DAO - Earnings call 4 2023

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Operator

Good day, and welcome to the Youdao 2023 Fourth Quarter and Full Year Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Jeffrey Wang, Investor Relations Director of Youdao. Please go ahead.

Jeffrey Wang

operator. you, Thank U.S. discussion future that for contain statements by forward-looking Safe Please performance, today which to the established as company from qualify are related Harbor note liability will intended the to Private Securities Litigation Act. Reform Such and subject performance assumptions other to the uncertainties, are factors. and statements not risks are of and future guarantees certain

Some cause in differ to those mentioned actual today's discussion. risks release materially beyond this company's the are these results of control could and press and from

that factors of could Youdao's A the general any risk discussion update forward-looking included The filings of financial obligation and certain U.S. Commission. these law. is undertake information, the affect results does Exchange the business with not except company to by Securities as in and company required

also measures management non-GAAP certain only. call, for purpose today's financial During will comparison discuss

and results of the non-GAAP full results, please definitions For quarter release the financial news year issued financial non-GAAP and of to fourth today. XXXX see financial GAAP reconciliations measures earlier

is Besides, on conference at Youdao's this available reminder, ir.youdao.com. being corporate be replay a a of conference will recorded. As website call this webcast

from Capital today Wayne our Jin, senior Peng us VP our Mr. Finance. our call Strategy Mr. Zhou, Youdao's Executive Mr. the on Feng President; management is Lei of VP Su, Markets; our Chief and Joining and Dr. Officer; of Li,

over I direction. Dr. will of Zhou turn highlights the and strategic to our now call to recent review some

Feng Zhou

thank and Jeffrey, you all for you, today's Thank in participating call.

renminbi, a everyone operations unless to on the this financial like we information, numbers remind is mentioned that release stated. all specifically are basis, begin, continuing would I on Before in information otherwise financial and based presented non-GAAP

million, X.X and from XXX.X% Net reached year-over-year. year-over-year. revenues cash an a from up RMB solid had financial We QX, in inflow. producing XX.X in reached QX, operations operating billion Income X.X% increasing all-time income high operations performance RMB

million, RMB terms XX% inflow flow, rising an cash XXX.X we operating In of of by achieved cash year-over-year.

up X.X X.X% year to outflow was operations amounted year-over-year. revenues by significantly. RMB our RMB reached financial narrowed improving Loss growing building XXX.X cash digital billion, online growth improved key million, Net For content strategy Operating the of indicators leadership XX.X% million, from XXX.X at XXXX, same full RMB year-over-year. technology. through time, businesses and growth year-over-year. and We executed AI marketing future in on services, areas, the key product our while including services XX.X% our

and large We solid our language continue towards foundations an delivered to both and of drive XXXX already major profitability models, two a versions future. for AI-driven have

share more in Now our color quarter. fourth I the to would like progress on

language X, to our processing abilities, and all, launched capabilities of we language second mode. teaching the with Last conversational education, X digital with for projects. model, characters, our human extensive upgrades large upgrades First to major Ziyue new Utilizing we this scenarios, and all-new model model Echo conversational capabilities. abilities released text month, Hi question-answering knowledge-based

P application, the We learning of and K-XX The conversation a learning. also extends Mr. language a major real-time tutoring AI from in introduced camera-based for all LLM covers K-XX and AI scenarios Tutor, the subjects. new of tutoring largest multi-modality one Ziyue application and to tool app

first to the an AI look all and and tutor to serving in be thrilled We forward with China users to are technology. more deliver this more subject

stars QAnything technologies, open have showcasing QX, far and two Additionally, on ability. since over garnered we technology sourced have so which our XX,XXX EmotiVoice GitHub,

growth. technology business is concrete driving already LLM

launched features. from LLM launched XXX% comes growth Most for of year-over-year subscription LLM features, translation three quarters. with grown LLM-driven AIBox over consecutive growth our quickly example, fees translation For and have we since the recently the

operating cash XXX.X XX%. net services The in increase of margin profit QX. net services is Services above reached strong revenues segment, reached of million. the XXX over year-over-year RMB data RMB for million, on stable largely XXX Learning inflow Momentum net digital from our was revenues million, a of basis. gross with an As year-over-year XX.X% content Furthermore, the RMB content

revenue Additionally, cover operating and QX in cost expenses. the could net

Youdao includes Literature improve -- Lingshi products their including primarily continue Departments users. and to and services for

