Financial Performance - NetEase's net revenue for Q3 2024 was RMB 26.2 billion (USD 3.7 billion), a decrease of 3.9% year-over-year[4] - Revenue from games and related value-added services was RMB 20.9 billion (USD 3.0 billion), down 4.2% year-over-year[4] - Youdao's revenue increased to RMB 1.6 billion (USD 224.1 million), up 2.2% year-over-year[4] - NetEase Cloud Music's revenue remained stable at RMB 2.0 billion (USD 284.9 million) compared to the previous quarter[4] - Gross profit for Q3 2024 was RMB 16.5 billion (USD 2.3 billion), a decrease of 2.9% year-over-year[4] - The net profit attributable to shareholders for Q3 2024 was RMB 6.5 billion (USD 931.7 million), compared to RMB 6.8 billion in the previous quarter and RMB 7.8 billion year-over-year[13] - The basic earnings per share for Q3 2024 was USD 0.29, down from USD 0.30 in the previous quarter and USD 0.35 year-over-year[13] - Net profit attributable to shareholders under non-GAAP measures is defined as net profit excluding stock-based compensation expenses, providing a clearer view of operational performance[23] - Net income attributable to shareholders under non-GAAP was RMB 8,645,164, representing a 3.4% decrease from RMB 8,918,000 in the same period last year[33] - The total gross profit margin for the company was 62.2%, compared to 63.2% in the previous quarter[31] Operating Expenses - The total operating expenses for Q3 2024 amounted to RMB 9.3 billion (USD 1.3 billion), an increase from RMB 9.0 billion in the previous quarter and a decrease from RMB 9.4 billion year-over-year[12] - The total operating costs increased to RMB 10,304,106, up from RMB 9,443,587 in the previous quarter[31] - Research and development expenses for Q3 2024 totaled RMB 4,347,052 thousand, slightly down from RMB 4,455,717 thousand in Q2 2024[27] - Research and development expenses amounted to RMB 294,630, reflecting a 10.5% increase from RMB 266,000 in the previous quarter[32] Cash Flow and Assets - As of September 30, 2024, the company's net cash balance was RMB 120 billion (USD 17.1 billion), an increase from RMB 110.9 billion at the end of 2023[15] - Net cash inflow from operating activities for Q3 2024 was RMB 10.6 billion (USD 1.5 billion), compared to RMB 6.5 billion in the previous quarter and RMB 9.8 billion year-over-year[15] - Cash and cash equivalents decreased to RMB 20.18 billion from RMB 21.43 billion, reflecting a decline of approximately 5.9%[26] - The company reported a net cash outflow from investing activities of RMB 515,908 for the three months ended September 30, 2023, compared to RMB 6,318,756 for the same period last year, indicating a significant reduction in investment expenditures[30] - Cash and cash equivalents at the end of the period were RMB 18,158,066, down from RMB 27,588,325 at the beginning of the period, representing a decrease of approximately 34.4%[30] Market and Product Developments - The mobile game "Naraka: Bladepoint" has seen a stable increase in popularity since its launch in July, reaching the fourth position on the iOS bestseller list[6] - "World of Warcraft" and "Hearthstone" have returned to the Chinese market, with daily active users increasing by over 50% and 150% respectively compared to pre-suspension levels[5] - New games such as "Destiny: Rising" and "Marvel's Secret Wars" are set to launch in December, expanding the game product matrix[6] - The company plans to continue expanding its market presence and invest in new technologies and products to drive future growth[31] Shareholder Returns - The company approved a quarterly dividend of USD 0.0870 per share, with payment expected on December 10, 2024[16] - As of September 30, 2024, the company had repurchased approximately 18.2 million American Depositary Shares for a total of about USD 1.6 billion under its buyback plan[18] Risks and Strategic Focus - The company faces various risks, including market growth stagnation and regulatory changes that could adversely affect operations[22] - The company has a commitment to developing innovative online services to keep pace with market trends and demands[22] - The company emphasizes the importance of non-GAAP financial metrics for investors to assess current operational performance and outlook[24] Tax and Liabilities - The effective tax rate for Q3 2024 was 16.1%, slightly up from 16.0% in the previous quarter and 14.2% year-over-year[13] - Total liabilities decreased to RMB 49.17 billion from RMB 57.84 billion, representing a reduction of about 15%[26] - The company experienced a net cash outflow from financing activities of RMB 2,423,355 for the three months ended September 30, 2023, compared to RMB 4,608,462 for the same period last year, indicating a reduction in financing costs[30]

