6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUERPURSUANT TO RULE 13a-16 OR 15d-16 OFTHE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2021

Commission file number: 001-39087

Youdao, Inc.

(Exact Name of Registrant as Specified in Its Charter)

No. 399, Wangshang Road, Binjiang District Hangzhou 310051, People’s Republic of China +86 0571-8985-2163

****(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F  ☒          Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

EXHIBIT INDEX

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Exhibit 99.1

For investorand media inquiries, please contact:

In China:

Jeffrey Wang

Youdao, Inc.

Tel: +86-10-8255-8163 ext. 89980

E-mail: [email protected]

The Piacente Group, Inc.

Emilie Wu

Tel: +86-21-6039-8363

E-mail: [email protected]

In the United States:

The Piacente Group, Inc.

Brandi Piacente

Tel: +1-212-481-2050

E-mail: [email protected]

Youdao ReportsThird Quarter 2021 Unaudited Financial Results

Hangzhou, China – November 16, 2021 – Youdao, Inc. (“Youdao” or the “Company”) (NYSE: DAO), a leading intelligent learning company in China, today announced its unaudited financial results for the third quarter ended September 30, 2021.

Third Quarter2021 Financial Highlights

^1^ Gross billings is a non-GAAP financial measure. Gross billings for a specific period refers to the total amount of consideration for Youdao’s tutoring services sold mainly on Youdao Premium Courses, NetEase Cloud Classroom and China University MOOC, net of the total amount of refunds, in such period. See "Non-GAAP Measures" and "Unaudited Reconciliation of GAAP and non-GAAP Results" at the end of this press release.

^2^ Youdao Premium Courses are Youdao’s tutoring service offerings primarily focused on K-12 students, covering a wide spectrum of subject matters, learning goals and areas of interest.

