Shares of Youdao Inc. (DAO) plummeted over 5% in pre-market trading on Thursday, following the release of the company's fourth quarter and fiscal 2024 financial results. Despite achieving its first-ever full-year profitability, Youdao reported declines in revenue across several key business segments.
For the fourth quarter, Youdao's total net revenue fell 9.5% year-over-year to RMB 1.34 billion ($183.6 million). The learning services segment, which includes online courses and tutoring, saw a 21.2% revenue decline to RMB 617.7 million ($84.6 million). Revenues from smart devices like the Youdao Dictionary Pen also dropped 8.1% compared to the prior year.
In the earnings release, Youdao CEO Dr. Feng Zhou highlighted the company's "continued strategic focus on a more selective customer acquisition approach, prioritizing higher ROI (return on investment) engagements" in the learning services business. This strategic shift likely contributed to the revenue declines in that segment.
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