In the users. high-quality disciplines of rate gathering I'm over the consultation have strengthening [ terms for for from the Moreover, our the basic praise service since refinement ] of academic AI to around efficiently quarter, of introduction retention in plan glad our share widespread Changi business was refinements, that in updates, Chauhan QX. writing we provided XX% third XX,XXX

up For content full XX.X% revenues expenses. RMB cost year and the net year-over-year, XXXX, covering digital reached services also billion, from X operating

level prediction advanced competition. Regarding The won XXX and students retention programming XX%. Go of services. CSP score of in This growth. competitive students courses Among them, quality courses programming prize. and our user year-over-year XXX% awards the CSP first reached XXXX, our STEAM achievement for courses courses courses, highlights rates approximately the XXX our system had received for the programming In

second was addition, in the the information In XXXX. of rewarded Zongheng prize Youdao consumption new competition China

quarter, expand a enhance service. role playing RMB attributed year-over-year growth a technology infrastructure, net to of surged the services our empowering the and upgrade peak online AI -- marketing larger provide cutting-edge advertisement the through over range AI million, broadening revenue recorded of client for Online in year-over-year services, larger fourth the X XX% This consecutive of to RTA our an quarters. us and is XXX.X data As revenues primarily base historic capabilities, XX.X%. marketing have to our applications. for extraordinary our technology growth our in and was

our AI of XX% workflow. have materials advertising about already current incorporated fact, In

of addition, OXO services In gaming, online XXX% rose and marketing in revenues entertainment, sports industries QX net over by from year-over-year.

RMB XX.X% net With revenues declining to regard million, XXX.X Smart the year-over-year. segment, to Devices amounted

Our to basis. of the a same sales overall the quarter revenue. impacting efforts time, reduce channels fourth investment this financial return At inventory, optimize continued improved has health channel the on of overall segment low to quarter-over-quarter

is Pad of first powered within believe our segment learning the the launched Learning P featuring Ziyue. us. We so Smart the LLM-based LLM have This all is industry's tutor. are headwinds the finished channel AI by Devices Mr. we temporary. behind AI pad We Product-wise, sales that Youdao reshuffling, XXX, recently Tutor our subject

happy fact, Youdao report making to the we with Pen launch our Dictionary February sold In in AX XX,XXX features, it week, #X on Pro most in more week in our history. LLM that the Pro. first XX, With units units I'm AI launched the XX first over and

paying we And the As are product summer. accelerating you our can the launched and on In Pro our EX. strong our launches. AI year, see, past years, started AX mostly were products we in new work is off. This year

liked new have time users and them. only more AI more more P because have devices than user word instruction and differentiations products attractive This Exclusive driving grammar AI by Youdao are features is AI are well. are and instruction, Mr. technology. and why before Our products These AI of features and like the satisfaction features selling high any Tutor growth.

So the in remain learning we of devices. future confident

RMB For of sales. education digitalization solutions, million in milestone reached over XXX we contract XXXX a major

Sports, since by Youdao Fun it been of of XXX current launch XX%. has the over Additionally, schools with the rate adopted over utilization

high-level Looking the let's take ahead, of business. a view

see COVID. for across groups are digital that and subjects after services steadily demand are last users First, learning increasingly year and since increasing content we -- across age

year, mainly is by Lingshi including continue new opportunity. established and position already content, Youdao a and This on we growth With capture and key business developing digital to literature growth teams experienced trajectory. this contents learnings content. on our to drive content is a areas, focusing multi-quarter good our in strong

in unique is a Another important factor level at technology. our high strengths AI

in build continue for in We tidal to wave on the educational technological like LLM our a leadership XXXX LLM.