Third Quarter2021 Key Operating and Financial Data **| | For the<br> three months ended September 30 | | | | | | || --- | --- | --- | --- | --- | --- | --- | --- || (in millions, RMB) | 2020 | | 2021 | | % of Change | | || Gross billings | | 955.5 | | 631.6 | | -33.9 | % || Gross billings of Youdao Premium Courses | | 877.0 | | 573.5 | | -34.6 | % || Paid<br> student enrollments of<br> <br>Youdao<br> Premium Courses (in thousands) | | 623.5 | | 368.7 | | -40.9 | % || Gross<br> billings per paid student enrollment of<br> <br>Youdao<br> Premium Courses (in RMB) | | 1,406 | | 1,555 | | 10.6 | % |"In the thirdquarter of this year, our four core pillars, namely learning products, vocational education courses, STEAM courses and education digitizationsolutions, had strong momentum. We have been making great endeavors to improve the learning efficiency of our users. Besides, we arealso taking steps to further fulfil our commitment to society," said Dr. Feng Zhou, Chief Executive Officer and Director of Youdao."Youdao hasalways been dedicated to complying with laws and regulations. As previously disclosed, we plan to dispose of our academic AST businessas part of our efforts to comply with regulatory requirements. We will continue to adapt our business to the evolving regulatory environmentand drive long-term sustainable growth through innovative technologies and products," Dr. Zhou concluded.Third Quarter2021 Financial ResultsNet RevenuesNet revenues forthe third quarter of 2021 were RMB1.4 billion (US$215.3 million), representing a 54.8% increase from RMB896.0 million for the same periodof 2020.Net revenues fromlearning services were RMB995.7 million (US$154.5 million) for the third quarter of 2021, representing a 65.9% increase from RMB600.4million for the same period of 2020. The year-over-year growth from learning services was primarily attributable to increasedrevenues from tutoring services, which were further driven by the growth in paid student enrollments during the period in the secondquarter of 2021.Net revenues fromlearning products were RMB254.5 million (US$39.5 million) for the third quarter of 2021, representing a 56.0% increase from RMB163.1million for the same period of 2020, primarily driven by the substantial increase in sales volumeof Youdao Dictionary Pen in the third quarter of 2021.Net revenues fromonline marketing services were RMB137.0 million (US$21.3 million) for the third quarter of 2021, representing a 3.4% increase from RMB132.6million for the same period of 2020.Gross Profit and Gross MarginGross profit forthe third quarter of 2021 was RMB785.6 million (US$121.9 million), representing a 90.9% increase from RMB411.6 million for the same periodof 2020. Gross margin increased to 56.6% for the third quarter of 2021 from 45.9% for the same period of 2020. Gross margin forlearning services increased to 66.2% for the third quarter of 2021 from 53.9% for the same period of 2020. The increase was driven byimproved economies of scale and ongoing optimization of Youdao’s faculty compensation structure.Gross margin forlearning products increased to 33.7% for the third quarter of 2021 from 29.8% for the same period of 2020. The improvement was mainlyattributable to the substantial rise in sales volume of Youdao Dictionary Pen 3.0, which carries a higher gross margin than other learningproducts.Gross margin foronline marketing services was 29.2% for the third quarter of 2021, compared with 29.5% for the same period of 2020.Operating ExpensesTotal operatingexpenses for the third quarter of 2021 were RMB914.9 million (US$142.0 million), representing a decrease of 29.9%, compared with RMB1.3billion for the same period of last year.Sales and marketingexpenses for the third quarter of 2021 were RMB650.2 million (US$100.9 million), representing a decrease of 43.4% from RMB1.1 billionfor the same period of 2020. This decrease was due to the reduction in marketing expenditures in K-12 tutoring services in the thirdquarter of 2021 due to the changing regulatory environment as previously disclosed.Research and developmentexpenses for the third quarter of 2021 were RMB193.3 million (US$30.0 million), representing an increase of 59.7% from RMB121.0 millionfor the same period of 2020. The increase was primarily due to higher payroll-related expenses associated with a larger