Netease ((NTES)) has held its Q2 earnings call. Read on for the main highlights of the call.
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In a recent earnings call, Netease expressed a generally positive sentiment, highlighting significant revenue growth and successful game launches. The company’s innovative offerings and strong community engagement were key drivers of this success. However, challenges were acknowledged in sustaining growth for new games and navigating the competitive landscape of shooting games.
Revenue Growth and Gaming Expansion
Netease reported a 9% year-over-year increase in total revenues, driven by a diverse portfolio of games. The revenue from games and related value-added services (VAS) rose by 14% compared to the same period last year, showcasing the company’s robust expansion in the gaming sector.
Successful Game Launches
The company celebrated the success of new game launches, with “MARVEL Mystic Mayhem” surpassing 1 million players and topping iOS download charts. Additionally, “FragPunk” achieved the #2 spot on PlayStation’s North America free-to-play download chart, marking a significant milestone for Netease.
Evergreen Titles and Community Engagement
Netease’s evergreen titles continue to thrive, with “Fantasy Westward Journey Online” reaching a new all-time high peak in concurrent players, surpassing 2.93 million. “Identity V” also broke its quarterly revenue record, underscoring the company’s strong community engagement.
AI and Innovation in Learning Services
In the learning services sector, Youdao delivered its first second-quarter operating profit, driven by AI innovations such as Mr. P AI Tutor and an AI advertising placement optimizer, highlighting Netease’s commitment to technological advancement.
Strong Financial Performance
The financial performance of Netease was robust, with a gross profit of RMB 18.1 billion for the second quarter, up 13% year-over-year. The non-GAAP net income attributable to shareholders also saw a 22% increase year-over-year, reaching RMB 9.5 billion.
Challenges in New Game Growth
Despite the initial success of “MARVEL Mystic Mayhem” in overseas markets, the company faces challenges in sustaining long-term growth for new games, indicating a need for strategic planning and innovation.
Decline in Innovative Business Revenues
Net revenue from innovative businesses and others declined by 18% year-over-year, primarily due to decreased net revenue from Yanxuan advertising services, highlighting a potential area for improvement.
Competition in Shooting Games
The competitive landscape of shooting games presents challenges for Netease, with high expectations requiring continuous high-quality art production and gameplay innovation to maintain a competitive edge.
Forward-Looking Guidance
Looking ahead, Netease’s total revenues for the second quarter of 2025 increased by 9% year-over-year, reaching RMB 27.9 billion. The company continues to introduce new game titles, contributing to growth, and maintains a robust cash position of approximately RMB 142.1 billion. The share repurchase program remains active, with 22.1 million ADS repurchased under the USD 5 billion program.
In summary, Netease’s earnings call reflected a positive outlook with significant revenue growth and successful game launches. While challenges remain in sustaining new game growth and competing in the shooting game genre, the company’s strong financial performance and innovative strategies position it well for future success.