| Exhibit No. |
Description | |
99.1 |
Unaudited Condensed Consolidated Interim Financial Statement | |
99.2 |
Discussion of Unaudited Financial Statements | |
101.INS |
Inline XBRL Instance Document | |
101.SCH |
Inline XBRL Taxonomy Extension Schema Document | |
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 |
Cover Page Interactive Data File (embedded within the Inline IXBRL document) | |
Youdao, Inc. | ||||||||
Date: February 10, 2021 |
By: |
/s/ Feng Zhou | ||||||
Name: |
Feng Zhou | |||||||
Title: |
Chief Executive Officer, Director | |||||||
F-2 |
||||
F-4 |
||||
F-6 |
||||
F-7 |
||||
F-9 |
As of |
||||||||||||
December 31, 2019 |
September 30, 2020 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Note 2(d) |
||||||||||||
ASSETS |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
||||||||||||
Time deposits |
||||||||||||
Short-term investments |
||||||||||||
Accounts receivable, net |
||||||||||||
Inventories, net |
||||||||||||
Amounts due from NetEase Group |
||||||||||||
Prepayment and other current assets |
||||||||||||
Total current assets |
||||||||||||
Non-current assets: |
||||||||||||
Property and equipment, net |
||||||||||||
Operating lease right-of-use |
||||||||||||
Other assets, net |
||||||||||||
Total non-current assets |
||||||||||||
Total assets |
||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY/(DEFICIT) |
||||||||||||
Current liabilities: |
||||||||||||
Accounts payables |
||||||||||||
Payroll payable |
||||||||||||
Amounts due to NetEase Group |
||||||||||||
Contract liabilities |
||||||||||||
Taxes payable |
||||||||||||
Accrued liabilities and other payables |
||||||||||||
Short-term loans from NetEase Group |
||||||||||||
Total current liabilities |
||||||||||||
Non-current liabilities: |
||||||||||||
Long-term lease liabilities |
||||||||||||
Other non-current liabilities |
||||||||||||
Total non-current liabilities |
||||||||||||
Total liabilities |
||||||||||||
As of |
||||||||||||
December 31, 2019 |
September 30, 2020 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Note 2(d) |
||||||||||||
Contingencies (Note 14) |
||||||||||||
Shareholders’ equity/(deficit): |
||||||||||||
Class A ordinary shares (US$ |
||||||||||||
Class B ordinary shares (US$ |
||||||||||||
Additional paid-in capital |
||||||||||||
Accumulated deficit |
( |
) | ( |
) | ( |
) | ||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||
Statutory reserves |
||||||||||||
Noncontrolling interests |
||||||||||||
Total shareholders’ equity/(deficit) |
( |
) |
( |
) | ||||||||
Total liabilities and shareholders’ equity/(deficit) |
||||||||||||
For the nine months ended September 30, |
||||||||||||
2019 |
2020 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Note 2(d) |
||||||||||||
| Net revenues: |
||||||||||||
| Learning services |
||||||||||||
| Online marketing services |
||||||||||||
| Learning products |
||||||||||||
| |
|
|
|
|
|
|||||||
| Total net revenues |
||||||||||||
| |
|
|
|
|
|
|||||||
| Cost of revenues: |
||||||||||||
| Learning services |
( |
) | ( |
) | ( |
) | ||||||
| Online marketing services |
( |
) | ( |
) | ( |
) | ||||||
| Learning products |
( |
) | ( |
) | ( |
) | ||||||
| |
|
|
|
|
|
|||||||
| Total cost of revenues |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
| Gross profit |
||||||||||||
| |
|
|
|
|
|
|||||||
| Operating expenses: |
||||||||||||
| Sales and marketing expenses (include transactions with related parties of RMB |
( |
) | ( |
) | ( |
) | ||||||
| Research and development expenses (include transactions with related parties of RMB |
( |
) | ( |
) | ( |
) | ||||||
| General and administrative expenses (include transactions with related parties of RMB |
( |
) | ( |
) | ( |
) | ||||||
| |
|
|
|
|
|
|||||||
| Total operating expenses |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
| Loss from operations |
( |
) |
( |
) |
( |
) | ||||||
| Interest (expense)/income, net (include interest expenses charged by related party of RMB |
( |
) | ( |
) | ( |
) | ||||||
| Others, net |
||||||||||||
| |
|
|
|
|
|
|||||||
| Loss before tax |
( |
) |
( |
) |
( |
) | ||||||
| Income tax expenses |
( |
) | ( |
) | ( |
) | ||||||
| |
|
|
|
|
|
|||||||
| Net loss |
( |
) |
( |
) |
( |
) | ||||||
| Net (income)/loss attributable to noncontrolling interests |
( |
) | ||||||||||
| |
|
|
|
|
|
|||||||
| Net loss attributable to the Company |
( |
) |
( |
) |
( |
) | ||||||
| Accretions of convertible redeemable preferred shares to redemption value |
( |
) | — | — | ||||||||
| |
|
|
|
|
|
|||||||
| Net loss attributable to ordinary shareholders of the Company |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
For the nine months ended September 30, |
||||||||||||
2019 |
2020 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Note 2(d) |
||||||||||||
Net loss |
( |
) |
( |
) |
( |
) | ||||||
Other comprehensive income: |
||||||||||||
Foreign currency translation adjustment |
( |
) | ( |
) | ||||||||
Total other comprehensive income/(loss) |
( |
) | ( |
) | ||||||||
Total comprehensive loss |
( |
) |
( |
) |
( |
) | ||||||
Comprehensive (income)/loss attributable to noncontrolling interests |
( |
) | ||||||||||
Comprehensive loss attributable to the Company |
( |
) |
( |
) |
( |
) | ||||||
Accretions of convertible redeemable preferred shares to redemption value |
( |
) | — | — | ||||||||
Comprehensive loss attributable to ordinary shareholders of the Company |
( |
) |
( |
) |
( |
) | ||||||
Net loss per ordinary share/ADS |
||||||||||||
Basic |
( |
) | ( |
) | ( |
) | ||||||
Diluted |
( |
) | ( |
) | ( |
) | ||||||
Weighted average number of ordinary shares/ADSs |
||||||||||||
Basic |
||||||||||||
Diluted |
||||||||||||
Pre-IPO ordinary shares |
Class A ordinary shares |
Class B ordinary shares |
Additional paid-in capital |
Statutory reserves |
Accumulated deficit |
Accumulated other comprehensive income/(loss) |
Non-controlling interests |
Total shareholders’ (deficit)/ equity |
||||||||||||||||||||||||||||||||||||||||
Shares |
Amount RMB |
Shares |
Amount RMB |
Shares |
Amount RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2019 |
— |
— |
— |
— |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||||||||
Share-based compensation expenses |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Deemed contribution related to acquisition of businesses under common control |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Accretions of convertible redeemable preferred shares |
— | — | — | — | — | — | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||||||||||||||
Balance as of September 30, 2019 |
— |
— |
— |
— |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2020 |
— |
— |
( |
) |
( |
) |
||||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | ( |
) | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
Issuance of ordinary shares pursuant to incentive plans |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Share-based compensation expenses |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Deemed distribution to NetEase |
— | — | — | — | — | — | ( |
) | — | — | — | — | ( |
) | ||||||||||||||||||||||||||||||||||
Noncontrolling interests arising from business combination |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | — | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||||||||
Balance as of September 30, 2020 |
— |
— |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, |
||||||||||||
2019 |
2020 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Note 2(d) |
||||||||||||
| Cash flows from operating activities: |
||||||||||||
| Net loss |
( |
) |
( |
) |
( |
) | ||||||
| Depreciation and amortization |
||||||||||||
| Share-based compensation |
||||||||||||
| Fair value changes of short-term investments |
( |
) | ( |
) | ( |
) | ||||||
| Provision for allowance for doubtful accounts |
||||||||||||
| Reversal of inventory allowance |
— | ( |
) | ( |
) | |||||||
| Loss on disposal of property and equipment |
— | |||||||||||
| Unrealized exchange (gain)/loss |
( |
) | ||||||||||
| Changes in operating assets and liabilities, net of acquisition: |
||||||||||||
| Accounts receivable |
( |
) | ( |
) | ( |
) | ||||||
| Inventories |
( |
) | ( |
) | ( |
) | ||||||
| Prepayment and other current assets |
( |
) | ( |
) | ( |
) | ||||||
| Amounts due from NetEase Group |
( |
) | ||||||||||
| Operating lease right-of-use |
||||||||||||
| Other assets |
( |
) | ( |
) | ||||||||
| Contract liabilities |
||||||||||||
| Accounts payables |
||||||||||||
| Payroll payable |
( |
) | ||||||||||
| Taxes payable |
||||||||||||
| Accrued liabilities and other payables |
||||||||||||
| Amounts due to NetEase Group |
( |
) | ( |
) | ( |
) | ||||||
| Long-term lease liabilities |
( |
) | ( |
) | ( |
) | ||||||
| Other non-current liabilities |
— | ( |
) | ( |
) | |||||||
| |
|
|
|
|
|
|||||||
| Net cash used in operating activities |
( |
) |
( |
) |
( |
) | ||||||
| |
|
|
|
|
|
|||||||
| Cash flows from investing activities: |
||||||||||||
| Purchases of short-term investments |
( |
) | ( |
) | ( |
) | ||||||
| Proceeds of maturities of short-term investments |
||||||||||||
| Placements of time deposits |
( |
) | ( |
) | ( |
) | ||||||
| Proceeds from maturities of time deposits |
||||||||||||
| Cash paid for business combination, net of cash acquired (Note 4) |
— | ( |
) | ( |
) | |||||||
| Purchase of intangible assets |
( |
) | — | — | ||||||||
| Purchases of property and equipment |
( |
) | ( |
) | ( |
) | ||||||
| Proceeds from disposal of property and equipment |
||||||||||||
| Payment for equity investment |
— | ( |
) | ( |
) | |||||||
| |
|
|
|
|
|
|||||||
| Net cash provided by investing activities |
||||||||||||
| |
|
|
|
|
|
|||||||
For the nine months ended September 30, |
||||||||||||
2019 |
2020 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Note 2(d) |
||||||||||||
Cash flows from financing activities: |
||||||||||||
Funding from NetEase Group |
— | — | ||||||||||
Payment of offering expenses |
( |
) | ( |
) | ( |
) | ||||||
Proceeds from issuance of ordinary shares pursuant to incentive plans |
— | |||||||||||
Net cash provided by financing activities |
||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
( |
) | ( |
) | ||||||||
Net increase/(decrease) in cash and cash equivalents |
( |
) | ( |
) | ||||||||
Cash and cash equivalents at beginning of the period |
||||||||||||
Cash and cash equivalents at end of the period |
||||||||||||
Supplemental disclosures of cash flow information: |
||||||||||||
Cash paid for income tax expenses |
||||||||||||
Cash paid for interest expenses |
||||||||||||
Non-cash investing and financing activities: |
||||||||||||
Accretions of convertible redeemable preferred shares to redemption value |
— | — | ||||||||||
Changes in accrued liabilities and other payables related to property and equipment addition |
— | |||||||||||
Place and year of incorporation |
Percentage of direct or indirect economic ownership |
Principal activities | ||||
Subsidiaries |
||||||
Youdao (Hong Kong) Limited |
||||||
NetEase Youdao Information Technology (Beijing) Co., Ltd. (“Youdao Information”) |
||||||
NetEase Langsheng (Beijing) Technology Development Co., Ltd. (“Youdao Langsheng”) |
||||||
NetEase Youdao Information Technology (Hangzhou) Co., Ltd. (“Youdao Hangzhou”) |
||||||
VIE |
||||||
Beijing NetEase Youdao Computer System Co., Ltd. (“Youdao Computer”) |
For the nine months ended September 30, |
||||||||
2019 |
2020 |
|||||||
RMB |
RMB |
|||||||
Learning services |
||||||||
Online courses services |
||||||||
Fee-based premium services |
||||||||
Online marketing services |
||||||||
Learning products |
||||||||
Total net revenues |
||||||||
As of acquisition date |
||||
RMB |
||||
Consideration |
||||
Noncontrolling interests |
||||
Total |
||||
Cash and cash equivalents |
||||
Other tangible assets |
||||
Liabilities assumed |
( |
) | ||
Goodwill |
||||
Total |
||||
As of |
||||||||
December 31, |
September 30, |
|||||||
2019 |
2020 |
|||||||
RMB |
RMB |
|||||||
Accounts receivable, net: |
||||||||
Accounts receivable |
||||||||
Allowance for doubtful accounts /expected credit losses: |
||||||||
Balance at the beginning of year |
( |
) | ( |
) | ||||
Additional provision charged to expenses |
( |
) | ( |
) | ||||
Write-off |
— | |||||||
Balance at the end of year/period |
( |
) | ( |
) | ||||
As of |
||||||||
December 31, |
September 30, |
|||||||
2019 |
2020 |
|||||||
RMB |
RMB |
|||||||
Deferred expenses for learning services |
||||||||
Prepayment for value-added taxes |
||||||||
Prepayment for promotion fees |
||||||||
Deferred charges |
||||||||
Interest receivable |
||||||||
Prepaid sales commission |
— | |||||||
Prepayment for rental expenses |
||||||||
Prepayment for content fees |
||||||||
Others |
||||||||
Total |
||||||||
As of |
||||||||
December 31, |
September 30, |
|||||||
2019 |
2020 |
|||||||
RMB |
RMB |
|||||||
Servers and computers |
||||||||
Leasehold improvements |
||||||||
Furniture, fixtures and office equipment |
||||||||
Total |
||||||||
Less: accumulated depreciation |
( |
) | ( |
) | ||||
Net book value |
||||||||
As of |
||||||||
December 31, |
September 30, |
|||||||
2019 |
2020 |
|||||||
RMB |
RMB |
|||||||
| Withholding individual income taxes for employees |
||||||||
| VAT payable |
||||||||
| Enterprise income taxes payable |
||||||||
| Others |
||||||||
| |
|
|
|
|||||
| Total |
||||||||
| |
|
|
|
|||||
As of |
||||||||
December 31, |
September 30, |
|||||||
2019 |
2020 |
|||||||
RMB |
RMB |
|||||||
| Accrued marketing expenses |
||||||||
| Accrued liabilities for learning services and online marketing services |
||||||||
| Accrued outside labor service fee |
||||||||
| Accrued administrative expenses |
||||||||
| Accrued technical expenses |
||||||||
| Deferred government grant |
— | |||||||
| Operating lease liabilities-current portion |
||||||||
| Warehousing and logistics fees |
||||||||
| Accrued professional fee |
||||||||
| Payables for property and equipment |
— | |||||||
| Deposits payable to service providers |
||||||||
| Others |
||||||||
| |
|
|
|
|||||
| Total |
||||||||
| |
|
|
|
|||||
For the nine months ended September 30, |
||||||||
2019 |
2020 |
|||||||
RMB |
RMB |
|||||||
| Value-added tax exemption due to the COVID-19 |
— | |||||||
| Government grants |
||||||||
| Fair value changes of short-term investments |
||||||||
| Foreign exchange gain/(loss) |
( |
) | ||||||
| Others |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Total |
||||||||
| |
|
|
|
|||||