number of coursedevelopment and technology professionals.General and administrativeexpenses for the third quarter of 2021 were RMB71.4 million (US$11.1 million), representing an increase of 94.8% from RMB36.6 millionfor the same period of 2020. The increase was mainly attributable to an increase in employee headcount and related expenses in the thirdquarter of 2021.Loss from OperationsLoss from operationsfor the third quarter of 2021 was RMB129.3 million (US$20.1 million), compared with RMB894.0 million for the same period in 2020. Themargin of loss from operations was 9.3%, compared with 99.8% for the same period of last year.Net Loss Attributableto Youdao’s Ordinary ShareholdersNet loss attributableto Youdao’s ordinary shareholders for the third quarter of 2021 was RMB128.9 million (US$20.0 million), compared with RMB877.8million for the same period last year. Non-GAAP net loss attributable to Youdao’s ordinary shareholders for the third quarter of2021 was RMB101.0 million (US$15.7 million), compared with RMB865.7 million for the same period last year.Basic and dilutednet loss per American Depositary Share (“ADS”) attributable to ordinary shareholders for the third quarter of 2021 was RMB1.05(US$0.16), compared with RMB7.73 for the same period of 2020. Non-GAAP basic and diluted net loss per ADS attributable to ordinary shareholderswas RMB0.82 (US$0.13), compared with RMB7.63 for the same period of 2020.Balance SheetAs of September30, 2021, Youdao’s cash, cash equivalents, restricted cash, time deposits and short-term investments totaled RMB1.3 billion (US$201.7million), compared with RMB1.2 billion as of December 31, 2020. For the third quarter of 2021, net cash used in operating activitieswas RMB628.7 million (US$97.6 million), capital expenditures totaled RMB22.1 million (US$3.4 million), and depreciation andamortization expenses amounted to RMB7.7 million (US$1.2 million). Youdao’s ability to continue as a going concern is dependenton management’s ability to implement an effective business plan in future periods in light of the changing regulatory environment,generate operating cash flows and continue to be able to obtain outside sources of financing as necessary for Youdao’s future development.Since its formation, Youdao has received various financial support from the NetEase Group, among others, currently including a RMB878.0million short-term loan and US$300.0 million revolving loan facility. In support of Youdao’s future business, NetEase Group hasagreed that the short-term loan will be automatically extended for a period of eleven months each time upon Youdao’s prior writtenrequest.As of September30, 2021, the Company’s contract liabilities, which mainly consisted of deferred revenues generated from Youdao’s tutoringservices, were RMB1.1 billion (US$175.8 million), compared with RMB1.4 billion as of December 31, 2020.Updateon Disposition of Academic AST BusinessAs previously disclosed,Youdao plans to dispose of its after-school tutoring services for academic subjects included in China’s compulsory education system(the “Academic AST Business”), as part of its efforts to fully comply with applicable PRC regulatory requirements. Youdaocurrently expects the transaction to be completed by the end of 2021, subject to execution of the definitive agreements and regulatoryapproval. There can be no assurance regarding the ultimate timing of the proposed transaction or that the transaction will be completed.In the third quarter of 2021, revenues from Youdao’s Academic AST Business accounted for approximately 25% of its total revenues.Conference CallYoudao’smanagement team will host a teleconference call with simultaneous webcast at 6:00 a.m. Eastern Time on Tuesday, November 16,2021 (Beijing/Hong Kong Time: 7:00 p.m., Tuesday, November 16,2021). Youdao’s management will be on the call to discuss the financial results and answer questions.Dial-in detailsfor the earnings conference call are as follows:| United States (toll free): | +1-888-346-8982 || --- | --- || International: | +1-412-902-4272 || Mainland China (toll free): | 400-120-1203 || Hong Kong (toll free): | 800-905-945 || Hong Kong: | +852-3018-4992 || Conference ID: | 10161838 |A live and archivedwebcast of the conference call will be available on the Company’s investor relations website at http://ir.youdao.com.A