Youdao, Inc. (Youdao) is a technology-focused intelligent learning company in China.
Starting from online knowledge tools, the company offers a comprehensive suite of smart devices and learning services that are accessible, reliable and trustworthy.
In 2023, leveraging the rapid advancement of generative AI technologies, the company developed its own large language model (LLM), Ziyue, and unveiled a suite of AI-driven tools underpinned by Ziyue’s capabilities since 2023, including Hi Echo, an...
Youdao, Inc. (Youdao) is a technology-focused intelligent learning company in China.
Starting from online knowledge tools, the company offers a comprehensive suite of smart devices and learning services that are accessible, reliable and trustworthy.
In 2023, leveraging the rapid advancement of generative AI technologies, the company developed its own large language model (LLM), Ziyue, and unveiled a suite of AI-driven tools underpinned by Ziyue’s capabilities since 2023, including Hi Echo, an AI-driven digital human language coach providing personalized oral English speaking practice and real-time feedback, enabled through Ziyue, and Mr. P AI Tutor, a conversation-based tutorial function designed to extend the application of Ziyue to real-time and multi-modality tutoring across major subjects for students.
Youdao has developed and used technologies to provide learning applications, content, devices and solutions to users of all ages.
The company is a leading technology-focused intelligent learning company in China. Starting from online knowledge tools, the company offers a comprehensive suite of smart devices and learning services that are accessible, reliable and trustworthy.
For tens of millions of people, Youdao is the go-to destination for looking up a word, translating a foreign language, preparing for an exam, or picking up a new skill. Through technology, the company enriches the lives of people of all ages every day, guiding them on their journey of pursuing knowledge and sharing ideas.
Youdao was founded in 2006 as part of NetEase, a leading internet technology company in China, dedicated to providing online services centered around content, community, communication and commerce. In 2007, the company launched its flagship Youdao Dictionary, which is China’s leading language app. Youdao Dictionary had 45.8 million average MAUs in 2023.
Online knowledge or AI tools—a collection of dictionaries, empowered by leading-edge technologies, as well as a series of AI tools powered by Ziyue LLM. The company’s online knowledge tools are convenient, smart and powerful. The company offers most of its online knowledge tools for free, but monetize their massive user bases mainly through advertising. The company’s AI tools features AI-based technologies to facilitate personalized and efficient learning and usually the company offers them through users’ subscription. As these tools become ubiquitous in people’s lives, they have also helped drive organic user traffic to the company’s learning services and other products and services.
Learning services—primarily include (1) digital content services, which provide interactive learning features, primarily including Youdao Lingshi and Youdao Literature, (2) STEAM courses (operated mainly through Youdao Premium Courses), mainly consisting of Youdao Weiqi and Youdao iCode, (3) adult and vocational courses (operated through NetEase Cloud Classroom), including foreign language courses, post-graduate school entrance exam prep courses, vocational education courses, digital skills training courses, and other courses, such as China University MOOC. The company uses its extensive experience and know-how from the current course offerings to train instructors and teaching assistants and inform the company’s course development, which help the company attracts and retains students. The company integrates its core technologies into the learning and teaching process to create an engaging, interactive and customized learning experience across the company’s learning services.
Smart devices—primarily include Youdao Dictionary Pen, Youdao Listening Pod and Youdao Smart Learning Pad. The company’s approach to such devices is a seamless integration of AI algorithms and data processing into hardware devices that supplement the company’s online knowledge or AI tools and learning services. The company’s smart devices allow the company to further enhance users’ learning experience and efficiency.
Education digitalization solutions—include technologies and solutions licensed to schools or enterprise customers, such as Youdao Smart Learning Terminal, Youdao Smart Cloud and Youdao Sports.
Online marketing services—the provision of different formats of advertisement, mainly including performance-based advertising services and brand advertising services.
The company’s products and services are built upon a common set of core technologies, which allows the company to use data insights gained from an individual product or service to help optimize its entire product and service portfolio. The company is continuously reimagining and innovating its products and services. The company is doing this not only to cater to, but influence, the learning habits and lifestyles of the company’s users, to fulfill their goals and enrich their lives.
Technologies
The company’s leadership in technology is built by its smart, creative, diverse and dedicated team. The company has also founded Youdao AI Lab, its innovation center, to drive technology, enhance innovation and nurture aspiring engineers and entrepreneurs to propel the company’s long-term growth.
The company has developed the following core technologies to deliver an effective and enjoyable learning experience to its users across the company’s comprehensive suite of smart devices and learning services:
Optical character recognition (OCR). The company offers a wide suite of proprietary OCR technologies specifically designed to recognize massive volumes of physical learning materials. The company’s OCR technologies enable swift and precise recognition of (i) cursive handwriting; (ii) text in mixed languages; and (iii) tilted texts.