For the nine months ended September 30, |
||||||||
2019 |
2020 |
|||||||
RMB |
RMB |
|||||||
| Research and development expenses |
||||||||
| General and administrative expenses |
||||||||
| Cost of revenues |
||||||||
| Sales and marketing expenses |
||||||||
| |
|
|
|
|||||
| Total |
||||||||
| |
|
|
|
|||||
For the nine months ended September 30, |
||||||||
2019 |
2020 |
|||||||
| Expected volatility |
||||||||
| Expected dividends yield |
||||||||
| Risk-free interest rate |
||||||||
| Expected term (in years) |
||||||||
| Fair value of underlying ordinary share (US$) |
||||||||
Number of options |
Weighted average exercise price per share |
Weighted average remaining contractual life |
Aggregate intrinsic value |
|||||||||||||
(in thousands) |
US$ |
Years |
US$ |
|||||||||||||
| Outstanding as of January 1, 2019 |
||||||||||||||||
| Granted |
||||||||||||||||
| Forfeited |
( |
) | ||||||||||||||
| |
|
|||||||||||||||
| Outstanding as of September 30, 2019 |
||||||||||||||||
| |
|
|||||||||||||||
| Outstanding as of January 1, 2020 |
||||||||||||||||
| Granted |
||||||||||||||||
| Exercised |
( |
) | ||||||||||||||
| Forfeited |
( |
) | ||||||||||||||
| |
|
|||||||||||||||
| Outstanding as of September 30, 2020 |
||||||||||||||||
| |
|
|||||||||||||||
| Vested and exercisable as of September 30, 2019 |
||||||||||||||||
| Vested and exercisable as of September 30, 2020 |
||||||||||||||||
For the nine months ended September 30, |
||||||||
2019 |
2020 |
|||||||
RMB |
RMB |
|||||||
Numerator: |
||||||||
Net loss |
( |
) | ( |
) | ||||
Net (income)/loss attributable to noncontrolling interests |
( |
) | ||||||
Accretions of preferred shares to redemption value |
( |
) | — | |||||
Net loss attributable to ordinary shareholders of the Company |
( |
) |
( |
) | ||||
Denominator: |
||||||||
Weighted average number of ordinary shares/ADSs outstanding, basic |
||||||||
Weighted average number of ordinary shares/ADSs outstanding, diluted |
||||||||
Net loss per share/ADS, basic |
( |
) | ( |
) | ||||
Net loss per share/ADS, diluted |
( |
) | ( |
) | ||||
Fair value measurements |
||||||||||||
Total |
Quoted prices in active market for identical assets (Level 1) |
Significant other observable inputs (Level 2) |
||||||||||
RMB |
RMB |
RMB |
||||||||||
As of December 31, 2019 |
||||||||||||
Time deposits |
— | |||||||||||
Short-term investments |
— | |||||||||||
Total |
||||||||||||
As of September 30, 2020 |
||||||||||||
Time deposits |
— | |||||||||||
Short-term investments |
— | |||||||||||
Total |
||||||||||||
Name of entity or individual |
Relationships with the Group | |
| NetEase Group |
For the nine months ended September 30, |
||||||||
2019 |
2020 |
|||||||
RMB |
RMB |
|||||||
Services and products provided to NetEase Group |
||||||||
Learning services provided to NetEase Group |
||||||||
Learning products provided to NetEase Group |
||||||||
Online marketing services provided to NetEase Group |
||||||||
Services and products purchased from NetEase Group |
||||||||
Services purchased from NetEase Group |
||||||||
Fixed assets and inventories purchased from NetEase Group |
||||||||
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Interest expenses on short-term loans from NetEase Group |
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Deemed contribution related to acquisition of businesses under common control (Note 1) |
— | |||||||
Share-based compensation under NetEase Plan |
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Deemed distribution to NetEase |
— | |||||||
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Short-term loans from NetEase Group |
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Exhibit 99.2
Non-GAAP Financial Measure
We consider and use 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.
We define 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. Our management uses gross billings as a performance measurement because we generally bill our students for the entire course tuition at the time of sale of our courses and recognize revenue proportionally over an average of the learning periods of different online courses. We define 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 our management to assess our operating results without considering the impact of share-based compensation expenses, which are non-cash charges. We believe that these non-GAAP financial measures provide useful information to investors in understanding and evaluating our 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 we use 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 U.S. GAAP. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.
The following table sets forth a reconciliation of gross billings to net revenues, its most directly comparable GAAP measure, of our online courses:
| For the Year Ended December 31, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||
| 2017 | 2018 | 2019 | 2019 | 2020 | ||||||||||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||
| Net revenues of online courses |
115,003 | 329,424 | 607,568 | 87,272 | 391,622 | 1,317,440 | 194,038 | |||||||||||||||||||||
| Add: value-added tax |
10,153 | 23,666 | 53,178 | 7,639 | 33,551 | 114,118 | 16,807 | |||||||||||||||||||||
| Add: ending deferred revenue |
64,136 | 129,144 | 407,861 | 58,586 | 296,693 | 992,393 | 146,164 | |||||||||||||||||||||
| Less: beginning deferred revenue |
(9,930 | ) | (64,136 | ) | (129,144 | ) | (18,550 | ) | (129,144 | ) | (407,861 | ) | (60,071 | ) | ||||||||||||||
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| Gross billings of online courses (non-GAAP) |
179,362 | 418,098 | 939,463 | 134,947 | 592,722 | 2,016,090 | 296,938 | |||||||||||||||||||||
The following table sets forth a reconciliation of gross billings to net revenues, its most directly comparable GAAP measure, of Youdao Premium Courses:
| For the Year Ended December 31, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||
| 2017 | 2018 | 2019 | 2019 | 2020 | ||||||||||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||
| Net revenues of Youdao Premium Courses |
89,129 | 284,160 | 471,943 | 67,790 | 307,818 | 1,130,235 | 166,466 | |||||||||||||||||||||
| Add: value-added tax |
8,592 | 20,352 | 42,416 | 6,093 | 26,510 | 100,779 | 14,843 | |||||||||||||||||||||
| Add: ending deferred revenue |
54,067 | 109,105 | 344,111 | 49,428 | 243,128 | 893,517 | 131,601 | |||||||||||||||||||||
| Less: beginning deferred revenue |
— | (54,067 | ) | (109,105 | ) | (15,672 | ) | (109,105 | ) | (344,111 | ) | (50,682 | ) | |||||||||||||||
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| Gross billings of Youdao Premium Courses (non-GAAP) |
151,788 | 359,550 | 749,365 | 107,639 | 468,351 | 1,780,420 | 262,228 | |||||||||||||||||||||
The following table sets forth a reconciliation of non-GAAP net loss attributable to ordinary shareholders of the Company to net loss attributable to ordinary shareholders of the Company, its most directly comparable GAAP measure:
| For the Year Ended December 31, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||
| 2017 | 2018 | 2019 | 2019 | 2020 | ||||||||||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||
| Net loss attributable to ordinary shareholders of the Company |
(133,577 | ) | (239,221 | ) | (637,396 | ) | (91,556 | ) | (431,714 | ) | (1,305,035 | ) | (192,211 | ) | ||||||||||||||
| Add: share-based compensation |
5,290 | 6,176 | 25,074 | 3,602 | 5,498 | 26,901 | 3,962 | |||||||||||||||||||||
| Non-GAAP net loss attributable to ordinary shareholders of the Company |
(128,287 | ) | (233,045 | ) | (612,322 | ) | (87,954 | ) | (426,216 | ) | (1,278,134 | ) | (188,249 | ) | ||||||||||||||
Key Components of Results of Operations
Net Revenues
We have two reportable segments: (i) learning services and products, and (ii) online marketing services. We identify our reportable segments based on the organizational units used by management to monitor performance and make operating decisions.
The following table sets forth a breakdown of our net revenues, in absolute amounts and as percentages of total net revenues, for the periods indicated.
| For the Year Ended December 31, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 2018 | 2019 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||
| RMB | % | RMB | % | RMB | US$ | % | RMB | % | RMB | US$ | % | |||||||||||||||||||||||||||||||||||||
| (in thousands, except for percentages) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net Revenues |
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| Learning services and products |
149,915 | 32.9 | 428,716 | 58.6 | 851,870 | 122,364 | 65.3 | 539,957 | 60.4 | 1,725,672 | 254,164 | 83.7 | ||||||||||||||||||||||||||||||||||||
| Online marketing services |
305,831 | 67.1 | 302,882 | 41.4 | 453,013 | 65,071 | 34.7 | 354,494 | 39.6 | 335,047 | 49,347 | 16.3 | ||||||||||||||||||||||||||||||||||||
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| Total net revenues |
455,746 | 100.0 | 731,598 | 100.0 | 1,304,883 | 187,435 | 100.0 | 894,451 | 100.0 | 2,060,719 | 303,511 | 100.0 | ||||||||||||||||||||||||||||||||||||
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2
Learning services and products. We currently generate the majority of the net revenues of learning services and products from our online courses, mainly including Youdao Premium Courses, NetEase Cloud Classroom and China University MOOC. In 2017, 2018 and 2019 and for the nine months ended September 30, 2019 and 2020, the net revenues generated from our online courses were RMB115.0 million, RMB329.4 million, RMB607.6 million (US$87.3 million), RMB391.6 million and RMB1,317.4 million (US$194.0 million), respectively, accounting for 76.7%, 76.8%, 71.3%, 72.5% and 76.3%, respectively, of the total net revenues of learning services and products. During the same periods, the net revenues generated from Youdao Premium Courses were RMB89.1 million, RMB284.2 million, RMB471.9 million (US$67.8 million), RMB307.8 million and RMB1,130.2 million (US$166.5 million), respectively, accounting for the vast majority of the total net revenues of our online courses.
The gross billings of our online courses are generated from the tuition fees we receive from our students. We generally bill our students for the entire course tuition upfront at the time of sale of our course packages which could be up to two months before the course actually starts. The tuition fees we collect are initially recorded as deferred revenue and are recognized proportionally over an average of the learning periods of different online courses. The learning period of an online course refers to the period during which the online course is delivered plus the estimated period following the completion of the course during which the students view playback of the course recordings. The learning periods of our Youdao Premium Courses generally range from one month to 12 months. As of December 31, 2018 and 2019 and September 30, 2020, we had deferred revenue of RMB129.1 million, RMB407.9 million (US$58.6 million) and RMB992.4 million (US$146.2 million), respectively, from our online courses. For a reconciliation of our gross billings and net revenues, see “—Non-GAAP Financial Measure.”
In addition to online courses, we also generate net revenues from learning services and products from (i) fee-based premium services, including (a) the licensing of technologies and solutions, including through Youdao Smart Cloud, to business customers, and (b) sales of subscription packages to users of our online knowledge tools, such as Youdao Dictionary, as well as certain interactive learning apps, that allow them to access additional functions, content and privileges; and (ii) sales of smart devices, which currently mainly include Youdao Dictionary Pen and Youdao Pocket Translator.
Online marketing services. We generate net revenues of online marketing services through the provision of different formats of advertisement, including but not limited to banners, text-links, videos, logos, buttons and rich media. Most of our online marketing services are advertising solutions based on performance-based pricing, including those charged on a cost-per-click, or CPC, basis. In 2017, 2018 and 2019 and for the nine months ended September 30, 2019 and 2020, we generated 84.4%, 76.9%, 80.0%, 82.5% and 74.2%, respectively, of the net revenues of our online marketing services from performance-based advertising services. We also offer brand advertising services, which are focused on building advertisers’ brand awareness and presence through their logos and other visual aspects. Our brand advertising services are typically charged as a fixed amount of advertising fees based on the duration of the placement.
We use the number of performance-based advertisers as a key performance metric for our online marketing services segment given that the revenues generated from performance-based advertising services have historically accounted for a significant majority of our online marketing revenues. In 2017, 2018 and 2019 and for the nine months ended September 30, 2019 and 2020, we had approximately 3,000, 1,800, 2,400, 2,100 and 1,300 performance-based advertisers, respectively. We also monitor average total MAUs as an indirect performance metric for our online marketing services segment as we consider it to be a driving factor for the attractiveness of our online marketing services.
Cost of revenues
Our cost of revenues of learning services and products consist primarily of (i) costs associated with our full-time teaching staff and product and service operations personnel, mainly including the salaries and other benefits paid to our instructors and teaching assistants and the fees paid to certain of our instructors pursuant to revenue sharing arrangements; (ii) cost relating to the sales of our smart devices; (iii) payment channel fee charged by third-party online payment providers; (iv) costs of course materials, such as textbooks and exercise books, that we distribute to students of our online courses; and (v) server and bandwidth costs.
3
Our cost of revenues of online marketing services consist primarily of (i) traffic acquisition costs, which consists primarily of payments to third parties that distribute our advertisers’ advertisements through such third parties’ internet properties; and (ii) payroll-related expenses, which consist primarily of the salaries and other benefits paid to our operation personnel that support our online marketing services.
