Exhibit 99.1

For investor and media inquiries, please contact:

In China:

Jeffrey Wang

Youdao, Inc.

Tel: +86-10-8255-8963

E-mail: IR@rd.netease.com

The Piacente Group, Inc.

Emilie Wu

Tel: +86-21-6039-8363

E-mail: youdao@thepiacentegroup.com

In the United States:

The Piacente Group, Inc.

Brandi Piacente

Tel: +1-212-481-2050

E-mail: youdao@thepiacentegroup.com

Youdao Reports Fourth Quarter and Fiscal Year 2020 Unaudited Financial Results

Hangzhou, China – February 25, 2021 – Youdao, Inc. (“Youdao” or the “Company”) (NYSE: DAO), a leading intelligent learning company in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2020.

Fourth Quarter 2020 Financial Highlights

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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 online courses sold 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 flagship online learning offerings primarily focused on K-12 students, covering a wide spectrum of subject matters, learning goals and areas of interest.

Fourth Quarter 2020 Key Operating and Financial Data

Fiscal Year 2020 Financial Highlights

Fiscal Year 2020 Key Operating and Financial Data

“2020 was a banner year for Youdao. We made great financial and operational strides across our business, closing the year with excellent top line growth and positive operating cash flow in Q1, Q2 and Q4,” said Dr. Feng Zhou, Chief Executive Officer and Director of Youdao. “Our learning services and learning products segments prospered in the fourth quarter, led by our robust K-12 segment. Total gross billings of online courses climbed to RMB1.1 billion in the fourth quarter, up by 223% year-over-year and 17% quarter-over-quarter. We also introduced our Youdao Dictionary Pen 3.0, driving our total learning products sales to RMB237.3 million in the fourth quarter, up by 254% year-over-year.

“Retention rates remain strong. We continue to invest in our business and make great endeavors to drive sustainable and healthy growth. As we move into 2021, we will continue to refine the content of our online courses, upgrade our online learning products, and offer better and more comprehensive user experiences for our customers,” Dr. Zhou concluded.

Fourth Quarter 2020 Financial Results

Net Revenues

Net revenues for the fourth quarter of 2020 were RMB1.1 billion (US$169.6 million), representing a 169.7% increase from RMB410.4 million for the same period of 2019.

Net revenues from learning services were RMB731.6 million (US$112.1 million) for the fourth quarter of 2020, representing a 198.8% increase from RMB244.8 million for the same period of 2019. The year-over-year growth from learning services was primarily attributable to the increased revenues generated from online courses, which were further driven by a substantial increase in both the paid student enrollments for K-12 courses of Youdao Premium Courses and gross billings per paid student enrollment of Youdao Premium Courses. The paid student enrollments for K-12 courses of Youdao Premium Courses increased by 309.3% year-over-year to 659,200 in the fourth quarter of 2020. Gross billings per paid student enrollment of Youdao Premium Courses increased by 19.7% year-over-year to RMB1,302 in the fourth quarter of 2020.

Net revenues from learning products were RMB237.3 million (US$36.4 million) for the fourth quarter of 2020, a 253.8% increase from RMB67.1 million for the same period in 2019, which was primarily driven by the substantially increased sales volume of Youdao Dictionary Pen.

Net revenues from online marketing services were RMB137.8 million (US$21.1 million) for the fourth quarter of 2020, representing a 39.9% increase from RMB98.5 million for the same period in 2019. The year-over-year increase in revenues from online marketing services was attributable to the increase in performance-based advertisement through third parties’ internet properties.

Gross Profit and Gross Margin

Gross profit for the fourth quarter of 2020 was RMB525.5 million (US$80.5 million), representing a 329.2% increase from RMB122.4 million for the same period of 2019. Gross margin increased to 47.5% for the fourth quarter of 2020 from 29.8% for the same period of 2019.

Gross margin for learning services increased to 53.9% for the fourth quarter of 2020 from 30.0% for the same period of 2019. The increase was due to improved economies of scale and the continuous optimization of Youdao’s faculty compensation structure.

