroom, China University MOOC and NetEase KADA from NetEase Group. Since these businesses were controlled by NetEase both before and after the acquisition, this transaction was accounted for as a business combination under common control. In accordance with ASC 805, Business Combination, the consolidated financial statements of the Company were retrospectively adjusted to reflect the results of the acquired businesses as if they had been acquired throughout the periods presented. Basis of presentation for the Reorganization There was no change in the basis of presentation of the financial statement resulting from these Reorganization transactions. The assets and liabilities have been stated at historical carrying amounts. The Group has been operating as separated entities since inception, the allocation from NetEase Group for the expenses incurred by NetEase Group but related to the Group was not material. For the nine months ended September 30, 2019 and 2020, the allocation was related to the share-based compensation expenses from award plan of NetEase Group, amounting to RMB3,183 and RMB2,177, respectively (Note 11). Liquidity The Group incurred net losses of RMB398.6 million and RMB1.3 billion for the nine months ended September 30, 2019 and 2020, respectively. Net cash used in operating activities was RMB342.9 million and RMB450.8 million for the nine months ended September 30, 2019 and 2020, respectively. Accumulated deficit was RMB3.2 billion as of September 30, 2020. As of September 30, 2020, the Group was in a net current liability position of RMB1.1 billion. The Group assesses its liquidity by its ability to generate cash from operating activities and attract additional capital and/or finance funding. Historically, the Group has relied principally on both operational sources of cash and non-operational |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies (a) Basis of presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared on a going concern basis in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted consistent with Article 10 of Regulation S-X. (b) Principles of consolidation Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of the board of directors, or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has the power to direct the activities that most significantly impact the entity’s economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity. All significant intercompany balances and transactions within the Group have been eliminated upon consolidation. (c) Use of estimates The preparation of the Group’s unaudited interim condensed consolidated financial statements in conformity with the U.S. GAAP requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the balance sheet date and reported revenues and expenses during the reported periods in the unaudited interim condensed consolidated financial statements and accompanying notes. Significant accounting estimates include, but are not limited to, determination of the learning period of students, valuation allowance of deferred tax assets, determination of the fair value of ordinary shares, valuation, recognition of share-based compensation expenses and allowance for doubtful accounts including expected credit losses. Actual results could differ from those estimates and such differences may be material to the unaudited interim condensed consolidated financial statements. (d) Convenience translation Translations of balances in the unaudited interim condensed consolidated balance sheets, unaudited interim condensed consolidated statements of operation and comprehensive loss and unaudited interim condensed consolidated statements of cash flows from RMB into USD as of and for the nine months ended September 30, 2020 are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB6.7896, representing the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on September 30, 2020. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into USD at that rate on September 30, 2020, or at any other rate. (e) Revenue recognition The Group adopted ASC 606, Revenue from Contracts with Customers Disaggregation of net revenues For the nine months ended September 30, 2019 and 2020, substantially all of the Group’s net revenues were generated in the PRC. The following table provides information about disaggregated revenue by types: For the nine months ended 2019 2020 RMB RMB Learning services 454,980 1,423,025 Online courses services 391,622 1,317,440 Fee-based 63,358 105,585 Online marketing services 354,494 335,047 Learning products 84,977 302,647 Total net revenues 894,451 2,060,719 Contract balances Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent amounts invoiced and revenue recognized prior to invoicing, when the Group has satisfied its performance obligations and has the unconditional right to payment. Allowance for doubtful accounts/expected credit losses The Group closely monitors the collection of its accounts receivables and records a reserve for doubtful accounts against aged accounts and for specifically identified non-recoverable Contract liabilities Contract liabilities refer to the deferred revenue and refund liability. Deferred revenue is relating to the learning tuition, online marketing services and fee-based premium services with fees received from customers for which the Group’s revenue recognition criteria have not been met. Revenue recognized that was included in the deferred revenue balance at January 1, 2019 and January 1, 2020 amounted to RMB163,280 and RMB426,470, respectively. As of September 30, 2020, the aggregate amount of transaction price allocated to unsatisfied performance obligations is RMB1,045.3 million which includes deferred revenues balances and amounts to be invoiced and recognized as revenue in future periods. The Group expects to recognize all this balance as revenue over the next 12 months. This balance does not include an estimate for variable consideration arising from sales rebates to advertising service customers. Refund liability represents the consideration collected by the Group which it expects to refund to its customers according to refund policy. Refund liability is estimated based on the historical refund ratio for each of the revenue streams. The refund liabilities were not material, as of December 31, 2019 and September 30, 2020. In the event that the actual amount of refund made exceeds the estimation, such excessive amount will be deducted from net revenues. (f) Business combinations The Group accounts for its business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations For the Company’s majority-owned subsidiaries and consolidated VIEs, noncontrolling interests are recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Company. If a business combination is under common control, the acquired assets and liabilities are recognized at their historical book value. The consolidated financial statements include the results of the acquired entities from the earliest date presented or, if more recent, from the date when the entities first came under common control, regardless of the date of the combination. Consolidated financial statements for prior years would also be retrospectively adjusted for periods during which the entities were under common control. (g) Goodwill Goodwill represents the excess of the purchase consideration over the fair value of the identifiable assets acquired and the liabilities assumed in business combinations. Goodwill is not amortized but is tested for impairment at the reporting unit level on an annual basis as of December 31, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Under ASC 350-20-35, Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. The judgment in estimating the fair value of reporting units includes estimating future cash flows, determining appropriate discount rates and making other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit. (h) Recently adopted accounting pronouncements In June 2016, the FASB issued of ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment |
Concentration and Risks
Concentration and Risks | 9 Months Ended |
