Youdao, Inc.

Good day and welcome to UDAO's first quarter 2026 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jeffrey Wong, investor relations director of UDAO. Please go ahead.

Thank you, operator. Please note that the discussion today will contain forward-looking statements related to the future performance of the company, which I intend to qualify for the safe harbor from liability. as established by the U.S. Climate Security Litigation Reform Act. Such statements are not guarantees of the future performance and are subject to certain risks and uncertainties, exceptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect UDOT's business and its financial results is included in certain company filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For the definitions of non-GAAP financial measures, and Reconciliation of Gap to Non-Gap Financial Results, please see the 2026 Fourth Quarter Financial Results news release, issued earlier today. As a reminder, this conference is being recorded. A webcast replay of this conference call will also be available on UDOT's corporate website at ir.edu.com. Joining us today on the call from UDOT's Senior Management, Dr. Feng Zhou, our Chief Executive Officer, Mr. Lei Jing, our President, Mr. Peng Xu, our Senior VP, and Mr. Wayne Lee, our VP of Finance. I will now turn the call over to Dr. Zhou to review some of our recent highlights and strategic directions.

Thank you, Jeffrey, and thank you all for participating in today's call. Before we begin, I would like to remind everyone that all numbers are denominated in Myanmar B, unless otherwise stated. Yodal delivered a solid start in 2026, and net revenues were RMB 1.3 billion, up 3.8% year over year. Operating profit was RMB 57.5 million, marking our seventh consecutive quarters of operating profitability. While operating margin improved sequentially by 0.5 percentage points to 4.3%, year-over-year operating profit declined 44.7%, primarily reflecting our proactive investments in core strategic initiatives, including AI, as well as a high comparison base from the restructuring of learning services in the same period last year. Net operating cash outflow narrowed significantly by 60%. 3.6% year-over-year to RMB 93.1 million. Supported by successful AI product launches in Q1 and a strong pipeline ahead, we remain focused on delivering full-year improvements in profitability and cash flow in 2026. We continue to advance the AI technologies that drive our business growth. Just this week, we released Confucius 4, our open-source learning large language model. Its most important new feature is multi-model inputs, enabling industry-leading capabilities in solving and teaching K-12 subjects that require visual understanding, such as geometry. We also released EmotiVoice 2, our open-source, high-fidelity AI text-to-speech model, with advanced features including cross-lingual voice cloning. In addition, we launched Confucius Translation 4, our latest AI translation model, delivering industry-leading performance across 40 languages. With that, let me walk through the performance of each business line during this quarter. The revenues from the learning services segment were IMB $627.5 million, up 4.2% year-over-year. Youdao Lingshi maintained strong momentum with growth, growing by over 20% year-over-year in Q1. Product-improved innovation remained a key driver of this growth. Powered by our proprietary Confucius LRM, we launched English AI essay grading this quarter, further enhancing our differentiated AI-powered learning experience. The feature provides personalized, high-quality feedback reports in approximately one minute, improving learning outcomes for students while increasing operational efficiency for teaching assistants. Early adoption has been encouraging, with approximately 10,000 essays graded by AI to date. Our programming courses maintain strong momentum in the first quarter, with growth billions growing by over 20% year-over-year, supported by ongoing product enhancements and the strategic expansion of our user acquisition channels. In addition to business growth, our students continue to achieve outstanding results in top tier competitions, winning one gold, one silver, and two bronze medals at the 43rd National Olympiad in Informatics Winter Camp. In addition, one student was selected for the Chinese national team and won a gold medal at the 2026 International Winter AI Olympiad. These results underscore the depth of our teaching capabilities and the strength of our programming education ecosystem. Within learning services, our AI-driven subscription services continued their robust growth trajectory. In the first quarter, total sales exceeded RMB 100 million, representing year-over-year growth of over 70%. We also continue to iterate our proprietary Confucius LLM with a focus on high utility learning and productivity scenarios, further enriching our AI agent mix. This quarter we launched two new AI agent products. The first is Lobster AI, a personal AI desktop assistant designed for productivity and secure deployment. Lobster AI enables enterprises and individual users to deploy powerful, customized AI agents while maintaining data privacy. Since its open-source release, it has gained strong traction among the global developer community and surpassed 5,000 stars on GitHub. The second is Yudao Baopu, an AI-native knowledge base designed for complex knowledge synthesis. Powered by a dynamic reasoning architecture, Yudao Baoku can decompose complex queries, perform multi-round verification, and provide precise citations. It helps users transform large volumes of materials into structured multi-model outputs, including chart-rich presentations and mind maps, helping users improve knowledge work productivity. In addition to launching new AI-native products, we continued to upgrade our core applications. The AI simultaneous interpretation feature in UDAW dictionary and UDAW desktop translation saw user engagement increase by over 100% year-over-year. This growth was driven by two key upgrades. First, the deployment of Confucius 3 translation LLM. which reduces the latency by approximately 50%. And second, the evolution of the feature from a translation tool into a more autonomous AI agent, enabling more natural interactions and deeper contextual understanding. Our technical capabilities were further validated at the 14th National Interpretation Contest, where Yudao won championships in eight of the 16 AI-tracked language categories, demonstrating the strength of our AI translation systems. In the first quarter, our online marketing services maintained strong momentum, generating RMB $611.1 million in net revenues, up 20.9% year-over-year. Growth was primarily driven by increased demand for performance-based advertising, supported by our continued investments in AI technology. Gaming remained a core advertising vertical and continued to demonstrate resilience and steady growth. At the same time, we captured emerging opportunities in fast-growing sectors, particularly AI applications and short-form dramas. By integrating advanced AI capabilities with vertical-specific marketing scenarios, we achieved over 50% year-over-year advertising revenue growth in each of these emerging sectors. On the product front, we continue to leverage our vertical advertising LRM to enhance product and service quality. In Q1, we launched an upgraded version of Infinise, our one-stop AI platform for KOL marketing. The upgrade focused on two key areas. First, workflow synergy. Symfony now enables brands to manage the full collaboration lifecycle, from top-tier influencers to KOCs, through a streamlined online workflow that significantly shortens collaboration cycles. Second, AI-powered self-service. The platform automates influencer recommendations and content creation, lowering entry barriers while improving execution efficiency. Since the upgrade, Infonese has received positive feedback from KOLs and marketers. To date, nearly 60,000 influencers globally have registered on the platform, providing a solid foundation for future expansion. Gross margin for online marketing services was 29.6% in the first quarter, largely stable year-over-year and up 1.8 percentage points sequentially. marking the second consecutive quarter of sequential improvement. Turning to our smart devices segment, net revenues were RMB 109.4 million in the first quarter, down 42.6% year-over-year. We continue to exercise operational discipline in this segment, prioritizing SKU Health, inventory management, and profitability over near-term volume growth. At the same time, our products continue to receive strong external recognition. This quarter, the Yudao Tutoring Pen was honored as the best educational hardware solution at the 2026 EdTech Awards and was the only Chinese product to receive this distinction. In addition, Yudao Space X was recognized as an AI benchmark by Wall Street CM, reflecting continued recognition of our AI capabilities and educational value. Looking ahead, we remain firmly committed to our AI-native strategy by continuously refining our vertical LLMs for learning and advertising and expanding our AI agent matrix. We are enhancing how users learn, work, and market while creating new opportunities for sustainable growth. As we continue to improve user experience, we remain focused on driving continued improvements in profitability and cash flow in 2026. With that, I'll hand the call over to Supong for a deeper dive into our financial results. Thank you.