NetEase (NasdaqGS:NTES) Q4 2025 Earnings call February 11, 2026 07:00 AM ET Company ParticipantsBill Pang - Vice President of Corporate DevelopmentBrandi Piacente - Investor Relations RepresentativeHu Zhaoxuan - EVPLincoln Kong - Executive DirectorRitchie Sun - DirectorWilliam Ding - CEONone - TranslatorConference Call ParticipantsAlicia Yap - AnalystJialong Shi - AnalystNone - AnalystNone - AnalystNone - AnalystOperatorGood day and welcome to the NetEase fourth quarter and full year 2025 earnings conferenc ...

NetEase (NasdaqGS:NTES) Q4 2025 Earnings call February 11, 2026 07:00 AM ET Speaker2Good day and welcome to the NetEase fourth quarter and full year 2025 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Brandi Piacente. Please go ahead.Speaker1Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the future performance of the company and are intended to qualify for the safe harbor from ...

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].

3 February 2026 | 5:26PM HKT Equity Research NetEase Inc. (NTES) Addressing key debates on AI gaming impact, new/legacy game and margin trend; 4Q25 preview; Buy | NTES | 12m Price Target: $169.00 | Price: $129.08 | Upside: 30.9% | | --- | --- | --- | --- | | 9999.HK | 12m Price Target: HK$264.00 | Price: HK$197.90 | Upside: 33.4% | We address the key debates on NetEase, post its recent share price weakness (YTD -12% vs. KWEB -1%), likely on concerns over recent game grossing slowdown, 4Q25/1Q26's high margi ...

Industry Overview - The Internet Software & Services industry is closely tied to the economy, with initial estimates declining due to concerns over tariffs, inflation, and interest rates, although the economy has remained relatively stable [1] - The industry is characterized by a diverse range of players, which leads to some dissonance, but overall valuations have decreased significantly, making it attractive for investors [4] Key Themes - Technology adoption is crucial for growth, with companies leveraging AI and cloud services to stay competitive, leading to increased demand for software and services [6] - The U.S. economy is performing better than expected, despite concerns about job growth and geopolitical tensions affecting oil prices and supply chains [6] - Subscription-based models are becoming more prevalent, providing stability and allowing companies to retain customers and adjust pricing as needed [7] Market Performance - The Zacks Internet – Software & Services Industry has outperformed the broader Zacks Computer and Technology Sector and the S&P 500, returning 33% over the past year compared to 27.6% and 16.3% respectively [11] - The industry is currently trading at a forward P/E ratio of 223.7X, which is slightly above its median level, indicating that shares are not overvalued on average [14] Company Highlights Criteo S.A. (CRTO) - Criteo operates a commerce media platform that connects advertisers with retailers and publishers, leveraging AI to enhance its services [16][20] - The company has maintained a client retention rate close to 90% and reported a 11% growth in Retail Media ex-TAC contributions [18][19] - Despite a challenging market, Criteo's shares have decreased by 53.5% over the past year, but earnings estimates for 2025 and 2026 have shown positive revisions [23] NetEase, Inc. (NTES) - NetEase is focused on online services, primarily in gaming, which is its largest revenue contributor, supported by a strong in-house R&D team [26][27] - The company has seen significant success with popular game titles and is expanding its international business with new content [28][29] - NetEase's shares have gained 59% over the past year, with positive earnings and revenue growth expected for 2025 and 2026 [29]