Company Rating - Buy/Buy rating for NetEase (NTES.O) and NetEase-S (09999.HK) with a current price of $86.98/133.10 HKD and a fair value of $132.34/206.01 HKD [1] Core Views - NetEase reported 24Q2 revenue of 254.9 billion RMB, a YoY increase of 6% but a QoQ decrease of 5% [2] - Gross margin improved by 3.08 percentage points to 62.9% in 24Q2 [2] - GAAP net profit attributable to shareholders was 6.759 billion RMB, while Non-GAAP net profit was 7.819 billion RMB, with a Non-GAAP net margin of 30.68% [2] - Game-related value-added services revenue reached 200.56 billion RMB, a YoY increase of 6.7%, with mobile games contributing 76.4% of online game revenue [2] - New games such as "World Beyond," "Naraka: Bladepoint Mobile," and "Marvel Duel" contributed to performance growth [2] - The company has a strong pipeline of games, including "Marvel Rivals" and "Where Winds Meet," expected to launch within the year [2] Business Performance - Mobile games revenue grew by 16.06% YoY to 147.25 billion RMB, while PC games revenue slightly declined by 0.05% to 45.49 billion RMB [2] - Classic mobile games like "Fantasy Westward Journey" and "Identity V" maintained strong performance, with "Identity V" showing significant improvement in revenue rankings [2][9] - NetEase's Youdao segment reported a 9.54% YoY increase in revenue to 1.322 billion RMB, with a focus on AI+education driving future growth [11] - Cloud Music's H1 revenue reached 4.07 billion RMB, exceeding expectations, with a 48% YoY increase in gross profit and a 176% YoY increase in net profit [12] Financial Projections - NetEase's total revenue is projected to be 1.09 trillion RMB in 2024, 1.225 trillion RMB in 2025, and 1.336 trillion RMB in 2026 [2] - Non-GAAP net profit is expected to be 33.3 billion RMB in 2024, 37.2 billion RMB in 2025, and 40.7 billion RMB in 2026 [2] - The SOTP valuation method yields a fair value of $132.34 per ADS (US) and 206.01 HKD per share (HK) [2] Game Pipeline and Strategy - NetEase has a robust game pipeline, including "Marvel Rivals" and "Where Winds Meet," which are expected to launch within the year [2] - The return of Blizzard games in China is expected to provide additional support to the PC gaming segment [2] - Long-term growth is supported by the company's strong R&D capabilities and its ability to consistently produce high-quality games [2] Segment Valuation - The gaming segment is valued at 574.5 billion RMB based on a 20x PE multiple [16] - Youdao is valued at 3.1 billion RMB with a 1x PS multiple [17] - Cloud Music is valued at 13.2 billion RMB with a 16x PE multiple [18] - The total SOTP valuation for NetEase is 596.6 billion RMB, translating to $850 billion USD or 661.5 billion HKD [18]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a strong expectation of performance exceeding the market by over 20% [3][4]. Core Insights - The company's Q2 mobile game revenue grew by 16% year-on-year, outperforming the industry average decline of 5.7%, with significant contributions from titles like "Dreamland Mobile" and "Identity V" [3]. - The outlook for the second half of the year is positive, with expectations for growth driven by new PC game releases and the stabilization of existing titles [3][4]. - Online music revenue increased by 27% year-on-year, indicating strong growth potential in this segment despite some offset from a strategic reduction in live streaming [3][4]. Financial Data and Earnings Forecast - Revenue projections for 2024E, 2025E, and 2026E are estimated at 107,588 million RMB, 119,644 million RMB, and 127,182 million RMB respectively, with growth rates of 4%, 11%, and 6% [2][6]. - Adjusted net profit for 2024E, 2025E, and 2026E is forecasted to be 32,822 million RMB, 36,374 million RMB, and 39,738 million RMB, reflecting growth rates of 0%, 11%, and 9% [2][6]. - The company’s price-to-earnings (PE) ratio is projected to decrease from 11x in 2024 to 9x in 2026, indicating a potentially undervalued stock [4].

