Core Viewpoint - NetEase Cloud Music reported a slight decline in total revenue for FY25, but adjusted net profit showed significant growth, indicating a mixed financial performance with concerns over revenue growth in online music services and overall gross profit margin [1]. Financial Performance - Total revenue for FY25 decreased by 2% YoY to RMB7.76 billion, slightly below the Bloomberg consensus estimate of RMB7.91 billion [1]. - Adjusted net profit increased by 68% YoY to RMB2.86 billion, aligning with consensus estimates [1]. - Adjusted operating profit grew by 32% YoY to RMB1.73 billion, excluding the impact of deferred income tax credit [1]. Revenue Breakdown - Online music services revenue grew by 8% YoY to RMB3.0 billion in 2H25, a slowdown from 16% YoY growth in 1H25 [2]. - Membership subscription revenue rose by 12% YoY to RMB2.6 billion in 2H25, driven by subscriber base growth but offset by a decline in monthly ARPPU [2]. - Non-subscription music revenue fell by 7% YoY in 2H25, primarily due to decreased revenue from digital album sales [2]. - Revenue from social entertainment and others dropped by 17% YoY to RMB905 million in 2H25, although it stabilized with a 5% HoH growth [2]. Margin Analysis - Overall gross profit margin (GPM) increased by 2.7 percentage points YoY but declined by 1.4 percentage points HoH to 35.0% in 2H25, mainly due to reduced revenue from higher-margin non-subscription business [3]. - Adjusted operating margin improved by 4.6 percentage points YoY to 21.1% in 2H25, attributed to operating leverage and effective expense control [3]. Future Outlook - For FY26E, total revenue is forecasted to increase by 8% YoY to RMB8.4 billion, driven by solid growth in the online music business [4]. - Music subscription revenue is expected to rise by 13% YoY to RMB5.7 billion in FY26E, supported by growth in both subscriber base and ARPPU [4]. - Adjusted operating profit is projected to grow by 19% YoY in FY26E, with operating profit margin increasing by 2 percentage points YoY [4].

Investment Rating - The report maintains a "BUY" rating for NetEase Cloud Music, indicating a potential return of over 15% over the next 12 months [14]. Core Insights - NetEase Cloud Music's total revenue for FY25 declined by 2% YoY to RMB7.76 billion, slightly below the Bloomberg consensus estimate of RMB7.91 billion. However, adjusted net profit increased by 68% YoY to RMB2.86 billion, aligning with consensus estimates [1]. - The company has slightly lowered its FY26 total revenue forecast by 1% due to a soft non-subscription business, but maintains a solid earnings growth outlook for FY26 [1][6]. - The target price has been adjusted to HK$245.00, down from HK$330.00, based on a 23x FY26E non-GAAP PE, reflecting a decline in sector valuation [1][9]. Financial Performance Summary - FY25 total revenue: RMB7.76 billion, down 2% YoY; adjusted net profit: RMB2.86 billion, up 68% YoY [2]. - FY26 revenue forecast: RMB8.42 billion, expected to grow by 8.5% YoY; adjusted net profit forecast: RMB2.14 billion, expected to decline by 25.3% YoY [2][7]. - Gross margin for FY26 is projected at 37.0%, with an operating profit margin of 22.9% [2][11]. Revenue Breakdown - Online music services revenue grew by 8% YoY to RMB3.0 billion in 2H25, while membership subscription revenue increased by 12% YoY to RMB2.6 billion [6]. - Non-subscription music revenue declined by 7% YoY in 2H25, primarily due to a drop in digital album sales [6]. - Social entertainment revenue fell by 17% YoY to RMB905 million in 2H25, although it stabilized with a 5% HoH growth [6]. Margin Analysis - Overall gross profit margin (GPM) increased by 2.7 percentage points YoY but declined by 1.4 percentage points HoH to 35.0% in 2H25 [6]. - Adjusted operating margin improved by 4.6 percentage points YoY to 21.1% in 2H25, driven by operating leverage and effective expense control [6]. Valuation Metrics - The current price of NetEase Cloud Music is HK$165.40, with an upside potential of 48.1% to the target price of HK$245.00 [3]. - The company is currently trading at a P/E of 15x for FY26E, which is considered attractive compared to the target P/E of 23x [1][9].

NetEase 4Q25 Investor Presentation Investor Relations February 11, 2026 SAFE HARBOR STATEMENT This announcement contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar expressions. In addition, statements that are not histo ...