Language data mining. The company pioneered the development of systems to crawl the web for hundreds of millions of words and expressions in ‘parallel’ language pairs. This has enabled the company to accurately translate millions of rare, ‘out-of-dictionary’ words, phrases and terms, such as the titles of movies, books, names of individuals, and new technical terminologies. In addition, the company is also able to mine from the web bilingual sentence pairs using natural language processing (NLP) techniques. To achieve optimal translation results, the company aligns parallel language data with the company’s algorithms to filter noisy, less reliable data.
Neural machine translation (NMT) engine. NMT is an innovative approach to machine translation, which leverages deep learning of language data to produce significantly better translation results as compared to traditional machine translation models. According to the company’s internal evaluation based on Bilingual Evaluation Understudy, or BLEU, a widely recognized method for evaluating machine translation, the company outperformed other mainstream online translation services in China and globally in the accuracy of translation from Chinese to another language.
Automatic speech recognition (ASR) and text-to-speech (TTS). The company has developed advanced ASR technologies with industry-leading accuracy rates in Chinese and English. The company uses extensive human voice data generated by its users to reinforce the company’s ASR models to improve recognition accuracy. The company also has developed industry-leading TTS capability that converts text into human-like speech in Chinese, English, Japanese, Korean, and Portuguese, powered by machine learning, facilitating lifelike interactions with the company’s users.
Data analytics for adaptive learning. The company has built its proprietary adaptive learning engine and machine learning technologies to analyze massive data from students’ interactions with the company to understand students’ learning progress, provide intelligent and personalized feedback, and make predictions about their future performance.
Live-streaming technologies. The company’s live-streaming technologies and platforms can deliver superior reliability, scalability and performance. The company’s proprietary audio-visual coding and streaming technologies make it possible for the company to stream each live class to a massive number of participants simultaneously with low loss rates, even over weak internet connections. The company also offers various features, such as voice chats among multiple users and various visual and audio effects, to enhance the live-streaming learning experience.
Large language model (LLM). The company leverages the language understanding and generation from the LLM to achieve customized learning functions, and has developed its proprietary LLM ‘Ziyue.’ Ziyue integrates the knowledge of different school subjects and provides students with personalized analysis and instructions, which can be used in various application scenarios, including translation, oral language tutoring and composition mentoring. The company has applied Ziyue to its learning services, such as AIBox in Youdao Desktop Translation, and the company’s smart devices, such as Hi Echo in Youdao Dictionary Pen and Youdao Smart Learning Pad.
Offerings
A Holistic Product Innovation Approach
Learning is a lifelong process. With this in mind, the company offers a comprehensive portfolio of smart devices and learning services to cater to people’s varying learning needs throughout their lives.
Online knowledge or AI tools, including Youdao Dictionary and other dictionary and translation tools, as well as AI-based learning tools powered by the company’s Ziyue LLM, such as Hi Echo and Mr. P AI Tutor;
Learning services, mainly including digital content services, STEAM courses, adult and vocational courses, and other courses such as China University MOOC;
Smart devices, primarily including Youdao Dictionary Pen, Youdao Listening Pod and Youdao Smart Learning Pad;
Education digitalization solutions, mainly including technologies and solutions licensed to schools or enterprise customers, such as Youdao Smart Learning Terminal, Youdao Smart Cloud and Youdao Sports; and
Online marketing services, mainly including performance-based advertising services and brand advertising services.
The company takes an integrated, holistic approach to grow and manage its offerings, resulting in significant economies of scale and synergies. The massive loyal user base of the company’s knowledge tools and services generates organic traffic to the company’s other product and service offerings with a strong potential for monetization. As the company continued to develop its learning services primarily including digital content services, STEAM courses and adult and vocational courses, the company also benefitted from its strong course and content development capabilities, accumulated from developing the company’s Academic AST Business historically.
The company’s offerings are fully integrated from a technology and data perspective—the company has built its core technologies to support the full range of its offerings, and through the company’s massive user base, the company has amassed extensive data to deepen its data insights and train the company’s algorithms to drive operational efficiencies and enhance user experience across its offerings.
Online Knowledge or AI Tools
Youdao Dictionary
Launched in 2007, Youdao Dictionary is the company’s very first major product and flagship online language tool. It is China’s most popular and trusted online dictionary and translation tool. Youdao Dictionary has the following core features and strengths:
Extensive content. Youdao Dictionary provides users with easy and intuitive access to concise dictionaries created by the company’s in-house editorial staff. Powered by web reference mining technologies, it also provides an extensive array of machine-generated language-related content, including audio pronunciations, internet slang, buzzwords and bilingual example sentences. Users can also access 24 licensed dictionaries and encyclopedias, such as the New Oxford English-Chinese Dictionary and Collins Comprehensive English-English-Chinese Dictionary. As of December 31, 2023, Youdao Dictionary offered over 672 million entries across 109 languages.