Investment Rating - The report maintains a "Recommended" rating for NetEase-S (09999.HK) with a target price of 156 HKD, while the current price is 119.60 HKD [6][4]. Core Views - The company's Q2 2024 revenue reached 25.486 billion CNY, representing a year-over-year increase of 6.14% but a quarter-over-quarter decrease of 5.08%. The gaming and related services revenue was 20.056 billion CNY, up 6.69% year-over-year but down 6.54% quarter-over-quarter. The net profit attributable to shareholders was 6.759 billion CNY, down 18% year-over-year [1][11]. - The mobile gaming segment showed year-over-year growth of 16.06% but a quarter-over-quarter decline of 8.3%. The overall gross margin for gaming-related businesses improved to 70% in Q2 2024, an increase of 0.5 percentage points from the previous quarter [2][18]. - The report highlights the ongoing improvement in the profitability of Youdao and Cloud Music, with Youdao's revenue at 1.322 billion CNY (up 9.5% year-over-year) and Cloud Music's revenue at 2.041 billion CNY (up 4.74% year-over-year) [3][23]. Summary by Sections 1. Resilience of Existing Games and Impact of Exchange Rate Losses - NetEase's Q2 2024 revenue was 25.486 billion CNY, with gaming and related services revenue at 20.056 billion CNY. The company experienced a net profit of 6.759 billion CNY, impacted by exchange rate losses [1][11]. 2. Mobile Gaming Growth and Margin Improvement - Mobile gaming revenue was 14.73 billion CNY, showing a year-over-year increase of 16.06%. The overall gross margin for gaming-related services reached 70% [2][18]. 3. Profitability of Youdao and Cloud Music - Youdao's revenue was 1.322 billion CNY, with a narrowed net loss of 0.099 billion CNY. Cloud Music's revenue was 2.041 billion CNY, with a significant profit increase in the first half of the year [3][23]. 4. Gross Margin Trends - The overall gross margin for gaming-related businesses improved to 70% in Q2 2024, indicating a positive trend in profitability [2][26]. 5. Financial Forecasts and Valuation - The report adjusts profit forecasts for 2024-2026, predicting net profits of 29.8 billion CNY, 33.3 billion CNY, and 35.9 billion CNY respectively. The corresponding PE ratios are 11.8, 10.5, and 9.8 [4][30].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 136.96 [2][5] Core Insights - The company's Q2 revenue reached HKD 25.49 billion, showing a year-over-year increase of 6.1% but a quarter-over-quarter decrease of 5.1%. The growth is primarily attributed to increased mobile game revenue [4][5] - The gross margin for Q2 was 62.95%, up 3.1 percentage points year-over-year, mainly driven by growth in the gross margin of cloud music [4][5] - The company expects new game launches to drive future growth, with projected net profits for 2024, 2025, and 2026 at HKD 29.62 billion, HKD 35.21 billion, and HKD 39.62 billion respectively [5][6] Financial Summary - The company's revenue for 2022 was HKD 96.496 billion, with a year-over-year growth of 10.15%. For 2023, the revenue is projected to be HKD 103.468 billion, reflecting a growth rate of 7.23% [4][6] - The net profit attributable to the parent company for 2022 was HKD 20.338 billion, with a year-over-year growth of 20.65%. The projected net profit for 2023 is HKD 29.417 billion, indicating a growth of 44.64% [4][6] - The earnings per share (EPS) for 2022 was HKD 6.33, expected to rise to HKD 9.16 in 2023 [4][6] Business Segments - Revenue from games and related value-added services in Q2 was HKD 20.06 billion, with a gross margin of 70%, reflecting a year-over-year increase of 2.61 percentage points [5][6] - Cloud music revenue for Q2 was HKD 2.04 billion, with a gross margin of 32.1%, up 5.1 percentage points year-over-year [5][6] - The education segment, represented by Youdao, generated revenue of HKD 1.322 billion in Q2, with a gross margin of 48.2% [5][6]

Investment Rating - The report assigns a rating of "Accumulate" (downgraded) for the company [1]. Core Views - The overall performance of the company remains robust, with a focus on the release schedule of upcoming game products [1]. - The company achieved a revenue of 25.485 billion RMB in Q2 2024, reflecting a year-on-year increase of 6.1% but a quarter-on-quarter decrease of 5.1% [4]. - The net profit attributable to shareholders was 6.759 billion RMB, down 18.0% year-on-year and 11.5% quarter-on-quarter [4]. - The non-GAAP net profit attributable to shareholders was 7.819 billion RMB, down 13.3% year-on-year and 8.1% quarter-on-quarter [4]. - The gross margin decreased to 62.9%, with a year-on-year increase of 3.1 percentage points and a quarter-on-quarter decrease of 0.4 percentage points [2]. Financial Performance - The gaming and value-added services segment generated revenue of 20.1 billion RMB in Q2 2024, up 6.7% year-on-year but down 6.5% quarter-on-quarter, with a gross margin of 