The following table sets forth a breakdown of our cost of revenues, in absolute amounts and as percentages of total cost of revenues and as percentages of the total net revenues, for the periods indicated.
| For the Year Ended December 31, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 2018 | 2019 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RMB | % of total cost of revenues |
% of total net revenues |
RMB | % of total cost of revenues |
% of total net revenues |
RMB | US$ | % of total cost of revenues |
% of total net revenues |
RMB | % of total cost of revenues |
% of total net revenues |
RMB | US$ | % of total cost of revenues |
% of total net revenues |
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| (in thousands, except for percentages) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenues |
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| Learning services and products |
139,600 | 47.5 | 30.7 | 335,127 | 65.1 | 45.8 | 620,669 | 89,153 | 66.4 | 47.6 | 400,035 | 61.9 | 44.8 | 885,756 | 130,458 | 78.3 | 43.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Online marketing services |
154,207 | 52.5 | 33.8 | 180,006 | 34.9 | 24.6 | 313,592 | 45,045 | 33.6 | 24.0 | 246,224 | 38.1 | 27.5 | 246,146 | 36,253 | 21.7 | 11.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||
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| Total cost of revenues |
293,807 | 100.0 | 64.5 | 515,133 | 100.0 | 70.4 | 934,261 | 134,198 | 100.0 | 71.6 | 646,259 | 100.0 | 72.3 | 1,131,902 | 166,711 | 100.0 | 54.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||
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Gross profit
We recorded gross profit of RMB161.9 million, RMB216.5 million and RMB370.6 million (US$53.2 million), respectively, in 2017, 2018 and 2019, and RMB248.2 million and RMB928.8 million (US$136.8 million), respectively, for the nine months ended September 30, 2019 and 2020.
For the nine months ended September 30, 2019 and 2020, our overall gross margin was 27.7% and 45.1%, respectively. During the same periods, the gross margin of learning services and products was 25.9% and 48.7%, respectively, and the gross margin of online marketing services was 30.5% and 26.5%, respectively. In 2017, 2018 and 2019, our overall gross margin was 35.5%, 29.6% and 28.4%, respectively. During the same periods, the gross margin of learning services and products was 6.9%, 21.8% and 27.1%, respectively, and the gross margin of online marketing services was 49.6%, 40.6% and 30.8%, respectively. Historically, we made substantial investments in building our faculty and expanding our online course offerings. As our online course offerings continue to grow and to attract more students, we expect that we will be able to optimize our faculty’s compensation structure and achieve greater economies of scale in respect of course development. As a result, we expect the gross margin of learning services and products to improve in the foreseeable future. We expect the gross margin of online marketing services to stabilize in the long term, although we may experience significant fluctuations in the short term.
Operating expenses
The following table sets forth a breakdown of our operating expenses, in absolute amounts and as percentages of total operating expenses and as percentages of the total net revenues, for the periods indicated.
4
| For the Year Ended December 31, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 2018 | 2019 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RMB | % of total operating expenses |
% of total net revenues |
RMB | % of total operating expenses |
% of total net revenues |
RMB | US$ | % of total operating expenses |
% of total net revenues |
RMB | % of total operating expenses |
% of total net revenues |
RMB | US$ | % of total operating expenses |
% of total net revenues |
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| Operating expenses |
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| Sales and marketing expenses |
136,412 | 46.7 | 29.9 | 213,405 | 49.0 | 29.2 | 622,884 | 89,472 | 64.2 | 47.7 | 417,111 | 64.6 | 46.6 | 1,892,237 | 278,696 | 82.9 | 91.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Research and development expenses |
133,092 | 45.6 | 29.2 | 184,020 | 42.2 | 25.1 | 275,367 | 39,554 | 28.3 | 21.1 | 186,113 | 28.9 | 20.8 | 296,513 | 43,672 | 13.0 | 14.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses |
22,476 | 7.7 | 4.9 | 38,177 | 8.8 | 5.2 | 73,289 | 10,527 | 7.5 | 5.6 | 41,856 | 6.5 | 4.7 | 93,080 | 13,709 | 4.1 | 4.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||
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| Total operating expenses |
291,980 | 100.0 | 64.0 | 435,602 | 100.0 | 59.5 | 971,540 | 139,553 | 100.0 | 74.4 | 645,080 | 100.0 | 72.1 | 2,281,830 | 336,077 | 100.0 | 110.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||
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Sales and marketing expenses. Our sales and marketing expenses consist primarily of (i) expenses relating to our marketing and branding activities, including expenses relating to our online traffic acquisition channels, (ii) payroll-related expenses, which consist primarily of the salaries and other benefits paid to our sales and marketing personnel and (iii) the amounts we pay to third-party service providers to whom we outsource certain of our sales and marketing functions. We expect our sales and marketing expenses to increase in the foreseeable future, including rapid increases in absolute amounts and as a percentage of revenue in the near future, as we continue to invest heavily in our sales, branding and marketing efforts to increase our student and user bases.
Research and development expenses. Our research and development expenses consist primarily of (i) payroll-related expenses, which primarily include the salaries and other benefits paid to our R&D and related personnel; (ii) fees paid to outside vendors for their software testing and other services; and (iii) rentals of premises occupied by our R&D and related personnel. We expect our research and development expenses to increase in the foreseeable future as we continue to invest substantially in technology to enhance our users’ and students’ learning experience.
General and administrative expenses. Our general and administrative expenses consist primarily of (i) payroll-related expenses, which primarily include the salaries and other benefits paid to our management and administrative personnel; (ii) fees paid to third-party professional service providers; and (iii) credit losses allowance provided on the receivables. We expect our general and administrative expenses to increase in the foreseeable future as we incur additional costs as a result of operating as a public company.
Taxation
We had income tax expense of RMB2.4 million and RMB2.4 million (US$0.4 million) for the nine months ended September 30, 2019 and 2020, respectively. We are subject to various rates of income tax under different jurisdictions. The following summarizes major factors affecting our applicable tax rates in the Cayman Islands, Hong Kong and the PRC.
Cayman Islands
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty.
There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or brought within the jurisdiction of the Cayman Islands. In addition, the Cayman Islands does not impose withholding tax on dividend payments.
5
Hong Kong
Our subsidiary incorporated in Hong Kong was subject to Hong Kong profits tax at a rate of 16.5% for taxable income earned in Hong Kong before April 1, 2018. Starting from the financial year commencing on April 1, 2018, the two-tiered profits tax regime took effect, under which the tax rate is 8.25% for assessable profits on the first HK$2 million and 16.5% for any assessable profits in excess of HK$2 million.
PRC
Our subsidiaries and VIEs in China are companies incorporated under PRC law and, as such, are subject to PRC enterprise income tax on their taxable income in accordance with the relevant PRC income tax laws. Pursuant to the PRC EIT Law, which became effective on January 1, 2008, a uniform 25% enterprise income tax rate is generally applicable to both foreign-invested enterprises and domestic enterprises, except where a special preferential rate applies. Entities qualifying as High and New Technology Enterprises (“HNTE”) qualify for a preferential tax rate of 15% subject to a requirement that they re-apply for HNTE status every three years. Youdao Information was qualified as an HNTE in 2015 initially and extended the qualification in 2018, and subject to a preferential tax rate of 15% since 2015 to 2020. As of September 30, 2020, Youdao Information was in an accumulative loss status. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
Pursuant to the applicable PRC provision regulations and corresponding implementation rules on VAT, our major subsidiaries and VIEs are generally subject to VAT at a rate of 6% for services rendered. We are also subject to cultural development fee on the provision of advertising services in China with an applicable rate of 3% based on the advertising revenue and subject to a 50% reduction which became effective from July 1, 2019. The cultural development fee on the provision of advertising services will be exempted starting on January 1, 2020 until December 31, 2020 according to the Announcement on Tax and Fee Policies to Support the Film and Other Industries issued by the Ministry of Finance and SAT on May 13, 2020 due to the breakout of COVID-19. The entities that are engaged in the sale of learning products are generally required to pay VAT at a rate of 17% or other applicable value added tax rate implemented by the provision regulation of the gross sales proceeds received, less any creditable value added tax already paid or borne by the taxpayer. Pursuant to further VAT reform implemented from May 1, 2018, all industries that were previously subject to VAT at a rate of 17% were adjusted to 16%, and effective from April 1, 2019, the 16% VAT rate was further reduced to 13%. Since January 2020, in accordance with the Announcement on Tax Policies to Support Prevention and Control of COVID-19 issued by Ministry of Finance and SAT, and the Announcement on the Period of Implementation of Tax Policies to Support Epidemic Prevention and Control and to Ensure Supply (collectively, the “Tax Policies”), due to the COVID-19, the VAT from providing daily life services will be exempted starting on January 1, 2020 and ending on December 31, 2020. For the nine months ended September 30, 2020, we recognized RMB29.5 million in other income arising from the VAT exemption according to the Tax Polices.
6
As a Cayman Islands holding company, we may receive dividends from our PRC subsidiaries through Youdao HK. The PRC EIT Law and its implementing rules provide that dividends paid by a PRC entity to a nonresident enterprise for income tax purposes is subject to PRC withholding tax at a rate of 10%, subject to reduction by an applicable tax treaty with China. Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the PRC enterprise and certain other conditions are met. Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or SAT Circular 81, a Hong Kong resident enterprise must meet the following conditions, among others, in order to apply the reduced withholding tax rate: (i) it must be a company; (ii) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (iii) it must have directly owned such required percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends. The State Administration of Taxation promulgated the Administrative Measures for Nonresident Taxpayers to Enjoy Treatment under Treaties, or SAT Circular 35, which became effective on January 1, 2020. SAT Circular 35 provides that nonresident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax. Instead, nonresident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. Accordingly, Youdao HK may be able to benefit from the 5% withholding tax rate for the dividends it receives from its PRC subsidiaries, if it satisfies the conditions prescribed under SAT Circular 81 and other relevant tax rules and regulations. However, according to SAT Circular 81 and SAT Circular 35, if the relevant tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable withholding tax in the future.
If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC EIT Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Item 3. Key Information—3.D. Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and ADS holders” in our annual report on Form 20-F for the year ended December 31, 2019.
Impact of COVID-19 on Our Operations and Financial Performance
Substantially all of our revenues and workforce are concentrated in China. Our results of operations and financial condition in 2020 have been and will continue to be affected by the spread of COVID-19. The COVID-19 outbreak has impact on China’s internet advertising industry in general. The extent to which COVID-19 impacts our financial position, results of operations and cash flows in 2020 will depend on the future developments of the outbreak, including new information concerning the global severity of and actions taken to contain the outbreak, which are highly uncertain and unpredictable. In addition, our financial position, results of operations and cash flows could be adversely affected to the extent that the outbreak harms the Chinese economy in general.
In 2020, in response to the intensifying efforts to contain the spread of COVID-19, the Chinese government took a number of actions, which included extending the Chinese New Year holiday, quarantining individuals suspected of having COVID-19, asking residents in China to stay at home and to avoid public gathering, among other things. During 2020, COVID-19 caused temporary closure of many corporate offices and store fronts across China, and we experienced growth in the number of trial users driven by the increased learning demand during the pandemic as a result. In addition, our online advertising services revenue decreased for the nine months ended September 30, 2020, as compared to the same period in 2019, due to the challenging macroeconomic environment in China. However, our online advertising services revenue has been rebounding since the second quarter of 2020. We cannot guarantee that such decrease will not occur again in the future.
During 2020, we took a series of measures in response to the outbreak, including, among others, remote working arrangements for our employees. We temporarily shut down some of our premises and facilities, following all legal directions and safety guidelines with respect to our premises and facilities in operation. These measures, if taken again in the future, could reduce the capacity and efficiency of our operations, which in turn could negatively affect our results of operations. We strive to provide quality original content to maintain and expand our user base. We will pay close attention to the development of the COVID-19 outbreak, perform further assessment of its impact and take relevant measures to minimize the impact.
7
As of September 30, 2020, we had RMB78.0 million (US$11.5 million) in cash and cash equivalents. Our cash and cash equivalents primarily consist of cash on hand and highly liquid investments, which are unrestricted from withdrawal or use, or which have original maturities of three months or less when purchased. As of the same date, we had RMB817.5 million (US$120.4 million) in time deposits and RMB237.4 million (US$35.0 million) in short-term investment. Our principal sources of liquidity have been cash generated from operating activities, our controlling shareholder’s funding support, as well as the proceeds we received from our public offerings of ordinary shares and the concurrent private placement from Orbis.
We believe this level of liquidity is sufficient to successfully navigate an extended period of uncertainty. See also “Item 3. Key Information—D. Risk Factors— Risks Related to Our Business and Industry — We face risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt our operations” of our annual report on Form 20-F for the fiscal year ended December 31, 2019.