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own quick had ramp and are products a first and and technology model our LLM up released mover a our here We We industry-first XXXX for quickly. multiple in products.

understanding we From content-based new marketing including will we and position learning As product view, devices, online over AI-powered, high-level in around contribute this services we this learning experiences learning the gain of in world. to of our people and a for leadership building LLM of are the a technology, and country year, lead apps. believe other more believe the generation to we products, high-quality more good

an now and give to Su is you on our Thank Peng financials. you update

Peng Su

listen highlights be our today further the presenting release some financial fourth Dr. XXXX. you, full and from details. to hello, Today, issued year earlier quarter Zhou, I you for everyone. to the of We encourage Thank and press will

or of intelligence were continuous the XXX.X USD XX.X our smart RMB quarter of the learning streamline XX.X% million million, quarter, the low was XXX.X XXXX. to for first our As revenue a the or return in XXXX, or from primarily learning on our down X.X% net were same total revenue of with marketing X.X% increase channel million, investment due million efforts Dr. period from representing USD XXXX. XXXX. mentioned, revenue period USD representing from RMB Zhou services X.X the XXX decrease same billion a fourth RMB same Net for period from to Net million, the products XXX.X of from devices

online properties. increase from our services marketing through from XX.X% for from advertisement million the or the third-party of year-over-year services period were XXX.X the XXXX. The were performance-based marketing a the same USD mainly revenue revenue increase million, in online to attributable increased RMB demand representing Net XX.X the Internet

fourth margin first XX.X% of XXXX margin the XXXX was RMB the same XXXX. was for XXXX. for XX.X% the same total Gross million, For of million of our of first same period for Gross quarter XXX.X with representing quarter, with the gross the of services first for for compared from margin for or compared for online period of XX.X% XXXX XXXX. profit first for decrease XX.X% services marketing with Gross was for quarter the learning X.X% smart XX.X% devices XX.X% was the a of XXXX. compared USD XXX.X the quarter quarter period

For total USD RMB million for of XXX.X with the year. XX.X million operating last million period RMB same the expense or fourth compared XXX quarter, for

more in our detail. at Looking expense

XXX.X with Our XXXX. XXX.X the sales million XXX.X development expense Research compared with in compared RMB quarter of expense RMB and were the were XXXX. in marketing first million of quarter XXX.X RMB first and million the RMB million

year. of Our operating the X.X% last quarter in with same was for income the first period of XXXX margin income, compared X.X%

and shareholders RMB XXXX, from or our XX.X loss, RMB to was income or USD diluted RMB for year. or ADS the from to the and quarter period continuing for per net or X.XX For XX.X shareholders for RMB USD of ADS period X.XX. continuing million XXXX million attributable attributable USD diluted operations first quarter net last income with net of same was compared continuing ordinary net per continuing RMB operations the USD million million million Basic for shareholder X year. ordinary first of operations ordinary from Non-GAAP income from to ordinary the same the quarter X.XX. first attributable income for basic first to with compared RMB net quarter attributable Non-GAAP shareholders was XX.X XX.X X.X million last X.XX of the was operation

activities operating or USD first RMB continuing the by quarter. provided was XXX.X cash for net the Our XX.X million million

our full results. year to Turning

or Our USD for Total our up XXXX XXXX X.X total year-over-year Total or X.X% million by smart were operating XXX.X to RMB services USD XXXX billion billion were keeping decreased our million. revenue XX.X% billion or for XXXX by learning X.X XXXX USD for or for flat USD for X.X from million. from USD million, RMB RMB XXX.X devices profit with XX.X% revenue XXXX. from or to marketing Net RMB compared compared XXX.X million. Net RMB increased gross for in into for the X.X online with USD X.X billion XXXX. XXX.X XXX.X revenue billion XXX.X was XXX.X billion RMB X.X down to RMB XXXX. to billion or our million, year-over-year expense services RMB XXXX million X.X revenue Net

basic attributable loss per diluted Net ADS for loss continuing million attributable ordinary and was or to XXX.X RMB from shareholders was X.XX to XX.X shareholders USD or for X.XX. from XXXX the net operation RMB continuing and USD million XXXX operations ordinary

Looking balance at sheet. our

time contract December of investments end of our USD compared the or our deposits the As liabilities, generated were XX, cash million RMB from reserved with deferred equivalent, short-term services period, the At RMB XX.X XX, or XXX.X billion XXX.X mainly revenue consists and USD as XXXX. our XXXX, December cash, RMB cash, learning totaled X.X of million. million of billion X.X which

questions. our Operator, attention. We concludes remarks. for like go This would to Thank open ahead. now prepared the to your you please your floor