69.5% [3]. - Mobile game revenue saw a strong year-on-year growth of 16.1%, while PC game revenue declined by 0.1% due to base effects [3]. - Notable games such as "Party of Eggs," "Identity V," and "Rate the Land" continue to attract players, with "Naraka: Bladepoint" achieving record daily active users [3]. - The company has several major products lined up for release in the second half of the year, including "Yanyun Sixteen Sounds" and "Marvel: Battle Lines" [3]. Other Business Segments - NetEase Youdao reported Q2 2024 revenue of 1.32 billion RMB, a year-on-year increase of 9.5%, with significant growth in digital content services and online marketing services [3]. - NetEase Cloud Music achieved revenue of 2.04 billion RMB in Q2 2024, up 4.7% year-on-year, with a gross margin improvement to 32% [3]. - The innovation and other business segment generated revenue of 2.07 billion RMB, a slight increase of 0.5% year-on-year [3]. Earnings Forecast and Valuation - The company is expected to achieve revenues of 104.7 billion RMB, 115.9 billion RMB, and 124.9 billion RMB for FY2024-2026, respectively [6]. - Adjusted net profits are projected to be 31.9 billion RMB, 36.0 billion RMB, and 39.9 billion RMB for the same period [6]. - The target price is set at 144 HKD, maintaining a "Buy" rating based on a sum-of-the-parts valuation [6].

Investment Rating - The report maintains a "Buy" rating for the company [1][3]. Core Insights - The company achieved a revenue of 25.5 billion RMB in Q2 2024, representing a year-on-year growth of 6%. However, the Non-GAAP net profit decreased by 13% to 7.8 billion RMB, primarily due to reduced foreign exchange gains [2]. - The online gaming segment showed robust performance with revenues of 19.3 billion RMB, a 12% increase year-on-year, driven by successful new game launches and a strong pipeline of upcoming titles [2][3]. - Cloud music revenue grew by 4.7% to 2 billion RMB, with an improved gross margin of 32.1%, attributed to accelerated membership growth and better cost control [2]. - The AI-driven education platform, Youdao, reported a revenue of 1.3 billion RMB, up 9.5%, with significant growth in AI subscription services [2]. - The innovative segment remained stable with revenues of 2.1 billion RMB, maintaining its position in the market [2]. Summary by Sections Revenue and Profitability - Q2 2024 revenue was 25.5 billion RMB, up 6% year-on-year. Non-GAAP net profit was 7.8 billion RMB, down 13% [2]. - The gaming segment's revenue was 19.3 billion RMB, a 12% increase, with mobile games contributing 14.7 billion RMB, up 16% [2]. Future Projections - The company expects Non-GAAP net profits of 35.5 billion RMB, 38.3 billion RMB, and 41.3 billion RMB for 2024, 2025, and 2026 respectively, with corresponding EPS of 10.26 RMB, 11.09 RMB, and 11.95 RMB [3][11]. Business Segments - Cloud music revenue is projected to grow, with a focus on enhancing user experience and subscription services [8]. - Youdao's revenue is expected to continue its upward trend, driven by AI integration and educational services [8]. - The innovative segment is anticipated to maintain stable growth, focusing on product quality and market demand [8].

Investment Rating - The investment rating for the company is "Outperform the Market" [4][21]. Core Views - The company reported a revenue growth of 6% year-on-year in Q2 2024, with total revenue reaching 25.5 billion yuan. The growth was primarily driven by mobile gaming and Youdao [1][7]. - The company's Non-GAAP net profit for Q2 2024 was 7.8 billion yuan, a decrease of 13% year-on-year, with a Non-GAAP net profit margin of 31%, down 7 percentage points [1][7]. - The online gaming business generated revenue of 19.27 billion yuan, a 12% increase year-on-year, with mobile game revenue growing by 16% to 14.7 billion yuan [12][14]. - The company has a strong game pipeline, with several new titles expected to launch soon, including "Eternal Return Mobile" and "Yanyun Sixteen Sounds" [14][21]. Financial Summary - For 2024, the company is projected to achieve a revenue of 117.5 billion yuan, representing a 13.2% increase from 2023. The Non-GAAP net profit is expected to be 36.03 billion yuan, a 10.5% increase [3][23]. - The company's gross margin for Q2 2024 was 63%, an increase of 3 percentage points year-on-year, with the gaming and value-added services gross margin at 70% [1][8]. - The total operating expense ratio for Q2 2024 was 36%, up 1 percentage point year-on-year, with a sales expense ratio of 13.7% [1][8]. Business Segment Performance - Youdao's revenue for Q2 2024 was 1.3 billion yuan, a 10% increase year-on-year, with advertising service revenue doubling to 510 million yuan, a 68% increase [15][21]. - NetEase Cloud Music reported a revenue of 2 billion yuan in Q2 2024, a 5% increase year-on-year, with a gross margin of 32.1%, up 5.1 percentage points [18][21].