Sep. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration and Risks | 3. Concentration and Risks Financial instruments that potentially expose the Group to significant concentration of credit risk primarily consist of cash and cash equivalents, time deposits and short-term investments. As of September 30, 2020, substantially all of the Group’s cash and cash equivalents, time deposits and short-term investments were held in major financial institutions located in Mainland China and Hong Kong, which management considered being of high credit quality. There was no customer individually account for more than 10% of the total net revenues for the nine months ended September 30, 2019 and 2020, respectively. There was one instructor and two instructors, through whom the Company’s net learning services and products revenue earned was more than 10% of the Company’s net learning services and products revenue for the nine months ended September 30, 2019 and 2020, respectively. |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combination | 4. Business Combination In June 2020, the Group acquired 92.5% equity interest of a private company, which primarily provides kids programming courses to its users, with cash consideration of RMB7,700. Total consideration was paid by the Group in July 2020. The Group began to consolidate its financial statements from June 2020 and the remaining 7.5% equity interest was recognized as noncontrolling interests on the balance sheet upon the acquisition date. The goodwill was allocated to learning services and products segment and was recognized in other assets. Consideration for this transaction was allocated on the acquisition date based on the fair value of the assets acquired and the liabilities assumed as follows: As of acquisition date RMB Consideration 7,700 Noncontrolling interests 624 Total 8,324 Cash and cash equivalents 1,302 Other tangible assets 156 Liabilities assumed (72 ) Goodwill 6,938 Total 8,324 The acquisition above did not have a material impact on the Group’s unaudited interim condensed consolidated financial statements, and, therefore, pro forma disclosures have not been presented. |
Accounts Receivable, Net
Accounts Receivable, Net | 9 Months Ended |
Sep. 30, 2020 | |
Receivables, Net, Current [Abstract] | |
Accounts Receivable, Net | 5. Accounts Receivable, Net The following is a summary of accounts receivable as of December 31, 2019 and September 30, 2020: As of December 31, September 30, 2019 2020 RMB RMB Accounts receivable, net: Accounts receivable 202,953 346,326 Allowance for doubtful accounts /expected credit losses: Balance at the beginning of year (799 ) (2,278 ) Additional provision charged to expenses (1,897 ) (9,719 ) Write-off 418 — Balance at the end of year/period (2,278 ) (11,997 ) 200,675 334,329 |
Prepayment and Other Current As
Prepayment and Other Current Assets | 9 Months Ended |
Sep. 30, 2020 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
Prepayment and Other Current Assets | 6. Prepayment and Other Current Assets The following is a summary of prepayment and other current assets as of December 31, 2019 and September 30, 2020: As of December 31, September 30, 2019 2020 RMB RMB Deferred expenses for learning services 48,185 45,238 Prepayment for value-added taxes 18,034 36,739 Prepayment for promotion fees 20,777 27,879 Deferred charges 12,472 27,545 Interest receivable 6,252 17,893 Prepaid sales commission — 12,098 Prepayment for rental expenses 1,237 7,215 Prepayment for content fees 3,201 3,036 Others 10,733 22,941 Total 120,891 200,584 |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | 7. Property and Equipment, Net Property and equipment, net as of December 31, 2019 and September 30, 2020 are as follows: As of December 31, September 30, 2019 2020 RMB RMB Servers and computers 53,428 71,260 Leasehold improvements 1,645 6,564 Furniture, fixtures and office equipment 3,259 3,786 Total 58,332 81,610 Less: accumulated depreciation (33,781 ) (42,122 ) Net book value 24,551 39,488 Depreciation expenses recognized for the nine months ended September 30, 2019 and 2020 were RMB7,288 and RMB11,278, respectively. |
Taxes Payable
Taxes Payable | 9 Months Ended |
Sep. 30, 2020 | |
Taxes Payable, Current [Abstract] | |
Taxes Payable | 8. Taxes Payable The following is a summary of taxes payable as of December 31, 2019 and September 30, 2020: As of December 31, September 30, 2019 2020 RMB RMB Withholding individual income taxes for employees 5,679 29,580 VAT payable 10,925 1,021 Enterprise income taxes payable 7,952 4,822 Others 1,421 78 Total 25,977 35,501 As of September 30, 2020, there was approximately RMB18,809 included in the balance of withholding individual income taxes for employees due to the exercise of their options under the Company’s incentive plan, which was paid in October 2020. |
Accrued Liabilities and Other P
Accrued Liabilities and Other Payables | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities and Other Payables | 9. Accrued Liabilities and Other Payables The following is a summary of accrued liabilities and other payables as of December 31, 2019 and September 30, 2020: As of December 31, September 30, 2019 2020 RMB RMB Accrued marketing expenses 43,765 260,210 Accrued liabilities for learning services and online marketing services 85,598 119,591 Accrued outside labor service fee 10,488 59,082 Accrued administrative expenses 7,846 26,014 Accrued technical expenses 8,960 23,843 Deferred government grant — 23,342 Operating lease liabilities-current portion 4,166 19,457 Warehousing and logistics fees 3,469 10,498 Accrued professional fee 18,334 10,474 Payables for property and equipment — 6,614 Deposits payable to service providers 2,542 1,981 Others 7,475 22,391 Total 192,643 583,497 |
Others, Net
Others, Net | 9 Months Ended |
Sep. 30, 2020 | |
Other Nonoperating Income (Expense) [Abstract] | |
Others, Net | 10. Others, Net For the nine months ended September 30, 2019 2020 RMB RMB Value-added tax exemption due to the COVID-19 — 29,469 Government grants 10,928 25,333 Fair value changes of short-term investments 836 7,119 Foreign exchange gain/(loss) 5,724 (8,182 ) Others (296 ) (2,192 ) Total 17,192 51,547 Since January 2020, in accordance with the Announcement on Tax Policies to Support Prevention and Control of COVID-19 COVID-19, |
Share-based Compensation
Share-based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-based Compensation | 11. Share-based Compensation The table below sets forth the allocation of share-based compensation expenses: For the nine months ended September 30, 2019 2020 RMB RMB Research and development expenses 1,061 11,577 General and administrative expenses 2,302 7,658 Cost of revenues 1,447 3,876 Sales and marketing expenses 688 3,790 Total 5,498 26,901 NetEase Plan (a) Description of restricted share units plan In November 2009, NetEase adopted a restricted share units plan for NetEase’s employees, directors and consultants (the “2009 RSU Plan”). NetEase has reserved 323,694,050 ordinary shares for issuance under the plan. The 2009 RSU Plan was adopted by a resolution of the board of directors on November 17, 2009 and became effective for a term of ten years unless sooner terminated. In October 2019, NetEase adopted a 2019 restricted share unit plan (the “2019 Plan”) for its employees, directors and others. The 2019 Plan has a ten-year (b) Share-based compensation expenses NetEase recognizes share-based compensation expenses in its consolidated statements of operations and comprehensive income based on awards ultimately expected to vest, after considering estimated forfeitures. Forfeitures are estimated based on the NetEase’s historical experience over the last five years and revised in subsequent periods if actual forfeitures differ from those estimates. The corresponding share-based compensation expenses were allocated to the Group based on grants to the Group’s employees, amounting to RMB3,183 and RMB2,177 which is treated as deemed contribution from NetEase Group and recorded in additional paid-in Youdao Plan (a) Description of share incentive plan On February 3, 2015, the Company adopted an option and restricted share unit plan for the Company’s employees, directors and consultants (the “2015 Share Incentive Plan” or “2015 Plan”). The 2015 Plan was adopted in February 2015 and became effective for a term of ten years unless sooner terminated, initially 8,000,000 ordinary shares of the Company was reserved. In April 2018, the Company further reserved an additional 2,222,222 ordinary shares for