Superior translation results. Youdao Dictionary translates words, sentences or even paragraphs as one speaks, types, writes or takes a picture. As of December 31, 2023, Youdao Dictionary supported two-way translation across 109 languages. In 2023, Youdao Dictionary processed a daily average of 66.1 million translation queries, making it one of the most frequently used online translation services in China. Youdao Dictionary delivers accuracy and translation quality, powered by the company’s proprietary NMT engine, which continually learns how to deliver more accurate and natural-sounding translation from a massive web and user database.
Rich user-centric functions. Youdao Dictionary offers a variety of tools and functions to enhance user experience, including:
Instant camera translation, which allows users to use their camera to near-instantly translate text from image across 22 languages, supported by the company’s advanced OCR technologies.
Instant speech-to-speech and speech-to-text translation, which translates instantly as the user speaks into text or spoken word across 44 languages, powered by the company’s ASR and TTS capabilities.
Whole-document translation, which allows users to upload and quickly translate entire documents in various formats.
Mouse-over translation, which works as a plug-in to mainstream web browsers, allowing users to view translation of text displayed on-screen instantly.
Offline model, which allows users to access the dictionary and translation library without connecting to the internet.
Writing Guide, a personalized, AI-enabled writing assessment tool across vocabulary, grammar and tense for students of all ages. Leveraging the company’s self-developed OCR and NLP technologies, Writing Guide recently introduced a function of word choice suggestions, which is aimed to enable students to deliver impeccable, mistake-free writing.
The company designs Youdao Dictionary as an all-in-one app connecting users to a wide range of learning tools and resources with its interface purpose-built to attract user traffic to the company’s other offerings. For example, Youdao Dictionary’s navigation bar allows users to view and enroll in its tutoring courses, and offers features from the company’s automated English essay grader, all within the Youdao Dictionary app without the need to separately download other apps.
Youdao Dictionary is accessed mostly through the company’s Youdao Dictionary mobile app that incorporates the full range of the company’s online dictionary and translation services, although users can access the online dictionary functions and the translation functions through respective websites. Most of Youdao Dictionary’s functions are offered to users free of charge, with the option for users to pay monthly, semi-annual or annual subscription fees for additional privileges, features and content.
Other Online Dictionary and Translation Tools
In addition to Youdao Dictionary, the company offers the following online dictionary and translation tools to address diverse user needs:
Youdao Translation, a tool specifically designed to support translation needs of business and leisure travelers across over 31 languages via camera and speech translation. Youdao Translation had 9.4 million average MAUs in 2023.
U-Dictionary, an online dictionary and translation app the company offers in Indonesia and other overseas markets; see ‘—Global Opportunities.’
Youdao Kids’ Dictionary, a smart tool that offers translation services in Chinese and English, with extensive content and interactive tools designed to make it fun to learn languages.
Despite their varying target user groups, these tools offer a substantially similar set of features and functions as Youdao Dictionary and are supported by the same set of language-centric technologies, including the company’s NMT engine and language data mining.
AI Tools
In 2023, the company launched Ziyue, its own large language model (LLM). Ziyue is China’s first LLM specifically for the education sector. Ziyue quickly distinguished itself by driving a suite of AI-powered educational products and services. In 2023, the company successfully completed the filing of Ziyue with the Cyberspace Administration of China, a move that underlines regulatory confidence in the company’s technological expertise and responsible innovation.
In 2023, the company launched Hi Echo, an AI-driven virtual English-speaking tutor. Hi Echo is the world’s first digital human language coach. Hi Echo, powered by Ziyue, offers personalized English language practice, tailored to each user’s abilities and preferences. This language coach was first launched on the Youdao Dictionary Pen X6 Pro in August 2023, followed by a mobile app version in October that quickly amassed over 100,000 users. With a comprehensive library of expressions and authentic accents, Hi Echo provides customized advice aimed at enhancing English proficiency. Covering diverse topics across different dialogue scenarios, Hi Echo enables users to engage in realistic conversational settings. Additionally, Hi Echo’s unique evaluation system offers real-time feedback on content, pronunciation, and grammar, ensuring a holistic learning experience.
In 2024, the company launched Mr. P AI Tutor, a conversation-based tutorial function designed to extend the application of Ziyue to real-time and multi-modality tutoring across major subjects for students. This innovative AI tutor was first launched with Youdao Smart Learning Pad X20 in January 2024 and has been well received by users.
