Bo Zhang

Zhang Bo from Huatai Securities asked about the expected positive business impacts from integrating Youdao's Confucius large language model with DeepSeek.

Answer

CEO Dr. Feng Zhou detailed a three-pronged impact. First, enhancing DeepSeek's general capabilities with domain-specific knowledge using their proven RAG technology. Second, developing sophisticated AI agents to automate multi-step tasks in education and advertising, moving beyond simple Q&A. Third, creating smaller, highly efficient vertical models, like the recently open-sourced Confucius-o1, which can outperform larger general models on specific tasks while keeping R&D and compute costs low.

Bo Zhang of Huatai Securities asked for management's outlook for the fourth quarter and their strategic priorities moving forward.

Answer

VP of Finance Yongwei Li reiterated the focus on achieving full-year operating profitability, driven by generative AI integration. He expressed confidence in meeting this goal, citing strong performance in the first three quarters. For Q4, he expects continued growth in AI-driven subscription services, profitability in online marketing, and innovation in AI-integrated smart devices. CEO Feng Zhou added that the company's dual strategy of focusing its business and betting on LLMs has been successful, creating new high-growth revenue streams that will drive future performance.