the 2015 Plan, which resulted in the total number of ordinary shares reserved under the 2015 Plan to be 10,222,222. (b) Valuation The Group uses binomial option pricing model to determine fair value of the share-based awards. The fair value of each option granted for the nine months ended September 30, 2019 and 2020 is estimated on the date of grant using the following assumptions: For the nine months ended September 30, 2019 2020 Expected volatility 46.50%-46.90% 48.90%-52.20% Expected dividends yield 0% 0% Risk-free interest rate 2.10%-2.60% 0.30%-1.69% Expected term (in years) 6 6 Fair value of underlying ordinary share (US$) 6.35-7.29 16.00-42.31 The expected volatility at the grant date and each option valuation date was estimated based on the annualized standard deviation of the daily return embedded in historical share prices of comparable peer companies with a time horizon close to the expected expiry of the term of the options. The Company has not declared or paid any cash dividends on its capital stock, and the Company does not anticipate any dividend payments in the foreseeable future. Expected term is the contract life of the options. The Company estimated the risk-free interest rate based on the yield to maturity of U.S. treasury bonds denominated in USD at the option valuation date. The following table presents a summary of the Company’s options activities for the nine months ended September 30, 2019 and 2020: Number of Weighted Weighted average Aggregate (in thousands) US$ Years US$ Outstanding as of January 1, 2019 6,991 2.13 3.40 29,468 Granted 2,072 3.50 Forfeited (626 ) 2.52 Outstanding as of September 30, 2019 8,437 2.44 3.30 40,906 Outstanding as of January 1, 2020 8,329 2.43 3.06 97,000 Granted 888 4.00 Exercised (1,987 ) 1.93 Forfeited (247 ) 2.89 Outstanding as of September 30, 2020 6,983 2.76 2.98 161,159 Vested and exercisable as of September 30, 2019 — — Vested and exercisable as of September 30, 2020 3,156 2.12 1.70 74,874 The weighted average grant date fair value of share options granted during the nine months ended September 30, 2019 and 2020 were US$4.12 and US$23.37 per share Under the option plan, options are only exercisable subject to the grantee’s continuous service and completion of the Company’s IPO, and options for which the service condition has been satisfied are forfeited should employment terminate before the Company’s public listing. As the effectiveness of an IPO was not within the control of the Company, it was not deemed probable to occur for accounting purposes until the effective date of the IPO which was on October 24, 2019. Therefore, for the nine months ended September 30, 2019, no compensation expenses were recorded for the share options granted to the Group’s employees. As of September 30, 2020, the unrecognized compensation expenses related to the options granted under the 2015 Plan was estimated to US$16,049 (RMB108,966) and is expected to be recognized through the remaining vesting period of each grant. As of September 30, 2020, the weighted average remaining vesting period was 2.47 years. |
Net Loss per Share
Net Loss per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss per Share | 12. Net Loss per Share The following table sets forth the computation of basic and diluted net loss per share for the nine months ended September 30, 2019 and 2020: For the nine months ended September 30, 2019 2020 RMB RMB Numerator: Net loss (398,570 ) (1,305,418 ) Net (income)/loss attributable to noncontrolling interests (935 ) 383 Accretions of preferred shares to redemption value (32,209 ) — Net loss attributable to ordinary shareholders of the Company (431,714 ) (1,305,035 ) Denominator: Weighted average number of ordinary shares/ADSs outstanding, basic 92,000,000 112,517,299 Weighted average number of ordinary shares/ADSs outstanding, diluted 92,000,000 112,517,299 Net loss per share/ADS, basic (4.69 ) (11.60 ) Net loss per share/ADS, diluted (4.69 ) (11.60 ) Basic and diluted loss per share are computed using the weighted average number of ordinary shares/ADS outstanding during the period. 6,814,815 preferred shares and options for the purchase of 8,436,900 ordinary shares as of September 30, 2019, and options for the purchase of 6,637,830 ordinary shares as of September 30, 2020, respectively, were excluded from the computation of diluted net loss per share for the periods then ended because of their anti-dilutive effect. |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments | 13. Financial Instruments Fair value The following table sets forth the major financial instruments, measured at fair value, by level within the fair value hierarchy as of December 31, 2019 and September 30, 2020: Fair value measurements Total Quoted prices in active Significant other RMB RMB RMB As of December 31, 2019 Time deposits 1,325,737 1,325,737 — Short-term investments 121,126 — 121,126 Total 1,446,863 1,325,737 121,126 As of September 30, 2020 Time deposits 817,475 817,475 — Short-term investments 237,418 — 237,418 Total 1,054,893 817,475 237,418 The rates of interest under the loan agreements from NetEase Group with the lending banks were determined based on the prevailing interest rates in the market. The Group classifies the valuation techniques that use these inputs as Level 2 of fair value measurements of short-term loans. For other financial assets and liabilities with carrying values that approximate fair value, if measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | 14. Contingencies Litigation From time to time, the Group is involved in claims and legal proceedings that arise in the ordinary course of business. Based on currently available information, management does not believe that the ultimate outcome of any unresolved matters, individually and in the aggregate, is reasonably possible to have a material adverse effect on the Group’s financial position, results of operations or cash flows. However, litigation is subject to inherent uncertainties and the Group’s view of these matters may change in the future. The Group records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Group reviews the need for any such liability on a regular basis. The Group has not recorded any material liabilities in this regard as of September 30, 2020. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 15. Related Party Transactions During the nine months ended September 30, 2019 and 2020, other than disclosed elsewhere, the Company had the following material related party transactions: Name of entity or individual Relationships with the Group NetEase Group Control or under common control (a) Transactions with related parties For the nine months ended 2019 2020 RMB RMB Services and products provided to NetEase Group Learning services provided to NetEase Group 1,494 3,492 Learning products provided to NetEase Group 7,118 6,362 Online marketing services provided to NetEase Group 20,488 13,785 Services and products purchased from NetEase Group Services purchased from NetEase Group 52,200 121,124 Fixed assets and inventories purchased from NetEase Group 18,222 1,843 Loan related transactions Interest expenses on short-term loans from NetEase Group 22,379 23,369 Equity related transactions Deemed contribution related to acquisition of businesses under common control (Note 1) 69,603 — Share-based compensation under NetEase Plan 3,183 2,177 Deemed distribution to NetEase — 2,060 Learning services provided to NetEase Group mainly refer to the translation services provided to the entities within NetEase Group. Learning products provided to NetEase Group mainly refer to the arrangements where entities within NetEase Group acts as the distributor to sell smart devices, the revenues of which are recognized upon the delivery to the customer. Online marketing services provided to NetEase Group mainly refer to the performance-based advertising arrangement provided to the entities within NetEase Group to promote their own services and products. Service purchased from NetEase Group mainly consists of the human resource which the employees are with employment contracts with the entities within NetEase Group but provide services to the Group, office leasing and purchase of server custody service. Deemed contribution related to acquisition of businesses under common control represents a contribution from NetEase Group. (b) Balances with related parties As of December 31, September 30, 2019 2020 RMB RMB Amounts due from NetEase Group 14,930 5,728 Amounts due to NetEase Group 48,126 38,116 Short-term loans from NetEase Group 878,000 878,000 Short-term loans as of December 31, 2019 and September 30, 2020 amounted to RMB878,000, respectively, which consisted of entrustment loans from NetEase Group through banks denominated in RMB. All of these loans were repayable within one year. The effective interest rate for the outstanding loans for the nine months ended September 30, 2019 and 2020 ranged from approximately 3.5% to 3.9% per annum. The interest expense was RMB22,379 and RMB23,369 for the nine months ended September 30, 2019 and 2020, respectively. