Summary of NetEase Inc. (NTES) Conference Call Company Overview - **Company**: NetEase Inc. (NTES) - **Market Cap**: $81.9 billion - **Enterprise Value**: $62.1 billion - **Industry**: Gaming, Entertainment & Healthcare Tech - **Current Price**: $129.08 - **12-Month Price Target**: $169.00 (Upside: 30.9%) [1] Key Industry Insights - **Gaming Trends**: Anticipated slowdown in cash grossing growth (+5% YoY) into 4Q25 due to lack of new game contributions. However, flagship titles like FWJ mobile/PC and Eggy Party are expected to show strength [2] - **Margin Trends**: Margins may swing due to increased S&M ratio but are expected to maintain around 13% of sales [2] - **AI Impact**: Concerns over AI tools like Genie 3 affecting the gaming sector. However, these tools are currently viewed as developer aids rather than replacements for core game design expertise [4] Financial Performance - **Revenue Growth**: Expected +9% YoY growth for online games revenue in 4Q25, driven by flagship titles and recovery in Eggy Party [22] - **Earnings Projections**: Adjusted EBIT expected to grow +10% YoY in 4Q25. The stock is trading at 14X 2026E PE, below historical averages, indicating limited downside risk [22] - **Forecasts**: - Revenue (RMB million): 105,295.2 (2024), 113,412.0 (2025E), 123,343.7 (2026E), 133,294.2 (2027E) [19] - EBITDA (RMB million): 36,555.9 (2024), 43,255.0 (2025E), 47,839.3 (2026E), 52,563.5 (2027E) [19] - EPS ($): 7.20 (2024), 8.51 (2025E), 9.23 (2026E), 10.09 (2027E) [19] Game Pipeline and Upcoming Titles - **Key Titles**: - **Sea of Remnants**: Expected to gross RMB 5-6 billion in the first 12 months post-launch, with innovative gameplay [3] - **ANANTA**: Anticipated to launch in late 2026/early 2027 [37] - **Code: Oni**: An auto-chess game with a Chinese theme, expected to launch in 2026 [39] - **Upcoming Releases**: - **Where Winds Meet**: Contributed positively in 4Q25 with both domestic and overseas performance [24] - **Eggy Party**: Resumed positive growth, indicating a healthy trajectory [24] Market Position and Competitive Landscape - **Market Concerns**: Recent share price weakness attributed to concerns over game grossing slowdown and high margin comparisons [1] - **Competitive Dynamics**: Legacy titles remain a core growth pillar, with a focus on quality over quantity in new game launches [3] Additional Considerations - **Tax Implications**: Most game services are subject to a 6% value-added tax, with no expected changes post new VAT rules effective January 1, 2026 [21] - **Management Focus**: Upcoming earnings report will provide insights on new game timelines, potential HK primary listing, and AI integration strategies [23] This summary encapsulates the key points from the conference call, highlighting the company's current position, financial outlook, and strategic initiatives within the gaming industry.

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 ...