Operator

Gong We begin question question-and-answer session. Brian Instructions] first Citi [Operator from the will Group. The is with now

Brian Gong

large our on question a model. have language I

for own is our pretty to we our AI Thank year. large you. to share Youdao channels launched the management monetization model language committed Can also year? and NIM the

Feng Zhou

about about I'll is education important also consensus and industry important take it. applications. this the AI one in for the Gates talks Bill of education Altman large are question. talks a that Yes. first, Sam most the is health language there model areas areas. most care

to scenarios One new important projects kind basically that. We of overall completely education really think, about businesses. two use two think One kinds existing then So our in capture monetize is is ways, in this and of value-adding projects. I things. the focus LLM is to

So a category, we couple have for of the first channels.

So smart very is important devices. obviously, one the one of

think I one is trend quite clear.

quickly features are selling of devices. for LLM becoming So our major points kind

] Iva instruction, the for explaining or So example, AI word that's like grammar for words most features Jinja and sentences [indiscernible] become the have instruction, features AI separate used features These phrases. [ this since Dictionary, the Pen dictionary to explaining the not selling Dictionary how Dictionary Dictionary, year. we points the won compare Pen, major app, market. and for Youdao Youdao I last for Youdao

was the web So One done [indiscernible]. on a with features. two that is interpretation

translation. machine is other The

really And works that learning that it the and is [ technology. for something way other also, scenario to players ] users care. a good have more and you that have gain market you don't. also share when So very the Then monetize specific only we really

also we We Mr. will be think course, the that Language] popular. also [ Of [Foreign Molson AI have Tutor ] P [indiscernible]

monetize through devices. technology smart the is one way this So we

driving course, significantly. talked also year-over-year growth translation, and subscriptions. to to the app and dictionary Of about our it over three contributed though AIBox a last key of has subscription for monetize quarters marketing in we online become for XXX% We our growth also feature

go XX% generative right go advertising somewhere a yes, they process, the in through materials, So -- over workflows. now, our of AI they through

materials significant. of One AI processed are five technology using already from generated AI using ad out it's pretty or that's technology. So

we apply So to that's how first existing AI category, the our businesses.

for maybe completely more the important new is one, other The term longer products.

we Hi course, app. of English have So Echo, the learning

also AI will P and yes, a we Mr. product, as So Tutor have too. stand-alone -- Yes.

AI future a So product. product P stand-alone upcoming. as It's is Mr. Tutor a

at look think products, cover these large If they scenarios. we these I apps, use

at a annual spoken revenue Korean learning, language Speak the we learning ] language fact, [ think, app, English English USD scenario our the in million significant if around example, in look yes. For And business is XX pretty already, itself. I has, peers,

So look Mr. for that if you even Yes, tutoring larger learning the I covers P AI future Tutor, there. an think there's bright at language it AI-powered scenario. And a is parents student the the question home a learning and drills and have AI If answer that then herself. much scenario. students question, can better exercises at doing the and than is tutor or home

would profound one of is say. a is idea important it most because a think I So in this profound idea, education. scenarios the I It's home

So an all a that I if if subjects a and value. students will then lot of fashion, we can can answer in that AI have instructional for high-quality AI the that create question the tutor think and answer questions learn the really

think in One I are impact So immediate at. summary, two that looking are categories channels, we business. the on the the an has the ones two

larger The in other term, one, longer probably but scope, yes.

LLM very will -- the I'm impact -- forward. this about have going business our the So optimistic on

Operator

with is CICC. question Wang next The Kelly from

Caini Wang

we is, in services of kind revenue flat XXXX. XXXX is see compared question that my So Language] to can learning [Foreign our

what focus our Services for -- the Learning wondering, XXXX? is in segment Thank just I'm you. the So

Feng Zhou

Yes.

take So too. this, I'll

major so is So at you if net services in in of XXXX, data yes, services, contributor look our this content learning revenue content. the

redefine digital after within change. and content new learning sector according we policy the the by So to service launched that's services services any

adult like other including and Lingshi include primarily these Literature some things courses. courses, not smaller Youdao and So

So reached content in XXXX, billion. services net revenues RMB from X [indiscernible]

XX.X% year-over-year, yes. So it is up

and -- around So XX%. the was margin gross

our so of business So the this we -- part met expectations.