Results of Operations
The following table summarizes our consolidated results of operations both in absolute amounts and as percentages of our total revenues for the periods presented. This information should be read together with our consolidated financial statements and related notes included in Exhibit 99.1 to this report on Form 6-K. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
| For the Year Ended December 31, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2017 | 2018 | 2019 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||
| RMB | % | RMB | % | RMB | US$ | % | RMB | % | RMB | US$ | % | |||||||||||||||||||||||||||||||||||||
| (in thousands, except for percentages, shares and per share/ADS data) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Selected Consolidated Statements of Operations: |
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| Net revenues |
455,746 | 100.0 | 731,598 | 100.0 | 1,304,883 | 187,435 | 100.0 | 894,451 | 100.0 | 2,060,719 | 303,511 | 100.0 | ||||||||||||||||||||||||||||||||||||
| Cost of revenues(1) |
(293,807 | ) | (64.5 | ) | (515,133 | ) | (70.4 | ) | (934,261 | ) | (134,198 | ) | (71.6 | ) | (646,259 | ) | (72.3 | ) | (1,131,902 | ) | (166,711 | ) | (54.9 | ) | ||||||||||||||||||||||||
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| Gross profit |
161,939 | 35.5 | 216,465 | 29.6 | 370,622 | 53,237 | 28.4 | 248,192 | 27.7 | 928,817 | 136,800 | 45.1 | ||||||||||||||||||||||||||||||||||||
| Operating expenses |
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| Sales and marketing expenses(1) |
(136,412 | ) | (29.9 | ) | (213,405 | ) | (29.2 | ) | (622,884 | ) | (89,472 | ) | (47.7 | ) | (417,111 | ) | (46.6 | ) | (1,892,237 | ) | (278,696 | ) | (91.8 | ) | ||||||||||||||||||||||||
| Research and development expenses(1) |
(133,092 | ) | (29.2 | ) | (184,020 | ) | (25.1 | ) | (275,367 | ) | (39,554 | ) | (21.1 | ) | (186,113 | ) | (20.8 | ) | (296,513 | ) | (43,672 | ) | (14.4 | ) | ||||||||||||||||||||||||
| General and administrative expenses(1) |
(22,476 | ) | (4.9 | ) | (38,177 | ) | (5.2 | ) | (73,289 | ) | (10,527 | ) | (5.6 | ) | (41,856 | ) | (4.7 | ) | (93,080 | ) | (13,709 | ) | (4.5 | ) | ||||||||||||||||||||||||
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| Total operating expenses |
(291,980 | ) | (64.0 | ) | (435,602 | ) | (59.5 | ) | (971,540 | ) | (139,553 | ) | (74.4 | ) | (645,080 | ) | (72.1 | ) | (2,281,830 | ) | (336,077 | ) | (110.7 | ) | ||||||||||||||||||||||||
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| Loss from operations |
(130,041 | ) | (28.5 | ) | (219,137 | ) | (29.9 | ) | (600,918 | ) | (86,316 | ) | (46.0 | ) | (396,888 | ) | (44.4 | ) | (1,353,013 | ) | (199,277 | ) | (65.6 | ) | ||||||||||||||||||||||||
| Interest (expense)/ income, net |
(29,327 | ) | (6.4 | ) | (23,507 | ) | (3.2 | ) | (18,169 | ) | (2,610 | ) | (1.4 | ) | (16,433 | ) | (1.8 | ) | (1,518 | ) | (224 | ) | (0.1 | ) | ||||||||||||||||||||||||
| Others, net |
598 | 0.1 | 44,643 | 6.1 | 20,064 | 2,882 | 1.5 | 17,192 | 1.9 | 51,547 | 7,592 | 2.5 | ||||||||||||||||||||||||||||||||||||
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| Loss before tax |
(158,770 | ) | (34.8 | ) | (198,001 | ) | (27.0 | ) | (599,023 | ) | (86,044 | ) | (45.9 | ) | (396,129 | ) | (44.3 | ) | (1,302,984 | ) | (191,909 | ) | (63.2 | ) | ||||||||||||||||||||||||
| Income tax expenses |
(5,162 | ) | (1.1 | ) | (11,294 | ) | (1.6 | ) | (2,432 | ) | (349 | ) | (0.2 | ) | (2,441 | ) | (0.3 | ) | (2,434 | ) | (358 | ) | (0.1 | ) | ||||||||||||||||||||||||
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| Net loss |
(163,932 | ) | (35.9 | ) | (209,295 | ) | (28.6 | ) | (601,455 | ) | (86,393 | ) | (46.1 | ) | (398,570 | ) | (44.6 | ) | (1,305,418 | ) | (192,267 | ) | (63.3 | ) | ||||||||||||||||||||||||
| Net loss/(income) attributable to noncontrolling interests |
30,355 | 6.6 | 385 | 0.0 | (48 | ) | (7 | ) | 0.0 | (935 | ) | (0.1 | ) | 383 | 56 | 0.0 | ||||||||||||||||||||||||||||||||
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| Net loss attributable to the Company |
(133,577 | ) | (29.3 | ) | (208,910 | ) | (28.6 | ) | (601,503 | ) | (86,400 | ) | (46.1 | ) | (399,505 | ) | (44.7 | ) | (1,305,035 | ) | (192,211 | ) | (63.3 | ) | ||||||||||||||||||||||||
| Accretions of convertible redeemable preferred shares to redemption value |
— | — | (30,311 | ) | (4.1 | ) | (35,893 | ) | (5,156 | ) | (2.8 | ) | (32,209 | ) | (3.6 | ) | — | — | — | |||||||||||||||||||||||||||||
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| Net loss attributable to ordinary shareholders of the Company |
(133,577 | ) | (29.3 | ) | (239,221 | ) | (32.7 | ) | (637,396 | ) | (91,556 | ) | (48.9 | ) | (431,714 | ) | (48.3 | ) | (1,305,035 | ) | (192,211 | ) | (63.3 | ) | ||||||||||||||||||||||||
| Net loss per ordinary share/ADS |
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| Basic |
(2.04 | ) | (2.80 | ) | (6.68 | ) | (0.96 | ) | (4.69 | ) | (11.60 | ) | (1.71 | ) | ||||||||||||||||||||||||||||||||||
| Diluted |
(2.04 | ) | (2.80 | ) | (6.68 | ) | (0.96 | ) | (4.69 | ) | (11.60 | ) | (1.71 | ) | ||||||||||||||||||||||||||||||||||
| Weighted average number of ordinary shares/ADSs used in calculating net loss per ordinary share/ADS |
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| Basic |
65,387,160 | 85,346,790 | 95,445,982 | 95,445,982 | 92,000,000 | 112,517,299 | 112,517,299 | |||||||||||||||||||||||||||||||||||||||||
| Diluted |
65,387,160 | 85,346,790 | 95,445,982 | 95,445,982 | 92,000,000 | 112,517,299 | 112,517,299 | |||||||||||||||||||||||||||||||||||||||||
Notes:
| (1) | The following table sets forth our share-based compensation expenses, including the share-based compensation expenses allocated to us based on awards granted to our employees pursuant to NetEase’s RSU incentive plans. |
8
| For the Year Ended December 31, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||
| 2017 | 2018 | 2019 | 2019 | 2020 | ||||||||||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||
| Cost of revenues |
2,220 | 3,055 | 4,407 | 633 | 1,447 | 3,876 | 571 | |||||||||||||||||||||
| Sales and marketing expenses |
289 | 350 | 2,107 | 303 | 688 | 3,790 | 558 | |||||||||||||||||||||
| Research and development expenses |
2,773 | 2,735 | 9,432 | 1,355 | 1,061 | 11,577 | 1,705 | |||||||||||||||||||||
| General and administrative expenses |
8 | 36 | 9,128 | 1,311 | 2,302 | 7,658 | 1,128 | |||||||||||||||||||||
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| Total |
5,290 | 6,176 | 25,074 | 3,602 | 5,498 | 26,901 | 3,962 | |||||||||||||||||||||
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9
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Net Revenues
Our net revenues increased by 130.4% from RMB894.5 million for the nine months ended September 30, 2019 to RMB2,060.7 million (US$303.5 million) for the nine months ended September 30, 2020.
Learning services and products
Our net revenues generated from learning services and products increased by 219.6% from RMB540.0 million for the nine months ended September 30, 2019 to RMB1,725.7 million (US$254.2 million) for the nine months ended September 30, 2020, primarily driven by substantial increases in revenues from our online courses and, to a lesser extent, from the sales of smart devices and other learning services.
| • | Online courses. Our net revenues generated from online courses increased by 236.4% from RMB391.6 million for the nine months ended September 30, 2019 to RMB1,317.4 million (US$194.0 million) for the nine months ended September 30, 2020 which was primarily driven by an increase in the number of paid student enrollments. The paid student enrollments of Youdao Premium Courses, which accounted for the vast majority of the total paid student enrollments of our online courses, increased from approximately 575 thousand for the nine months ended September 30, 2019 to approximately 1,301 thousand for the nine months ended September 30, 2020, primarily as a result of the expansion of our K-12 course offerings and our enhanced brand name among students and parents of our K-12 students. The increase in the net revenues generated from online courses was also driven by an increase in our gross billings per paid student enrollment, which in turn was mainly due to the increased sales of our foreign language courses, which generally have a higher level of gross billings per paid student enrollment than that of other courses. Our gross billings per paid student enrollment of Youdao Premium Courses increased by 68.1% from approximately RMB814 for the nine months ended September 30, 2019 to approximately RMB1,369 (US$201.6) for the nine months ended September 30, 2020. |
| • | Learning products. Our net revenues generated from distribution of learning products increased significantly from RMB85.0 million for the nine months ended September 30, 2019 to RMB302.6 million (US$44.6 million) for the nine months ended September 30, 2020, mainly due to a significant increase in the sales of Youdao Dictionary Pen 2.0 since its launch in August 2019. |
| • | Other learning services. Our net revenues generated from other learning services increased by 66.6% from RMB63.4 million for the nine months ended September 30, 2019 to RMB105.6 million (US$15.6 million) for the nine months ended September 30, 2020, primarily driven by an increase in the licensing fees for Youdao Smart Cloud and other enterprise services and increased sales of subscription packages of our online knowledge tools. |
Online marketing services
Our net revenues generated from online marketing services decreased by 5.5% from RMB354.5 million for the nine months ended September 30, 2019 to RMB335.0 million (US$49.3 million) for the nine months ended September 30, 2020, primarily due to a decrease in revenues from performance-based advertising services from RMB292.6 million for the nine months ended September 30, 2019 to RMB248.7 million (US$36.6 million) for the nine months ended September 30, 2020. Such decrease was in turn caused by the decreased demand from certain advertising customers.
10
Cost of revenues
Our cost of revenues increased by 75.1% from RMB646.3 million for the nine months ended September 30, 2019 to RMB1,131.9 million (US$166.7 million) for the nine months ended September 30, 2020.
Learning services and products
Our cost of revenues of learning services and products increased from RMB400.0 million for the nine months ended September 30, 2019 to RMB885.8 million (US$130.5 million) for the nine months ended September 30, 2020, primarily due to (i) an increase in the cost of learning products by 263.3% from RMB58.5 million for the nine months ended September 30, 2019 to RMB212.4 million (US$31.3 million) for the nine months ended September 30, 2020, which was largely driven by the increase in the sale volume of smart devices; (ii) an increase in the amount of the revenues shared with key instructors by 121.9% from RMB102.7 million for the nine months ended September 30, 2019 to RMB227.9 million (US$33.6 million) for the nine months ended September 30, 2020 as we continued to expand our business scales and our faculty; and (iii) an increase in the payroll related expenses by 85.2% from RMB93.7 million for the nine months ended September 30, 2019 to RMB173.5 million (US$25.6 million) for the nine months ended September 30, 2020, mainly driven by the increased salaries and other benefits paid to our instructors and teaching assistants as more teaching assistants were engaged to support the expansion of our online course offerings. The total number of our full-time teaching staff and product and service operations personnel increased from 508 as of September 30, 2019 to 2,355 as of September 30, 2020.
Online marketing services
Our cost of revenues of online marketing services slightly decreased from RMB246.2 million for the nine months ended September 30, 2019 to RMB246.1 million (US$36.3 million) for the nine months ended September 30, 2020, which was largely consistent with the decline in our revenue over the same period.
Gross profit & gross margin
The gross margin of learning services and products increased from 25.9% for the nine months ended September 30, 2019 to 48.7% for the nine months ended September 30, 2020, primarily attributable to the improved gross margin of our online courses, which in turn was driven by improved economies of scale and the continuous optimization of faculty compensation structure. The gross margin of online marketing services decreased from 30.5% for the nine months ended September 30, 2019 to 26.5% for the nine months ended September 30, 2020, primarily due to the distribution of advertisements through third parties’ internet properties, which typically had a lower gross margin profile than same period last year.
Our overall gross profit increased by 274.2% from RMB248.2 million for the nine months ended September 30, 2019 to RMB928.8 million (US$136.8 million) for the nine months ended September 30, 2020. Our overall gross margin was 27.7% and 45.1%, respectively, for the nine months ended September 30, 2019 and 2020. The increase in our overall gross margin was due to the increase in revenue portion of learning services and product as well as an improved gross margin level of learning services and products.
Operating expenses
Our total operating expenses increased by 253.7% from RMB645.1 million for the nine months ended September 30, 2019 to RMB2,281.8 million (US$336.1 million) for the nine months ended September 30, 2020.
11
Sales and marketing expenses
Our sales and marketing expenses increased by 353.7% from RMB417.1 million for the nine months ended September 30, 2019 to RMB1,892.2 million (US$278.7 million) for the nine months ended September 30, 2020, which was mainly due to a significant increase in marketing spending from RMB323.3 million for the nine months ended September 30, 2019 to RMB1,496.0 million (US$220.3 million) for the nine months ended September 30, 2020 driven by our intensified sales and marketing efforts associated with student acquisition and branding enhancement. The increase in our sales and marketing expenses was also driven by a 289.8% increase in the payroll-related expenses, due to increase in the number of our sales and marketing employees and the amount of sales and marketing services we sourced from third-party service providers as we continued to increase our sales and marketing efforts. The number of our sales and marketing employees increased from 467 as of September 30, 2019 to 618 as of September 30, 2020.
Research and development expenses
Our research and development expenses increased by 59.3% from RMB186.1 million for the nine months ended September 30, 2019 to RMB296.5 million (US$43.7 million) for the nine months ended September 30, 2020, which was primarily attributable to a 60.1% increase in the payroll-related expenses from RMB159.7 million for the nine months ended September 30, 2019 to RMB255.7 million (US$37.7 million) for the nine months ended September 30, 2020, mainly driven by the increased number of our R&D and related personnel and their increased share-based compensation expenses since the completion of our initial public offering. The number of our R&D and related personnel increased from 601 as of September 30, 2019 to 850 as of September 30, 2020.
General and administrative expenses
Our general and administrative expenses increased by 122.4% from RMB41.9 million for the nine months ended September 30, 2019 to RMB93.1 million (US$13.7 million) for the nine months ended September 30, 2020, which was mainly attributable to increases in both the number of our general and administrative staff and their compensation level, and, to a lesser extent, the increased credit losses allowance on the doubtful receivables. The number of our general and administrative staff increased from 48 as of September 30, 2019 to 120 as of September 30, 2020.
Net loss
As a result of the foregoing, our net losses were RMB398.6 million and RMB1,305.4 million (US$192.3 million), respectively, for the nine months ended September 30, 2019 and 2020.
Liquidity and Capital Resources
Cash flows and working capital
Our sources of liquidity primarily include short-term loans from NetEase Group and the proceeds received from the sale and issuance of our shares. For details of the loans from NetEase Group.
We had working capital deficit (being total current liabilities exceeded that of total current assets) as of December 31, 2018 and September 30, 2020, and a positive working capital (being total current assets exceeded that of total current liabilities) as of December 31, 2019. As of September 30, 2020, we had outstanding interest-bearing short-term loans payable to NetEase Group in the amount of RMB878.0 million (US$129.3 million), representing approximately 31.2% of our current liabilities. These loans are generally repayable within one year and were used to provide working capital for the daily operations of our business. In support of our future business, NetEase has also agreed to provide financial support to our continuous operations in the next twelve months. In addition, NetEase has agreed to us that as long as we are controlled by NetEase, these loans will be automatically extended for a period of eleven months each time upon our prior written request. Repayment of such loans would materially and adversely affect our liquidity, financial position and cash flow.