replay of theconference call will be accessible by phone one hour after the conclusion of the live call at the following numbers, until November 23,2021:| United States: | +1-877-344-7529 || --- | --- || International: | +1-412-317-0088 || Replay Access Code: | 10161838 |About Youdao, Inc.Youdao, Inc. (NYSE:DAO) is a leading intelligent learning company in China dedicated to developing and using technologies to provide learning content, applicationsand solutions to users of all ages. Building on thepopularity of its online knowledge tools such as Youdao Dictionary and Youdao Translation, Youdao now offers online courses coveringa wide spectrum of age groups, subject matters, learning goals and areas of interest. In addition, Youdao has developed a variety ofinteractive learning apps and smart learning devices. Youdao was founded in 2006 as part of NetEase, Inc. (NASDAQ: NTES; HKEX: 9999),a leading internet technology company in China.For more information,please visit: http://ir.youdao.com.Non-GAAP MeasuresYoudao considersand uses non-GAAP financial measures, such as gross billings and non-GAAP net income/(loss) attributable to the Company’s ordinaryshareholders and non-GAAP basic and diluted earnings/(loss) per ADS, as supplemental metrics in reviewing and assessing its operatingperformance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolationor as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted inthe United States of America (“U.S. GAAP”).Youdao definesgross billings for a specific period as the total amount of consideration for tutoring courses sold mainly on Youdao Premium Courses, NetEaseCloud Classroom and China University MOOC, net of the total amount of refunds, in such period. The management uses gross billings asa performance measurement because the Company generally bills students for the entire course tuition at the time of sale of the coursesand recognizes revenue proportionally over an average of the learning periods of different courses. Youdao defines non-GAAP net income/(loss)attributable to the Company’s ordinary shareholders as net income/(loss) attributable to the Company’s ordinary shareholdersexcluding share-based compensation expenses, amortization of intangible assets from business combination, impairment on long-term investments,adjustment for GAAP to non-GAAP reconciling items for the income/(loss) attributable to noncontrolling interests, and income tax effectsof above GAAP to non-GAAP reconciling items. Non-GAAP net income/(loss) attributable to the Company’s shareholders enables Youdao’smanagement to assess its operating results without considering the impact of these items, which are non-cash charges. Youdao believesthat these non-GAAP financial measures provide useful information to investors in understanding and evaluating the Company’s currentoperating performance and prospects in the same manner as management does, if they so choose.Non-GAAP financialmeasures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitationsas analytical tools, which possibly does not reflect all items of expense that affect our operations. In addition, the non-GAAP financialmeasures Youdao uses may differ from the non-GAAP measures uses by other companies, including peer companies, and therefore their comparabilitymay be limited.The presentationof these non-GAAP financial measures is not intended to be considered in isolation from or as a substitute for the financial informationprepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned“Unaudited Reconciliation of GAAP and non-GAAP Results” set forth at the end of this release.The accompanyingtables have more details on the reconciliations between our GAAP financial measures that are most directly comparable to non-GAAP financialmeasures. Youdao encourages you to review its financial information in its entirety and not rely on a single financial measure.Exchange RateInformationThis announcementcontains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of thereader. Unless otherwise stated, all translations from RMB to US$ were made atthe rate of RMB6.4434 to US$1.00, the exchange rate on September 30, 2021 set forth in the H.10 statistical release of the Federal ReserveBoard. