NetEase Announces Second Quarter 2024 Unaudited Financial Results

Core Viewpoint - NetEase, Inc. reported its unaudited financial results for the second quarter of 2024, showing a year-over-year increase in net revenues and net income, driven by growth in gaming and related services, as well as digital content services [1][2][4]. Financial Highlights - Net revenues for Q2 2024 were RMB25.5 billion (US$3.5 billion), a 6.1% increase from Q2 2023 [2][5]. - Net revenues from games and related value-added services were RMB20.1 billion (US$2.8 billion), up 6.7% year-over-year [2][5]. - Gross profit reached RMB16.0 billion (US$2.2 billion), reflecting an 11.6% increase compared to the same quarter last year [2][6]. - Net income attributable to shareholders was RMB6.8 billion (US$930.0 million), with a non-GAAP net income of RMB7.8 billion (US$1.1 billion) [2][7]. Operational Highlights - The company launched several successful new titles, including "Lost Light" and "Once Human," which achieved significant user engagement shortly after their release [3]. - Continued popularity of existing games was noted, with "Naraka: Bladepoint" reaching record-high daily active users (DAUs) [3]. - Youdao and Cloud Music segments showed growth, with Youdao recording historic-high operating cash flow [3][4]. Segment Performance - Net revenues from Youdao were RMB1.3 billion (US$181.9 million), a 9.5% increase year-over-year [2][5]. - Cloud Music generated RMB2.0 billion (US$280.8 million) in revenues, marking a 4.7% increase compared to the same quarter last year [2][5]. - Innovative businesses and others reported stable revenues of RMB2.1 billion (US$284.5 million) [2][5]. Profitability Metrics - Gross profit margin for games and related services was 70.0%, up from 67.4% year-over-year [6][8]. - Operating expenses totaled RMB9.0 billion (US$1.2 billion), reflecting an increase due to higher R&D investments [6][8]. - The effective tax rate for Q2 2024 was 16.0%, consistent with the previous quarter [8]. Cash Position and Dividends - As of June 30, 2024, the company's net cash totaled RMB116.1 billion (US$16.0 billion), an increase from RMB110.9 billion at the end of 2023 [7]. - A quarterly dividend of US$0.0870 per share has been approved, payable on September 17, 2024 [9]. Share Repurchase Program - The company has repurchased approximately 11.9 million ADSs for a total cost of US$1.1 billion under its ongoing share repurchase program [9].