Thank you, operator. Please note that discussion today will contain forward-looking statements related to the future performance of the company, which are intended to qualify for the safe harbor from liability as established by the U.S.

Private Securities Litigation Reform Act. Such statements are not guarantees of the future performance and are subject to certain risks and uncertainties, assumptions and other factors.

Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect Youdao's business and financial results is included in certain company filings with the U.S.

Securities and Exchange Commission. The company does not undertake any obligation to update this forward-looking information, except as required by law.

During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For the definitions of non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial results, please see the 2025 fourth quarter and full year financial results news release issued earlier today.

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

Joining us today on the call from Youdao's senior management are Dr. Feng Zhou, our Chief Executive Officer; Mr.

Lei Jin, our President; Mr. Peng Su, our Senior VP; and Mr.

Wei Li, our VP of Finance. I will now turn the call over to Dr.

Zhou to review some of our recent highlights and strategic direction.

Thank you, Jeffrey, and thank you all for participating in today's call. Before we begin, I would like to remind everyone that all numbers are denominated in RMB unless otherwise stated.

In the fourth quarter, both net revenues and cash flow showed strong improvement. Net revenues reached RMB1.6 billion, a 16.8% year-over-year increase.

This growth was primarily driven by the learning services segment returning to a growth trajectory, combined with the sustained strong performance of our online marketing services. Net cash flow from operating activities for the quarter was RMB184.2 million, up 16.4% year-over-year.

Our operating profit for the fourth quarter was RMB60.2 million, marking our six consecutive quarters of operating profitability, representing an increase of 113% quarter-over-quarter and a decrease of 28.5% year-over-year. For the full year 2025, our key financial performance demonstrated positive momentum across the board.

Total net revenues for the year reached RMB5.9 billion, an increase of 5% year-over-year. Operating profit grew to RMB231.3 million, up 48.7% year-over-year.

Notably, 2025 marked the first year we achieved full-year net cash inflow from operating activities, totaling RMB55.2 million. This compared with a net cash outflow of RMB67.9 million in 2024.

This milestone reflects continued improvements in our competitiveness and operating efficiency and fulfills the financial objectives we set at the beginning of the year. I will now walk through the performance of each business line during the fourth quarter.

Starting with learning services. Fourth quarter net revenues reached RMB727.2 million, representing a 17.7% year-over-year increase.

This performance reflects a clear return to growth following the successful completion of our strategic restructuring. Within the segment, digital content services contributed RMB436.1 million, up 12.2% year-over-year.

Youdao Lingshi continued to perform well, with revenue surging over 40% year-over-year. Retention rates exceeded 75%, representing an improvement of approximately 5 percentage points.

These results demonstrate meaningful progress in both scale and user satisfaction. Technological innovation remains central to our product competitiveness.

During the quarter, Youdao Lingshi was recognized by CNR as the 2025 Industry Benchmark Education Group. This recognition affirms our leadership position and reflects our continued investment in education technology.

Building on the successful launch of our Chinese AI essay grading feature, we plan to introduce an English AI essay grading tool in the near future. Powered by our proprietary large language model, Confucius, and aligned with rigorous examination standards, this tool is designed to help students improve their writing proficiency and quality.

Our programming course also delivered strong results. Continuous product upgrades drove a 50% year-over-year increase in gross billings for the fourth quarter, supported by retention rates above 75%.

Importantly, student achievements remain a key measure of success. In 2025, hundreds of our students achieved top results in the NOIP and the CSP-J and S Finals, validating the quality and effectiveness of our programming curriculum.

Within the learning services segment, AI-driven subscription services delivered particularly strong performance. Fourth quarter sales exceeded RMB100 million, representing an over 80% year-over-year increase.

For the full year 2025, total sales approached RMB400 million, a record high with annual growth exceeding 50%. This growth reflects both the expansion of our product portfolio and sustained demand for high-quality AI-powered apps.

We're driving this momentum through two primary avenues. First, we are expanding into new market segments through innovative applications.

In 2025, we launched Scholar AI, an integrated AI-powered plagiarism detection and writing refinement application. In the fourth quarter, its sales doubled quarter-over-quarter.