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be,at any particular rate or at all.Safe Harbor StatementThis press releasecontains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private SecuritiesLitigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company’s beliefs and expectations,are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could causeactual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statementscan be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,”“target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,”“continue,” “is/are likely to” or other similar expressions. The Company may also make written or oral forward-lookingstatements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders,in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statementsthat are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements.Forward-looking statements involve inherent risks and uncertainties. Further information regarding such risks, uncertainties or factorsis included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this pressrelease, and the Company does not undertake any duty to update such information, except as required under applicable law. | YOUDAO, INC. || --- || UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS || (RMB and USD in thousands) || | As of December 31, | | | As of September 30, | | | As of September 30, | || --- | --- | --- | --- | --- | --- | --- | --- | --- || | 2020 | | | 2021 | | | 2021 | || | | RMB | | | RMB | | | (1) || Assets | | | | | | | | || Current assets: | | | | | | | | || Cash and cash equivalents | | 609,199 | | | 493,709 | | | 76,622 || Time deposits | | 263 | | | 292,111 | | | 45,335 || Restricted cash | | - | | | 396,042 | | | 61,465 || Short-term investments | | 584,999 | | | 117,673 | | | 18,263 || Accounts receivable, net | | 268,830 | | | 244,844 | | | 37,999 || Inventories, net | | 148,662 | | | 267,451 | | | 41,508 || Amounts due from NetEase Group | | 4,081 | | | 3,792 | | | 589 || Prepayment and other current<br> assets | | 235,532 | | | 204,615 | | | 31,755 || Total current assets | | 1,851,566 | | | 2,020,237 | | | 313,536 || Non-current assets: | | | | | | | | || Property and equipment, net | | 45,636 | | | 80,035 | | | 12,421 || Operating lease right-of-use assets, net | | 105,865 | | | 140,968 | | | 21,878 || Other assets, net | | 67,181 | | | 210,926 | | | 32,735 || Total non-current assets | | 218,682 | | | 431,929 | | | 67,034 || Total assets | | 2,070,248 | | | 2,452,166 | | | 380,570 || Liabilities, Mezzanine Equity and Shareholders' Deficits | | | | | | | | || Current liabilities: | | | | | | | | || Accounts payables | | 141,304 | | | 116,931 | | | 18,147 || Payroll payable | | 209,603 | | | 173,889 | | | 26,987 || Amounts due to NetEase Group | | 67,230 | | | 106,489 | | | 16,527 || Contract liabilities | | 1,440,489 | | | 1,132,744 | | | 175,799 || Taxes payable | | 54,895 | | | 25,196 | | | 3,910 || Accrued liabilities and other payables | | 602,044 | | | 627,013 | | | 97,312 || Short-term loans from NetEase<br> Group | | 878,000 | | | 878,000 | | | 136,263 || Total current liabilities | | 3,393,565 | | | 3,060,262 | | | 474,945 || Non-current liabilities: | | | | | | | | || Long-term lease liabilities | | 79,748 | | | 94,565 | | | 14,676 || Other non-current liabilities | | 4,043 | | | 11,894 | | | 1,846 || Total non-current liabilities | | 83,791 | | | 106,459 | | | 16,522 || Total liabilities | | 3,477,356 | | | 3,166,721 | | | 491,467 || Mezzanine equity^(2)^ | | - | | | 102,886 | | | 15,968 || Shareholders' deficit: | | | | | | | | || Youdao's shareholders' deficit | | (1,408,105 | ) | | (816,118 | ) | | (126,660 || Noncontrolling interests | | 997 | | | (1,323 | ) | | (205 || Total shareholders' deficit | | (1,407,108 | ) | | (817,441 | ) | | (126,865 || Total liabilities, mezzanine<br> equity and shareholders’ deficit | | 2,070,248 | | | 2,452,166 | | | 380,570 |*All values are in US Dollars.