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | 16. Segment Information Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Group’s CODM is the Chief Executive Officer. The Group’s organizational structure is based on a number of factors that the CODM uses to evaluate, view and run its business operations which include, but are not limited to, customer base, homogeneity of products and technology. The Group’s operating segments are based on this organizational structure and information reviewed by the Group’s CODM to evaluate the operating segment results. The Group reports two reportable segments-learning services and products and online marketing services. The Group currently does not allocate operating expenses or assets to its segments, as its CODM does not use such information to allocate resources or evaluate the performance of the operating segments. The table below provides a summary of the Group’s segment results for the nine months ended September 30, 2019 and 2020. For the nine months ended 2019 2020 RMB RMB Net revenues Learning services and products 539,957 1,725,672 Online marketing services 354,494 335,047 Total net revenues 894,451 2,060,719 Cost of revenues Learning services and products 400,035 885,756 Online marketing services 246,224 246,146 Total cost of revenues 646,259 1,131,902 Gross margin Learning services and products 26 % 49 % Online marketing services 31 % 27 % Total gross margin 28 % 45 % |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of presentation | (a) Basis of presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared on a going concern basis in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted consistent with Article 10 of Regulation S-X. |
Principles of consolidation | (b) Principles of consolidation Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of the board of directors, or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has the power to direct the activities that most significantly impact the entity’s economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity. All significant intercompany balances and transactions within the Group have been eliminated upon consolidation. |
Use of estimates | (c) Use of estimates The preparation of the Group’s unaudited interim condensed consolidated financial statements in conformity with the U.S. GAAP requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the balance sheet date and reported revenues and expenses during the reported periods in the unaudited interim condensed consolidated financial statements and accompanying notes. Significant accounting estimates include, but are not limited to, determination of the learning period of students, valuation allowance of deferred tax assets, determination of the fair value of ordinary shares, valuation, recognition of share-based compensation expenses and allowance for doubtful accounts including expected credit losses. Actual results could differ from those estimates and such differences may be material to the unaudited interim condensed consolidated financial statements. |
Convenience translation | (d) Convenience translation Translations of balances in the unaudited interim condensed consolidated balance sheets, unaudited interim condensed consolidated statements of operation and comprehensive loss and unaudited interim condensed consolidated statements of cash flows from RMB into USD as of and for the nine months ended September 30, 2020 are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB6.7896, representing the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on September 30, 2020. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into USD at that rate on September 30, 2020, or at any other rate. |
Revenue recognition | (e) Revenue recognition The Group adopted ASC 606, Revenue from Contracts with Customers Disaggregation of net revenues For the nine months ended September 30, 2019 and 2020, substantially all of the Group’s net revenues were generated in the PRC. The following table provides information about disaggregated revenue by types: For the nine months ended 2019 2020 RMB RMB Learning services 454,980 1,423,025 Online courses services 391,622 1,317,440 Fee-based 63,358 105,585 Online marketing services 354,494 335,047 Learning products 84,977 302,647 Total net revenues 894,451 2,060,719 Contract balances Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent amounts invoiced and revenue recognized prior to invoicing, when the Group has satisfied its performance obligations and has the unconditional right to payment. Allowance for doubtful accounts/expected credit losses The Group closely monitors the collection of its accounts receivables and records a reserve for doubtful accounts against aged accounts and for specifically identified non-recoverable Contract liabilities Contract liabilities refer to the deferred revenue and refund liability. Deferred revenue is relating to the learning tuition, online marketing services and fee-based premium services with fees received from customers for which the Group’s revenue recognition criteria have not been met. Revenue recognized that was included in the deferred revenue balance at January 1, 2019 and January 1, 2020 amounted to RMB163,280 and RMB426,470, respectively. As of September 30, 2020, the aggregate amount of transaction price allocated to unsatisfied performance obligations is RMB1,045.3 million which includes deferred revenues balances and amounts to be invoiced and recognized as revenue in future periods. The Group expects to recognize all this balance as revenue over the next 12 months. This balance does not include an estimate for variable consideration arising from sales rebates to advertising service customers. Refund liability represents the consideration collected by the Group which it expects to refund to its customers according to refund policy. Refund liability is estimated based on the historical refund ratio for each of the revenue streams. The refund liabilities were not material, as of December 31, 2019 and September 30, 2020. In the event that the actual amount of refund made exceeds the estimation, such excessive amount will be deducted from net revenues. |
Business combinations | (f) Business combinations The Group accounts for its business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations For the Company’s majority-owned subsidiaries and consolidated VIEs, noncontrolling interests are recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Company. If a business combination is under common control, the acquired assets and liabilities are recognized at their historical book value. The consolidated financial statements include the results of the acquired entities from the earliest date presented or, if more recent, from the date when the entities first came under common control, regardless of the date of the combination. Consolidated financial statements for prior years would also be retrospectively adjusted for periods during which the entities were under common control. |
Goodwill | (g) Goodwill Goodwill represents the excess of the purchase consideration over the fair value of the identifiable assets acquired and the liabilities assumed in business combinations. Goodwill is not amortized but is tested for impairment at the reporting unit level on an annual basis as of December 31, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Under ASC 350-20-35, Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. The judgment in estimating the fair value of reporting units includes estimating future cash flows, determining appropriate discount rates and making other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit. |