We have also recently entered into an official partnership with Turnitin, the global leader in academic and research integrity, which we expect to further accelerate adoption. Second, we continue to enhance our core applications.

The AI simultaneous interpretation feature within Youdao Dictionary and Youdao Desktop Translation achieved over 100% year-over-year sales growth in the fourth quarter. These innovations were recognized with multiple industry awards, including QbitAI's Outstanding AI Product and China AI Product of the Year.

Turning to online marketing services. Fourth quarter net revenues reached RMB660.9 million, up 37.2% year-over-year.

Growth was driven by increased demand from the NetEase Group, as well as overseas markets, supported by our continued investments in AI technology. This growth was broad-based across multiple verticals.

In gaming, stronger collaboration with NetEase Group and expansion of third-party clients drove a 50% year-over-year increase in advertising revenue. At the same time, we are capitalizing on the AI boom.

Rapid advances in large language models have fueled marketing demand from many high-growth AI apps. By positioning ourselves early as a preferred marketing partner in this trend, we achieved significant gains in client acquisition, resulting in revenue growth of over 50% for the quarter.

International performance was also strong. Overseas KOL revenues increased by more than 50% year-over-year in the fourth quarter.

In 2025, we successfully executed campaigns in over 50 countries. Our global capabilities were recognized by TikTok for Business, which named Youdao Ads as its 2025 Influencer Agency Gaming Industry Pioneer List, TikTok for Business 2025, further reinforcing our leadership in global digital marketing.

Gross margin for the online marketing segment was 27.8% in the fourth quarter, representing a 2 percentage points sequential improvement, despite a year-over-year decline. This reflects two deliberate strategic choices.

First, we prioritized client acquisition, with new clients accounting for approximately 30% of our advertisers this quarter. While margins are typically lower during onboarding, these partnerships provide a foundation for long-term value creation.

Second, we are beginning to see margin expansion from technological upgrades. The launch of our second-generation AI ad placement optimizer, which integrates automated creative production, has begun to improve both advertising efficiency and profitability.

In the smart devices segment, fourth quarter net revenues were RMB176.5 million, down 26.6% year-over-year. We continue to focus on improving this segment's overall operational health and made significant progress in 2025.

Our flagship Youdao Dictionary Pen remained the top-selling product on JD.com and Tmall during the November 11 shopping festival for the sixth consecutive year. Meanwhile, we continued to enhance the Youdao Tutoring Pen launched earlier in 2025, adding features such as intelligent knowledge cards and upgraded AI-powered video explanations.

Since launch, the system has generated over 600,000 videos. User engagement has been encouraging, with active users accessing tutoring features more than 10 times per day in the fourth quarter.

In summary, 2025 has been a year of comprehensive progress driven by our AI-native strategy. From the strong performance of our advertising business enabled by the AI ad placement optimizer, to improved user retention and engagement across our learning services, we have demonstrated that technological innovation translates directly into user value and commercial results.

Our expanding portfolio of AI subscription and device products, including Youdao Simultaneous Interpretation, Scholar AI, AnyDoc, and the AI Tutoring Pen, has broadened our reach to new user segments. Financially, we maintained strong discipline, delivered meaningful profitability growth, and our first-ever full year of net operating cash inflow.

This milestone underscores the sustainability and resilience of our business model. Looking ahead, we remain firmly committed to our AI-native strategy, with a clear focus on advancing our learning services and advertising businesses.

We will continue developing high-performance vertical large language models tailored to user needs, while actively capturing emerging opportunities such as AI agents, which significantly expand the potential for application layer innovations and data-driven value creation. Through these efforts, we aim to deliver differentiated user experiences while driving long-term sustainable growth.

We are not just participating in the AI transformation, we are building the foundation for sustained, intelligent growth. With that, I'll turn the call over to Su Peng for a more detailed discussion of our financial results.

Thank you.

Thank you, Dr. Zhou, and hello, everyone.

Today, I will be presenting some financial highlights from the fourth quarter and the full year of 2025. We encourage you to read through our press release issued earlier today for further details.