*Note 1:The conversion of Renminbi(RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.4434 on the last trading day of September(September 30, 2021) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.Note 2:Representing redeemablenoncontrolling interest arising from business acquisition. | YOUDAO, INC. || --- || UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS || (RMB and USD in thousands, except share and per ADS<br> data) || | Three<br> Months Ended | | | | | | | | | | | Nine<br> Months Ended | | | | | || --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- || | September<br> 30, | | | June<br> 30, | | | September<br> 30, | | | September<br> 30, | | September<br> 30, | | | September<br> 30, | | || | 2020 | | | 2021 | | | 2021 | | | 2021 | | 2020 | | | 2021 | | || | RMB | | | RMB | | | RMB | | | (1) | | RMB | | | RMB | | || Net revenues: | | | | | | | | | | | | | | | | | || Learning services | | 600,350 | | | 921,138 | | | 995,739 | | | | | 1,423,025 | | | 2,915,731 | || Learning products | | 163,106 | | | 206,290 | | | 254,513 | | | | | 302,647 | | | 662,722 | || Online marketing services | | 132,585 | | | 165,979 | | | 137,040 | | | | | 335,047 | | | 442,113 | || Total net revenues | | 896,041 | | | 1,293,407 | | | 1,387,292 | | | | | 2,060,719 | | | 4,020,566 | || Cost of revenues ^(2)^ | | (484,488 | ) | | (616,661 | ) | | (601,741 | ) | | ) | | (1,131,902 | ) | | (1,790,817 | ) || Gross profit | | 411,553 | | | 676,746 | | | 785,551 | | | | | 928,817 | | | 2,229,749 | || Operating expenses: | | | | | | | | | | | | | | | | | || Sales and<br> marketing expenses ^(2)^ | | (1,147,927 | ) | | (973,239 | ) | | (650,205 | ) | | ) | | (1,892,237 | ) | | (2,507,316 | ) || Research<br> and development expenses ^(2)^ | | (120,991 | ) | | (180,029 | ) | | (193,278 | ) | | ) | | (296,513 | ) | | (528,387 | ) || General<br> and administrative expenses ^(2)^ | | (36,639 | ) | | (67,850 | ) | | (71,368 | ) | | ) | | (93,080 | ) | | (188,572 | ) || Total operating expenses | | (1,305,557 | ) | | (1,221,118 | ) | | (914,851 | ) | | ) | | (2,281,830 | ) | | (3,224,275 | ) || Loss from operations | | (894,004 | ) | | (544,372 | ) | | (129,300 | ) | | ) | | (1,353,013 | ) | | (994,526 | ) || Interest income | | 6,626 | | | 6,735 | | | 5,959 | | | | | 21,851 | | | 15,768 | || Interest expense | | (7,843 | ) | | (7,764 | ) | | (7,835 | ) | | ) | | (23,369 | ) | | (23,216 | ) || Others, net | | 17,352 | | | 23,366 | | | 614 | | | | | 51,547 | | | 24,334 | || Loss before tax | | (877,869 | ) | | (522,035 | ) | | (130,562 | ) | | ) | | (1,302,984 | ) | | (977,640 | ) || Income tax expense | | (240 | ) | | (2,999 | ) | | (2,590 | ) | | ) | | (2,434 | ) | | (7,204 | ) || Net loss | | (878,109 | ) | | (525,034 | ) | | (133,152 | ) | | ) | | (1,305,418 | ) | | (984,844 | ) || Net loss attributable to noncontrolling<br> interests | | 304 | | | 681 | | | 4,254 | | | | | 383 | | | 5,802 | || Net loss attributable to ordinary<br> shareholders of the Company | | (877,805 | ) | | (524,353 | ) | | (128,898 | ) | | ) | | (1,305,035 | ) | | (979,042 | ) || Basic net loss per ADS | | (7.73 | ) | | (4.29 | ) | | (1.05 | ) | | ) | | (11.60 | ) | | (8.08 | ) || Diluted net loss per ADS | | (7.73 | ) | | (4.29 | ) | | (1.05 | ) | | ) | | (11.60 | ) | | (8.08 | ) || Shares used in computing basic net loss per ADS | | 113,495,422 | | | 122,332,306 | | | 122,715,264 | | | | | 112,517,299 | | | 121,131,136 | || Shares used in computing diluted net loss per ADS | | 113,495,422 | | | 122,332,306 | | | 122,715,264 | | | | | 112,517,299 | | | 121,131,136 | |All values are in US Dollars.Note 1:The conversion ofRenminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.4434 on the last trading dayof September (September 30, 2021) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.| Note 2: | | | | | | || --- | --- | --- | --- | --- | --- | --- || Share-based compensation in each category: | | | | | | || Cost of revenues | 1,665 | 2,496 | 1,843 | 286 | 3,876 | 6,220 || Sales and marketing expenses | 2,071 | 3,610 | 3,241 | 503 | 3,790 | 9,410 || Research and development expenses | 5,418 | 11,179 | 8,588 | 1,333 | 11,577 | 28,202 || General and administrative expenses | 2,917 | 6,548 | 6,799 | 1,055 | 7,658 | 18,503 | | YOUDAO, INC. || --- || UNAUDITED ADDITIONAL INFORMATION || (RMB and USD in thousands) || | Three<br> Months Ended | | | | | | | | | | | Nine<br> Months Ended | | | | | || --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- || | September<br> 30, | | | June<br> 30, | | | September<br> 30, | | | September<br> 30, | | September<br> 30, | | | September<br> 30, | | || | 2020 | | | 2021 | | | 2021 | | | 2021 | | 2020 | | | 2021 | | || | RMB | | | RMB | | | RMB | | | | | RMB | | | RMB | | || Net revenues | | | | | | | | | | | | | | | | | || Learning services | | 