The first batch of educational large models passed the national filing and the financial statements of DAO.US were impressive, with record profits in the fourth quarter.

On February 29th, the education technology company NetEase Youdao (DAO.US) released the unaudited financial report for the fourth quarter of 2023 and the fiscal year 2023. This is also the first performance report after three months of approval of Youdao Education's large model "Zi Yue". In the fourth quarter, Youdao's net revenue reached 1.48 billion yuan, continuing to grow year-on-year; operating profit and operating cash net inflow both reached historical highs. Operating profit achieved a profit of 80 million yuan in a single quarter, an increase of 209.2% year-on-year, and operating cash flow net inflow of 160 million yuan, an increase of 91.0% year-on-year. In the fourth quarter, under non-US GAAP, the net profit attributable to ordinary shareholders of Youdao was 69.30 million yuan, compared to 31.10 million yuan in the same period last year. The main financial indicators for 2023 showed improvement year-on-year, with Youdao achieving a net revenue of 5.39 billion yuan, a year-on-year increase of 7.5%; operating losses narrowed by 39.8% year-on-year. Youdao CEO Zhou Feng said: "We will continue to leverage the advantage of AI technology, continuously upgrade the 'Zi Yue' large model, further explore the application scenarios of large models in the fields of education and advertising, accelerate the landing of products and applications, and better help users improve learning and work efficiency." "Zi Yue" continues to lead innovation and accelerate the landing of various large model applications. Since last year, ChatGPT has sparked a global craze for artificial intelligence, driving another major revolution in downstream application scenarios. Large models are naturally compatible with education, making education one of the best areas for the application of artificial intelligence technology. Relying on years of accumulation and layout in the field of artificial intelligence, NetEase Youdao launched the first domestic education large model "Zi Yue" in July 2023, and has since accelerated its pace and successively landed a series of large model applications. In January of this year, Youdao released the "Zi Yue 2.0" version, achieving comprehensive improvements in knowledge questioning and text processing capabilities in oral conversation and education scenarios. With the assistance of AI technology, several of Youdao's businesses have gained market attention and positive feedback. Based on "Zi Yue 2.0", Youdao launched the virtual oral English coach Hi Echo 2.0, which added a "oral proficiency level" function and expanded the range of virtual human roles. In addition, Youdao has established a strategic partnership with the British Council, the organizer of the IELTS examination, and it is expected that users will be able to experience IELTS oral simulation practice in Hi Echo in March of this year. With innovative technology and professionalism, Hi Echo has received love from a large number of users. Currently, it has nearly a million registered users. During the reporting period, Youdao released another native application based on the Zi Yue education large model - AI Family Teacher Xiao P Teacher. It can provide students with instant question-and-answer services covering all subjects and stages of learning, and has already been successfully applied in Youdao's latest smart hardware AI learning device X20. Xiao P Teacher has become the most popular innovative application on the AI learning device X20. As a leader in AI education, Youdao is also promoting the development of the large model industry by leveraging open source ecology. Following the open sourcing of its self-developed TTS engine "EmotiVoice" in November last year, Youdao has also open sourced its self-developed RAG engine "QAnything", both of which can be freely obtained on GitHub, further promoting the sharing and advancement of AI technology. AI helps various businesses to flourish, and the "application-first" strategy is effective During the reporting period, Youdao's learning services business continued to maintain steady growth, with a net revenue of 780 million yuan, a year-on-year stability. In the fourth quarter, digital content services achieved a net revenue of 510 million yuan, an increase of 13.4% year-on-year, with a gross profit margin of over 70%. Looking at the whole year, Youdao's net revenue from digital content services in 2023 reached 2 billion yuan, an increase of 11.7% year-on-year. In addition, the net revenue from digital content services is already able to cover costs and operating expenses. In the field of quality education, NetEase Youdao has provided high-quality courses and services through continuous innovation and upgrades. For example, Youdao's self-developed CSP finals assessment system pioneered the function of offline machine code calculation and optimized code evaluation and estimated score algorithms, leading to a 200% increase in the number of users of the system compared to the previous year. During the reporting period, Youdao's revenue from intelligent learning hardware was 220 million yuan, and channel optimization has been basically completed. With the support of AI technology, intelligent hardware products continue to be iteratively updated. In November, Youdao released the latest version of the Youdao Dictionary Pen P6 Professional Edition, breaking through the industry ceiling in terms of content resources, AI capabilities, and hardware technology. In early January, the new generation of Youdao AI learning device X20, equipped with "Xiao P Teacher", was officially launched, introducing a "three-in-one" mode of learning machine, practice machine, and student-exclusive computer, offering users an unprecedented learning experience. At the beginning of the new year, Youdao focused on the mid-range market and launched the new SKU Dictionary Pen A6 Pro and Listening LIPPOE6, with the A6 Pro selling 50,000 units in the first week of its release; E6 won the sales champion in the same category on JD.com, TikTok, and Tmall during its first sales. Online marketing services continued to show strong growth momentum this quarter, achieving a historical high in net revenue for the quarter of 470 million yuan, an increase of 96.9% year-on-year. This is the fifth consecutive quarter of net revenue growth of over 50% for this business. The growth is mainly attributed to advanced AI technology and enhanced data capability building. It is revealed that about 20% of advertising materials have been integrated into the AI workflow. In terms of international expansion, Youdao's online marketing has established partnerships with over 1 million professional high-quality influencers worldwide, directly reaching over 2 billion users in more than 75 countries and regions. In January 2024, Youdao Ads became an authorized advertising agent for TikTok for Business, marking the beginning of a new journey in international marketing. It is worth noting that with the deepening of the new round of technological and industrial revolutions, digital transformation in education has become a global consensus and has become a new track for companies to develop education. Youdao's educational information technology business in 202...The contract amount for the 3-year contract has surpassed 100 million yuan for the first time. Since its release in August, Youdao Qu Dungping has successfully entered over 100 schools and has been used regularly, with a usage rate of over 95%."Je ne sais pas." "I don't know."