Financial Performance - NetEase's net revenue for Q2 2024 was RMB 25.5 billion ($3.5 billion), representing a year-over-year increase of 6.1%[3] - Revenue from games and related value-added services reached RMB 20.1 billion ($2.8 billion), up 6.7% year-over-year[3] - Youdao's revenue was RMB 1.3 billion ($181.9 million), reflecting a 9.5% year-over-year increase[3] - Cloud Music generated RMB 2 billion ($280.8 million) in revenue, a 4.7% increase year-over-year[3] - Gross profit for Q2 2024 was RMB 16 billion ($2.2 billion), marking an 11.6% year-over-year increase[3] - Net profit attributable to shareholders was RMB 6.8 billion ($930 million), with a non-GAAP net profit of RMB 7.8 billion ($1.1 billion)[4] - Basic earnings per share were $0.29, with a non-GAAP basic earnings per share of $0.33[4] - In Q2 2024, net profit attributable to shareholders was RMB 6.8 billion (USD 930 million), down from RMB 7.6 billion in the previous quarter and RMB 8.2 billion year-over-year[14] - Non-GAAP net profit attributable to shareholders in Q2 2024 was RMB 7.8 billion (USD 1.1 billion), down from RMB 8.5 billion in the previous quarter and RMB 9.0 billion year-over-year[15] - The net profit attributable to shareholders was RMB 8,242,767 thousand, a decrease of 1.5% from RMB 8,350,000 thousand year-over-year[31] - The net profit for the six months ended June 30, 2024, was $14,630,956, compared to $14,528,964 in the previous year, indicating a slight increase[35] Operating Metrics - In Q2 2024, the gross margin for games and related value-added services was 70.0%, up from 69.5% in the previous quarter and 67.4% year-over-year[9] - In Q2 2024, Youdao's gross margin was 48.2%, down from 49.0% in the previous quarter but up from 47.0% year-over-year, primarily due to a decline in learning services revenue contribution[9] - In Q2 2024, gross margin for Cloud Music was 32.1%, down from 38.0% in the previous quarter and up from 27.0% year-over-year, affected by a one-time adjustment in copyright fees[9] - The total gross profit margin for the company was 59.9%, compared to 59.5% in the same period last year[27] - The gross profit for the cloud music segment was RMB 525,684 thousand, with a gross margin of 27.0%, compared to 24.7% in the same period last year[27] Expenses and Costs - Total operating expenses in Q2 2024 were RMB 9 billion (USD 1.2 billion), down from RMB 9.4 billion in the previous quarter but up from RMB 8.3 billion year-over-year[11] - The company reported a total operating cost of RMB 9,635,888 thousand, which is a slight increase from RMB 9,443,587 thousand year-over-year[27] - Research and development expenses for the six months ended June 30, 2023, totaled RMB 7,658,639, compared to RMB 8,630,475 for the same period in 2022, a decrease of about 11.3%[25] - R&D expenses increased to RMB 429,892 thousand for the three months ended June 30, 2024, reflecting a 52.3% increase from RMB 282,466 thousand in the same period last year[29] Cash Flow and Investments - As of June 30, 2024, the company had a net cash balance of RMB 116.1 billion (USD 16 billion), up from RMB 110.9 billion at the end of 2023[16] - The company reported a net cash inflow from investing activities of RMB 11,589,514 thousand for the three months ended June 30, 2024, compared to RMB 12,859,889 thousand in the same period of 2023, indicating a decrease of 9.9%[26] - The company’s net cash inflow from operating activities for the three months ended June 30, 2024, was RMB 7,678,405 thousand, compared to RMB 9,557,169 thousand in the same period of 2023, a decrease of 19.6%[26] Shareholder Returns - The company declared a quarterly dividend of USD 0.0870 per share, payable on September 17, 2024, to shareholders of record as of September 6, 2024[17] - The company has repurchased approximately 11.9 million ADS under its buyback plan, totaling about USD 1.1 billion as of June 30, 2024[18] Financial Position - As of June 30, 2024, total assets amounted to RMB 183.34 billion, a decrease from RMB 185.92 billion as of December 31, 2023[24] - Cash and cash equivalents were reported at RMB 18.98 billion, down from RMB 21.43 billion as of December 31, 2023[24] - Total liabilities