For the fourth quarter, total net revenue was RMB1.6 billion or US$223.7 million, representing a 16.8% increase from the same period of 2024. Net revenue from our learning services was RMB727.2 million or US$104 million, representing a 17.7% increase from the same period of 2024.

This year-over-year increase was primarily driven by the strong sales performance of AI-driven subscription services compared with the same period of 2024. Net revenue from our smart devices was RMB176.5 million or US$25.2 million, down 26.6% from the same period of 2024, primarily due to the decline in demand of smart learning devices in the fourth quarter of 2025.

Net revenue from our online marketing services was RMB660.9 million or US$94.5 million, representing a 37.2% increase from RMB481.7 million for the same period of 2024. This year-over-year increase was mainly attributable to the increased demands from the NetEase Group and overseas markets, which was driven by our continued investment in AI technology.

For the fourth quarter, our total gross profit was RMB705.4 million or US$100.9 million, representing a 10.1% increase from the fourth quarter of 2024. Gross margin for learning services was 62.5% for the fourth quarter of 2025, compared with 60% for the same period of 2024.

Gross margin for smart devices was 48.1% for the fourth quarter of 2025, compared with 43.9% for the same period of 2024. Gross margin for online marketing services was 27.8% for the fourth quarter of 2025, compared with 34.2% for the same period of 2024.

For the fourth quarter, our total operating expense was RMB645.2 million or US$92.3 million, compared with RMB556.6 million for the same period of last year. Looking at our expense in the more details: Sales and marketing expense for the fourth quarter of 2025 was RMB437.1 million, compared with RMB381.8 million in the fourth quarter of 2024.

Research and development expense for the fourth quarter of 2025 was RMB142.6 million, compared with RMB120.7 million in the fourth quarter of 2024. Our operating income margin was 3.8% in the fourth quarter of 2025, compared with 6.3% for the same period of last year.

For the fourth quarter of 2025, our net income attributable to ordinary shareholders was RMB48.2 million or US$6.9 million, compared to RMB83 million for the same period of last year. Non-GAAP net income attributable to ordinary shareholders for the fourth quarter was RMB58.7 million or US$8.4 million, compared with RMB91.8 million for the same period of last year.

Basic and diluted net income per ADS attributable to ordinary shareholders for the fourth quarter of 2025 were RMB0.41 or US$0.06 and RMB0.40 or US$0.06, respectively. Non-GAAP basic and diluted net income per ADS attributable to ordinary shareholders for the fourth quarter were RMB0.50 or US$0.07 and RMB0.49 or US$0.07, respectively.

Our net cash provided by the operating activity was RMB184.2 million or US$26.3 million for the fourth quarter. Turning to our full year results.

Our total revenue for 2025 increased by 5% to RMB5.9 billion or US$845 million. Net revenue from our learning services for 2025 down by 4.2% year-over-year to RMB2.6 billion or US$376.2 million.

Net revenue from our smart devices for 2025 down by 18.2% year-over-year to RMB739.6 million or US$105.8 million. Net revenue from our online marketing services for 2025 were up 28.5% year-over-year to RMB2.5 billion or US$363 million.

Total gross profit for 2025 were RMB2.6 billion or US$374.2 million, compared with 2.7 billion in the 2024. Total operating expense for the 2025 decreased to RMB2.4 billion or US$342.6 million, compared with RMB2.6 billion in 2024.

Net income attributable to ordinary shareholders for the 2025 were RMB107.3 million or US$15.4 million. The basic and diluted net income per ADS attributable to ordinary shareholders for 2025 were RMB0.91 or US$0.13 and RMB0.90 or US$0.13, respectively.

For 2025, net cash provided by the operating activity was RMB55.2 million or US$7.9 million, compared with net cash used in the operating activity of RMB67.9 million for 2024. Looking at our balance sheet, as of December 31st, 2025, our contract liability, which mainly consists of deferred revenue generated from our learning services, were RMB847.7 million or US$121.2 million, compared with RMB961 million as of December 31st, 2024.

At the end of period, our cash, cash equivalents, current and non-current restricted cash, and short-term investments totaled RMB743.2 million or US$106.3 million. This concludes our prepared remarks.

Thank you for your attention. We would now like to open the call to your questions.

Operator, please go ahead.