Additionally, throughout 2023, the company launched the following products and features powered by the Ziyue LLM:
AIBox, an integral part of Youdao Desktop Translation and fueled by the capabilities of Ziyue, is a powerful tool for enhancing written communication. It offers users sentence refinement, grammar correction, writing suggestions, and text summarization;
AI writing refinement offers sophisticated writing assistance that extends beyond simple grammar corrections, delving into the refinement of sentence structure and the coherence of paragraphs;
AI translation, which delivers precise and contextually accurate translations;
AI University Application Adviser, a sophisticated tool designed to guide students through the often complex and daunting process of selecting colleges;
AI Q&A, an advanced question-and-answer feature designed to provide users with instant, accurate answers to a vast array of queries relating to learning English as a foreign language. Leveraging the power of Ziyue, AI Q&A can understand and process natural language questions, offering responses that are not only relevant but also contextually rich;
AI quiz recommendation, a feature designed to enhance learning; after students watch educational videos, it offers tailored quiz questions to both reinforce their understanding and evaluate their grasp of the material; and
AI grammar instruction, a feature designed to provide grammar instructions and explanations when processing translation queries.
Learning Services
The company has developed comprehensive offerings of learning services catering to the diverse learning needs of different age groups. The company’s learning service offerings mainly consist of (i) digital content services; (ii) STEAM courses; and (iii) adult and vocational courses.
Digital Content Services
In 2022, the company launched digital content services with interactive learning features, primarily including Youdao Lingshi and Youdao Literature. For example, within Youdao Lingshi, the company customizes learning tracks for students based on their diverse and ever-evolving learning needs, providing them with personalized exercise banks and quizzes to enhance their learning experience. In addition, the company’s pre-recorded video tutorials offer fragmented knowledge and exercises to help students achieve superior learning outcomes. Furthermore, the company also offers college admission consultation services for students.
STEAM Courses
In connection with the company’s disposal of its Academic AST Business, the company has been strategically shifting its focus to offering STEAM courses under the brand of Youdao Premium Courses. The company’s STEAM courses primarily include (i) Youdao Weiqi, (ii) computer coding courses and (iii) other STEAM courses.
Youdao Weiqi. The company launched Youdao Weiqi (Youdao Zongheng in Chinese) in 2020, an interest course that combines unique animation teaching with AI-powered quizzes and practices. Leveraging the company’s proprietary AI technology, students can practice adaptively with various levels of difficulty, and the company will generate learning reports automatically for both parents and students, including an intelligent analysis on diverse capabilities. In 2021, the company upgraded its Weiqi AI system and launched a WeChat mini-program, which features real-time assessments and interactive functions so that students can check their learning progress on their mobile devices in real-time. In 2022, the company launched the First National Children’s Weiqi Open Championship in collaboration with Chinese Weiqi Association and Jiangsu Chess Sports Association. The company also launched the Youdao Boardgame Academy app in the same year, on which users can learn Go and chess with the help of the company’s AI technology and play against each other. In 2023, the company launched the Second National Children’s Weiqi Open Championship in collaboration with Chinese Weiqi Association.
Computer Coding Courses. Through iCode, the company offers a wide range of online coding courses on professional computer coding, such as Scratch, Python and C++. The company develops the iCode curriculum by itself and in collaboration with experts from renowned institutions in China. In 2021, the company launched a new C++ offline course, in response to its users’ diverse and evolving needs. Youdao iCode features a Certified Software Professional assessment tool, which allows students to better track their programming learning progress. According to China Computer Federation, the organizing body of Certified Software Professional and National Olympiad in Informatics in Provinces contests, Youdao iCode became a Programming Trainer Accreditation (PTA) member in September 2021. In 2022, the company launched the self-developed ranking estimation system for CSP-J/S with an accuracy rate of 98%, which is a pioneering product in the informatics training industry. In 2023, 340 students from the company’s coding courses received awards in the CSP competition, including 106 students winning the first prize.
Adult and Vocational Courses
The company offers adult and vocational courses primarily through the company’s NetEase Cloud Classroom, a platform providing tutoring services mainly targeting adults in China.
Graduate school entrance exam courses. The company provides exam preparation courses for postgraduate entrance exams, which include comprehensive solutions, such as target consulting and hybrid tutoring by instructors and teaching assistants using AI technology.
Foreign language courses. The company offers courses for postsecondary students wishing to improve their English proficiency and English language skills in specific areas, such as grammar, vocabulary or oral communications. The company also provides preparation courses for students looking to take various English proficiency tests, ranging from TOEFL and IELTS, to the English test in the post-graduate entrance exams and other English certification exams in China. The company’s popular foreign language courses include Practical English designed to teach English grammar in a logical, systematic, and easily digestible way using a formulaic approach to understand complex grammatical forms. The company also offers practice exercises for students to test what they learn and see personalized feedback and analysis generated by algorithms.