Recently adopted accounting pronouncements | (h) Recently adopted accounting pronouncements In June 2016, the FASB issued of ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment |
Operations and Reorganization (
Operations and Reorganization (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of subsidiaries and variable interest entities | As of September 30, 2020, the Company’s major subsidiaries and consolidated VIE, are as follows: Place and year of incorporation Percentage of direct or indirect economic ownership Principal activities Subsidiaries Youdao (Hong Kong) Limited Hong Kong, China, 2016 100% Holding company NetEase Youdao Information Technology (Beijing) Co., Ltd. (“Youdao Information”) Beijing, China, 2006 100% Providing sales of smart devices and solutions, technical support to the VIEs NetEase Langsheng (Beijing) Technology Development Co., Ltd. (“Youdao Langsheng”) Beijing, China, 2017 85% Providing consulting services NetEase Youdao Information Technology (Hangzhou) Co., Ltd. (“Youdao Hangzhou”) Hangzhou, China, 2019 100% Providing technical support to the VIEs VIE Beijing NetEase Youdao Computer System Co., Ltd. (“Youdao Computer”) Beijing, China, 2007 100% Providing online learning services as well as online marketing services |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of disaggregation of revenue | For the nine months ended September 30, 2019 and 2020, substantially all of the Group’s net revenues were generated in the PRC. The following table provides information about disaggregated revenue by types: For the nine months ended 2019 2020 RMB RMB Learning services 454,980 1,423,025 Online courses services 391,622 1,317,440 Fee-based 63,358 105,585 Online marketing services 354,494 335,047 Learning products 84,977 302,647 Total net revenues 894,451 2,060,719 |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of fair value of the assets acquired and the liabilities | Consideration for this transaction was allocated on the acquisition date based on the fair value of the assets acquired and the liabilities assumed as follows: As of acquisition date RMB Consideration 7,700 Noncontrolling interests 624 Total 8,324 Cash and cash equivalents 1,302 Other tangible assets 156 Liabilities assumed (72 ) Goodwill 6,938 Total 8,324 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Receivables, Net, Current [Abstract] | |
Schedule of accounts receivable | The following is a summary of accounts receivable as of December 31, 2019 and September 30, 2020: As of December 31, September 30, 2019 2020 RMB RMB Accounts receivable, net: Accounts receivable 202,953 346,326 Allowance for doubtful accounts /expected credit losses: Balance at the beginning of year (799 ) (2,278 ) Additional provision charged to expenses (1,897 ) (9,719 ) Write-off 418 — Balance at the end of year/period (2,278 ) (11,997 ) 200,675 334,329 |
Prepayment and Other Current _2
Prepayment and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
Summary of prepayment and other current assets | The following is a summary of prepayment and other current assets as of December 31, 2019 and September 30, 2020: As of December 31, September 30, 2019 2020 RMB RMB Deferred expenses for learning services 48,185 45,238 Prepayment for value-added taxes 18,034 36,739 Prepayment for promotion fees 20,777 27,879 Deferred charges 12,472 27,545 Interest receivable 6,252 17,893 Prepaid sales commission — 12,098 Prepayment for rental expenses 1,237 7,215 Prepayment for content fees 3,201 3,036 Others 10,733 22,941 Total 120,891 200,584 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | Property and equipment, net as of December 31, 2019 and September 30, 2020 are as follows: As of December 31, September 30, 2019 2020 RMB RMB Servers and computers 53,428 71,260 Leasehold improvements 1,645 6,564 Furniture, fixtures and office equipment 3,259 3,786 Total 58,332 81,610 Less: accumulated depreciation (33,781 ) (42,122 ) Net book value 24,551 39,488 |
Taxes Payable (Tables)
Taxes Payable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Taxes Payable, Current [Abstract] | |
Summary of taxes payable | The following is a summary of taxes payable as of December 31, 2019 and September 30, 2020: As of December 31, September 30, 2019 2020 RMB RMB Withholding individual income taxes for employees 5,679 29,580 VAT payable 10,925 1,021 Enterprise income taxes payable 7,952 4,822 Others 1,421 78 Total 25,977 35,501 |
Accrued Liabilities and Other_2
Accrued Liabilities and Other Payables (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Summary of accrued liabilities and other payable | The following is a summary of accrued liabilities and other payables as of December 31, 2019 and September 30, 2020: As of December 31, September 30, 2019 2020 RMB RMB Accrued marketing expenses 43,765 260,210 Accrued liabilities for learning services and online marketing services 85,598 119,591 Accrued outside labor service fee 10,488 59,082 Accrued administrative expenses 7,846 26,014 Accrued technical expenses 8,960 23,843 Deferred government grant — 23,342 Operating lease liabilities-current portion 4,166 19,457 Warehousing and logistics fees 3,469 10,498 Accrued professional fee 18,334 10,474 Payables for property and equipment — 6,614 Deposits payable to service providers 2,542 1,981 Others 7,475 22,391 Total 192,643 583,497 |
Others, Net (Tables)
Others, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Nonoperating Income (Expense) [Abstract] | |
Schedule of Other Nonoperating Income Expense | For the nine months ended September 30, 2019 2020 RMB RMB Value-added tax exemption due to the COVID-19 — 29,469 Government grants 10,928 25,333 Fair value changes of short-term investments 836 7,119 Foreign exchange gain/(loss) 5,724 (8,182 ) Others (296 ) (2,192 ) Total 17,192 51,547 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of allocation of share-based compensation expenses | The table below sets forth the allocation of share-based compensation expenses: For the nine months ended September 30, 2019 2020 RMB RMB Research and development expenses 1,061 11,577 General and administrative expenses 2,302 7,658 Cost of revenues 1,447 3,876 Sales and marketing expenses 688 3,790 Total 5,498 26,901 |
Schedule of share based payment award stock options valuation assumptions | The fair value of each option granted for the nine months ended September 30, 2019 and 2020 is estimated on the date of grant using the following assumptions: For the nine months ended September 30, 2019 2020 Expected volatility 46.50%-46.90% 48.90%-52.20% Expected dividends yield 0% 0% Risk-free interest rate 2.10%-2.60% 0.30%-1.69% Expected term (in years) 6 6 Fair value of underlying ordinary share (US$) 6.35-7.29 16.00-42.31 |
Schedule of share based compensation stock option activity | The following table presents a summary of the Company’s options activities for the nine months ended September 30, 2019 and 2020: Number of Weighted Weighted average Aggregate (in thousands) US$ Years US$ Outstanding as of January 1, 2019 6,991 2.13 3.40 29,468 Granted 2,072 3.50 Forfeited (626 ) 2.52 Outstanding as of September 30, 2019 8,437 2.44 3.30 40,906 Outstanding as of January 1, 2020 8,329 2.43 3.06 97,000 Granted 888 4.00 Exercised (1,987 ) 1.93 Forfeited (247 ) 2.89 Outstanding as of September 30, 2020 6,983 2.76 2.98 161,159 Vested and exercisable as of September 30, 2019 — — Vested and exercisable as of September 30, 2020 3,156 2.12 1.70 74,874 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earning per shares basic and diluted | The following table sets forth the computation of basic and diluted net loss per share for the nine months ended September 30, 2019 and 2020: For the nine months ended September 30, 2019 2020 RMB RMB Numerator: Net loss (398,570 ) (1,305,418 ) Net (income)/loss attributable to noncontrolling interests (935 ) 383 Accretions of preferred shares to redemption value (32,209 ) — Net loss attributable to ordinary shareholders of the Company (431,714 ) (1,305,035 ) Denominator: Weighted average number of ordinary shares/ADSs outstanding, basic 92,000,000 112,517,299 Weighted average number of ordinary shares/ADSs outstanding, diluted 92,000,000 112,517,299 Net loss per share/ADS, basic (4.69 ) (11.60 ) Net loss per share/ADS, diluted (4.69 ) (11.60 ) |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of assets measured on recurring basis | The following table sets forth the major financial instruments, measured at fair value, by level within the fair value hierarchy as of December 31, 2019 and September 30, 2020: Fair value measurements Total Quoted prices in active Significant other RMB RMB RMB As of December 31, 2019 Time deposits 1,325,737 1,325,737 — Short-term investments 121,126 — 121,126 Total 1,446,863 1,325,737 121,126 As of September 30, 2020 Time deposits 817,475 817,475 — Short-term investments 237,418 — 237,418 Total 1,054,893 817,475 237,418 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of related party | During the nine months ended September 30, 2019 and 2020, other than disclosed elsewhere, the Company had the following material related party transactions: Name of entity or individual Relationships with the Group NetEase Group Control or under common control |