decreased to RMB 48.99 billion from RMB 57.84 billion as of December 31, 2023, indicating improved financial health[24] - The company’s equity attributable to shareholders increased to RMB 130.91 billion from RMB 124.29 billion, reflecting a growth of approximately 5.3%[24] - Short-term investments rose significantly to RMB 10.42 billion from RMB 4.44 billion, indicating a strategic shift towards liquid assets[24] - The company reported a total current liabilities of RMB 45.93 billion, down from RMB 53.84 billion, showing effective management of short-term obligations[24] - The deferred tax liabilities decreased to RMB 1.45 billion from RMB 2.30 billion, suggesting a positive adjustment in tax planning[24] - The total non-current assets increased to RMB 45.19 billion from RMB 43.23 billion, indicating ongoing investment in long-term growth[24] Tax and Regulatory - The effective tax rate for Q2 2024 was 16.0%, consistent with the previous quarter and up from 8.0% year-over-year[13] - The income tax expense for the six months ended June 30, 2023, was $(2,340,649), slightly lower than $(2,325,360) in the previous year[34] Market Strategy - The launch of new games, such as "Firefly Assault" and "World of Survival," has significantly boosted user engagement and downloads[5] - Youdao continues to see growth in digital content services and AI subscription services, achieving record operating cash inflow[6] - Cloud Music is enhancing its music ecosystem, focusing on high-quality user experiences and community engagement[6] - The company plans to continue expanding its market presence and investing in new technologies and products to drive future growth[27] Accounting and Reporting - The company emphasized the importance of non-GAAP financial metrics for investors to better understand operational performance and future prospects[23] - The company has made significant adjustments in its financial reporting between US GAAP and IFRS, reflecting important differences in accounting policies[38]

Investment Rating - The investment rating for the company is "Outperform the Market" [3][24][13] Core Insights - In Q1 2024, the company achieved a revenue of 26.9 billion yuan, representing a year-on-year growth of 7%. The growth was primarily driven by mobile gaming and Youdao, partially offset by a decline in PC gaming revenue [22][29] - The company's overall gross margin improved to 63%, up by 4 percentage points year-on-year, with gaming and value-added services gross margin at 69.5%, an increase of 3 percentage points [22][27] - Non-GAAP net profit for Q1 2024 was 8.5 billion yuan, a 12% increase year-on-year, with a Non-GAAP net profit margin of 32%, up by 1 percentage point [22][29] Summary by Sections Gaming Business - Online gaming revenue reached 20.43 billion yuan, a 10% increase year-on-year, with mobile gaming revenue at 16.1 billion yuan, growing by 19% due to strong performances from titles like "Party of Eggs" and "Identity V" [22][30] - PC gaming revenue decreased by 15% to 4.4 billion yuan, mainly due to the suspension of Blizzard games. The company has renewed its distribution agreement with Blizzard to reintroduce their games to the Chinese market [22][30] - The company plans to complete adjustments to "Fantasy Westward Journey" in the first half of this year to enhance long-term player engagement [22][31] Youdao - Youdao's net revenue for Q1 2024 was 1.4 billion yuan, a 20% increase year-on-year, with advertising revenue doubling to 490 million yuan, marking a historical high [22][32] - The strategic focus on digital content services and AI-driven subscription services has led to profitability over two consecutive quarters [22][32] Cloud Music - Cloud Music reported a net revenue of 2 billion yuan in Q1 2024, a 4% increase year-on-year, with a gross margin of 37.97%, up by 15.5 percentage points due to improved cost control [23][33] Financial Forecast - The company maintains a robust product pipeline with expected releases such as "Eternal Return" and "Yanyun Sixteen Sounds" in the second half of the year. The adjusted net profit forecasts for 2024-2026 are 36 billion, 38.6 billion, and 41.2 billion yuan respectively [22][13][26]