Gross margin for learning products increased to 39.5% for the fourth quarter of 2020 from 26.7% for the same period of 2019. The improvement was mainly attributable to the substantially increased sales volume of Youdao Dictionary Pen, which carry a higher gross margin profile than other learning products.

Gross margin for online marketing services was 26.9% for the fourth quarter of 2020, compared with 31.6% for the same period of 2019. The decrease was mainly attributable to the increase in performance-based advertisements through third parties’ internet properties, which typically have a lower gross margin profile.

Operating Expenses

Total operating expenses for the fourth quarter of 2020 were RMB978.2 million (US$149.9 million), representing an increase of 199.7%, compared with RMB326.5 million for the same period of last year.

Sales and marketing expenses for the fourth quarter of 2020 were RMB804.8 million (US$123.3 million), representing an increase of 291.1%, compared with RMB205.8 million for the same period of 2019. This increase was mainly driven by intensified sales and marketing efforts associated with student acquisition and branding enhancement, as well as increased compensation expenses incurred due to the expansion of the sales and marketing team for Youdao’s online courses.

Research and development expenses for the fourth quarter of 2020 were RMB128.1 million (US$19.6 million), representing an increase of 43.5%, compared with RMB89.3 million for the same period of 2019. The increase was primarily due to increased payroll-related expenses including share-based compensation expenses associated with an increased number of course development and technology professionals, as well as increased server and technical expenses due to the increased scale of online courses.

General and administrative expenses for the fourth quarter of 2020 were RMB45.4 million (US$7.0 million), representing an increase of 44.4%, compared with RMB31.4 million for the same period of 2019. The increase was mainly attributable to the increase in employee headcount and related expenses in the fourth quarter of 2020.

Loss from Operations

Loss from operations for the fourth quarter of 2020 was RMB452.8 million (US$69.4 million), compared with RMB204.0 million for the same period in 2019. The margin of loss from operations was 40.9%, compared with 49.7% for the same period of last year.

Net Loss Attributable to Youdao’s Ordinary Shareholders

Net loss attributable to Youdao’s ordinary shareholders for the fourth quarter of 2020 was RMB447.8 million (US$68.6 million), compared with RMB205.7 million for the same period of last year. Non-GAAP net loss attributable to Youdao’s ordinary shareholders for the fourth quarter of 2020 was RMB433.1 million (US$66.4 million), compared with RMB186.1 million for the same period of last year.

Basic and diluted net loss per American Depositary Share (“ADS”) attributable to ordinary shareholders for the fourth quarter of 2020 was RMB3.93 (US$0.60), compared with RMB1.95 for the same period of 2019. Non-GAAP basic and diluted net loss per ADS attributable to ordinary shareholders was RMB3.80 (US$0.58), compared with RMB1.76 for the same period of 2019.

Balance Sheet

As of December 31, 2020, Youdao’s cash, cash equivalents, time deposits and short-term investments totaled RMB1.2 billion (US$183.1 million), compared with RMB1.6 billion as of December 31, 2019. For the fourth quarter of 2020, net cash provided by operating activities was RMB129.2 million (US$19.8 million), capital expenditures totaled RMB15.9 million (US$2.4 million), and depreciation and amortization expenses amounted to RMB4.8 million (US$0.7 million).

As of December 31, 2020, the Company’s contract liabilities, which mainly consisted of deferred revenues generated from Youdao’s online courses, were RMB1.4 billion (US$220.8 million), representing an increase of 215.3% from RMB456.8 million as of December 31, 2019.

Fiscal Year 2020 Financial Results

Net Revenues

Net revenues for 2020 were RMB3.2 billion (US$485.4 million), representing a 142.7% increase from RMB1.3 billion for 2019.