Thanks management for taking my questions, and congratulations on decent results. Can management share your thoughts on 2026 outlook and across different business lines?

Thank you.

Hello Brian, yeah. I will take the question.

Our overall goal for 2026 is to continue serving our users and customers with more innovative and competitive products while growing the business at a sustainable and healthy manner, as always. A key foundation supporting these objectives is our AI-native strategy which enhances our ability to innovate and compete effectively across our learning services and advertising businesses.

Let me provide additional details across our business lines. First on the online marketing services.

In 2025, online marketing revenue grew by 29% to RMB 2.5 billion. In 2026, we plan to continue to focus on key growth areas by deploying more innovative solutions to capture favorable industry tailwinds.

We are seeing strong momentum in marketing demands across sectors such as AI applications, gaming, and also areas like short form drama content. To capture these opportunities, we will continue to leverage advanced AI capabilities, including our AI ad placement optimizer, which we will release version two shortly, and iMagicBox alongside programmatic advertisement and KOL marketing solutions.

These initiatives, we believe, will help us further improve targeting precision and conversion efficiency for our customers. Our goal remains clear: to deliver higher ROI for advertisers while providing a superior content experience for our users.

Second, for learning services, we completed the restructuring of our online courses business by the end of 2025, as you already know. We expect the learning services segment to return to around double-digit year-over-year growth in 2026.

Encouragingly, the segment already achieved 18% year-over-year growth in the fourth quarter. That's very good to see.

In terms of more details, Youdao Lingshi remains the centerpiece of our learning ecosystem. In 2026, we will continue leverage the stronger and stronger capabilities of our large language model Confucius to drive product innovation and service enhancements in Youdao Lingshi using AI to unlock new opportunities to user acquisition and engagement.

The second pillar of our learning services is AI-driven subscription services, which have been growing very rapidly. Total sales reached approximately RMB400 million, representing an increase of over 50% year-over-year in 2025.

The launches of new products Youdao AnyDoc, Youdao Yinslipin, and Scholar AI, Xueshucha, these new products were well-received, driving a record high revenue in this segment. Looking ahead, we believe 2026 will be a very important year for AI agents, which are more advanced AI systems capable of actually completing complex tasks and delivering more value to users.

We believe this industry trend plays to Youdao's strength, as we have a long track record of successfully developing user-centric applications. We plan to continue introducing new AI applications and agents to expand our services and portfolios this year, enhancing user engagement and strengthening our business models, which we expect will support sustained revenue growth.

Thirdly, on smart devices. For this segment, our priority is to continue improving the overall health of the business.

This year, we remain focused on two core products: the dictionary pen and the tutoring pen, deepening our presence in STEM learning scenarios to address user's critical pain points. In summary, we see a very meaningful opportunities across both the learning services and advertising segments, and we are well-positioned to capture them.

Our experienced teams and strong execution capabilities in applying AI technologies, they will enable us to continuously enhance our products and services. We will continue leveraging all our strengths in 2026 to better serve our users and customers while driving sustainable long-term growth.

Thank you.

Thank you.

Good evening, Zhou Zong, Su Zong. Thanks for taking my questions and congrats on achieving another solid quarter.

I just have a quick follow-up on the Youdao Lingshi business, because last year Youdao Lingshi made positive progress. What's the plan and outlook for 2026?

Can the management give us more details? Thank you.

Thank you, Brenda. This is Su Peng.

I will handle the questions. Heading into the 2026, first, we are very confident about the future growth of Youdao Lingshi business because of the outcome of the Lingshi's customers in 2025 and also the upgrades features of Youdao Lingshi's AI functions, and which pushed the retention rate to over 75%, just like Dr.

Zhou shared this information with you and in the previous comments. I think for the 2026, our strategy is in two ways: product refinement and efficient customer acquisitions.

The first, the AI is a core building to our differentiated competitive edge, we believe. We remain to commit our unique AI interactive class services model.

We will continue to expand and polish our AI features, ensuring that the technology truly serve the learning outcomes. Leveraging the power of our large language model Confucius, we are making the teaching process more precise and scientific, we believe.

Let's start with a little maybe more details. The first is the precision diagnose and the planning in our services.

