Youdao, Inc. (NYSE:DAO) Q3 2022 Earnings Call Transcript

And more recently, we just released about our next-generation Youdao Learning Pad, it’s called X10 and we think that we have upgraded about definitely in the features and functions and there will be more precession on AI diagnostics, and we think about that will be more expected more suitable for the student learning road maps, and we think we try to build up kind of that road map for the individual student to provide highly customer services for the different students based on our technology. So that’s why we think about the — feel confident about our products. And even right now, we see — still see production, a lot of demand from the market and right now it’s at a very early stage to see about finally, how much market we will account for the smart tablets market.

But right now, we see the fast growth of our product sales week by week. So we think that shows our product — part of our successful product strategy, and we will keep investing in this market and whatever we will upgrade our products and upgrade the features and provide more diversified services to the — to our customers. That’s the way I think about that’s our strategy and what’s the expectation for this market.

Dr. Feng Zhou: Yes. So let me add a few points. So first, the addressable market of learning tablets are larger than probably larger than Dictionary Pen. So if you look at different numbers, it’s either 5x, 6x or maybe 10x larger. So that’s — so that’s a very good market to be in if we can actually take shares from it. And the reason we think we are at a very good position to get our tablets into the hands of a lot of consumers is that, as I said, it’s an AI-driven product. And from our experience for the last few years, so we — whenever we can come up with really useful AI experiences like for the Dictionary Pen, the very quick translation look up of its — Dictionary Pen. And also, for example, for our recent Dictionary Pen P5, you can scan multiple lines with a single swipe of the pen.

Whenever we can come up with experiences like this, we will be at a good position in the market. So the product will have good reputation, and we will have lower marketing costs and everything. Things work in our favor. And we are going to just do that for the learning pad. And there are first 2 products have already bring new experiences to our users. That’s one. And the other point I want to make is that is that we will be using a pretty quick product patents, as you have seen. So we have already released 5 different SKUs this year already, and that’s faster than last year. And that’s because our teams have been gaining more and more experienced. We have gaining more know-how in the supply chain of learning hardware. And we are also getting more intellectual properties, more patents and everything.

We have more of that already in place, so we can innovate faster. And we are also building an ecosystem of content providers as we have seen in the Dictionary Pen OS initiative. So that’s also going well. Yes. So with that, I think we can — we are at a good position to with a lot of effort from the team, of course, to be able to achieve a leading position in the learning tablet market.