Net revenues from learning services were RMB2.2 billion (US$330.2 million) for 2020, representing a 207.9% increase from RMB699.8 million for 2019. The increase was primarily attributable to the increased revenues generated from online courses, which were further driven by a substantial increase in both the paid student enrollments for K-12 courses of Youdao Premium Courses and gross billings per paid student enrollment of Youdao Premium Courses. The paid student enrollments for K-12 courses of Youdao Premium Courses increased by 357.0% year-over-year to 1.6 million in 2020. Gross billings per paid student enrollment of Youdao Premium Courses increased by 49.4% year-over-year to RMB1,343 in 2020.

Net revenues from learning products were RMB540.0 million (US$82.8 million) for 2020, representing a 255.1% increase from RMB152.0 million for 2019. The increase was primarily attributable to the significant increase in sales volume of Youdao Dictionary Pen due to its growing popularity.

Net revenues from online marketing services were RMB472.9 million (US$72.5 million) for 2020, representing a 4.4% increase from RMB453.0 million for 2019.

Gross Profit and Gross Margin

Gross profit for 2020 was RMB1.5 billion (US$222.9 million), compared with RMB370.6 million for 2019. Gross margin for 2020 was 45.9%, compared with 28.4% for 2019.

Gross margin for learning services increased to 53.1% for 2020 from 26.7% for 2019, primarily attributable to improved economies of scale and faculty compensation structure optimization.

Gross margin for learning products increased to 34.1% for 2020 from 29.2% for 2019, primarily attributable to more revenue arising from the sales of Youdao Dictionary Pen, which carried a higher gross margin profile than other products.

Gross margin for online marketing services was 26.6% for 2020, compared with 30.8% for 2019. The decrease was mainly attributable to the distribution of advertisements through third parties’ internet properties, which had a lower gross margin than last year.

Operating Expenses

Total operating expenses for 2020 were RMB3.3 billion (US$499.6 million), compared with RMB971.5 million for 2019.

Sales and marketing expenses for 2020 were RMB2.7 billion (US$413.3 million), compared with RMB622.9 million for 2019. The increase was mainly driven by intensified sales and marketing efforts associated with student acquisition and branding enhancement, as well as increased compensation expenses incurred by the expansion of the sales and marketing team for Youdao’s online courses.

Research and development expenses for 2020 were RMB424.6 million (US$65.1 million), an increase of 54.2%, compared with RMB275.4 million for 2019. The increase was primarily due to increased payroll-related expenses including share-based compensation expenses, as well as rental and facility expenses associated with an increased number of course development and technology professionals.

General and administrative expenses for 2020 increased to RMB138.5 million (US$21.2 million) from RMB73.3 million for 2019. The increase was mainly attributable to increased payroll-related expenses, fees paid to third-party professional service providers and increased credit losses allowance on accounts receivable.

Loss from Operations

Loss from operations for 2020 was RMB1.8 billion (US$276.7 million), compared with RMB600.9 million for 2019. The margin of loss from operations was 57.0%, compared with 46.1% for 2019.

Net Loss Attributable to Youdao’s Ordinary Shareholders

Net loss attributable to Youdao’s ordinary shareholders for 2020 was RMB1.8 billion (US$268.6 million), compared with RMB637.4 million for 2019. Non-GAAP net loss attributable to Youdao’s ordinary shareholders for 2020 was RMB1.7 billion (US$262.3 million), compared with RMB612.3 million for 2019.

Basic and diluted net loss per ADS attributable to ordinary shareholders for 2020 was RMB15.53 (US$2.38), compared with RMB6.68 for 2019. Non-GAAP basic and diluted net loss per ADS attributable to ordinary shareholders was RMB15.16 (US$2.32), compared with RMB6.42 for 2019.

Operating Cash Flow

For 2020, net cash used in operating activities was RMB321.6 million (US$49.3 million), capital expenditures totaled RMB36.9 million (US$5.6 million), and depreciation and amortization expenses amounted to RMB16.1 million (US$2.5 million).

Completion of public offering of ADSs

The Company completed a public offering of 7,000,000 ADSs with a total net proceeds of approximately US$232 million after deducting the underwriter commissions and relevant offering expenses in February 2021.