Learning we services. XXXX, Content will the our focus be in Digital services of So think

few a So priorities. let me give regarding points our you

is user to quite the different satisfy area consumer needs. improving we are needs this in and first services So strong are

industry. is So Lingshi already our in leading the Youdao

also quite course is Literature popular. Youdao Our

will to As of gain so more and more personalized is the users key one we areas more provide we services users.

So class recently format with needs. Lingshi course introduced more students a for small advanced learning

service. the from different experiences. prerecorded content small provide our is actually with to experienced is The this offered the mostly new tutors So past video class and format

this for is new So feedback good format. very

Youdao user more time spend broadening more user course, how and a revision to -- much Literature, new to also age launched the wants provide groups choices Youdao the how course. to much wants on the with major of [indiscernible] the

industry, leadership products to and essentially, plans. in of these the different groups as needs improve more different products spending can personalized we So establish positions to cities, different the cater age

on think So we this opportunities front, good we have yes.

will policy Second, AI. like year. and of SKUs have be needs quickly The two this macro in yes, new families learning there China the in the changing last very environment, because the of trends been years

learner to interests see Services provide to humanitarian strengthening and Content we SKUs. new K-XX our life-long cultivate areas opportunities of be So of and Learning The their The focus important students. non-curriculum the broaden and naturally, high-quality teams, scope STEM on learning aimed services in will to competencies.

agile new lean take So approach, organically. and we projects, for so small grow and an start

and now. new incubation So these of the projects there already a going going few are on right through process

we the in projects these So will see fruits coming from quarters.

our we area model area our and productivity. results learning our in AI of a AI Thirdly, of efforts differentiate increase tutoring, and can diagnosis, to like productivity. there's The on and to AI apply key one products language personalized this thing do important our on technology, exercises is in on. applying lot large we and course, AI focus With is AI, we put

other a more fundamental to make in the So The apart is most activity. human area motivation. the learning, is teachings from that we obviously very the good important is really, motivation the very, really the learn. challenge to teacher want more very one believe is motivated, area labor-intensive students at But

can get results are activities do really teachers. we good for learning and If important results. also that, we lot a So from of labor require we focus on can then that

idea behind writing that AI For refinement. is the example, the

students one we refined already from quarter. writings in just For Youdao Literature, XX,XXX

that hour, teachers. hours is saves saved XX,XXX the one like for each if half over So then an

a And delivered. of significant. skills writing lot really that's improvement So

So add important a the perspective. this kind for win-win, company's can the is increase also productivity the value to we the of both from very and course unique

more we So have projects going like on. this

And will yes. have I year, more think it this on important and business impact so a the more

Su -- Peng, add. that's So you to yes, anything have if

Peng Su

in province can of add about I on of number reform for solving. problem color a confirmed including And Zhou's other -- exam in more the college the the reform, Yes, I And content the people a approach this -- adjustments after confirmed been entrance innovative in year. [indiscernible] question and services. reduction implementation exam Dr. in believe questions, scored in in most of news knows the comments the digital and has the the has

we So trend I deal see college think past expect about how for updated -- will them and exam. And the go of for -- and consulting entrance update for of consultings to entrance the test. if the we -- the digital including demand And year. the upgraded the in been formats have every services, exam college for you the single this test -- and the have family otherwise how in whole scenarios and our the has prepare format in time up the to the new the and been with the we content for digital the internally, when content new teach

the opportunities basic that think In And domestic plan in reputations in that's and they [indiscernible] high we the school. kind also we this [Foreign of very strong academic of XXXX. services driving the and Language], consultation think the sophisticated think we of will growth have services, be for for are the in addition, digital discipline, built a strengthening we the further

Operator

Chong is question with Thomas from Jefferies. next The

Thomas Chong

new that Following services XXXX? what in rapid marketing XXXX, in drivers we growth expect for are should online the growth the