Professional certification and skill courses. The company’s professional certification and skill course offerings mainly consist of certification preparation courses covering various professions, such as IT, accounting, human resources and teaching, all designed to equip students with the skills and knowledge sets required in workplaces to elevate their career prospects.
Other courses. The company’s other courses primarily include China University MOOC. MOOC stands for ‘massive open online course,’ which is a course designed to offer free or low-cost access to learning resources to a wide audience. In collaboration with the Higher Education Press, a publishing house under the supervision of the Ministry of Education of the PRC, the company operates China University MOOC, a platform offering online courses primarily targeting college students and adults in China. The company’s China University MOOC courses mainly include:
Courses in specific subjects across a wide range of academic disciplines commonly taught in postsecondary and higher education institutions in China, including both ‘general’ courses to provide a general idea of the subjects covered and ‘crash courses’ specifically designed for exam-taking students;
Test preparation courses for students preparing for the postgraduate admission exams of universities and higher education institutions in China; and
Vocational and professional training courses that cover a broad spectrum of occupations and professions, such as teaching, computer science, and business management.
China University MOOC offered 10,946 courses as of December 31, 2023, making it the leading MOOC platform in China. The China University MOOC courses are either prerecorded or live-streamed.
Most of the courses on China University MOOC are developed by third parties, mostly universities and other types of higher education institutions in China, and are offered for free. A minority of the courses on China University MOOC, mostly test preparation courses, are offered for tuition, and the company is authorized by the course content providers to offer such courses on the company’s online platform and share with them the revenues generated from sales of the courses.
The company’s adult and vocational courses are either prerecorded or delivered in a live format. These courses are developed by itself in-house or by third parties, and for those courses developed by third parties, the company is authorized by the course content developers to offer the courses on the company’s online platforms and share with them the revenues generated from the sales of the courses.
Features of The company’s Learning Services
Technology-Driven Learning Experience
The company integrates technologies into every major aspect of the learning and teaching process to ensure a superb learning experience. The company’s technology-driven learning experience provides the following key strengths:
AI tutoring. The company offers a set of advanced AI-based technologies, which the company collectively refers to as its ‘AI tutoring,’ to make learning more personalized and efficient while maintaining a high level of human touch.
Knowledge graph. Based on the company’s AI technology and data analytics, the company has built massive ‘knowledge graphs’ depicting different knowledge points, concepts and learning objectives, and supported a large quiz bank curated by the company’s course development professionals to help students understand the subject matter. As of December 31, 2023, the company had created 111 sets of knowledge graphs covering over 49,028 knowledge points.
Adaptive learning. Unlike a one-size-fits-all approach, the company tracks each student’s learning progress and then dynamically adapt its teaching to the student’s unique learning needs at a pace and level of difficulty that best benefits such students. The company’s adaptive learning approach also gives the faculty insight into how students are moving through the curriculum as individual students and subject and class levels evolve, which allows them to make appropriate instructional, intervention and course development decisions.
Customized educational content. Leveraging the company’s superior adaptive learning technology and data analytics, the company collects student learning and behavior data throughout their learning cycles to help the company understands their learning progress and predict through the company’s adaptive learning model how they will perform to achieve future learning objectives. This enables the company to provide its users with personalized learning content tailored to their study progress to ensure continuous learning improvement.
Course Development
The company focuses on cultivating creativity, craftsmanship and teamwork to develop the best content for the company’s users. Throughout the years, the company observed that many online education providers depend on a limited number of popular ‘star teachers’ to deliver high-quality content. To address this limitation, the company implements a standardized system for curriculum and learning content to ensure high-quality teaching by the company’s instructors and teaching assistants.
The company’s course development decisions at all levels are informed by its extensive data insights into students’ learning patterns and behaviors. For example, the company’s adaptive learning solutions generate detailed data at individual student, subject and class levels, such as the most frequently committed errors, which is used to guide the company’s course development processes. The company’s course development efforts are also informed by first-hand feedback and recommendations from instructors and students and analytics generated by the company’s smart devices.
Live Course Delivery
The company delivers its learning services primarily in a live-streaming format, which provides the following benefits:
Accessible and flexible. The live-streaming format maximizes flexibility for students to learn anytime, anywhere. Each live class is recorded and available for replay, allowing the company’s users to learn at their own pace.
Scalable. The live-streaming format allows the company to teach in large classes, make the best use of the company’s teaching resources, and rapidly expand the company’s user base in a cost-effective manner. This model also delivers compelling value propositions to the company’s instructors and teaching assistants by allowing them to reach the widest audience possible.