Change in Segment Reporting

To better reflect management’s perspective and match the segment presentation with recent business developments, the Company changed its segment disclosure to separately report the results of its learning products business. As a result, since the fourth quarter of 2020 the Company has reported the following segments: learning services, learning products and online marketing services. The Company has retrospectively revised prior period segment information to conform to current period presentation. This change in segment reporting aligns with the manner in which the Company’s chief operating decision maker (“CODM”) currently receives and uses financial information to allocate resources and evaluate the performance of the Company’s reporting segments.

Notes to Unaudited Financial Information

The unaudited financial information disclosed in this press release is preliminary. The audit of the financial statements and related notes to be included in the Company’s annual report on Form 20-F for the year ended December 31, 2020 is still in progress. In addition, because an audit of the Company’s internal controls over financial reporting in connection with section 404 of the Sarbanes-Oxley Act of 2002 has not yet been completed, the Company makes no representation as to the effectiveness of those internal controls as of the end of fiscal year 2020.

Adjustments to the financial statements may be identified when the audit work is completed, which could result in differences between the Company’s audited financial statements and this preliminary unaudited financial information.

Conference Call

Youdao’s management team will host a teleconference call with simultaneous webcast at 6:00 a.m. Eastern Time on Thursday, February 25, 2021 (Beijing/Hong Kong Time: 7:00 p.m., Thursday, February 25, 2021). Youdao’s management will be on the call to discuss the financial results and answer questions.

Dial-in details for the earnings conference call are as follows:

A live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.youdao.com.

A replay of the conference call will be accessible by phone one hour after the conclusion of the live call at the following numbers, until March 4, 2021:

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, applications and solutions to users of all ages. Building on the popularity of its online knowledge tools such as Youdao Dictionary and Youdao Translation, Youdao now offers online courses covering a wide spectrum of age groups, subject matters, learning goals and areas of interest. In addition, Youdao has developed a variety of interactive 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 Measures

Youdao considers and uses non-GAAP financial measures, such as gross billings and non-GAAP net income/(loss) attributable to the Company’s ordinary shareholders and non-GAAP basic and diluted earnings/(loss) per ADS, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Youdao defines gross billings for a specific period as the total amount of consideration for online courses sold on Youdao Premium Courses, NetEase Cloud Classroom and China University MOOC, net of the total amount of refunds, in such period. The management uses gross billings as a performance measurement because the Company generally bills students for the entire course tuition at the time of sale of the courses and recognizes revenue proportionally over an average of the learning periods of different online 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 shareholders excluding share-based compensation expenses. Non-GAAP net income/(loss) attributable to the Company’s shareholders enables Youdao’s management to assess its operating results without considering the impact of share-based compensation expenses, which are non-cash charges. Youdao believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating the Company’s current operating performance and prospects in the same manner as management does, if they so choose.

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools, which possibly does not reflect all items of expense that affect our operations. Share-based compensation expenses have been and may continue to be incurred in our business and are not reflected in the presentation of non-GAAP net income/(loss) attributable to the Company’s ordinary shareholders. In addition, the non-GAAP financial measures Youdao uses may differ from the non-GAAP measures uses by other companies, including peer companies, and therefore their comparability may be limited.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from or as a substitute for the financial information prepared 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 accompanying tables have more details on the reconciliations between our GAAP financial measures that are most directly comparable to non-GAAP financial measures. Youdao encourages you to review its financial information in its entirety and not rely on a single financial measure.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.5250 to US$1.00, the exchange rate on December 31, 2020 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation 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 cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can 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-looking statements 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. 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. Further information regarding such risks, uncertainties or factors is included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this press release, 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)

Note 1:

The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.5250 on the last trading day of December (December 31, 2020) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

YOUDAO, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(RMB and USD in thousands, except share and per ADS data)

Note 1:

The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.5250 on the last trading day of December (December 31, 2020) a set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

Note 2:

Share-based compensation in each category:

YOUDAO, INC.

UNAUDITED ADDITIONAL INFORMATION 

(RMB and USD in thousands)

YOUDAO, INC.

UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS 

(RMB and USD in thousands, except per ADS data)