Shares of Youdao Inc. (NYSE: DAO), the Chinese online education company, plummeted 5.39% in pre-market trading on Friday, following the release of its fourth-quarter and full-year 2024 earnings results. The stock's decline reflects the challenges faced by the company's learning services segment, which saw a significant revenue drop.
According to the earnings report, Youdao's net revenues from learning services in the fourth quarter decreased by 21.2% year-over-year to RMB 617.7 million ($84.6 million). The company attributed this decline to its strategic focus on a more selective customer acquisition approach, prioritizing higher return on investment engagements.
While Youdao achieved its first full-year operating profitability in 2024, with a net income of RMB 82.2 million ($11.3 million), the learning services segment remains a crucial component of the company's business. Youdao's CEO, Dr. Feng Zhou, acknowledged the challenges in the competitive landscape and business uncertainty, emphasizing the need to balance growth and profitability in the current economic environment.
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