The Zhitong Finance App learned that recently, Jefferies, an internationally renowned investment bank, released the latest report stating that it maintains the “buy” rating of the domestic education technology company NetEase Youdao (DAO.US), with a target price of 6.20 US dollars, and acknowledged the company's strategic initiatives to use AI to drive sustainable growth and profit.

On May 23, NetEase YouDao announced the unaudited financial report for the first quarter of 2024. Financial reports show that NetEase Youdao's net revenue for the first quarter reached 1.39 billion yuan, up 19.7% year on year. Of these, operating profit once again achieved a single quarter profit of 0.3 billion yuan and remained profitable for the first time for two consecutive quarters. Under non-US general accounting standards, net profit attributable to NetEase Youdao for the quarter was 0.2 billion yuan, turning a loss into a profit year on year, significantly better than market expectations.

Jefferies pointed out in the report that NetEase Youdao has shown outstanding performance in the field of digital content services. In particular, YouDao is leading, which is the part with the strongest user demand and the highest level of business health. Last year, the net revenue from digital content services reached RMB 2 billion, an increase of 11.7% over the previous year. Online marketing revenue increased sharply by 125.9% year over year, reaching 493 million yuan. The success of this market segment is due to a performance-based advertising platform that uses internal and external traffic to increase conversion efficiency by 50% driven by AI, demonstrating the potential of smart technology to drive sustainable growth. The total number of monthly active users of NetEase YouDao's AI subscription products has reached 100 million. Given the increasing demand for intelligent learning tools, these services represent an important growth channel for the future.

NetEase Youdao officially stated on the conference call that since last year, Youdao has been making efforts to control operating costs and expenses while improving operational efficiency. These efforts have paid off significantly, and for the first time, two consecutive quarters of profit have been achieved. Looking ahead, Youdao will maintain strict cost and expense management while striving to increase revenue. NetEase aims to be profitable throughout the year in the near future.

The company's management also stated during the performance conference call that they have always believed in long-term principles and insisted on making high-quality content and products. “We believe that sustainable growth and lasting success are built on superior products that meet and exceed customer expectations. As far as the outlook for this year is concerned, we will focus on digital content services, online marketing services, and AI subscription services.”

Furthermore, many domestic brokerage firms continue to be optimistic that NetEase's losses will narrow throughout the year, and CICC gave a rating of outperforming the industry.