Post-earnings recap
Reported
Thu, Aug 20, 2026
EPS actual
$0.11
EPS est.
—
EPS surprise
—
1-day move
+1.26%
Youdao's strong performance in Q2 2026, particularly in operating profit and AI-driven services, reflects its successful strategy in the education technology sector. The stock's 1.26% increase suggests investor optimism following the earnings report. Continued growth in AI capabilities and product launches may further enhance the company's market position in the coming quarters.
| Metric | Actual | Expected | Surprise |
|---|---|---|---|
| EPS | $0.11 | N/A | — |
| Revenue | RMB 1.5 billion | N/A | — |
| Operating Profit | RMB 111.5 million | N/A | +400% |
| AI-driven Learning Revenue | RMB 795.6 million | N/A | +20.9% |
| Gross Margin | 47% | N/A | — |
Management expressed confidence in the company's continued profitability and growth in AI-driven services. They highlighted the successful launch of new AI products and improvements in gross margins.
Operating profit surged nearly fourfold, marking the eighth consecutive quarter of profitability.
AI-driven learning services revenue increased by over 20% year-over-year.
Youdao, Inc. (DAO) operates in the consumer discretionary sector, focusing on education services. As a provider of online learning solutions, it plays a significant role in the growing demand for digital education, particularly in a post-pandemic world where remote learning has become more prevalent.
Last quarter
In Q1 2026, Youdao reported earnings of $0.05 per share, but revenue figures were not disclosed. Following the announcement, the stock dropped by nearly 7%.
EPS beat streak
0Q
EPS beat rate
0%
Avg EPS surprise
+0.00%
Avg 1-day reaction
+0.44%
With no analyst estimates available, expectations for this quarter remain uncertain. Investors will be closely watching for any signs of recovery in user engagement and revenue.
Bull case
If Youdao can demonstrate strong user growth and improved revenue figures, it may signal a turnaround, attracting more investors and boosting the stock price.
Bear case
Conversely, if the company fails to show significant growth or reports disappointing financials, it could lead to further declines in stock price, especially given the recent history of negative reactions.
The print will turn on these.
Q1
What is the current number of active users and how does it compare to previous quarters?
User growth is a key indicator of Youdao's market position and can significantly influence investor sentiment.
Q2
What are the expectations for revenue growth in the upcoming quarters?
Revenue growth will be critical for assessing the company's financial health and future prospects, especially after recent performance.
Why consensus could be wrong
The consensus may underestimate Youdao's potential for user growth due to increased demand for online education, which could drive revenue higher than expected.
Supporting evidence
The company's recent focus on enhancing its digital offerings may attract new users.
Historical trends show that significant user engagement can lead to revenue spikes, which may not be fully reflected in current estimates.
Key risk
If user growth exceeds expectations, it could challenge the current bearish sentiment.
Pre-commit to what would confirm each case.
This quarter's focus is on user engagement and revenue growth, which are pivotal for Youdao's recovery narrative.
Bull confirmed if
Demonstrating user growth of over 10% quarter-over-quarter would confirm the bull case.
Bear confirmed if
A decline in active users or negative revenue growth would confirm the bear case.
What the market is pricing for the move.
Implied Move
±27.20%
Historical Avg
±5.2%
The options market is pricing in a substantial move, indicating that traders expect significant volatility around the earnings report.
Options are pricing ±27.2% while DAO has averaged ±5.2% over the last 8 prints — setup is pricing rich.
ATM IV
0.7%
30d HV
76.5%
Likely market behavior by outcome. Not investment advice.
Beat & raise
If Youdao beats expectations, history suggests a potential stock increase of around 6.15%, confirming a positive trend.
In line / cautious
If results are in line with expectations, the stock may experience a muted reaction, reflecting ongoing uncertainty.
Miss
A miss could lead to a decline in the stock price, with historical averages suggesting a drop of around 6.15%.
The lines on the call that would change the story.
—
Est. EPS
$5.07
Est. Rev
$6.8B
Impl. Move
±15.6%