Schedule of related party transactions | For the nine months ended 2019 2020 RMB RMB Services and products provided to NetEase Group Learning services provided to NetEase Group 1,494 3,492 Learning products provided to NetEase Group 7,118 6,362 Online marketing services provided to NetEase Group 20,488 13,785 Services and products purchased from NetEase Group Services purchased from NetEase Group 52,200 121,124 Fixed assets and inventories purchased from NetEase Group 18,222 1,843 Loan related transactions Interest expenses on short-term loans from NetEase Group 22,379 23,369 Equity related transactions Deemed contribution related to acquisition of businesses under common control (Note 1) 69,603 — Share-based compensation under NetEase Plan 3,183 2,177 Deemed distribution to NetEase — 2,060 |
Schedule of related party balances | As of December 31, September 30, 2019 2020 RMB RMB Amounts due from NetEase Group 14,930 5,728 Amounts due to NetEase Group 48,126 38,116 Short-term loans from NetEase Group 878,000 878,000 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information by segment | The table below provides a summary of the Group’s segment results for the nine months ended September 30, 2019 and 2020. For the nine months ended 2019 2020 RMB RMB Net revenues Learning services and products 539,957 1,725,672 Online marketing services 354,494 335,047 Total net revenues 894,451 2,060,719 Cost of revenues Learning services and products 400,035 885,756 Online marketing services 246,224 246,146 Total cost of revenues 646,259 1,131,902 Gross margin Learning services and products 26 % 49 % Online marketing services 31 % 27 % Total gross margin 28 % 45 % |
Operations and Reorganization -
Operations and Reorganization - Additional Information (Detail) ¥ in Thousands, $ in Thousands | 1 Months Ended | 9 Months Ended | |||||
Oct. 31, 2019CNY (¥) | Oct. 31, 2019USD ($) | Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($) | Sep. 30, 2019CNY (¥) | Sep. 30, 2020USD ($) | Dec. 31, 2019CNY (¥) | |
Operations and Organization [Line Items] | |||||||
Net loss | ¥ (1,305,418) | $ (192,267) | ¥ (398,570) | ||||
Net cash used in operating activities | (450,800) | $ (66,394) | (342,870) | ||||
Accumulated deficit | (3,200,000) | $ (475,008) | ¥ (1,920,081) | ||||
Net current liability | 1,100,000 | ||||||
IPO [Member] | |||||||
Operations and Organization [Line Items] | |||||||
Proceeds received from ordinary shareholders | ¥ 621,900 | $ 88,200 | |||||
Private placement [Member] | |||||||
Operations and Organization [Line Items] | |||||||
Proceeds from concurrent private placement | ¥ 881,700 | $ 125,000 | |||||
NetEase Group [Member] | |||||||
Operations and Organization [Line Items] | |||||||
The allocation related to share-based compensation expenses | ¥ 2,177 | ¥ 3,183 |
Operations and Reorganization_2
Operations and Reorganization - Schedule Of Subsidiaries And Variable Interest Entities (Detail) | 9 Months Ended |
Sep. 30, 2020 | |
Youdao (Hong Kong) Limited [Member] | |
Subsidiaries And Variable Interest Entity [Line Items] | |
Place and year of incorporation | Hong Kong, China, 2016 |
Percentage of direct or indirect economic ownership | 100.00% |
Principal activities | Holding company |
NetEase Youdao Information Technology Beijing Co.,Ltd. [Member] | |
Subsidiaries And Variable Interest Entity [Line Items] | |
Place and year of incorporation | Beijing, China, 2006 |
Percentage of direct or indirect economic ownership | 100.00% |
Principal activities | Providing sales of smart devices and solutions, technical support to the VIEs |
NetEase Langsheng (Beijing) Technology Development Co., Ltd. [Member] | |
Subsidiaries And Variable Interest Entity [Line Items] | |
Place and year of incorporation | Beijing, China, 2017 |
Percentage of direct or indirect economic ownership | 85.00% |
Principal activities | Providing consulting services |
NetEase Youdao Information Technology (Hangzhou) Co., Ltd. [Member] | |
Subsidiaries And Variable Interest Entity [Line Items] | |
Place and year of incorporation | Hangzhou, China, 2019 |
Percentage of direct or indirect economic ownership | 100.00% |
Principal activities | Providing technical support to the VIEs |
Beijing NetEase Youdao Computer System Co., Ltd. [Member] | |
Subsidiaries And Variable Interest Entity [Line Items] | |
Place and year of incorporation | Beijing, China, 2007 |
Percentage of direct or indirect economic ownership | 100.00% |
Principal activities | Providing online learning services as well as online marketing services |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Detail) ¥ in Thousands | 9 Months Ended | |
Sep. 30, 2020CNY (¥) | Sep. 30, 2019CNY (¥) | |
Statutory Reserves [Line Items] | ||
Exchange rate | 6.7896 | |
Revenue recognized that was included in the deferred revenue balance at the beginning of the year | ¥ 426,470 | ¥ 163,280 |
The aggregate amount of transaction price allocated to unsatisfied performance obligations | ¥ 1,045,300 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of disaggregated Revenue (Detail) ¥ in Thousands, $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($) | Sep. 30, 2019CNY (¥) | |
Disaggregation of Revenue [Line Items] | |||
Net revenues | ¥ 2,060,719 | $ 303,511 | ¥ 894,451 |
Learning services [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | 1,423,025 | 209,589 | 454,980 |
Online courses services [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | 1,317,440 | 391,622 | |
Fee-based premium services [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | 105,585 | 63,358 | |
Online marketing services [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | 335,047 | 49,347 | 354,494 |
Learning products [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | ¥ 302,647 | $ 44,575 | ¥ 84,977 |
Concentration and Risks - Addit
Concentration and Risks - Additional Information (Detail) - Revenue Benchmark [Member] | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Customer concentration risk [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk number of customers | 0 | 0 |
Concentration risk percentage | 10.00% | 10.00% |
Instructor concentration risk [Member] | Learning services and products [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk number of instructors | 2 | 1 |
Concentration risk percentage | 10.00% | 10.00% |
Business Combination - Addition
Business Combination - Additional information (Details) ¥ in Thousands | 1 Months Ended |
Jun. 30, 2020CNY (¥) | |
Business Acquisition [Line Items] | |
Percentage of voting equity interests acquired | 92.50% |
Business Combination, Consideration Transferred | ¥ 7,700 |
Noncontrolling Interest [Member] | |
Business Acquisition [Line Items] | |
Percentage of voting equity interests acquired | 7.50% |
Business Combination - Schedule
Business Combination - Schedule of fair value of the assets acquired and the liabilities (Detail) ¥ in Thousands | 1 Months Ended |
Jun. 30, 2020CNY (¥) | |
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract] | |
Consideration | ¥ 7,700 |
Noncontrolling interests | 624 |
Total | 8,324 |
Cash and cash equivalents | 1,302 |
Other tangible assets | 156 |
Liabilities assumed | (72) |
Goodwill | 6,938 |
Total | ¥ 8,324 |
Accounts Receivable, Net - Sche