Core Viewpoint - NetEase reported its unaudited financial results for the fourth quarter and fiscal year 2025, showing a slight increase in net revenues but a decline in net income compared to the previous year, highlighting the impact of various business segments and the integration of AI in operations [1]. Financial Highlights - Fourth quarter net revenues reached RMB27.5 billion (US$3.9 billion), a 3.0% increase from the same quarter in 2024 [1]. - Net revenues from games and related value-added services were RMB22.0 billion (US$3.1 billion), up 3.4% year-over-year [1]. - Youdao's net revenues increased by 16.8% year-over-year to RMB1.6 billion (US$223.7 million) [1]. - Net income attributable to shareholders for the fourth quarter was RMB6.2 billion (US$892.6 million), down from RMB8.8 billion in the same quarter of 2024 [1]. Operational Highlights - Blizzard titles maintained strong engagement in China, achieving record-high annual revenue [1]. - The game portfolio was strengthened with successful launches like Sword of Justice and Where Winds Meet, which surpassed 80 million cumulative players [1]. - AI integration across game development processes has improved production efficiency and enabled new gameplay experiences [1]. Fiscal Year 2025 Results - Total net revenues for fiscal year 2025 were RMB112.6 billion (US$16.1 billion), an increase from RMB105.3 billion in 2024 [1]. - Net revenues from games and related services for the fiscal year were RMB92.1 billion (US$13.2 billion), compared to RMB83.6 billion in 2024 [1]. - Net income attributable to shareholders for the fiscal year totaled RMB33.8 billion (US$4.8 billion), up from RMB29.7 billion in 2024 [1]. Cost and Profit Analysis - Cost of revenues for the fourth quarter was RMB9.9 billion (US$1.4 billion), a decrease from RMB10.5 billion in the same quarter of 2024 [1]. - Gross profit for the fourth quarter was RMB17.7 billion (US$2.5 billion), compared to RMB16.3 billion in the same quarter of 2024 [1]. - Total operating expenses for the fourth quarter were RMB9.4 billion (US$1.3 billion), up from RMB8.5 billion in the same quarter of 2024 [1]. Cash and Dividend Information - As of December 31, 2025, the company's net cash totaled RMB163.5 billion (US$23.4 billion), an increase from RMB131.5 billion in 2024 [1]. - A quarterly dividend of US$0.232 per share (US$1.16 per ADS) was approved for the fourth quarter of 2025 [2]. Share Repurchase Program - The company extended its share repurchase program of up to US$5.0 billion for an additional 36 months until January 9, 2029, with approximately 22.1 million ADSs repurchased for a total cost of US$2.0 billion as of December 31, 2025 [2].

Group 1 - NetEase, Inc. will report its financial results for the fourth quarter and fiscal year 2025 on February 11, 2026, before the U.S. market opens [1] - The earnings teleconference call will occur at 7:00 a.m. Eastern Time on February 11, 2026, with management discussing the quarterly results and answering questions [2] - Interested parties can participate in the conference call by dialing 1-914-202-3258 and providing the conference ID: 10052758 [3] Group 2 - NetEase is a leading internet and game services provider, known for its premium content and extensive gaming ecosystem [4] - The company has one of the largest in-house game R&D teams, focusing on mobile, PC, and console gaming to create superior gaming experiences [5] - Beyond gaming, NetEase offers services through subsidiaries like Youdao, an intelligent learning and advertising solutions provider, and NetEase Cloud Music, an online music platform [6]

Core Insights - NetEase, Inc. announced the retirement of Yingfeng Ding, Executive Vice President and head of the Interactive Entertainment Group, effective December 31, 2025, after 23 years with the company [1][2] - Mr. Ding will continue to serve as a consultant to NetEase in 2026 following his retirement [2] Company Overview - NetEase, Inc. is a leading internet and game services provider, known for its premium content and extensive offerings in the gaming ecosystem, including popular mobile and PC games in China and globally [3][4] - The company boasts one of the largest in-house game R&D teams, focusing on mobile, PC, and console gaming, aiming to create superior gaming experiences and deliver value to its community [4] Additional Services - Beyond gaming, NetEase's service offerings include Youdao, an intelligent learning and advertising solutions provider, NetEase Cloud Music, an online music platform, and Yanxuan, a private-label consumer lifestyle brand [5]

Summary of the Conference Call on China's Online Music Industry Industry Overview - The conference focused on the **China Internet Sector**, specifically the **online music industry** [2][4]. Key Players and Competition - **Soda Music** is experiencing rapid user growth, primarily attracting younger and price-sensitive users. The expert estimates that Soda Music's Monthly Active Users (MAU) could reach approximately **200 million** but will need to enhance its music library to penetrate deeper into established user preferences [2][3]. - **TME (Tencent Music Entertainment)** leverages its extensive content library and partnerships to provide a comprehensive music experience, while **NetEase Cloud Music** focuses on building a unique brand identity and community [4]. User Engagement and Content Strategy - A comprehensive content library and strong user engagement are essential for incumbents to maintain market share. New entrants like Soda Music may struggle to attract users due to entrenched listening habits and the challenges of offering lower-priced paid content [3]. - Soda Music aims to differentiate itself through improved content distribution and leveraging the Douyin ecosystem for music discovery [3][4]. Monetization Potential - The expert is optimistic about the long-term monetization potential of China's online music industry. The current paying ratio is estimated at **20%**, significantly lower than the **40-50%** seen in developed markets like the US and Europe. This gap is expected to narrow as younger users with better paying habits become more prevalent [5]. - The Average Revenue Per Paying User (ARPPU) in China is around **US$1.5/month**, which is lower than peers in similar income regions. The expert predicts ARPPU could rise to **US$4-5/month** over the next five years as disposable income allocated to music streaming increases [5]. Risks and Challenges - Key risks identified for the online music sector include: 1. Evolving competitive landscape and intensifying competition 2. Rapid changes in technology and user preferences 3. Uncertain monetization strategies 4. Rising costs associated with traffic acquisition and content [7]. Conclusion - The online music industry in China is poised for growth, driven by user engagement and monetization opportunities. However, competition from emerging platforms like Soda Music and the need for established players to innovate and adapt to changing user preferences present significant challenges [2][5][7].