Lei Jin

domestic product their [indiscernible] Jin. [ or the is a in of growing Lei all [indiscernible] is life significant performance business. driver player are ], of and XX% XX% range is They XXXX, this is market Baidu. The like maybe AD Tencent, This trend. advertising across this major the the the In space

our of in ] growth much business, are compared AI development the higher [ market, resulting in AD we we integrated up level have with scale we regular As the -- the into AD market. the

RMB increase We performance. X.X net every Besides strong utilization the of data of and and we quarter-over-quarter whole nearly revenue XXX% were deep effective year a continuous year-over-year. understanding billion growth in for the of capabilities, and growth focus AD the AI an on achieved client our in have the quarter demand, XXXX

attention gather ] internal will a advertising, just mentioned performance, focus strengthen to are Those and to to our AD we following advantage the the the great on above new key growth [ continue result. areas. XXXX, capabilities drivers in In explore digital the two paying

overseas the market. is First

Youdao extensive XXX translation brand global for solutions excels ADS of the is marketing placement. provides promotion business overseas languages. services digital ADS and translation Chinese the expertise This marketing field, influencer the a AD providing our for in the enterprises, and in Youdao

or the This [ Moreover, growth high-quality global connect agency advertising various will regions market our with users for influencers XX algorithm translating of AI countries more reach in technology, we in us the have in X to the over international translation recommendation expansion support and the self-developed X future. ] allows the neural authorized than million enabled an Notably, our industries become us billion the network further in over to recently directly brand. TikTok, Chinese which worldwide.

vertical Secondly, games. the of potential online like we industry, explore just the

marketing. the gaming collaborate advantages several including with in AD half in of to material understanding of have latter deep NetEase the In [indiscernible] we in began last content game the serving more and capabilities production, closely class We Games. year,

aiming will provide tap to a you. continue industries, we our aforementioned business. robust and growth in capabilities to further more the forward, for AI service into the and comprehensive vertical Moving advertisement the client leverage of plans to tailored Thank

Feng Zhou

this Feng lot the got point. like growth to add and I'd a why asked yes. about recently how achieve advertisement we is in this a business, Zhou. significant Yes, We

here. question the answer to try me Let

past is ability to to ads advertisement operations and success business key in combine deep the our our and strong believe future I technology.

is Youdao's ad unique. business

our monetization advancement a on brand not traffic are of nor agency. We a team

performance business. a are technology-based We ad platform

third-party upgraded traffic. addition assets in and performance traffic, own ads to we our So and for also deliver

revenue. contributes every and page view So of tiny a bit click every

to capability business. in That's language efficiency the AI maximize useful good it why this. for is is large value very key a the and to fit So learning in is creation. adapting of delivery model and And ad and this kind process business, our efficiency

of on good technology. -- really at of lot do lot they ad a A teams good sales ability, have not a strong But and the So lot ad the a business customers. other market, not strong acquiring tech necessarily companies on of have business operations. hand,

through have So years have, think of their skills. experience so our I we both acquired team

ad business operations understanding of So and deep technology.

So why And such we growth continue in to the that is that also have the in be better, believe skills year. future. if whether can past I also seen whether we can we those do determine successful will

I understanding hope business, in the we how this helpful about is think ad yes.

Operator

is Zhang ] with next Huatai Securities. The from question [ Bo

Unknown Analyst

taking to Good to return is for growth? evening, how Device Smart a business my In Thanks challenge. management. In Hello. XXXX, questions. faced This [indiscernible]. XXXX,

Feng Zhou

recent in Devices I've discussed the prepared on remarks. progress the

some more launch provide on recent on me directions. the the let details So product most and thoughts future some

with the over The in week. talked about the we expectations sold exceeded Pro units Pen, XX,XXX our Dictionary as first launch AX