12
We believe that our existing cash, cash equivalents, time deposits and short-term investments balance as of September 30, 2020 as well as continuous funding support from our controlling shareholder NetEase would be sufficient to fund our operating activities, capital expenditures and other obligations for at least the next 12 months. However, we may decide to enhance our liquidity position or increase our cash reserve for future expansions and acquisitions through additional capital and/or finance funding. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
We intend to finance our future working capital requirements and capital expenditures from cash generated from operating activities, funds raised from financing activities, including the net proceeds we received from our initial public offering and the concurrent private placements to Orbis in October 2019. We may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our existing cash is insufficient to meet our requirements, we may seek to issue debt or equity securities or obtain additional credit facilities. Financing may be unavailable in the amounts we need or on terms acceptable to us, if at all. Issuance of additional equity securities, including convertible debt securities, would dilute our earnings per share. The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial covenants that restrict our operations and our ability to pay dividends to our shareholders. If we are unable to obtain additional equity or debt financing as required, our business operations and prospects may suffer.
As a holding company with no material operations of our own, we conduct a substantial majority of our operations through our PRC subsidiaries and our VIEs in China. We are permitted under PRC laws and regulations to provide funding to our PRC subsidiaries in China through capital contributions or loans, subject to applicable approval, registration, filings and reporting procedures with government authorities and limits on the amount of capital contributions and loans. The ability of our subsidiaries in China to make dividends or other cash payments to us is subject to various restrictions under PRC laws and regulations. See “Item 3. Key Information—3.D. Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of our initial public offering and the concurrent private placements to Orbis to make loans or additional capital contributions to our PRC subsidiaries and to make loans to our VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business” and “Item 3. Key Information—3.D. Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and ADS holders.” in our annual report on Form 20-F for the year ended December 31, 2019.
The following table presents our summary consolidated cash flow data for the periods indicated.
| For the Year Ended December 31, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||
| 2017 | 2018 | 2019 | 2019 | 2020 | ||||||||||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||
| Net cash used in operating activities |
(87,138 | ) | (100,330 | ) | (372,270 | ) | (53,474 | ) | (342,870 | ) | (450,787 | ) | (66,394 | ) | ||||||||||||||
| Net cash (used in)/provided by investing activities |
(10,836 | ) | (374,000 | ) | (1,084,005 | ) | (155,706 | ) | 279,384 | 340,923 | 50,213 | |||||||||||||||||
| Net cash provided by financing activities |
107,765 | 475,117 | 1,587,669 | 228,054 | 74,832 | 19,134 | 2,818 | |||||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents |
— | 1,120 | 196 | 28 | 1,805 | (4,623 | ) | (681 | ) | |||||||||||||||||||
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| Net increase/(decrease) in cash and cash equivalents |
9,791 | 1,907 | 131,590 | 18,902 | 13,151 | (95,353 | ) | (14,044 | ) | |||||||||||||||||||
| Cash and cash equivalents at beginning of the year/period |
30,040 | 39,831 | 41,738 | 5,995 | 41,738 | 173,328 | 25,528 | |||||||||||||||||||||
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| Cash and cash equivalents at end of the year/period |
39,831 | 41,738 | 173,328 | 24,897 | 54,889 | 77,975 | 11,484 | |||||||||||||||||||||
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13
Operating activities
Net cash used in operating activities was RMB450.8 million (US$66.4 million) for the nine months ended September 30, 2020. The difference between our net loss of RMB1,305.4 million (US$192.3 million) and the net cash used in operating activities was mainly due to (i) an increase of contract liabilities (which are mainly composed of deferred revenue relating to the tuition fees received from students for which revenue recognition criteria have not been met) of RMB608.8 million (US$89.7 million) due to the increased gross billings of online courses; (ii) an increase in accrued liabilities and other payables of RMB392.1 million (US$57.7 million) which mainly consisted of accrued liabilities for learning services and accrued marketing expenses and outsourcing labor service fees, resulting from the growth of our business and our increased marketing and promotion activities; and (iii) an increase in accounts payable of RMB56.5 million (US$8.3 million) due to increased purchase of learning products and deferred payments to suppliers, partially offset by (i) an increase in accounts receivable of RMB143.2 million (US$21.1 million) primarily arising from the increased receivables from third-party online payment which resulted from an increase in the amount of tuition fees collected through such payment providers; (ii) an increase in prepayment and other current assets of RMB79.7 million (US$11.7 million); and (iii) a decrease in long-term lease liabilities of RMB22.3 million (US$3.3 million) due to payment of rentals. Historically, the tuition fees collected through third-party online payment providers were usually settled within 60 days.
Net cash used in operating activities was RMB342.9 million for the nine months ended September 30, 2019. The difference between our net loss of RMB398.6 million and the net cash used in operating activities was mainly due to (i) an increase of contract liabilities (which are mainly composed of deferred revenue relating to the tuition fees received from students for which revenue recognition criteria have not been met) of RMB166.1 million due to increased gross billings of our online courses; and (ii) an increase in accrued liabilities and other payables of RMB72.2 million which mainly consisted of accrued liabilities for learning services and accrued marketing expenses, resulting from the growth of our business and our increased marketing and promotion activities, partially offset by (i) an increase in accounts receivable of RMB84.9 million primarily arising from increased receivables from third-party online payment which resulted from an increase in the amount of tuition fees collected through such payment providers; (ii) an increase in prepayment and other current assets of RMB61.0 million; (iii) an increase in inventory of RMB29.0 million; and (iv) a decrease in payroll payable of RMB25.5 million. Historically, the tuition fees collected through third-party online payment providers were usually settled within 60 days.
Investing activities
Net cash provided by investing activities for the nine months ended September 30, 2020 was RMB340.9 million (US$50.2 million), which was mainly attributable to (i) the proceeds received from the maturities of time deposits of RMB510.2 million (US$75.2 million); and (ii) the proceeds received from maturities of short-term investments of RMB465.0 million (US$68.5 million), partially offset by (i) the purchases of short-term investments of RMB578.0 million (US$85.1 million) with variable interest rates; (ii) the purchases of property and equipment of RMB20.9 million (US$3.1 million); (iii) the purchases of time deposits placed with banks with original maturities between three to twelve months of RMB20.7 million (US$3.0 million); and (iv) the payment for equity investments and cash consideration paid for business combination net of cash acquired of RMB14.9 million (US$2.2 million).
14
Net cash provided by investing activities for the nine months ended September 30, 2019 was RMB279.4 million, which was mainly attributable to (i) the proceeds we received from the maturities of time deposits of RMB498.3 million; and (ii) the proceeds received from maturities of short-term investments of RMB106.9 million, partially offset by (i) the purchases of time deposit we placed with banks with original maturities between three to twelve months of RMB251.7 million; (ii) the purchases of short-term investments of RMB62.0 million with variable interest rates; and (iii) the purchases of property and equipment of RMB13.7 million.
Financing activities
Net cash provided by financing activities for the nine months ended September 30, 2020 was RMB19.1 million (US$2.8 million), which was mainly attributable to the proceeds received from the issuance of ordinary shares granted to our employees pursuant to incentive plans of RMB27.0 million (US$4.0 million), partially offset by payment for initial public offering expenses of RMB7.9 million (US$1.2 million).
Net cash provided by financing activities for the nine months ended September 30, 2019 was RMB74.8 million, which was attributable to the funding from NetEase Group of RMB75.6 million.
15
Cover Page |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Document Information [Line Items] | |
| Document Type | 6-K |
| Amendment Flag | false |
| Document Period End Date | Sep. 30, 2020 |
| Document Fiscal Year Focus | 2020 |
| Document Fiscal Period Focus | Q3 |
| Entity Registrant Name | Youdao, Inc. |
| Entity Central Index Key | 0001781753 |
| Current Fiscal Year End Date | --12-31 |
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 30, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Class A ordinary shares [Member] | ||
| Ordinary shares, par value | $ 0.0001 | |
| Ordinary shares authorized | 200,000,000 | 200,000,000 |
| Ordinary shares issued | 24,622,785 | 22,635,396 |
| Ordinary shares outstanding | 24,622,785 | 22,635,396 |
| Class B ordinary shares [Member] | ||
| Ordinary shares, par value | $ 0.0001 | |
| Ordinary shares authorized | 100,000,000 | 100,000,000 |
| Ordinary shares issued | 89,132,360 | 89,132,360 |
| Ordinary shares outstanding | 89,132,360 | 89,132,360 |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - CNY (¥) ¥ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Related party transaction, net revenue | ¥ 23,639 | ¥ 29,100 |
| Interest expense, related party | 23,369 | 22,379 |
| Cost of revenues [Member] | ||
| Related party transaction, cost of revenues and operating expenses | 83,337 | 24,597 |
| Sales and marketing expenses [Member] | ||
| Related party transaction, cost of revenues and operating expenses | 8,832 | 9,902 |
| Research and development expenses [Member] | ||
| Related party transaction, cost of revenues and operating expenses | 18,168 | 14,234 |
| General and administrative expenses [Member] | ||
| Related party transaction, cost of revenues and operating expenses | ¥ 10,787 | ¥ 3,467 |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' (DEFICIT)/EQUITY ¥ in Thousands, $ in Thousands |
CNY (¥) |
USD ($) |
Class A ordinary shares [Member]
CNY (¥)
shares
|
Class B ordinary shares [Member]
CNY (¥)
shares
|
Additional paid-in capital [Member]
CNY (¥)
|
Statutory reserves [Member]
CNY (¥)
|
Accumulated deficit [Member]
CNY (¥)
|
Accumulated other comprehensive income/(loss) [Member]
CNY (¥)
|
Non-controlling interests [Member]
CNY (¥)
|
Pre-IPO ordinary shares [Member]
CNY (¥)
shares
|
|---|---|---|---|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2018 | ¥ (1,141,433) | ¥ 138,024 | ¥ 292 | ¥ (1,281,191) | ¥ 496 | ¥ 888 | ¥ 58 | |||
| Balance (Shares) at Dec. 31, 2018 | shares | 92,000,000 | |||||||||
| Net loss | (398,570) | (399,505) | 935 | |||||||
| Share-based compensation expenses | 5,498 | 5,498 | ||||||||
| Foreign currency translation adjustment | 55 | 55 | ||||||||
| Deemed contribution related to acquisition of businesses under common control | 69,603 | 69,603 | ||||||||
| Accretions of convertible redeemable preferred shares | (32,209) | (32,209) | ||||||||
| Balance at Sep. 30, 2019 | (1,497,056) | 213,125 | 292 | (1,712,905) | 551 | 1,823 | ¥ 58 | |||
| Balance (Shares) at Sep. 30, 2019 | shares | 92,000,000 | |||||||||
| Balance at Dec. 31, 2019 | 301,027 | ¥ 16 | ¥ 56 | 2,232,841 | 1,786 | (1,920,081) | (14,527) | 936 | ||
| Balance (Shares) at Dec. 31, 2019 | shares | 22,635,396 | 89,132,360 | ||||||||
| Net loss | (1,305,418) | $ (192,267) | (1,305,035) | (383) | ||||||
| Issuance of ordinary shares pursuant to incentive plans (Shares) | shares | 1,987,389 | |||||||||
| Issuance of ordinary shares pursuant to incentive plans | 26,996 | ¥ 1 | 26,995 | |||||||
| Share-based compensation expenses | 26,901 | 26,901 | ||||||||
| Deemed distribution to NetEase | (2,060) | (2,060) | ||||||||
| Noncontrolling interests arising from business combination | 624 | 624 | ||||||||
| Foreign currency translation adjustment | (19,466) | (2,867) | (19,466) | |||||||
| Balance at Sep. 30, 2020 | ¥ (971,396) | $ (143,071) | ¥ 17 | ¥ 56 | ¥ 2,284,677 | ¥ 1,786 | ¥ (3,225,116) | ¥ (33,993) | ¥ 1,177 | |
| Balance (Shares) at Sep. 30, 2020 | shares | 24,622,785 | 89,132,360 |
Operations and Reorganization |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operations and Reorganization | 1. Operations and Reorganization Principal activities and reorganization Youdao, Inc. (“Youdao” or the “Company”) was incorporated in the Cayman Islands on November 27, 2014. Youdao, Inc., its subsidiaries and consolidated variable interest entities (“VIEs”), together are referred to as “the Group” or “Youdao Group”. NetEase, Inc. (the “Parent” or “NetEase”) and its subsidiaries and consolidated VIEs, other than the Company and its subsidiaries and VIEs, are collectively referred to herein as the “NetEase Group”. The Group provides a variety of learning content, applications and solutions, which covers a wide spectrum of topics and targets people from broad age groups for their lifelong learning needs through its websites and mobile applications. The Group generates its revenues from learning services and products as well as online marketing services. The learning services mainly include online courses, fee-based premium services and others. As of September 30, 2020, the Company’s major subsidiaries and consolidated VIE, are as follows:
Reorganization The Group started its business in 2006, through Youdao Information. Since the date of inception, Youdao Information was substantially owned by the NetEase Group and several employees and former employees of the Group, as noncontrolling shareholders, including Feng Zhou, Chief Executive Officer of the Company. In May 2019, the Group acquired certain education businesses, including NetEase Cloud Classroom, China University MOOC and NetEase KADA from NetEase Group. Since these businesses were controlled by NetEase both before and after the acquisition, this transaction was accounted for as a business combination under common control. In accordance with ASC 805, Business Combination, the consolidated financial statements of the Company were retrospectively adjusted to reflect the results of the acquired businesses as if they had been acquired throughout the periods presented. Basis of presentation for the Reorganization There was no change in the basis of presentation of the financial statement resulting from these Reorganization transactions. The assets and liabilities have been stated at historical carrying amounts. The Group has been operating as separated entities since inception, the allocation from NetEase Group for the expenses incurred by NetEase Group but related to the Group was not material. For the nine months ended September 30, 2019 and 2020, the allocation was related to the share-based compensation expenses from award plan of NetEase Group, amounting to RMB3,183 and RMB2,177, respectively (Note 11). Liquidity The Group incurred net losses of RMB398.6 million and RMB1.3 billion for the nine months ended September 30, 2019 and 2020, respectively. Net cash used in operating activities was RMB342.9 million and RMB450.8 million for the nine months ended September 30, 2019 and 2020, respectively. Accumulated deficit was RMB3.2 billion as of September 30, 2020. As of September 30, 2020, the Group was in a net current liability position of RMB1.1 billion. The Group assesses its liquidity by its ability to generate cash from operating activities and attract additional capital and/or finance funding. Historically, the Group has relied principally on both operational sources of cash and
non-operational sources of financing from NetEase Group and investors to fund its operations and business development. The Group’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan, which includes increasing revenues while controlling operating expenses, as well as, generating operational cash flows and continuing to gain support from outside sources of financing. The Group has been continuously receiving financing support from NetEase Group and NetEase Group will continue to provide financial support in the next twelve months from the date of this financial statements. Refer to Note 15 for details of the Group’s relationship with NetEase Group for financing activities. In October 2019, the Company has completed its IPO on the NYSE and the CPP to certain investment funds managed by Orbis Investment Management Limited, raising the net proceeds of US$88.2 million (or equivalent to RMB621.9 million) and US$125.0 million (or equivalent to RMB881.7 million), respectively. Moreover, the Group can adjust the pace of its operation expansion and control the operating expenses. Based on the above considerations, the Group believes the cash and cash equivalents, time deposits, short-term investments and the operating cash flows are sufficient to meet the cash requirements to fund planned operations and other commitments for at least the next twelve months. The Group’s unaudited interim condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. |
Summary of Significant Accounting Policies |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies (a) Basis of presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared on a going concern basis in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted consistent with Article 10 of Regulation S-X. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments as necessary for the fair statement of the Company’s financial position, results of operations and cash flows as of September 30, 2020 and for the nine months ended September 30, 2019 and 2020. The consolidated balance sheet at December 31, 2019 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S. GAAP. The unaudited interim condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the unaudited interim condensed consolidated financial statements have read or have access to the audited consolidated financial statements for the preceding fiscal years. Accordingly, these financial statements should be read in conjunction with the audited consolidated financial statements and related footnotes for the year ended December 31, 2019. Results for the nine months ended September 30, 2020 are not necessarily indicative of the results expected for the full fiscal year or for any future period. (b) Principles of consolidation Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of the board of directors, or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has the power to direct the activities that most significantly impact the entity’s economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity. All significant intercompany balances and transactions within the Group have been eliminated upon consolidation. (c) Use of estimates The preparation of the Group’s unaudited interim condensed consolidated financial statements in conformity with the U.S. GAAP requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the balance sheet date and reported revenues and expenses during the reported periods in the unaudited interim condensed consolidated financial statements and accompanying notes. Significant accounting estimates include, but are not limited to, determination of the learning period of students, valuation allowance of deferred tax assets, determination of the fair value of ordinary shares, valuation, recognition of share-based compensation expenses and allowance for doubtful accounts including expected credit losses. Actual results could differ from those estimates and such differences may be material to the unaudited interim condensed consolidated financial statements. (d) Convenience translation Translations of balances in the unaudited interim condensed consolidated balance sheets, unaudited interim condensed consolidated statements of operation and comprehensive loss and unaudited interim condensed consolidated statements of cash flows from RMB into USD as of and for the nine months ended September 30, 2020 are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB6.7896, representing the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on September 30, 2020. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into USD at that rate on September 30, 2020, or at any other rate. (e) Revenue recognition The Group adopted ASC 606, Revenue from Contracts with Customers Disaggregation of net revenues For the nine months ended September 30, 2019 and 2020, substantially all of the Group’s net revenues were generated in the PRC. The following table provides information about disaggregated revenue by types:
Contract balances Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent amounts invoiced and revenue recognized prior to invoicing, when the Group has satisfied its performance obligations and has the unconditional right to payment. Allowance for doubtful accounts/expected credit losses The Group closely monitors the collection of its accounts receivables and records a reserve for doubtful accounts against aged accounts and for specifically identified non-recoverable amounts for periods prior to January 1, 2020. If the economic situation and the financial condition of the customer deteriorate resulting in an impairment of the customer’s ability to make payments, additional allowances might be required. Accounts receivables balances are written off when they are determined to be uncollectible. From January 1, 2020, the Group’s accounts receivables are subject to the measurement of credit losses within the scope of ASC Topic 326. Accounts receivable consist primarily of receivables from payment channels, advertising customers, and receivables from distribution channels. The Group has identified the relevant risk characteristics of its customers which include size, type of the services or the products the Group provides, or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Group considers the past collection experience, current economic conditions, future economic conditions (external data and macroeconomic factors) and changes in the Group’s customer collection trends. Contract liabilities Contract liabilities refer to the deferred revenue and refund liability. Deferred revenue is relating to the learning tuition, online marketing services and fee-based premium services with fees received from customers for which the Group’s revenue recognition criteria have not been met. Revenue recognized that was included in the deferred revenue balance at January 1, 2019 and January 1, 2020 amounted to RMB163,280 and RMB426,470, respectively. As of September 30, 2020, the aggregate amount of transaction price allocated to unsatisfied performance obligations is RMB1,045.3 million which includes deferred revenues balances and amounts to be invoiced and recognized as revenue in future periods. The Group expects to recognize all this balance as revenue over the next 12 months. This balance does not include an estimate for variable consideration arising from sales rebates to advertising service customers. Refund liability represents the consideration collected by the Group which it expects to refund to its customers according to refund policy. Refund liability is estimated based on the historical refund ratio for each of the revenue streams. The refund liabilities were not material, as of December 31, 2019 and September 30, 2020. In the event that the actual amount of refund made exceeds the estimation, such excessive amount will be deducted from net revenues. (f) Business combinations The Group accounts for its business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations For the Company’s majority-owned subsidiaries and consolidated VIEs, noncontrolling interests are recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Company. If a business combination is under common control, the acquired assets and liabilities are recognized at their historical book value. The consolidated financial statements include the results of the acquired entities from the earliest date presented or, if more recent, from the date when the entities first came under common control, regardless of the date of the combination. Consolidated financial statements for prior years would also be retrospectively adjusted for periods during which the entities were under common control. (g) Goodwill Goodwill represents the excess of the purchase consideration over the fair value of the identifiable assets acquired and the liabilities assumed in business combinations. Goodwill is not amortized but is tested for impairment at the reporting unit level on an annual basis as of December 31, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Under ASC 350-20-35, Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. The judgment in estimating the fair value of reporting units includes estimating future cash flows, determining appropriate discount rates and making other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit. (h) Recently adopted accounting pronouncements In June 2016, the FASB issued of ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) In January 2017, the FASB issued ASU
No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment |
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Concentration and Risks |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Risks and Uncertainties [Abstract] | |
| Concentration and Risks | 3. Concentration and Risks Financial instruments that potentially expose the Group to significant concentration of credit risk primarily consist of cash and cash equivalents, time deposits and short-term investments. As of September 30, 2020, substantially all of the Group’s cash and cash equivalents, time deposits and short-term investments were held in major financial institutions located in Mainland China and Hong Kong, which management considered being of high credit quality. There was no customer individually account for more than 10% of the total net revenues for the nine months ended September 30, 2019 and 2020, respectively. There was one instructor and two instructors, through whom the Company’s net learning services and products revenue earned was more than 10% of the Company’s net learning services and products revenue for the nine months ended September 30, 2019 and 2020, respectively. |
Business Combination |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination | 4. Business Combination In June 2020, the Group acquired 92.5% equity interest of a private company, which primarily provides kids programming courses to its users, with cash consideration of RMB7,700. Total consideration was paid by the Group in July 2020. The Group began to consolidate its financial statements from June 2020 and the remaining 7.5% equity interest was recognized as noncontrolling interests on the balance sheet upon the acquisition date. The goodwill was allocated to learning services and products segment and was recognized in other assets. Consideration for this transaction was allocated on the acquisition date based on the fair value of the assets acquired and the liabilities assumed as follows:
The acquisition above did not have a material impact on the Group’s unaudited interim condensed consolidated financial statements, and, therefore, pro forma disclosures have not been presented. |
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Accounts Receivable, Net |
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| Receivables, Net, Current [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Receivable, Net | 5. Accounts Receivable, Net The following is a summary of accounts receivable as of December 31, 2019 and September 30, 2020:
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Prepayment and Other Current Assets |
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| Prepaid Expense and Other Assets, Current [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepayment and Other Current Assets | 6. Prepayment and Other Current Assets The following is a summary of prepayment and other current assets as of December 31, 2019 and September 30, 2020:
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Property and Equipment, Net |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment, Net | 7. Property and Equipment, Net Property and equipment, net as of December 31, 2019 and September 30, 2020 are as follows:
Depreciation expenses recognized for the nine months ended September 30, 2019 and 2020 were RMB7,288 and RMB11,278, respectively. |
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Taxes Payable |
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| Taxes Payable, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Taxes Payable | 8. Taxes Payable The following is a summary of taxes payable as of December 31, 2019 and September 30, 2020:
As of September 30, 2020, there was approximately RMB18,809 included in the balance of withholding individual income taxes for employees due to the exercise of their options under the Company’s incentive plan, which was paid in October 2020. |
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Accrued Liabilities and Other Payables |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued Liabilities and Other Payables | 9. Accrued Liabilities and Other Payables The following is a summary of accrued liabilities and other payables as of December 31, 2019 and September 30, 2020:
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Others, Net |
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| Other Nonoperating Income (Expense) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Others, Net | 10. Others, Net
Since January 2020, in accordance with the Announcement on Tax Policies to Support Prevention and Control of
COVID-19 issued by Ministry of Finance and SAT, and the Announcement on the Period of Implementation of Tax Policies to Support Epidemic Prevention and Control and to Ensure Supply, due to the COVID-19, the VAT from providing daily life services will be exempted starting on January 1, 2020 until December 31, 2020. During the nine months ended September 30, 2020, the Company recognized RMB29,469 in other income arising from the VAT exemption according to the Tax Polices. |
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Share-based Compensation |
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| Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Compensation | 11. Share-based Compensation The table below sets forth the allocation of share-based compensation expenses:
NetEase Plan (a) Description of restricted share units plan In November 2009, NetEase adopted a restricted share units plan for NetEase’s employees, directors and consultants (the “2009 RSU Plan”). NetEase has reserved 323,694,050 ordinary shares for issuance under the plan. The 2009 RSU Plan was adopted by a resolution of the board of directors on November 17, 2009 and became effective for a term of ten years unless sooner terminated. In October 2019, NetEase adopted a 2019 restricted share unit plan (the “2019 Plan”) for its employees, directors and others. The 2019 Plan has a ten-year term and a maximum number of 322,458,300 ordinary shares available for issuance pursuant to all awards under the plan. (b) Share-based compensation expenses NetEase recognizes share-based compensation expenses in its consolidated statements of operations and comprehensive income based on awards ultimately expected to vest, after considering estimated forfeitures. Forfeitures are estimated based on the NetEase’s historical experience over the last five years and revised in subsequent periods if actual forfeitures differ from those estimates. The corresponding share-based compensation expenses were allocated to the Group based on grants to the Group’s employees, amounting to RMB3,183 and RMB2,177 which is treated as deemed contribution from NetEase Group and recorded in additional paid-in capital, for the nine months ended September 30, 2019 and 2020, respectively. Youdao Plan (a) Description of share incentive plan On February 3, 2015, the Company adopted an option and restricted share unit plan for the Company’s employees, directors and consultants (the “2015 Share Incentive Plan” or “2015 Plan”). The 2015 Plan was adopted in February 2015 and became effective for a term of ten years unless sooner terminated, initially 8,000,000 ordinary shares of the Company was reserved. In April 2018, the Company further reserved an additional 2,222,222 ordinary shares for the 2015 Plan, which resulted in the total number of ordinary shares reserved under the 2015 Plan to be 10,222,222. (b) Valuation The Group uses binomial option pricing model to determine fair value of the share-based awards. The fair value of each option granted for the nine months ended September 30, 2019 and 2020 is estimated on the date of grant using the following assumptions:
The expected volatility at the grant date and each option valuation date was estimated based on the annualized standard deviation of the daily return embedded in historical share prices of comparable peer companies with a time horizon close to the expected expiry of the term of the options. The Company has not declared or paid any cash dividends on its capital stock, and the Company does not anticipate any dividend payments in the foreseeable future. Expected term is the contract life of the options. The Company estimated the risk-free interest rate based on the yield to maturity of U.S. treasury bonds denominated in USD at the option valuation date. The following table presents a summary of the Company’s options activities for the nine months ended September 30, 2019 and 2020:
The weighted average grant date fair value of share options granted during the nine months ended September 30, 2019 and 2020 were US$4.12 and US$23.37 per share , respectively. The total fair value of options vested during the nine months ended September 30, 2019 and 2020 were nil and RMB11,536 (US$1,699), respectively. Under the option plan, options are only exercisable subject to the grantee’s continuous service and completion of the Company’s IPO, and options for which the service condition has been satisfied are forfeited should employment terminate before the Company’s public listing. As the effectiveness of an IPO was not within the control of the Company, it was not deemed probable to occur for accounting purposes until the effective date of the IPO which was on October 24, 2019. Therefore, for the nine months ended September 30, 2019, no compensation expenses were recorded for the share options granted to the Group’s employees. As of September 30, 2020, the unrecognized compensation expenses related to the options granted under the 2015 Plan was estimated to US$16,049 (RMB108,966) and is expected to be recognized through the remaining vesting period of each grant. As of September 30, 2020, the weighted average remaining vesting period was 2.47 years. |
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Net Loss per Share |
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| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Loss per Share | 12. Net Loss per Share The following table sets forth the computation of basic and diluted net loss per share for the nine months ended September 30, 2019 and 2020:
Basic and diluted loss per share are computed using the weighted average number of ordinary shares/ADS outstanding during the period. 6,814,815 preferred shares and options for the purchase of 8,436,900 ordinary shares as of September 30, 2019, and options for the purchase of 6,637,830 ordinary shares as of September 30, 2020, respectively, were excluded from the computation of diluted net loss per share for the periods then ended because of their anti-dilutive effect. |
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Financial Instruments |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments | 13. Financial Instruments Fair value The following table sets forth the major financial instruments, measured at fair value, by level within the fair value hierarchy as of December 31, 2019 and September 30, 2020:
The rates of interest under the loan agreements from NetEase Group with the lending banks were determined based on the prevailing interest rates in the market. The Group classifies the valuation techniques that use these inputs as Level 2 of fair value measurements of short-term loans. For other financial assets and liabilities with carrying values that approximate fair value, if measured at fair value in the financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy. |
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Contingencies |
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Sep. 30, 2020 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Contingencies | 14. Contingencies Litigation From time to time, the Group is involved in claims and legal proceedings that arise in the ordinary course of business. Based on currently available information, management does not believe that the ultimate outcome of any unresolved matters, individually and in the aggregate, is reasonably possible to have a material adverse effect on the Group’s financial position, results of operations or cash flows. However, litigation is subject to inherent uncertainties and the Group’s view of these matters may change in the future. The Group records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Group reviews the need for any such liability on a regular basis. The Group has not recorded any material liabilities in this regard as of September 30, 2020. |
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions | 15. Related Party Transactions During the nine months ended September 30, 2019 and 2020, other than disclosed elsewhere, the Company had the following material related party transactions:
(a) Transactions with related parties
Learning services provided to NetEase Group mainly refer to the translation services provided to the entities within NetEase Group. Learning products provided to NetEase Group mainly refer to the arrangements where entities within NetEase Group acts as the distributor to sell smart devices, the revenues of which are recognized upon the delivery to the customer. Online marketing services provided to NetEase Group mainly refer to the performance-based advertising arrangement provided to the entities within NetEase Group to promote their own services and products. Service purchased from NetEase Group mainly consists of the human resource which the employees are with employment contracts with the entities within NetEase Group but provide services to the Group, office leasing and purchase of server custody service. Deemed contribution related to acquisition of businesses under common control represents a contribution from NetEase Group. (b) Balances with related parties
Short-term loans as of December 31, 2019 and September 30, 2020 amounted to RMB878,000, respectively, which consisted of entrustment loans from NetEase Group through banks denominated in RMB. All of these loans were repayable within one year. The effective interest rate for the outstanding loans for the nine months ended September 30, 2019 and 2020 ranged from approximately 3.5% to 3.9% per annum. The interest expense was RMB22,379 and RMB23,369 for the nine months ended September 30, 2019 and 2020, respectively. |
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Segment Information |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Information | 16. Segment Information Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Group’s CODM is the Chief Executive Officer. The Group’s organizational structure is based on a number of factors that the CODM uses to evaluate, view and run its business operations which include, but are not limited to, customer base, homogeneity of products and technology. The Group’s operating segments are based on this organizational structure and information reviewed by the Group’s CODM to evaluate the operating segment results. The Group reports two reportable segments-learning services and products and online marketing services. The Group currently does not allocate operating expenses or assets to its segments, as its CODM does not use such information to allocate resources or evaluate the performance of the operating segments. The table below provides a summary of the Group’s segment results for the nine months ended September 30, 2019 and 2020.
