NTES(US:NTES) Di Yi Cai Jing·2025-05-15 13:45Core Viewpoint - NetEase's strong performance in Q1 2025 is primarily driven by its robust gaming business, exceeding market expectations with a significant increase in both revenue and net profit [1][3]. Financial Performance - For Q1 2025, NetEase reported a net revenue of 288 billion RMB, a year-on-year increase of 7.4%, and a net profit attributable to shareholders of 103 billion RMB, reflecting a growth of 35.5% compared to the same period last year [1][2]. - The gaming and related value-added services generated a net revenue of 240 billion RMB, accounting for 83% of total revenue, with a year-on-year increase of 12.1% [4]. Cost Management - Operating expenses decreased significantly, with total operating expenses dropping by 14.4% to 80 billion RMB, and sales and marketing expenses reduced from 40.2 billion RMB to approximately 27 billion RMB [3]. - The reduction in sales and marketing expenses is attributed to the high promotional costs for the game "Party of Eggs" in the previous year and the impact of internal anti-corruption measures implemented by the company [3]. Game Performance - The CEO of NetEase highlighted the strong performance of newly launched games and several long-standing titles, with "Identity V" and "Rate of the Land" achieving record results [5]. - The new game "Yanyun Sixteen Sounds," launched in December last year, has surpassed 30 million registered players by March this year, indicating strong market interest [5]. AI Integration - NetEase has been investing in AI for five years, applying it across various business areas, including gaming, to enhance user-generated content and improve player immersion [6]. - In Q1, NetEase's R&D expenditure reached 44 billion RMB, reflecting the company's commitment to integrating AI technology into its operations [6]. Cash Position - As of March 31, 2025, NetEase reported a net cash balance of 137 billion RMB, indicating a strong liquidity position [7].