​Youdao Announces Pricing Ahead of $100.8 Million IPO in New York

​Youdao expects to price its shares in the range of between $15 to $18 per ADS at its IPO set for next Friday.

Author: Anthony Russo   

Youdao Inc., set to become publicly traded next week, has filed to sell 5.6 million American depositary shares priced between $15 and $18 apiece.

At the top of the expected range, the e-learning unit of Chinese internet technology company NetEase Inc. (Nasdaq: NTES), would raise $100.8 million in its offering, down from the $300 million the company targeted in an earlier filing.

The underwriters will have a 30-day option to purchase up to an additional 840,000 additional ADSs, according to the amended prospectus filed with the U.S. Securities and Exchange Commission on Tuesday.

Underwriters on Youdao's IPO are Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC, joined by China International Capital Corp, Hong Kong Securities Ltd. and HSBC Securities (USA) Inc. 

Founded in 2006, Youdao provides online knowledge tools, smart devices, online courses and interactive learning apps. Its platform averaged more than 100 million monthly active users in the first half of 2019.

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By 2023, the market size of online learning in China is expected to reach 719.8 billion yuan, with a compound annual growth rate (CAGR) of 47.4% from 2018, the company stated in its filing.

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The revenue of Youdao increased by 61% from 455.7 million yuan in 2017 to 732 million in 2018. However, its net loss widened 27% from 165 million yuan in 2017 to 209 million yuan in 2018. Moreover, the gap has further widened this year. For the first six months of 2019, Youdao reported losses of $27.6 million on revenue of $79.9 million. 

Youdao applied to list on the New York Stock Exchange under the symbol "DAO" and scheduled to take off in public trading on Oct. 25.