Core Insights - Chartmetric has integrated chart data from NetEase Cloud Music, enhancing access to regional listening trends for global music professionals [1][2] - The integration aims to bridge the data gap between China's music ecosystem and the global market, facilitating artist development and marketing strategies [2][3] Company Overview - NetEase Cloud Music is a leading music streaming platform in China, primarily catering to a youth demographic, with 90% of its users under the age of 35 [2][5] - The platform is pivotal for music discovery, especially for international and independent artists, and generates significant streaming volumes for global acts [3][5] Chartmetric Integration - Chartmetric now tracks three key rankings from NetEase: China Hot 100 Songs Chart (weekly), International Hot 100 Songs Chart (weekly), and International New 100 Songs Chart (daily) [7] - This integration allows users to monitor performance across China's streaming ecosystem and compare regional trends with global benchmarks [7] Recent Developments - Mariah Carey launched her album "Here For It All" in China via NetEase Cloud Music, achieving quadrupled first-week streams compared to her previous album "Caution" [4] - This launch is noted as Carey's strongest studio album debut in the Chinese market to date [4] Industry Impact - The collaboration between NetEase Cloud Music and Chartmetric is expected to expand visibility for artists and foster new opportunities for discovery and collaboration within the music industry [3][6] - Over 5,000 organizations in the music industry utilize Chartmetric's tools for market intelligence and to identify emerging talent [7]

NetEase 3Q25 Investor Presentation Investor Relations November 20, 2025 SAFE HARBOR STATEMENT This announcement contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar expressions. In addition, statements that are not histo ...

Core Viewpoint - NetEase, Inc. reported solid financial results for Q3 2025, demonstrating healthy growth in both domestic and international markets, particularly in gaming services, while also highlighting the company's commitment to innovation and user experience [5][10]. Financial Highlights - Net revenues for Q3 2025 reached RMB 28.4 billion (US$ 4.0 billion), marking an increase of 8.2% year-over-year [7][10]. - Net revenues from games and related services were RMB 23.3 billion (US$ 3.3 billion), up 11.8% compared to the same quarter in 2024 [8][10]. - Gross profit for the quarter was RMB 18.2 billion (US$ 2.6 billion), reflecting a 10.3% increase year-over-year [14][10]. - Net income attributable to shareholders was RMB 8.6 billion (US$ 1.2 billion), consistent with the previous quarter and up from RMB 6.5 billion in Q3 2024 [18][10]. Operational Highlights - The company emphasized its focus on user experience and innovation in gaming, with notable titles like Fantasy Westward Journey Online achieving record player counts [5][10]. - New game launches, including Destiny: Rising and ANANTA, received positive reception in both Western and Chinese markets [10]. - The company continues to strengthen its global portfolio with diverse game genres and collaborations with international partners [6][10]. Segment Performance - Youdao's net revenues were RMB 1.6 billion (US$ 228.8 million), a 3.6% increase year-over-year, driven by smart devices and online marketing services [9][10]. - NetEase Cloud Music reported stable revenues of RMB 2.0 billion (US$ 275.9 million), unchanged from the previous quarter and the same quarter last year [11][10]. - Innovative businesses and others saw a decline in revenues to RMB 1.4 billion (US$ 202.1 million), down 18.9% year-over-year, primarily due to decreased revenues from Yanxuan [12][10]. Cost and Expenses - Cost of revenues for Q3 2025 was RMB 10.2 billion (US$ 1.4 billion), an increase from RMB 9.8 billion in the previous quarter [13][10]. - Total operating expenses rose to RMB 10.2 billion (US$ 1.4 billion), reflecting increased marketing expenditures related to online games [15][10]. Cash Flow and Financial Position - As of September 30, 2025, the company's net cash totaled RMB 153.2 billion (US$ 21.5 billion), up from RMB 131.5 billion at the end of 2024 [21][10]. - Net cash provided by operating activities was RMB 12.9 billion (US$ 1.8 billion) for the quarter, compared to RMB 10.9 billion in the previous quarter [21][10]. Shareholder Returns - The board approved a dividend of US$ 0.1140 per share (US$ 0.5700 per ADS) for Q3 2025, payable on December 16, 2025 [22][10]. - The company extended its share repurchase program by an additional 36 months, with approximately 22.1 million ADSs repurchased for a total cost of US$ 2.0 billion as of September 30, 2025 [25][10].