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Summary of Significant Accounting Policies (Policies) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of presentation | (a) Basis of presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared on a going concern basis in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted consistent with Article 10 of Regulation
S-X. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments as necessary for the fair statement of the Company’s financial position, results of operations and cash flows as of September 30, 2020 and for the nine months ended September 30, 2019 and 2020. The consolidated balance sheet at December 31, 2019 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S. GAAP. The unaudited interim condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the unaudited interim condensed consolidated financial statements have read or have access to the audited consolidated financial statements for the preceding fiscal years. Accordingly, these financial statements should be read in conjunction with the audited consolidated financial statements and related footnotes for the year ended December 31, 2019. Results for the nine months ended September 30, 2020 are not necessarily indicative of the results expected for the full fiscal year or for any future period. |
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| Principles of consolidation | (b) Principles of consolidation Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of the board of directors, or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has the power to direct the activities that most significantly impact the entity’s economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity. All significant intercompany balances and transactions within the Group have been eliminated upon consolidation. |
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| Use of estimates | (c) Use of estimates The preparation of the Group’s unaudited interim condensed consolidated financial statements in conformity with the U.S. GAAP requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the balance sheet date and reported revenues and expenses during the reported periods in the unaudited interim condensed consolidated financial statements and accompanying notes. Significant accounting estimates include, but are not limited to, determination of the learning period of students, valuation allowance of deferred tax assets, determination of the fair value of ordinary shares, valuation, recognition of share-based compensation expenses and allowance for doubtful accounts including expected credit losses. Actual results could differ from those estimates and such differences may be material to the unaudited interim condensed consolidated financial statements. |
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| Convenience translation | (d) Convenience translation Translations of balances in the unaudited interim condensed consolidated balance sheets, unaudited interim condensed consolidated statements of operation and comprehensive loss and unaudited interim condensed consolidated statements of cash flows from RMB into USD as of and for the nine months ended September 30, 2020 are solely for the convenience of the reader and were calculated at the rate of US$1.00 = RMB6.7896, representing the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on September 30, 2020. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into USD at that rate on September 30, 2020, or at any other rate. |
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| Revenue recognition | (e) Revenue recognition The Group adopted ASC 606, Revenue from Contracts with Customers Disaggregation of net revenues For the nine months ended September 30, 2019 and 2020, substantially all of the Group’s net revenues were generated in the PRC. The following table provides information about disaggregated revenue by types:
Contract balances Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent amounts invoiced and revenue recognized prior to invoicing, when the Group has satisfied its performance obligations and has the unconditional right to payment. Allowance for doubtful accounts/expected credit losses The Group closely monitors the collection of its accounts receivables and records a reserve for doubtful accounts against aged accounts and for specifically identified non-recoverable amounts for periods prior to January 1, 2020. If the economic situation and the financial condition of the customer deteriorate resulting in an impairment of the customer’s ability to make payments, additional allowances might be required. Accounts receivables balances are written off when they are determined to be uncollectible. From January 1, 2020, the Group’s accounts receivables are subject to the measurement of credit losses within the scope of ASC Topic 326. Accounts receivable consist primarily of receivables from payment channels, advertising customers, and receivables from distribution channels. The Group has identified the relevant risk characteristics of its customers which include size, type of the services or the products the Group provides, or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Group considers the past collection experience, current economic conditions, future economic conditions (external data and macroeconomic factors) and changes in the Group’s customer collection trends. Contract liabilities Contract liabilities refer to the deferred revenue and refund liability. Deferred revenue is relating to the learning tuition, online marketing services and fee-based premium services with fees received from customers for which the Group’s revenue recognition criteria have not been met. Revenue recognized that was included in the deferred revenue balance at January 1, 2019 and January 1, 2020 amounted to RMB163,280 and RMB426,470, respectively. As of September 30, 2020, the aggregate amount of transaction price allocated to unsatisfied performance obligations is RMB1,045.3 million which includes deferred revenues balances and amounts to be invoiced and recognized as revenue in future periods. The Group expects to recognize all this balance as revenue over the next 12 months. This balance does not include an estimate for variable consideration arising from sales rebates to advertising service customers. Refund liability represents the consideration collected by the Group which it expects to refund to its customers according to refund policy. Refund liability is estimated based on the historical refund ratio for each of the revenue streams. The refund liabilities were not material, as of December 31, 2019 and September 30, 2020. In the event that the actual amount of refund made exceeds the estimation, such excessive amount will be deducted from net revenues. |
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| Business combinations | (f) Business combinations The Group accounts for its business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations For the Company’s majority-owned subsidiaries and consolidated VIEs, noncontrolling interests are recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Company. If a business combination is under common control, the acquired assets and liabilities are recognized at their historical book value. The consolidated financial statements include the results of the acquired entities from the earliest date presented or, if more recent, from the date when the entities first came under common control, regardless of the date of the combination. Consolidated financial statements for prior years would also be retrospectively adjusted for periods during which the entities were under common control. |
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| Goodwill | (g) Goodwill Goodwill represents the excess of the purchase consideration over the fair value of the identifiable assets acquired and the liabilities assumed in business combinations. Goodwill is not amortized but is tested for impairment at the reporting unit level on an annual basis as of December 31, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Under ASC 350-20-35, Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. The judgment in estimating the fair value of reporting units includes estimating future cash flows, determining appropriate discount rates and making other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit. |
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| Recently adopted accounting pronouncements | (h) Recently adopted accounting pronouncements In June 2016, the FASB issued of ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) In January 2017, the FASB issued ASU
No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment |
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Operations and Reorganization (Tables) |
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of subsidiaries and variable interest entities | As of September 30, 2020, the Company’s major subsidiaries and consolidated VIE, are as follows:
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Summary of Significant Accounting Policies (Tables) |
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of disaggregation of revenue | For the nine months ended September 30, 2019 and 2020, substantially all of the Group’s net revenues were generated in the PRC. The following table provides information about disaggregated revenue by types:
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Business Combination (Tables) |
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of fair value of the assets acquired and the liabilities | Consideration for this transaction was allocated on the acquisition date based on the fair value of the assets acquired and the liabilities assumed as follows:
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Accounts Receivable, Net (Tables) |
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables, Net, Current [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accounts receivable | The following is a summary of accounts receivable as of December 31, 2019 and September 30, 2020:
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Prepayment and Other Current Assets (Tables) |
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid Expense and Other Assets, Current [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of prepayment and other current assets | The following is a summary of prepayment and other current assets as of December 31, 2019 and September 30, 2020:
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Property and Equipment, Net (Tables) |
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property and equipment, net | Property and equipment, net as of December 31, 2019 and September 30, 2020 are as follows:
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Taxes Payable (Tables) |
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Taxes Payable, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of taxes payable | The following is a summary of taxes payable as of December 31, 2019 and September 30, 2020:
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Accrued Liabilities and Other Payables (Tables) |
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of accrued liabilities and other payable | The following is a summary of accrued liabilities and other payables as of December 31, 2019 and September 30, 2020:
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Others, Net (Tables) |
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Nonoperating Income (Expense) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other Nonoperating Income Expense |
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Share-based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of allocation of share-based compensation expenses | The table below sets forth the allocation of share-based compensation expenses:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of share based payment award stock options valuation assumptions | The fair value of each option granted for the nine months ended September 30, 2019 and 2020 is estimated on the date of grant using the following assumptions:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of share based compensation stock option activity | The following table presents a summary of the Company’s options activities for the nine months ended September 30, 2019 and 2020:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earning per shares basic and diluted | The following table sets forth the computation of basic and diluted net loss per share for the nine months ended September 30, 2019 and 2020:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of fair value of assets measured on recurring basis | The following table sets forth the major financial instruments, measured at fair value, by level within the fair value hierarchy as of December 31, 2019 and September 30, 2020:
|
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Related Party Transactions (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of related party | During the nine months ended September 30, 2019 and 2020, other than disclosed elsewhere, the Company had the following material related party transactions:
|
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| Schedule of related party transactions |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of related party balances |
|
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of segment reporting information by segment | The table below provides a summary of the Group’s segment results for the nine months ended September 30, 2019 and 2020.