We will improve the accuracy of diagnosing the knowledge gaps to generate a scientific and personalized learning paths, essentially teaching students according to their aptitude. Second, solving the core pain points.

We are addressing the critical needs in the college entrance and the prepare process with the practical features like the AI-based college admissions advisors and AI essay grading, comprehensively elevating the users experience and their loyalty. The next is about the dual approach we are exploring a more efficient paths for the customer acquisitions.

First is we need to highlight the organic traffic owned by Youdao. We will further activate the traffic value within our own ecosystem by deeply integrating with our apps like the Youdao Dictionary and the Mr.

P AI Tutors, as well as our smart devices like the Youdao Tutoring Pen. We can improve the acquisition precision well-efficiently lowering the cost, leveraging the conversion from our existing broad user space.

Through new AI-driven channels, we are exploring the franchise customer acquisition channels powered by our AI features, using our technology and advantage to open up a new growth space and inject viability into our business. In 2026, driven by the tech innovation and guided by our user value, we expect to push the Lingshi business to a new heights.

We believe we are keep growing and keep investment in that business. I hope that answers your questions.

Thank you, Brenda.

Thank you, Su Zong. That's very helpful.

Thanks, Brian. Management, my question is regarding for advertisement.

In 2025, we saw that very strong the overseas advertisement growth. I just want to know that how does the management think about the outlook in 2026?

That's my question. Thank you.

Thank you. This is Lei Jin.

In 2025, our advertising business achieved several key milestones, including the launch of Youdao iMagicBox and our AI ad placement optimizer, alongside our official partnership with Google. Those initiatives drove our online marketing revenues to a record RMB2.5 billion, a robust 28.5% increase year-over-year.

Looking ahead to 2026, we aim to drive high-quality growth by deepening our core resources and pushing our technological boundaries. First, we will double down on our international KOL business.

We are capitalizing on wave of the Chinese enterprises going global, positioning ourselves as their strategic accelerator. This is based on our core strongholds.

We have built a highly competitive global traffic ecosystem with two key pillars. First, our resource moat.

We now reach over 20 million 30 30 million influencers and creators globally, with more than 1,000 top-tier influencers under exclusive contracts. This creates a significant barrier to entry.

Second, our service track record. We have successfully helped over 1,000 companies go global, covering more than 50 countries.

Our coverage is diverse, spanning traditional strongholds like gaming, e-commerce, automotive, and consumer electronics, while also capturing emerging opportunities like short-form drama. In 2026, we will build this further, using our resource advantage to serve more Chinese companies seeking global growth.

Second, we are actively exploring overseas programmatic advertising to drive tech-lead long-term growth. If the KOL business is about the human connection, programmatic advertising is an efficiency revolution based on technology.

We will leverage our proprietary vertical AD model, combined with our experience and broad client base from domestic programmatic ADS to explore this market abroad. Empowered by our LLM, we are committed to achieve more precise traffic distribution and higher ROI.

Our goal is to translate those technical capabilities into actual business increments, aiming to build a second growth curve for our overseas advertising business in the medium to long term. In summary, through the dual engines our international KOL business and the programmatic AD exploration, we expect to take our overseas advertising to the next level in 2026.

Thank you.

Thank you very much.

Thanks for taking my question. I'm Zhang from Huatai.

My question is, Youdao achieved a full-year positive net operating cash flow for the first year in 2025. Is the goal for 2026 to achieve a net inflow for the total cash flow?

Thanks.

Thank you for your question, Zhang. This is Wayne.

I will take your question. As we know, a company's total cash flow is composed of three three pillars: operating, investing, and financing activities.

Among these, operating cash flow stands as a most critical indicator of business healthy and long-term sustainability. Therefore, I would first like to address our performance and strategic objectives regarding operating cash flow.

Enhancing profitability and secure positive operating cash flow were our core target for 2025. As mentioned by Dr.

Zhou, we have successfully delivered on both of these goals last year. Looking ahead to 2026, our objective is to achieve faster growth in operating profit and propel our operating cash flow to a more meaningful and substantial level.

Our confidence in this trajectory is rooted in three key drivers. First, AI-driven empowerment.