Accounts Receivable, Net - Schedule of accounts receivable (Detail) ¥ in Thousands, $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020CNY (¥) | Dec. 31, 2019CNY (¥) | Sep. 30, 2020USD ($) | |
Accounts receivable, net: | |||
Accounts receivable | ¥ 346,326 | ¥ 202,953 | |
Allowance for doubtful accounts/expected credit losses: | |||
Balance at the beginning of year | (2,278) | (799) | |
Additional provision charged to expenses | (9,719) | (1,897) | |
Write-off | 418 | ||
Balance at the end of year/period | (11,997) | (2,278) | |
Total | ¥ 334,329 | ¥ 200,675 | $ 49,241 |
Prepayment and Other Current _3
Prepayment and Other Current Assets - Schedule of prepaid expenses and other current assets (Detail) ¥ in Thousands, $ in Thousands | Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($) | Dec. 31, 2019CNY (¥) |
Prepaid Expense and Other Assets, Current [Abstract] | |||
Deferred expenses for learning services | ¥ 45,238 | ¥ 48,185 | |
Prepayment for value-added taxes | 36,739 | 18,034 | |
Prepayment for promotion fees | 27,879 | 20,777 | |
Deferred charges | 27,545 | 12,472 | |
Interest receivable | 17,893 | 6,252 | |
Prepaid Sales Commission | 12,098 | ||
Prepayment for rental expenses | 7,215 | 1,237 | |
Prepayment For Content Fees | 3,036 | 3,201 | |
Others | 22,941 | 10,733 | |
Total | ¥ 200,584 | $ 29,544 | ¥ 120,891 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of property and equipment, net (Detail) ¥ in Thousands, $ in Thousands | Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($) | Dec. 31, 2019CNY (¥) |
Property, Plant and Equipment [Line Items] | |||
Property,plant and equipment, gross | ¥ 81,610 | ¥ 58,332 | |
Less: accumulated depreciation | (42,122) | (33,781) | |
Net book value | 39,488 | $ 5,816 | 24,551 |
Servers and computers [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property,plant and equipment, gross | 71,260 | 53,428 | |
Leasehold improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property,plant and equipment, gross | 6,564 | 1,645 | |
Furniture, fixtures and office equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property,plant and equipment, gross | ¥ 3,786 | ¥ 3,259 |
Property and Equipment, Net - A
Property and Equipment, Net - Additional Information (Detail) - CNY (¥) ¥ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expenses | ¥ 11,278 | ¥ 7,288 |
Taxes Payable - Summary of taxe
Taxes Payable - Summary of taxes payable (Detail) ¥ in Thousands, $ in Thousands | Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($) | Dec. 31, 2019CNY (¥) |
Taxes Payable, Current [Abstract] | |||
Withholding individual income taxes for employees | ¥ 29,580 | ¥ 5,679 | |
VAT payable | 1,021 | 10,925 | |
Enterprise income taxes payable | 4,822 | 7,952 | |
Others | 78 | 1,421 | |
Total | ¥ 35,501 | $ 5,229 | ¥ 25,977 |
Taxes Payable - Additional Info
Taxes Payable - Additional Information (Detail) - CNY (¥) ¥ in Thousands | 1 Months Ended | |
Oct. 31, 2020 | Sep. 30, 2020 | |
Taxes Payable [Abstract] | ||
Income tax withheld share based compensation option exercise | ¥ 18,809 | |
Payment tax with holding share based payment arrangement | ¥ 18,809 |
Accrued Liabilities and Other_3
Accrued Liabilities and Other Payables - Schedule of accrued liabilities and other payable (Detail) ¥ in Thousands, $ in Thousands | Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($) | Dec. 31, 2019CNY (¥) |
Payables and Accruals [Abstract] | |||
Accrued marketing expenses | ¥ 260,210 | ¥ 43,765 | |
Accrued liabilities for learning services and online marketing services | 119,591 | 85,598 | |
Accrued outside labor service fee | 59,082 | 10,488 | |
Accrued administrative expenses | 26,014 | 7,846 | |
Accrued technical expenses | 23,843 | 8,960 | |
Deferred government grant | 23,342 | ||
Operating lease liabilities-current portion | 19,457 | 4,166 | |
Warehousing and logistics fees | 10,498 | 3,469 | |
Accrued professional fee | 10,474 | 18,334 | |
Payables for property and equipment | 6,614 | ||
Deposits payable to service providers | 1,981 | 2,542 | |
Others | 22,391 | 7,475 | |
Total | ¥ 583,497 | $ 85,940 | ¥ 192,643 |
Others, Net - Additional Inform
Others, Net - Additional Information (Detail) ¥ in Thousands | 9 Months Ended |
Sep. 30, 2020CNY (¥) | |
Others Net [Line Items] | |
Value added tax exemption | ¥ 29,469 |
Covid Nineteen Pandemic [Member] | Other Income [Member] | |
Others Net [Line Items] | |
Value added tax exemption | ¥ 29,469 |
Others, Net - Schedule of other
Others, Net - Schedule of other nonoperating income expense (Detail) ¥ in Thousands, $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($) | Sep. 30, 2019CNY (¥) | |
Other Nonoperating Income (Expense) [Abstract] | |||
Value-added tax exemption due to the COVID-19 | ¥ 29,469 | ||
Government grants | 25,333 | ¥ 10,928 | |
Fair value changes of short-term investments | 7,119 | 836 | |
Foreign exchange gain/(loss) | (8,182) | 5,724 | |
Others | (2,192) | (296) | |
Total | ¥ 51,547 | $ 7,592 | ¥ 17,192 |
Share-based Compensation - Sche
Share-based Compensation - Schedule of share-based compensation expenses (Detail) ¥ in Thousands, $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($) | Sep. 30, 2019CNY (¥) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expenses | ¥ 26,901 | $ 3,962 | ¥ 5,498 |
Research and development expenses [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expenses | 11,577 | 1,061 | |
General and administrative expenses [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expenses | 7,658 | 2,302 | |
Cost of revenues [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expenses | 3,876 | 1,447 | |
Sales and marketing expenses [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expenses | ¥ 3,790 | ¥ 688 |
Share-based Compensation - Addi
Share-based Compensation - Additional Information (Detail) $ / shares in Units, $ in Thousands | Feb. 03, 2015shares | Nov. 30, 2009shares | Oct. 31, 2019shares | Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($)$ / shares | Sep. 30, 2019CNY (¥) | Sep. 30, 2019$ / shares | Sep. 30, 2020USD ($) | Apr. 30, 2018shares |
2019 Plan [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Term of compensation plan | 10 years | ||||||||
NetEase Group [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Shares-based compensation expense | ¥ | ¥ 2,177,000 | ¥ 3,183,000 | |||||||
NetEase Group [Member] | 2009 RSU Plan [Member] | Restricted share units [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of shares reserved for future issuance | 323,694,050 | ||||||||
Term of compensation plan | 10 years | ||||||||
NetEase Group [Member] | 2019 Plan [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of shares reserved for future issuance | 322,458,300 | ||||||||
Youdao, Inc. [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Weighted average grant date fair value of share options granted | $ / shares | $ 23.37 | $ 4.12 | |||||||
Fair value of options vested | 11,536,000 | $ 1,699 | 0 | ||||||
Youdao, Inc. [Member] | 2015 Incentive Plan [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of shares reserved for future issuance | 8,000,000 | 10,222,222 | |||||||
Term of compensation plan | 10 years | ||||||||
Shares-based compensation expense | ¥ | ¥ 0 | ||||||||
Total unrecognized compensation expense | ¥ 108,966,000 | $ 16,049 | |||||||
Weighted average remaining vesting period | 2 years 5 months 19 days | 2 years 5 months 19 days | |||||||
Additional number of shares reserved for future issuance | 2,222,222 |
Share-based Compensation - Sc_2
Share-based Compensation - Schedule of share based payment award stock options valuation assumptions (Detail) - $ / shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividends yield | 0.00% | 0.00% |
Expected term (in years) | 6 years | 6 years |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 48.90% | 46.50% |
Risk-free interest rate | 0.30% | 2.10% |
Fair value of underlying ordinary share (US$) | $ 16 | $ 6.35 |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 52.20% | 46.90% |
Risk-free interest rate | 1.69% | 2.60% |
Fair value of underlying ordinary share (US$) | $ 42.31 | $ 7.29 |
Share-based Compensation - Sc_3
Share-based Compensation - Schedule of share based compensation stock option activity (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | ||||
Number of options - Beginning balance | 8,329 | 6,991 | 6,991 | |
Number of options - Granted | 888 | 2,072 | ||