Interactive. The company’s live classes can be powerful interactive presentation tools to drive interaction and engagement among teachers and students. The company want its users to not just focus on course materials, but actively engage with teachers and each other, through real-time group audio or video chat, and picture and video sharing.
Interactive ‘Dual-teacher’ Model
The company mainly adopts a ‘dual-teacher’ model to cultivate an interactive, engaging learning environment, featuring instructors and teaching assistants working closely to deliver a course.
Typically, each course has one instructor, supported by one or more teaching assistants. Instructors and teaching assistants have different roles and responsibilities. Generally, the instructors are responsible for delivering courses and learning content to students, and the teaching assistants are focused on providing academic and administrative support to students during or after class hours. The company’s ‘dual-teacher’ model features real-time, AI-driven interactions during and after the live courses.
To ensure a seamless learning experience, the company requires its instructors and teaching assistants to stay in close touch with each other and with their students to understand their learning objectives and concerns. The company’s ‘dual-teacher’ model helps maximize its ability to improve teaching effectiveness and efficiency, and the personal, individual attention provided to the company’s users helps build a sense of community that drives student engagement and enhances learning results.
Smart Devices
The company develops and offers smart devices to make learning more productive and efficient for the company’s users. In most cases, the company’s smart devices are developed and designed by the company or in collaboration with third parties, while the manufacturing of such devices is outsourced to third-party manufacturers under original equipment manufacturer agreements.
Youdao Dictionary Pen
In July 2018, the company launched Youdao Dictionary Pen, a sleek, modern electronic translation pen with powerful Chinese/English translation capabilities. Powered by the company’s industry-leading NMT and OCR technologies, users can simply scan the words using Youdao Dictionary Pen, and its screen will instantly display the translations and definitions of the words without connecting to the internet. The company launched Youdao Dictionary Pen 2.0 and Youdao Dictionary Pen 2.0 Pro with enhanced functionality in August 2019 and June 2020, respectively, which has been widely accepted among students and parents as an effective device. The company launched Youdao Dictionary Pen 3.0 in December 2020, which incorporates certain innovative features, such as ‘Tap and Check’ and ‘Interactive Reading.’ These new features allow faster word lookups and enable young learners to read picture books.
The company continued upgrading Youdao Dictionary Pen and launched the People’s Education Version in September 2021. This product marks the company’s first strategic partnership with People Education Electronic & Audiovisual Press, whose parent company, People’s Education Press, mainly engages in the compilation, publication and distribution of school textbooks and other educational books in the PRC.
The company launched Youdao Dictionary Pen X5 and Youdao Dictionary Pen P5 in August 2022 and October 2022, respectively, to further expand the vocabulary bank and upgrade other functions of the device.
The company launched Youdao Dictionary Pen X6 Pro and Youdao Dictionary Pen S6 in August 2023. Youdao Dictionary Pen X6 Pro, the company’s flagship product, is equipped with applications of AI grammar instruction and digital human language coach, Hi Echo, powered by the company’s Ziyue LLM.
Youdao Listening Pod
Drawn upon the company’s AI-adaptive learning technology, the company launched Youdao Listening Pod in September 2021, a portable learning device that is designed to deliver an immersive English learning experience to users, and offer them with differentiated, interactive listening and speaking practices. With Youdao Listening Pod, users can study natural pronunciation by listening and reading over 7,000 recording clips of training content, interact and communicate lively with AI-powered chat bots and practice on mock questions to score their English listening and speaking capabilities. In 2022, the company launched an upgraded version of Youdao Listening Pod with an increased storage capacity and a new AI-powered learning cloud storage function. These new functions automatically generate Chinese and English subtitles for uploaded audio files with follow-along reading and repetition capabilities, making language learning more engaging and efficient. In August 2023, the company launched Youdao Listening Pod Pro, which features improved hardware functionality, such as CPU and microphones. The company’s Youdao Listening Pod Pro customizes English listening content to cater to learners’ specific needs at various stages, leveraging the company’s AI dialogue functions powered by Ziyue LLM for optimal support.
Youdao Smart Learning Pad
In August 2022, the company launched Youdao Smart Learning Pad Y10, the company’s first intelligent learning pad product. In October 2022, the company further introduced Youdao Smart Learning Pad X10, an upgraded version with improved AI-driven precision education, a larger screen and more storage. Backed by the company’s proprietary technology infrastructure, Youdao Smart Learning Pad X10 showcases a unique AI-supported ‘Learning Dashboard,’ which can track and present users’ learning performances and provide personalized suggestions focused on their academic weaknesses. Users can start from either uploading photos of their homework assignments and test papers to the plugged-in system, or conducting quizzes or exercises directly on the device. Leveraging the company’s comprehensive quiz bank with over 200,000 sets of mock exams, Youdao Smart Learning Pad X10 is able to quickly process and generate users’ performance reports encompassing accurate rates, areas of improvements and levels of expertise. In January 2024, the company launched Youdao Smart Learning Pad X20, featuring the Mr. P AI Tutor function. By virtue of the robust capabilities of Ziyue, Mr. P AI Tutor provides real-time multi-modality tutoring across major subjects for students, which is widely recognized by users. Additionally, Youdao Smart Learning Pad X20 offers high-quality learning materials, as well as supervision features for parents.