The widespread integration of AI is profoundly transforming our product form and services models. In 2025, we successfully validated AI's immense potential for enhancing quality and efficiency across our business lines.

Second, the momentum of our core business units. Powered by Confucius, Youdao Lingshi, advertising, and AI-driven subscription services are expected to maintain their strong momentum.

This is expected to drive acceleration in the year-over-year growth of our total revenue and the improvement in operating profits. Third, the continuous upgrade of refined management.

By optimizing credit management for our B2B operations and other key processes, we have significantly bolstered our financial resilience and risk mitigation capabilities. Regarding the goal of achieving a positive total cash flow, we maintain a balanced and rational stance.

We will not blindly tighten expenditures simply to reach a positive figure on paper. Instead, we will seek the optimal equilibrium between strategic investment opportunities and the cost discipline.

Should strategic investment targets emerge in the market, we will move decisively to capture them. Furthermore, when cash reserves are sufficient, we will optimize our capital structure by investing in wealth management products or repaying principal on loans from our parent company.

While these actions are recorded as investing or financing cash outflow, which may affect the total cash flow figure in the short term, however, they serve to increase interest income or reduce financing interest costs in the long run. Above all, we will prioritize the continuous improvements of our operating cash flow, as it is the most valuable cash flow metric.

Building upon this, we will also steadily advance the healthy development of our total cash flow to generate long-term value for our shareholders. Thank you.

Thank you.

sorry, can you hear me now?

great. Dr.

Zhou and Zhou Zong, thank you for taking my question. Congratulations on a very solid quarter.

I recall Dr. Zhou mentioned in the opening remarks, 2026 is the year of AI agent.

My question is, in what areas of Youdao business will you plan to deploy the AI agent, and how significantly the potential impact will be? Thank you.

Hi hi hi Jialong. It's good to speak to you.

We we think AI agents is an area of particular interest to us. One of the key reasons is that so compared with chat products, we would call the first-generation AI products, AI agents, they they operate longer, they have access to more customer and user data, and they can make deeper and more meaningful decisions regarding how to serve the customer or user better.

Basically they they are more intelligent AI product that can create real values. We we look at all our business to see if we have opportunity to to apply this technology.

There are several we are already we have mentioned and we're working on. One is the regarding our advertising business.

We already have the AI ad placement optimizer product. Basically, there are a lot of opportunities to apply AI agents in ads, because ads is a is a is a is an area where a lot of experience and a lot of data is needed to achieve good results.

Before, the the the the the people operating the ad systems, they contribute a lot of the value in having good results, ad results. Now, we we can have the these agents to to try different combinations, to try more combinations, and actually transfer more knowledge and experience between ad campaigns of the same customer or even across across customers and segments to achieve better results.

This is this I believe is a is an area where a lot of value can be created just because simply because the sheer volume and scale of of ad of advertising. That's one area.

The other area, of course, is learning and productivity applications. One one example I can give is the AI simultaneous interpretation app.

It it is a so we think it it is a agent agent application, because compared with translation 5 years ago, it's it's very different. It combines the voice technology together with large language model-driven translation technology, and it automati- automatically summarizes the conversation, and in the future, we will be able to take help users take further actions after a either it's a it's a online meeting, or it's a it's a online course that the user is is experiencing.

Basically, we think there are a lot of possibilities and and combining these user scenarios with a subscription-based business model. Users are nowadays, the young users are fairly willing to pay for pay for services on a monthly or quarterly basis over subscription.

We think if you look at the numbers, we already have 400 million about 400 million RMB in subscription sales in 2025. We believe we still is at the beginning.

It's still it's still very early. We have we have a lot of room to grow this sales in and and And one last thing.

Today we we launched a new AI agent product, basically a basically a little bit like OpenClaw so basically a as a a 7 days 24-hour AI agent that runs on your computer and help you achieve achieve achieve tasks. It's called Youdao Lobster AI.

If you guys are interested, check it out. Yeah.

Hope that answers your question. Thank you.

Yes. That did.

Thanks Dr. Zhou for the detailed color.

祝您和有道的这个同事春节快乐。 好的，春节快乐。Thank you.

Thank you.

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