AI Pen of terms and itself, Pro and has within support and best like off-line best the screen price grammar the and In translation range the the instruction. instruction high-quality word AX features product content

moreover, good for value a quality So affordable job and really supply team very delivering price, chain a a of good good relatively yes. our did

video to on selling the Douyin also So momentum. live launch contributed

launch. of AX a of rough the Pro kind breakdown that's So

gross similar products. worth is is that products, margin compared our than ratio for out Pro higher-priced It AX for more us it consumers has the to affordable a our although pointing actually higher-end

not sacrificing units. selling for So more margin are we

our gross our a maintain in-house able partners. design ratio this to our strong supplier We other with also of margin competitive product chain and IC supply collaboration abilities for close our are because with

category EX #X product, our part, this This a the year, also team other for delivering is launches to now. Devices product the the selling team in good in It its expect expectations. is listening met coming keep months. I good start the the The right and

we in planned, have forward, launches QX yes. more Going device QX and

is cover with look we peers. last our products going category. The to bit little our mostly at higher-priced to plan year both products you been products both higher in and and points -- forward focused lower on compared If their price have before, with leading a

do to time this the team So able supply the accumulated finally years the of to chains. the is quality slightly because it over products experience lower we because our experience and for and -- possible we're premium over this deliver maturity of of priced

now So to it believe users more combination. this reach right time we product with is the

let me say and products premium a words. few future For

So lot opportunity creating features, hardware features and more unique AI hardware value for users I provide believe a for products. of for premium

yes, on example, device ] with attractive popular run large grammar is device. instruction running are For very want Naturally, them users the users. itself models that our features to language helm [ become now like because on

As it is is -- more convenient, it better. is response time

one of the for we dictionary off-line supports the whether got actually asked So questions it most translation. is pen

whether key it dictionary our offline operations. Yes, these support line all is supports in But course, purchase thinking of pen yes. off user the a can that deciding the factor translation, that reflects of the

interesting. are So device ] on AI [ very

think we will So we have we them. to have yes, yes, -- when more we share

the lastly, sales So reorganization done. channel is

work recent significant focused, live sales video of The The to build a more agile launch. channels. and get ] of the the transitioned more to they ahead AOL lot new the The also from we've sales team to team's Douyin's out a [ momentum brought marketing has recommendations optimize first and need testament still a launch online them, good channels and sales to So and is structure. ability. more -- kind ROIs sales, of the to sales supply

launch the nonetheless, a is start. good very So

your answers hope question. that So I

Operator

]. with [ question Citi The [indiscernible] from is next

Unknown Analyst

one I Well, question. only have

in cash cash the XXXX, With the flow provide you. could improved flow outlook management observed for Thank in XXXX?

Yongwei Li

your to indicator in a in and XXXX XXXX healthy was fourth business by This that the around Notably, towards quarter, the note a net with inflow as key we I X% Wayne. your is reached question. the year-over-year. This pleased outflow question. is in improvement near flow healthy treated million, Operating year-over-year. a will period. narrowed rising The you remarkable operating cash our progressing Thank direction. cash our indicates for operating flow of of take cash operating a cash XXX XX% always company, by is prior record RMB for compared are

services basis, operating On achieve Learning helped further Online both improved a the Marketing cash makes inflow, flow and in settlement services more which confident us operating cash the positive XXXX. in

We expect XXXX. cash good for to maintain such in flow operating our momentum

our generate inflow optimizing to AI we to Firstly, will enhance technology business leveraging cash and operations. continue through ability

a In to capability also management quarter, expected to product this the due with cash that cash the Smart flow but performance addition, segment the activity the exhibit this in from preliminary segment, user channel the and improvements stronger It in acquisition Devices and and generation as segment. Learning boost noting fourth varying quarterly, in period. seasonality sales is Services worth to retention during the the are second

long-term from to us. been has NetEase Furthermore, a perspective, financial support providing

For the years in loan release cash earnings we area Thanks. resources. the XXXX. and in $XXX as maturity especially on In XX, flow our technologies million disclosed amounting for March we instance, XXXX, long-term with very should of in to confident investment our development Youdao's our facilitate dated core facility revolving in three business, of sum, are

Operator

would the the management concludes session. that I like conference or the comments. back to additional any for turn question-and-answer to And over closing

Jeffrey Wang

us once again you joining today. for Thank

in out free Communications to Have the If or directly day. please any a to questions, U.S. feel contact China Financial us reach or you have Youdao great at further Pearson

Operator

you thank gentlemen, conference and now Ladies the is for joining over.

Thank your may disconnect telephones. You you.

Youdao (DAO) 29 Feb 242023 Q4 Earnings call transcript