|
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Operations and Reorganization - Additional Information (Detail) ¥ in Thousands, $ in Thousands |
1 Months Ended | 9 Months Ended | |||||
|---|---|---|---|---|---|---|---|
|
Oct. 31, 2019
CNY (¥)
|
Oct. 31, 2019
USD ($)
|
Sep. 30, 2020
CNY (¥)
|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2019
CNY (¥)
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2019
CNY (¥)
|
|
| Operations and Organization [Line Items] | |||||||
| Net loss | ¥ (1,305,418) | $ (192,267) | ¥ (398,570) | ||||
| Net cash used in operating activities | (450,800) | $ (66,394) | (342,870) | ||||
| Accumulated deficit | (3,200,000) | $ (475,008) | ¥ (1,920,081) | ||||
| Net current liability | 1,100,000 | ||||||
| IPO [Member] | |||||||
| Operations and Organization [Line Items] | |||||||
| Proceeds received from ordinary shareholders | ¥ 621,900 | $ 88,200 | |||||
| Private placement [Member] | |||||||
| Operations and Organization [Line Items] | |||||||
| Proceeds from concurrent private placement | ¥ 881,700 | $ 125,000 | |||||
| NetEase Group [Member] | |||||||
| Operations and Organization [Line Items] | |||||||
| The allocation related to share-based compensation expenses | ¥ 2,177 | ¥ 3,183 | |||||
Summary of Significant Accounting Policies - Additional Information (Detail) ¥ in Thousands |
9 Months Ended | |
|---|---|---|
|
Sep. 30, 2020
CNY (¥)
|
Sep. 30, 2019
CNY (¥)
|
|
| Statutory Reserves [Line Items] | ||
| Exchange rate | 6.7896 | |
| Revenue recognized that was included in the deferred revenue balance at the beginning of the year | ¥ 426,470 | ¥ 163,280 |
| The aggregate amount of transaction price allocated to unsatisfied performance obligations | ¥ 1,045,300 | |
Summary of Significant Accounting Policies - Schedule of disaggregated Revenue (Detail) ¥ in Thousands, $ in Thousands |
9 Months Ended | ||
|---|---|---|---|
|
Sep. 30, 2020
CNY (¥)
|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2019
CNY (¥)
|
|
| Disaggregation of Revenue [Line Items] | |||
| Net revenues | ¥ 2,060,719 | $ 303,511 | ¥ 894,451 |
| Learning services [Member] | |||
| Disaggregation of Revenue [Line Items] | |||
| Net revenues | 1,423,025 | 209,589 | 454,980 |
| Online courses services [Member] | |||
| Disaggregation of Revenue [Line Items] | |||
| Net revenues | 1,317,440 | 391,622 | |
| Fee-based premium services [Member] | |||
| Disaggregation of Revenue [Line Items] | |||
| Net revenues | 105,585 | 63,358 | |
| Online marketing services [Member] | |||
| Disaggregation of Revenue [Line Items] | |||
| Net revenues | 335,047 | 49,347 | 354,494 |
| Learning products [Member] | |||
| Disaggregation of Revenue [Line Items] | |||
| Net revenues | ¥ 302,647 | $ 44,575 | ¥ 84,977 |
Concentration and Risks - Additional Information (Detail) - Revenue Benchmark [Member] |
9 Months Ended | |
|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Customer concentration risk [Member] | ||
| Concentration Risk [Line Items] | ||
| Concentration risk number of customers | 0 | 0 |
| Concentration risk percentage | 10.00% | 10.00% |
| Instructor concentration risk [Member] | Learning services and products [Member] | ||
| Concentration Risk [Line Items] | ||
| Concentration risk number of instructors | 2 | 1 |
| Concentration risk percentage | 10.00% | 10.00% |
Business Combination - Additional information (Details) ¥ in Thousands |
1 Months Ended |
|---|---|
|
Jun. 30, 2020
CNY (¥)
| |
| Business Acquisition [Line Items] | |
| Percentage of voting equity interests acquired | 92.50% |
| Business Combination, Consideration Transferred | ¥ 7,700 |
| Noncontrolling Interest [Member] | |
| Business Acquisition [Line Items] | |
| Percentage of voting equity interests acquired | 7.50% |
Business Combination - Schedule of fair value of the assets acquired and the liabilities (Detail) ¥ in Thousands |
1 Months Ended |
|---|---|
|
Jun. 30, 2020
CNY (¥)
| |
| Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract] | |
| Consideration | ¥ 7,700 |
| Noncontrolling interests | 624 |
| Total | 8,324 |
| Cash and cash equivalents | 1,302 |
| Other tangible assets | 156 |
| Liabilities assumed | (72) |
| Goodwill | 6,938 |
| Total | ¥ 8,324 |
Accounts Receivable, Net - Schedule of accounts receivable (Detail) ¥ in Thousands, $ in Thousands |
9 Months Ended | 12 Months Ended | |
|---|---|---|---|
|
Sep. 30, 2020
CNY (¥)
|
Dec. 31, 2019
CNY (¥)
|
Sep. 30, 2020
USD ($)
|
|
| Accounts receivable, net: | |||
| Accounts receivable | ¥ 346,326 | ¥ 202,953 | |
| Allowance for doubtful accounts/expected credit losses: | |||
| Balance at the beginning of year | (2,278) | (799) | |
| Additional provision charged to expenses | (9,719) | (1,897) | |
| Write-off | 418 | ||
| Balance at the end of year/period | (11,997) | (2,278) | |
| Total | ¥ 334,329 | ¥ 200,675 | $ 49,241 |
Prepayment and Other Current Assets - Schedule of prepaid expenses and other current assets (Detail) ¥ in Thousands, $ in Thousands |
Sep. 30, 2020
CNY (¥)
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2019
CNY (¥)
|
|---|---|---|---|
| Prepaid Expense and Other Assets, Current [Abstract] | |||
| Deferred expenses for learning services | ¥ 45,238 | ¥ 48,185 | |
| Prepayment for value-added taxes | 36,739 | 18,034 | |
| Prepayment for promotion fees | 27,879 | 20,777 | |
| Deferred charges | 27,545 | 12,472 | |
| Interest receivable | 17,893 | 6,252 | |
| Prepaid Sales Commission | 12,098 | ||
| Prepayment for rental expenses | 7,215 | 1,237 | |
| Prepayment For Content Fees | 3,036 | 3,201 | |
| Others | 22,941 | 10,733 | |
| Total | ¥ 200,584 | $ 29,544 | ¥ 120,891 |
Property and Equipment, Net - Schedule of property and equipment, net (Detail) ¥ in Thousands, $ in Thousands |
Sep. 30, 2020
CNY (¥)
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2019
CNY (¥)
|
|---|---|---|---|
| Property, Plant and Equipment [Line Items] | |||
| Property,plant and equipment, gross | ¥ 81,610 | ¥ 58,332 | |
| Less: accumulated depreciation | (42,122) | (33,781) | |
| Net book value | 39,488 | $ 5,816 | 24,551 |
| Servers and computers [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Property,plant and equipment, gross | 71,260 | 53,428 | |
| Leasehold improvements [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Property,plant and equipment, gross | 6,564 | 1,645 | |
| Furniture, fixtures and office equipment [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Property,plant and equipment, gross | ¥ 3,786 | ¥ 3,259 |
Property and Equipment, Net - Additional Information (Detail) - CNY (¥) ¥ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Property, Plant and Equipment [Abstract] | ||
| Depreciation expenses | ¥ 11,278 | ¥ 7,288 |
Taxes Payable - Summary of taxes payable (Detail) ¥ in Thousands, $ in Thousands |
Sep. 30, 2020
CNY (¥)
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2019
CNY (¥)
|
|---|---|---|---|
| Taxes Payable, Current [Abstract] | |||
| Withholding individual income taxes for employees | ¥ 29,580 | ¥ 5,679 | |
| VAT payable | 1,021 | 10,925 | |
| Enterprise income taxes payable | 4,822 | 7,952 | |
| Others | 78 | 1,421 | |
| Total | ¥ 35,501 | $ 5,229 | ¥ 25,977 |
Taxes Payable - Additional Information (Detail) - CNY (¥) ¥ in Thousands |
1 Months Ended | |
|---|---|---|
Oct. 31, 2020 |
Sep. 30, 2020 |
|
| Taxes Payable [Abstract] | ||
| Income tax withheld share based compensation option exercise | ¥ 18,809 | |
| Payment tax with holding share based payment arrangement | ¥ 18,809 |
Accrued Liabilities and Other Payables - Schedule of accrued liabilities and other payable (Detail) ¥ in Thousands, $ in Thousands |
Sep. 30, 2020
CNY (¥)
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2019
CNY (¥)
|
|---|---|---|---|
| Payables and Accruals [Abstract] | |||
| Accrued marketing expenses | ¥ 260,210 | ¥ 43,765 | |
| Accrued liabilities for learning services and online marketing services | 119,591 | 85,598 | |
| Accrued outside labor service fee | 59,082 | 10,488 | |
| Accrued administrative expenses | 26,014 | 7,846 | |
| Accrued technical expenses | 23,843 | 8,960 | |
| Deferred government grant | 23,342 | ||
| Operating lease liabilities-current portion | 19,457 | 4,166 | |
| Warehousing and logistics fees | 10,498 | 3,469 | |
| Accrued professional fee | 10,474 | 18,334 | |
| Payables for property and equipment | 6,614 | ||
| Deposits payable to service providers | 1,981 | 2,542 | |
| Others | 22,391 | 7,475 | |
| Total | ¥ 583,497 | $ 85,940 | ¥ 192,643 |
Others, Net - Additional Information (Detail) ¥ in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2020
CNY (¥)
| |
| Others Net [Line Items] | |
| Value added tax exemption | ¥ 29,469 |
| Covid Nineteen Pandemic [Member] | Other Income [Member] | |
| Others Net [Line Items] | |
| Value added tax exemption | ¥ 29,469 |
Others, Net - Schedule of other nonoperating income expense (Detail) ¥ in Thousands, $ in Thousands |
9 Months Ended | ||
|---|---|---|---|
|
Sep. 30, 2020
CNY (¥)
|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2019
CNY (¥)
|
|
| Other Nonoperating Income (Expense) [Abstract] | |||
| Value-added tax exemption due to the COVID-19 | ¥ 29,469 | ||
| Government grants | 25,333 | ¥ 10,928 | |
| Fair value changes of short-term investments | 7,119 | 836 | |
| Foreign exchange gain/(loss) | (8,182) | 5,724 | |
| Others | (2,192) | (296) | |
| Total | ¥ 51,547 | $ 7,592 | ¥ 17,192 |
Share-based Compensation - Schedule of share-based compensation expenses (Detail) ¥ in Thousands, $ in Thousands |
9 Months Ended | ||
|---|---|---|---|
|
Sep. 30, 2020
CNY (¥)
|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2019
CNY (¥)
|
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
| Share-based compensation expenses | ¥ 26,901 | $ 3,962 | ¥ 5,498 |
| Research and development expenses [Member] | |||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
| Share-based compensation expenses | 11,577 | 1,061 | |
| General and administrative expenses [Member] | |||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
| Share-based compensation expenses | 7,658 | 2,302 | |
| Cost of revenues [Member] | |||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
| Share-based compensation expenses | 3,876 | 1,447 | |
| Sales and marketing expenses [Member] | |||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
| Share-based compensation expenses | ¥ 3,790 | ¥ 688 | |
Share-based Compensation - Schedule of share based payment award stock options valuation assumptions (Detail) - $ / shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Expected dividends yield | 0.00% | 0.00% |
| Expected term (in years) | 6 years | 6 years |
| Minimum [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Expected volatility | 48.90% | 46.50% |
| Risk-free interest rate | 0.30% | 2.10% |
| Fair value of underlying ordinary share (US$) | $ 16.00 | $ 6.35 |
| Maximum [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Expected volatility | 52.20% | 46.90% |
| Risk-free interest rate | 1.69% | 2.60% |
| Fair value of underlying ordinary share (US$) | $ 42.31 | $ 7.29 |
Net Loss per Share - Schedule of earning per shares basic and diluted (Detail) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands |
9 Months Ended | ||
|---|---|---|---|
|
Sep. 30, 2020
CNY (¥)
¥ / shares
shares
|
Sep. 30, 2020
USD ($)
$ / shares
shares
|
Sep. 30, 2019
CNY (¥)
¥ / shares
shares
|
|
| Numerator: | |||
| Net loss | ¥ (1,305,418) | $ (192,267) | ¥ (398,570) |
| Net (income)/loss attributable to noncontrolling interests | 383 | 56 | (935) |
| Accretions of convertible redeemable preferred shares to redemption value | ¥ | (32,209) | ||
| Net loss attributable to ordinary shareholders of the Company | ¥ (1,305,035) | $ (192,211) | ¥ (431,714) |
| Denominator: | |||
| Weighted average number of ordinary shares/ADSs outstanding, basic | 112,517,299 | 112,517,299 | 92,000,000 |
| Weighted average number of ordinary shares/ADSs outstanding, diluted | 112,517,299 | 112,517,299 | 92,000,000 |
| Net loss per share/ADS, basic | (per share) | ¥ (11.60) | $ (1.71) | ¥ (4.69) |
| Net loss per share/ADS, diluted | (per share) | ¥ (11.60) | $ (1.71) | ¥ (4.69) |
Net Loss per Share - Additional Information (Detail) - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Preferred shares [Member] | ||
| Net Loss per Share [Line Items] | ||
| Anti dilutive securities excluded in calculation of earnings per share | 6,814,815 | |
| Options for purchase of ordinary shares [Member] | ||
| Net Loss per Share [Line Items] | ||
| Anti dilutive securities excluded in calculation of earnings per share | 6,637,830 | 8,436,900 |
Financial Instruments - Schedule of fair value (Detail) ¥ in Thousands, $ in Thousands |
Sep. 30, 2020
CNY (¥)
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2019
CNY (¥)
|
|---|---|---|---|
| Fair Value, by Balance Sheet Grouping [Line Items] | |||
| Time deposits | ¥ 817,475 | $ 120,401 | ¥ 1,325,737 |
| Short-term investments | 237,418 | $ 34,968 | 121,126 |
| Fair Value Recurring [Member] | |||
| Fair Value, by Balance Sheet Grouping [Line Items] | |||
| Time deposits | 817,475 | 1,325,737 | |
| Short-term investments | 237,418 | 121,126 | |
| Total | 1,054,893 | 1,446,863 | |
| Fair Value Recurring [Member] | Quoted prices in active market for identical assets (Level 1) [Member] | |||
| Fair Value, by Balance Sheet Grouping [Line Items] | |||
| Time deposits | 817,475 | 1,325,737 | |
| Total | 817,475 | 1,325,737 | |
| Fair Value Recurring [Member] | Significant other observable inputs (Level 2) [Member] | |||
| Fair Value, by Balance Sheet Grouping [Line Items] | |||
| Short-term investments | 237,418 | 121,126 | |
| Total | ¥ 237,418 | ¥ 121,126 |
Related Party Transactions - Additional Information (Detail) ¥ in Thousands, $ in Thousands |
9 Months Ended | |||
|---|---|---|---|---|
|
Sep. 30, 2020
CNY (¥)
|
Sep. 30, 2019
CNY (¥)
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2019
CNY (¥)
|
|
| Related Party Transaction [Line Items] | ||||
| Short-term loans | ¥ 878,000 | $ 129,315 | ¥ 878,000 | |
| Interest expense | 23,369 | ¥ 22,379 | ||
| NetEase Group [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Short-term loans | 878,000 | ¥ 878,000 | ||
| Interest expense | ¥ 23,369 | ¥ 22,379 | ||
| NetEase Group [Member] | Maximum [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Effective interest rate | 3.90% | 3.90% | ||
| NetEase Group [Member] | Minimum [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Effective interest rate | 3.50% | 3.50% | ||
Related Party Transactions - Schedule of related party (Detail) |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| NetEase Group [Member] | |
| Related Party Transaction [Line Items] | |
| Relationships with the Group | Control or under common control |
Related Party Transactions - Schedule of related party balances (Detail) ¥ in Thousands, $ in Thousands |
Sep. 30, 2020
CNY (¥)
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2019
CNY (¥)
|
|---|---|---|---|
| Amounts due from NetEase Group | ¥ 5,728 | $ 844 | ¥ 14,930 |
| Amounts due to NetEase Group | 38,116 | 5,614 | 48,126 |
| Short-term loans from NetEase Group | 878,000 | $ 129,315 | 878,000 |
| NetEase Group [Member] | |||
| Amounts due from NetEase Group | 5,728 | 14,930 | |
| Amounts due to NetEase Group | 38,116 | 48,126 | |
| Short-term loans from NetEase Group | ¥ 878,000 | ¥ 878,000 |
Segment Information - Schedule of segment reporting information by segment (Detail) ¥ in Thousands, $ in Thousands |
9 Months Ended | ||
|---|---|---|---|
|
Sep. 30, 2020
CNY (¥)
segment
|
Sep. 30, 2020
USD ($)
segment
|
Sep. 30, 2019
CNY (¥)
segment
|
|
| Segment Reporting Information [Line Items] | |||
| Number of reportable segments | segment | 2 | 2 | 2 |
| Net revenues | |||
| Total net revenues | ¥ 2,060,719 | $ 303,511 | ¥ 894,451 |
| Cost of revenues | |||
| Total cost of revenues | ¥ 1,131,902 | $ 166,711 | ¥ 646,259 |
| Gross margin | |||
| Total gross margin | 45.00% | 45.00% | 28.00% |
| Learning services and products [Member] | |||
| Net revenues | |||
| Total net revenues | ¥ 1,725,672 | ¥ 539,957 | |
| Cost of revenues | |||
| Total cost of revenues | ¥ 885,756 | ¥ 400,035 | |
| Gross margin | |||
| Total gross margin | 49.00% | 49.00% | 26.00% |
| Online marketing services [Member] | |||
| Net revenues | |||
| Total net revenues | ¥ 335,047 | $ 49,347 | ¥ 354,494 |
| Cost of revenues | |||
| Total cost of revenues | ¥ 246,146 | $ 36,253 | ¥ 246,224 |
| Gross margin | |||
| Total gross margin | 27.00% | 27.00% | 31.00% |
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