Youdao, education-focused subsidiary of NetEase (NTES: NASDAQ), submitted the prospectus to the US Securities and Exchange Commission (SEC) on October 1, planning to apply for listing on the New York Stock Exchange with ticker "DAO".
According to the prospectus, it is planned to raise up to USD 300 million. Morgan Stanley, Credit Suisse, Citigroup, CICC and HSBC are underwriters of this public offering.
Youdao saw a good revenue gain in this year, as well as a doubled net loss. In the first half of 2019, Youdao accumulated a revenue of CNY 548.54 million (USD 79.90 million), a year-on-year increase of 67.7%, while the net loss was CNY 167.89 million (USD 24.46 million), doubled from that of the same period last year of CNY 82.75 million (USD 25.3 million). In 2018, the total revenue was CNY 731.60 million (USD 106.57 million) and the net loss was CNY 209.30 million (USD 30.49 million).
The revenues are generated from two major businesses: learning services & products of CNY 314.80 million (USD 45.86 million) accounting for 57.2% of the total revenue in H1 2019, up 57.8% year-on-year, and online marketing services of CNY 233.74 million (USD 34.05 million). Youdao’s learning services & products include online courses, other learning services (Yaodao Intelligent Cloud, etc.) and smart devices, where online courses take up the most, with revenues of CNY 228 million and CNY 330 million in H1 2019 and 2018 respectively.
China's intelligent education market include online courses, knowledge products and institutional learning solutions, with underlying AI technology such as adaptive learning. The sector is growing rapidly with technology development. According to Frost & Sullivan estimates, the market size of Chinese intelligent learning industry is CNY 103.4 billion (USD 14.46 billion) , which is expected to increase at a CAGR of 47.4% to CNY 719.8 billion (USD 100.69 billion).
Besides, due to the imbalanced education resources, opportunities permeate in overseas markets, such as Indian, Indonesian and Southern American countries, which could be the expanding direction for Chinese players.
Several Chinese education suppliers have been listed on the US bourses, including education giants New Oriental (EDU.NYSE) and Tomorrow Advancing Life (TAL:NYSE), English teaching online platform Liulishuo (LAIX:NYSE) and 51talk(COE:NYSE), as well as GSX Techedu (GSX:NYSE)