Dr. Feng Zhou: That’s a very natural question. So first, I would say that driving towards profitability is a priority for us. The operating loss in Q3 mainly came from our early-stage products and businesses. These include STEAM courses, Youdao Smart Learning Pad of the new device and education digitization solutions. These are the 3 significant loss makers. Yes, we have plans for profitability for each product area here. So let me break that down a little bit. So our STEAM courses, they are growing fast, and we believe they have a bright feature. For this segment, what we are doing is to optimize our product offerings and marketing tactics. And we’re seeing continuous improvements in return of investments every month. The Go courses are more mature over all the STEAM courses.
Our other STEAM courses such as chess programming, science music and Chinese painting, they are mostly still in their early days. So the investments we made in these areas, they are paying off. So Youdao Go and it’s compelling app has accumulated over 1.6 million users and it’s already the leader in online Go learning in China. That’s for the Steam courses. For Smart Learning Pad, it is a strategic product for us and it is in the early stages. The opportunity here is that the learning pad market is going through a generational transformation from a hardware and content-based business to a technology-centered AI adaptive learning based business. We are taking advantage of this transformational opportunity, and it is a very good investment for us.
And very importantly, the first 2 products, Y10 and X10, they are off to a good start, and we believe they have a bright future. As for the third category, the education digitization solutions, we recently reduced our resources here. There are progress in our products and services here. So our campus board education digitalization solution with Vision analytics was released and started to enter schools and schools like them. However, due to macroeconomic challenges, the landscape has been different from our projections 1 or 2 years ago. Yes, spending on digitalization solutions has been slower than we expected. So our goal here is to find better product positions in this challenging environment with less resources and achieve profitable growth.
So all in all, if we add all our business that’s operating profitably and also the — these 3 loss makers together, we’ve been able to narrow our net operating cash outflow to RMB 294 million in Q3. Operating loss also improved to RMB 219 million with operating loss margin improving 6.1% year-over-year. Going forward, the plan is to operate prudently growing the business while, at the same time, drive towards profitability. I hope that answers the question.
Operator: Our next question comes from Thomas Chong with Jefferies.
Thomas Chong: In Q2, I think we mentioned that we are confident in the prospect of second half of this year. Would you please share your Q4 expectations?
Dr. Feng Zhou: Yes, I think yes, you have seen our Q3 numbers. And the solid Q3 financials and operating results, they give us confidence in Q4. So net revenue reached RMB 1.4 billion in Q3, so up 35% year-over-year. So one thing is even if you compare the net revenue in Q3 to Q3 last year and Q3 2020, without giving effect to the recent disposal of our academic AST business, revenues still increased by 1.1% and 56.5%, respectively. So in Q4, we will keep focusing on the healthiness of our key financials and operating indicators. That’s for sure. As for learning services, Q3 — Q4 is the retention season for STEAM courses, which is expected to have a positive effect on the cash flow and other financial metrics. Besides digital content services released in Q2 have performed well in sales and gross margin over the past 2 quarters.