600,350 | | | 921,138 | | | 995,739 | | | | | 1,423,025 | | | 2,915,731 | || Learning products | | 163,106 | | | 206,290 | | | 254,513 | | | | | 302,647 | | | 662,722 | || Online marketing services | | 132,585 | | | 165,979 | | | 137,040 | | | | | 335,047 | | | 442,113 | || Total net revenues | | 896,041 | | | 1,293,407 | | | 1,387,292 | | | | | 2,060,719 | | | 4,020,566 | || Cost of revenues | | | | | | | | | | | | | | | | | || Learning services | | 276,568 | | | 387,345 | | | 336,108 | | | | | 673,331 | | | 1,066,632 | || Learning products | | 114,469 | | | 117,671 | | | 168,637 | | | | | 212,425 | | | 399,222 | || Online marketing services | | 93,451 | | | 111,645 | | | 96,996 | | | | | 246,146 | | | 324,963 | || Total cost of revenues | | 484,488 | | | 616,661 | | | 601,741 | | | | | 1,131,902 | | | 1,790,817 | || Gross margin | | | | | | | | | | | | | | | | | || Learning services | | 53.9 | % | | 57.9 | % | | 66.2 | % | | % | | 52.7 | % | | 63.4 | % || Learning products | | 29.8 | % | | 43.0 | % | | 33.7 | % | | % | | 29.8 | % | | 39.8 | % || Online marketing services | | 29.5 | % | | 32.7 | % | | 29.2 | % | | % | | 26.5 | % | | 26.5 | % || Total gross margin | | 45.9 | % | | 52.3 | % | | 56.6 | % | | % | | 45.1 | % | | 55.5 | % |All values are in US Dollars. | YOUDAO, INC. || --- || UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS || (RMB and USD in thousands, except per ADS data) || | Three<br> Months Ended | | | | | | | | | | | Nine<br> Months Ended | | | | | || --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- || | September<br> 30, | | | June<br> 30, | | | September<br> 30, | | | September<br> 30, | | September<br> 30, | | | September<br> 30, | | || | 2020 | | | 2021 | | | 2021 | | | 2021 | | 2020 | | | 2021 | | || | RMB | | | RMB | | | RMB | | | | | RMB | | | RMB | | || Net revenues of tutoring services | | 567,044 | | | 884,163 | | | 948,608 | | | | | 1,317,440 | | | 2,795,817 | || Add:  value-added tax | | 54,083 | | | 61,257 | | | 39,052 | | | | | 114,118 | | | 146,084 | || ending deferred<br> revenue | | 992,393 | | | 1,292,672 | | | 994,937 | | | | | 992,393 | | | 994,937 | || Less: beginning deferred revenue | | (658,052 | ) | | (1,155,891 | ) | | (1,292,672 | ) | | ) | | (407,861 | ) | | (1,356,041 | ) || deferred<br> revenue from acquired subsidiaries | | - | | | - | | | (58,295 | ) | | ) | | - | | | (58,295 | ) || Non-GAAP gross billings | | 955,468 | | | 1,082,201 | | | 631,630 | | | | | 2,016,090 | | | 2,522,502 | || Net revenues of Youdao Premium Courses | | 496,508 | | | 820,532 | | | 886,057 | | | | | 1,130,235 | | | 2,605,509 | || Add:  value-added tax | | 49,643 | | | 58,004 | | | 35,763 | | | | | 100,779 | | | 135,738 | || ending deferred<br> revenue | | 893,517 | | | 1,200,300 | | | 910,285 | | | | | 893,517 | | | 910,285 | || Less: beginning deferred revenue | | (562,643 | ) | | (1,054,107 | ) | | (1,200,300 | ) | | ) | | (344,111 | ) | | (1,253,527 | ) || deferred<br> revenue from acquired subsidiaries | | - | | | - | | | (58,295 | ) | | ) | | - | | | (58,295 | ) || Non-GAAP gross billings of Youdao Premium Courses | | 877,025 | | | 1,024,729 | | | 573,510 | | | | | 1,780,420 | | | 2,339,710 | || Net loss attributable to ordinary shareholders of the<br> Company | | (877,805 | ) | | (524,353 | ) | | (128,898 | ) | | ) | | (1,305,035 | ) | | (979,042 | ) || Add: share-based compensation | | 12,071 | | | 23,833 | | | 20,471 | | | | | 26,901 | | | 62,335 | || amortization<br> of intangible assets from business combination | | - | | | - | | | 996 | | | | | - | | | 996 | || impairment<br> on long-term investments | | - | | | - | | | 7,000 | | | | | - | | | 7,000 | || Less: tax effects on non-GAAP adjustments | | - | | | - | | | (149 | ) | | ) | | - | | | (149 | ) || GAAP to<br> non-GAAP reconciling items for the<br> loss attributable to noncontrolling interests | | - | | | - | | | (381 | ) | | ) | | - | | | (381 | ) || Non-GAAP net loss attributable to ordinary shareholders<br> of the Company | | (865,734 | ) | | (500,520 | ) | | (100,961 | ) | | ) | | (1,278,134 | ) | | (909,241 | ) || Non-GAAP basic net loss per ADS | | (7.63 | ) | | (4.09 | ) | | (0.82 | ) | | ) | | (11.36 | ) | | (7.51 | ) || Non-GAAP diluted net loss per ADS | | (7.63 | ) | | (4.09 | ) | | (0.82 | ) | | ) | | (11.36 | ) | | (7.51 | ) |All values are in US Dollars.