Number of options - Exercised | (1,987) | |||
Number of options - Forfeited | (247) | (626) | ||
Number of options - Ending balance | 6,983 | 8,437 | 8,329 | 6,991 |
Number of options - Vested and exercisable | 3,156 | 0 | ||
Weighted average exercise price per share - Beginning balance | $ 2.43 | $ 2.13 | $ 2.13 | |
Weighted average exercise price per share - Granted | 4 | 3.50 | ||
Weighted average exercise price per share - Exercised | 1.93 | |||
Weighted average exercise price per share - Forfeited | 2.89 | 2.52 | ||
Weighted average exercise price per share - Ending balance | 2.76 | 2.44 | $ 2.43 | $ 2.13 |
Weighted average exercise price per share - Vested and exercisable | $ 2.12 | $ 0 | ||
Weighted average remaining contractual life | 2 years 11 months 23 days | 3 years 3 months 18 days | 3 years 21 days | 3 years 4 months 24 days |
Weighted average remaining contractual life - Vested and exercisable | 1 year 8 months 12 days | |||
Aggregate intrinsic value | $ 161,159 | $ 40,906 | $ 97,000 | $ 29,468 |
Vested and exercisable, Aggregate intrinsic value | $ 74,874 |
Net Loss per Share - Schedule o
Net Loss per Share - Schedule of earning per shares basic and diluted (Detail) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020CNY (¥)¥ / sharesshares | Sep. 30, 2020USD ($)$ / sharesshares | Sep. 30, 2019CNY (¥)¥ / sharesshares | |
Numerator: | |||
Net loss | ¥ (1,305,418) | $ (192,267) | ¥ (398,570) |
Net (income)/loss attributable to noncontrolling interests | 383 | 56 | (935) |
Accretions of convertible redeemable preferred shares to redemption value | ¥ | (32,209) | ||
Net loss attributable to ordinary shareholders of the Company | ¥ (1,305,035) | $ (192,211) | ¥ (431,714) |
Denominator: | |||
Weighted average number of ordinary shares/ADSs outstanding, basic | 112,517,299 | 112,517,299 | 92,000,000 |
Weighted average number of ordinary shares/ADSs outstanding, diluted | 112,517,299 | 112,517,299 | 92,000,000 |
Net loss per share/ADS, basic | (per share) | ¥ (11.60) | $ (1.71) | ¥ (4.69) |
Net loss per share/ADS, diluted | (per share) | ¥ (11.60) | $ (1.71) | ¥ (4.69) |
Net Loss per Share - Additional
Net Loss per Share - Additional Information (Detail) - shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Preferred shares [Member] | ||
Net Loss per Share [Line Items] | ||
Anti dilutive securities excluded in calculation of earnings per share | 6,814,815 | |
Options for purchase of ordinary shares [Member] | ||
Net Loss per Share [Line Items] | ||
Anti dilutive securities excluded in calculation of earnings per share | 6,637,830 | 8,436,900 |
Financial Instruments - Schedul
Financial Instruments - Schedule of fair value (Detail) ¥ in Thousands, $ in Thousands | Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($) | Dec. 31, 2019CNY (¥) |
Fair Value, by Balance Sheet Grouping [Line Items] | |||
Time deposits | ¥ 817,475 | $ 120,401 | ¥ 1,325,737 |
Short-term investments | 237,418 | $ 34,968 | 121,126 |
Fair Value Recurring [Member] | |||
Fair Value, by Balance Sheet Grouping [Line Items] | |||
Time deposits | 817,475 | 1,325,737 | |
Short-term investments | 237,418 | 121,126 | |
Total | 1,054,893 | 1,446,863 | |
Fair Value Recurring [Member] | Quoted prices in active market for identical assets (Level 1) [Member] | |||
Fair Value, by Balance Sheet Grouping [Line Items] | |||
Time deposits | 817,475 | 1,325,737 | |
Total | 817,475 | 1,325,737 | |
Fair Value Recurring [Member] | Significant other observable inputs (Level 2) [Member] | |||
Fair Value, by Balance Sheet Grouping [Line Items] | |||
Short-term investments | 237,418 | 121,126 | |
Total | ¥ 237,418 | ¥ 121,126 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) ¥ in Thousands, $ in Thousands | 9 Months Ended | |||
Sep. 30, 2020CNY (¥) | Sep. 30, 2019CNY (¥) | Sep. 30, 2020USD ($) | Dec. 31, 2019CNY (¥) | |
Related Party Transaction [Line Items] | ||||
Short-term loans | ¥ 878,000 | $ 129,315 | ¥ 878,000 | |
Interest expense | 23,369 | ¥ 22,379 | ||
NetEase Group [Member] | ||||
Related Party Transaction [Line Items] | ||||
Short-term loans | 878,000 | ¥ 878,000 | ||
Interest expense | ¥ 23,369 | ¥ 22,379 | ||
NetEase Group [Member] | Maximum [Member] | ||||
Related Party Transaction [Line Items] | ||||
Effective interest rate | 3.90% | 3.90% | ||
NetEase Group [Member] | Minimum [Member] | ||||
Related Party Transaction [Line Items] | ||||
Effective interest rate | 3.50% | 3.50% |
Related Party Transactions - Sc
Related Party Transactions - Schedule of related party (Detail) | 9 Months Ended |
Sep. 30, 2020 | |
NetEase Group [Member] | |
Related Party Transaction [Line Items] | |
Relationships with the Group | Control or under common control |
Related Party Transactions - _2
Related Party Transactions - Schedule of related party transactions (Detail) - CNY (¥) ¥ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Services and products provided to NetEase Group [Member] | Learning services provided to NetEase Group [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Amounts of Transaction | ¥ 3,492 | ¥ 1,494 |
Services and products provided to NetEase Group [Member] | Learning products provided to NetEase Group [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Amounts of Transaction | 6,362 | 7,118 |
Services and products provided to NetEase Group [Member] | Online marketing services provided to NetEase Group [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Amounts of Transaction | 13,785 | 20,488 |
Services and products purchased from NetEase Group [Member] | Services purchased from NetEase Group [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Amounts of Transaction | 121,124 | 52,200 |
Services and products purchased from NetEase Group [Member] | Fixed assets and inventories purchased from NetEase Group [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Amounts of Transaction | 1,843 | 18,222 |
Loan related transactions [Member] | Interest expenses on short-term loans from NetEase Group [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Amounts of Transaction | 23,369 | 22,379 |
Equity related transactions [Member] | Deemed contribution related to acquisition of businesses under common control [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Amounts of Transaction | 69,603 | |
Equity related transactions [Member] | Share-based compensation under NetEase Plan [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Amounts of Transaction | 2,177 | ¥ 3,183 |
Equity related transactions [Member] | Deemed Distribution To NetEase [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Amounts of Transaction | ¥ 2,060 |
Related Party Transactions - _3
Related Party Transactions - Schedule of related party balances (Detail) ¥ in Thousands, $ in Thousands | Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($) | Dec. 31, 2019CNY (¥) |
Amounts due from NetEase Group | ¥ 5,728 | $ 844 | ¥ 14,930 |
Amounts due to NetEase Group | 38,116 | 5,614 | 48,126 |
Short-term loans from NetEase Group | 878,000 | $ 129,315 | 878,000 |
NetEase Group [Member] | |||
Amounts due from NetEase Group | 5,728 | 14,930 | |
Amounts due to NetEase Group | 38,116 | 48,126 | |
Short-term loans from NetEase Group | ¥ 878,000 | ¥ 878,000 |
Segment Information - Schedule
Segment Information - Schedule of segment reporting information by segment (Detail) ¥ in Thousands, $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020CNY (¥)segment | Sep. 30, 2020USD ($)segment | Sep. 30, 2019CNY (¥)segment | |
Segment Reporting Information [Line Items] | |||
Number of reportable segments | segment | 2 | 2 | 2 |
Net revenues | |||
Total net revenues | ¥ 2,060,719 | $ 303,511 | ¥ 894,451 |
Cost of revenues | |||
Total cost of revenues | ¥ 1,131,902 | $ 166,711 | ¥ 646,259 |
Gross margin | |||
Total gross margin | 45.00% | 45.00% | 28.00% |
Learning services and products [Member] | |||
Net revenues | |||
Total net revenues | ¥ 1,725,672 | ¥ 539,957 | |
Cost of revenues | |||
Total cost of revenues | ¥ 885,756 | ¥ 400,035 | |
Gross margin | |||
Total gross margin | 49.00% | 49.00% | 26.00% |
Online marketing services [Member] | |||
Net revenues | |||
Total net revenues | ¥ 335,047 | $ 49,347 | ¥ 354,494 |
Cost of revenues | |||
Total cost of revenues | ¥ 246,146 | $ 36,253 | ¥ 246,224 |
Gross margin | |||
Total gross margin | 27.00% | 27.00% | 31.00% |