Education Digitalization Solutions
Education digitalization solutions mainly include technologies and solutions licensed to schools or enterprise customers. The company’s education digitalization solutions include:
Youdao Smart Learning Terminal
In 2020, the company launched Youdao Smart Learning Terminal, a device that automates paper-based homework processing and provides learning diagnosis through AI technology at schools. In October 2021, the company upgraded Youdao Smart Learning Terminal to the second generation, which introduced a feature of high-resolution scanning to enable batch scanning and uploading of homework and exam papers. Youdao Smart Learning Terminal 2.0 also enlarges the image capture area that allows teachers and students to easily capture and recognize the content of the learning materials.
In particular, the company helped the government of Binjiang District in Hangzhou to achieve education digitalization, where Youdao Intelligent Learning Terminal played an important role in helping instructors to analyze student learning curves and knowledge points, and improve their teaching quality and efficiency. In the fourth quarter of 2021, the company entered into a strategic partnership with Suzhou municipal government and Suzhou Education Bureau to empower the educational institutions in Suzhou with the company’s education digitalization solutions. In addition, the company formed strategic partnership with Haicang District of Xiamen in 2022. Going forward, the company intends to deepen its collaboration with more local governments and public schools with a commitment to further promoting education digitalization in China.
Youdao Smart Cloud
Youdao Smart Cloud is a cloud-based platform that allows third-party app developers, smart device brands and automobile manufacturers to access the company’s advanced OCR capability and NMT engine and incorporate them into their apps, devices, and services through application programming interfaces, or APIs. The company also licenses its OCR and NMT technologies and solutions to customers on a non-cloud basis. In addition, in collaboration with the Higher Education Press, the company also provides college and university customers with a cloud-based platform for them to build their online course offerings, as well as a range of ancillary technological support services.
Youdao Sports
In 2022, the company introduced Youdao Sports, a sports-focused educational system that utilizes the company’s proprietary visual recognition technology to gather, analyze, and evaluate students’ on-campus exercise data points. Youdao Sports covers a diverse range of sports categories, including 50-meter dash, long jump, and skipping rope. The system generates real-time analysis based on students’ movements and athletic performance, ultimately enhancing the teaching efficiency and productivity in the field of physical education.
In 2023, the company launched Youdao Fun Sports, an intelligent sports terminal that integrates sports record-keeping, sports performance assessment and physical education. Youdao Fun Sports also incorporates engaging and animated features during students’ sport activities to enrich their experience and enhance motivation. As of December 31, 2023, Youdao Fun Sports has been adopted by over 100 schools.
Online Marketing Services
The company offers online marketing services through the provision of different formats of advertisement, including but not limited to banners, text links, videos, logos, buttons and rich media. The company’s online marketing services mainly include performance-based advertising services and brand advertising services. In 2023, leveraging the company’s cutting-edge AI technology and enhanced data infrastructure, the company upgraded its Real-Time API (RTA) technology capabilities, which broadened the company’s client base and expanded the range of application.
Global Opportunities
The company sees massive opportunities in expanding in overseas markets. Leveraging the company’s experience in growing and monetizing a large user base in China, the company is well positioned to address the burgeoning, unmet demand for language apps and online marketing services in overseas markets.
The company’s principal product offered overseas is U-Dictionary, a free online dictionary and translation app that the company launched in March 2016. U-Dictionary primarily targets users in Southeast Asia (Indonesia, Vietnam, and Thailand), the Middle East (Egypt), America and Latin America (Mexico, Brazil). U-Dictionary had amassed over 278 million downloads as of December 31, 2023.
The company also offers Youdao Ads, a global leading digital marketing solution for brand expansion in global markets, which provides four main types of services, including integrated marketing, influencer campaigns, paid social advertising and E-commerce live. With the support of the company’s AI technology, recommendation algorithm, neural machine translation, and other proprietary technologies, the company connected more than one million influencers and celebrities and reached two billion users globally through Youdao Ads as of the date of this annual report.
The company plans to continue to expand globally and solidify its positions in overseas markets by refining the company’s existing offerings and launching new products and services to meet local needs.
How The company Generates Revenues
Sales of Smart Devices
The company sells smart devices to customers through retailers or distributors. The company recognizes revenues when control of the goods is transferred to the customer, which generally occurs upon the delivery to the end customers or upon the delivery to distributors.
