Netease ((NTES)) has held its Q4 earnings call. Read on for the main highlights of the call.
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NetEase’s recent earnings call reflected a generally positive sentiment, marked by robust revenue growth and successful gaming initiatives. The company showcased impressive achievements with new game launches such as Marvel Rivals and the return of Blizzard games to China. However, challenges like declines in certain revenue streams and lower gross profit margins were also noted. Overall, the balance tilted towards optimism with achievements outweighing the hurdles.
Record Revenue Achieved
NetEase reported a total net revenue of RMB 105.3 billion for 2024, with RMB 83.6 billion coming from games and related services. This marks the 22nd consecutive year of revenue growth in their online games operations, underscoring the company’s consistent performance and market presence.
Marvel Rivals Success
The launch of Marvel Rivals marked a significant triumph for NetEase. The game quickly reached the top of Steam’s best-seller chart within four hours and attracted over 40 million players, highlighting the company’s strength in game development and marketing.
Where Winds Meet Launch
Where Winds Meet also achieved remarkable success, garnering 50 million players within two weeks of its launch. The game topped iOS download charts, showcasing its engaging and innovative gameplay.
Blizzard Game Returns
NetEase celebrated a successful re-introduction of Blizzard games in China, with titles like World of Warcraft and Hearthstone gaining strong momentum, reinforcing their strategic partnership.
Strong Performance of PC Client Games
PC client games saw a 17% year-over-year growth, with a notable 57% increase in Q4. This growth was propelled by popular titles such as Naraka: Bladepoint and Westward Journey Online II, illustrating NetEase’s robust portfolio.
Youdao’s First Annual Operating Profit
In a positive financial development, Youdao achieved its first-ever annual operating profit in 2024, with a 10% increase year-over-year in Q4, reflecting effective cost management and strategic focus.
Decline in Youdao Learning Services Revenue
Despite the overall positive performance, Youdao’s learning services experienced a 9.5% revenue decline in Q4, as the company prioritized balancing revenue with profitability.
Decrease in NetEase Cloud Music Revenue
NetEase Cloud Music witnessed a 5% year-over-year decline in net revenue during Q4, attributed to a dip in social entertainment services revenue.
Decline in Innovative Business Revenue
Innovative businesses and others saw a 17% year-over-year revenue decline in Q4, indicating challenges in diversifying revenue streams.
Lower Gross Profit Margins in Games
The gross profit margin for games dropped to 66.7% in Q4, down from 69.5% the previous year, due to a higher proportion of revenue coming from licensed games.
Forward-Looking Guidance
NetEase’s guidance for 2024 underscores its commitment to innovation and global expansion. The company highlighted record high revenues, a 31% increase in non-GAAP net income, and announced a dividend and share repurchase plan. The strategic focus remains on high-quality content and sustainable growth, with mobile games constituting a significant portion of revenue.
In conclusion, NetEase’s earnings call painted a generally optimistic picture with strong revenue growth and successful game launches. Despite some declines in specific areas, the overall sentiment was positive, driven by strategic initiatives and market successes.