Tuition Fees
The company charges tuition fees for its digital content services, STEAM courses, adult and vocational courses, and a portion of the China University MOOC courses. Tuitions are generally collected in advance and are initially recorded as deferred revenue. The company recognizes revenues when control of the promised tutoring services is transferred to the company’s customers. The company accepts payments of tuition through major third-party online payment solutions in China, bank transfers and credit cards.
The refund policy of the company’s tutoring services is based on a number of factors, including the total length of the course and whether the course has started when the refund request is made, among other things. For example, for some of the company’s tutoring services, the company offers an unconditional full refund within 90 days upon payment of the tuition if the course has not started when the refund is requested and a conditional full refund if less than 30 days have elapsed since the start date of the course.
Advertisement
The company’s platform provides a powerful medium for advertisers to engage the company’s massive user bases. The company offers advertising in various formats, including banner ads, video ads, as well as display ads that automatically appear when a user activates the company’s mobile apps.
The company primarily offers performance-based advertising solutions, where users click on its advertisers’ promotional links displayed on the company’s platforms and the internet properties of contracted third parties and engage directly with the advertisers. The company charges its performance-based advertising solutions mainly on a per-click basis. The company also generates revenues from brand advertising, which is focused on building the advertisers’ brands through logos, presence and other visual components. Most of the company’s brand advertisers pay the company fixed advertising fees.
To attract and retain large advertisers, the company also offers value-added marketing services, such as advertising effectiveness analysis and campaign management, to enhance the effectiveness of their advertising campaigns. These value-added services are typically offered as a package with the basic advertising services purchased by the advertisers without additional charges.
Subscription Fees
While users may access the company’s online knowledge or AI tools, such as Youdao Dictionary, free of charge, or subscribe them for memberships for additional functions, content and privileges. For example, the company offers users a paid subscription to Youdao Dictionary, with discounts available if users opt to subscribe with automatically renewable terms or a six-month or annual subscription.
Licensing Fees
The company licenses its technologies and services, principally through Youdao Smart Cloud, to business customers, for which the company receives a fixed licensing fee for a specified period or licensing fees on a pay-per-consumption basis.
Sales, Marketing and Branding
The company is focused on delivering a superior learning experience through better products and services. This has allowed the company to build a strong Youdao brand that generates significant organic traffic through word of mouth. The company’s reputation and awareness of its brand in China, and increasingly, abroad, provide the company with the best and most cost-efficient marketing channel.
The company generates user traffic and leads primarily from online channels. As a key sales and marketing strategy, the company cross-sells its comprehensive portfolio of products and services, which allows the company to effectively scale its business with modest traffic acquisition and marketing spend. For example, the massive and loyal user base of the company’s knowledge tools generates organic traffic to its learning services. In addition, the company employs mobile marketing, such as brand advertisements and marketing campaigns on app stores, leading mobile news apps and social media platforms, as well as through optimization techniques designed to improve the company’s ranking in popular search engines’ results.
The company also engages in offline marketing and branding to supplement its overall sales and marketing strategies. The company sponsored the variety show Sisters Riding the Wind and Waves Season 2 in January 2021. The company also signed Ms. Ying Na, a famous Chinese singer, as the promotion ambassador for the company’s learning services in January 2021. In August 2022, the company sponsored the First National Children’s Weiqi Open Championship in collaboration with the Chinese Weiqi Association and Jiangsu Chess Sport Association, which was highly recognized by the General Administration of Sport of China. In August 2023, the company launched the Second National Children’s Weiqi Open Championship in collaboration with Chinese Weiqi Association.
Intellectual Property
As of March 31, 2024, the company had registered approximately 428 patents with the PRC State Intellectual Property Administration, 431 trademarks with the PRC State Intellectual Property Administration, 328 copy rights with the PRC State Copyright Bureau, and 183 domain names, which include the registrations of the company’s core trademarks (‘Youdao’) and the domain names of the company’s main operating websites.
Seasonality
The company has experienced seasonal fluctuations in its results of operations. For example, the company tends to experience strong sale of the company’s smart devices as a result of the commencement of school term in September and various e-commerce promotions in November and December.
Regulations
The company provides information and services to its users through the company’s websites and mobile apps, which are classified as commercial internet information services as defined in the above provisions. To comply with the relevant laws and regulations, Youdao Computer, Linjiedian Education and Youdao Guangzhou Computer, the VIEs in the PRC, have obtained an ICP License, respectively.
Research and Development Expenses
The company’s research and development expenses were RMB743.4 million (U.S.$104.7 million) in 2023.
History
Youdao, Inc. was founded in 2006. The company was incorporated in the Cayman Islands in 2014.
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