Summary of NetEase Inc. (NTES) Conference Call Company Overview - **Company**: NetEase Inc. (NTES) - **Industry**: Online Gaming and Entertainment Key Highlights Recent Trends by Title and Pipeline - **Game Longevity**: NetEase operates games in a long-lasting cycle with a community mindset, although individual games experience ups and downs [3][4] - **Eggy Party**: Resolved Android channel issues in 2024, achieving record-high average user time spent and active users in Q3 2025 due to new gameplay and UGC tools [4] - **Identity V**: Faced competition in lower-tier cities but is innovating gameplay to meet user needs [4] - **Upcoming Releases**: - **Diablo IV**: Launching in China on December 12, 2024 - **Sea of Remnants**: Scheduled for 2026, no specific date yet - **ANANTA**: Development is on track, timeline not disclosed [4] Overseas Strategy - **Global Ambitions**: Management emphasized ambitions for globalization, with "Where Winds Meet" (WWM) exceeding expectations in overseas performance, appealing to both Chinese and Western players [5] Margin and OPEX Outlook - **Gross Margin**: Expected to stabilize, with annual Sales & Marketing (S&M) ratio projected at 12-13% for FY25 [6][7] - **Domestic Market**: Limited room for further expansion in Gross Profit Margin (GPM) as most improvements have been realized [7] - **Global Market**: Global channel fees are stable, limiting GPM changes for international revenue [7] - **R&D Expenses**: Hiring costs are manageable as the company is not competing aggressively for AI talent [7] AI Application - **AI Integration**: NetEase is leveraging AI in various aspects of game development, including animation, scene alignment, in-game algorithms, and code generation [6] Financial Performance - **Revenue Growth**: Projected revenue growth from RMB 105.3 billion in 2024 to RMB 133.9 billion by 2027, with a CAGR of approximately 8% [10][13] - **Gross Margin**: Expected to increase from 62.5% in 2024 to 65.3% by 2027 [10] - **Net Profit**: Projected to grow from RMB 33.5 billion in 2024 to RMB 46.6 billion by 2027 [10] Price Target and Risks - **Price Target**: Buy rating with a 12-month target price of US$160 (upside of 19.8%) and HK$250 (upside of 22.2%) [11][13] - **Key Risks**: - Weaker performance of legacy games - Slower-than-expected monetization of new games - Increased competition in gaming and other sectors - Rising content costs in music and online education [11] Additional Insights - **Market Capitalization**: Approximately $84.8 billion - **Enterprise Value**: Approximately $65.4 billion - **P/E Ratio**: Projected to be 12.9 in 2024, increasing to 14.7 by 2027 [13] This summary encapsulates the key points from the conference call, highlighting NetEase's strategic direction, financial outlook, and potential risks in 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 ...

Core Insights - The company reported a 9% YoY growth in total revenue to RMB27.9 billion, which was 2% below consensus expectations [3] - Operating profit increased by 30% YoY to RMB9.1 billion, also missing consensus by 1% [1] - Cash revenue reached RMB21.2 billion, reflecting a 20% YoY increase and beating forecasts by 3%, indicating successful summer campaigns [1] Financial Performance - Core online game revenue grew 15% YoY to RMB22.1 billion, slightly below consensus estimates [3] - Gross profit margin expanded to 64.7%, exceeding the consensus of 63.4% [3] - The company has a deferred revenue of RMB16.1 billion, which is a 28% YoY increase [3] Strategic Initiatives - The company is focusing on rejuvenating existing game portfolios and improving operational efficiency, prioritizing quality over quantity in game development [1] - Successful summer campaigns for key franchises such as Marvel Rivals and Where Winds Meet were highlighted, supported by strong operational capabilities [1] - Upcoming game launches include Destiny Rising and Diablo II, with a focus on cross-terminal global launches [1] Operational Adjustments - The company has streamlined its game development and marketing operations, leading to improved efficiency [1] - Significant increases in operating expenses (opex) by 6-8% were noted, particularly in sales and marketing (S&M) estimates, which were raised by 10-14% [2] Valuation and Outlook - The target price has been uplifted to US$153/HK$240 based on adjusted earnings per share and net cash [3] - The company has repurchased approximately 0.5 million shares and has a remaining buyback quota of US$3.0 billion until January 2026 [3]

Financial Performance - NetEase's market capitalization was $854 billion as of August 13, 2025[9] - Net revenues for 2Q25 reached $39 billion[9] - Net income attributable to the company's shareholders for 2Q25 was $12 billion[9] - Basic net income per ADS (GAAP) for 2Q25 was $188[9] - Net cash as of June 30, 2025, amounted to $198 billion[9] Revenue Breakdown (2Q25) - Games and related value-added services generated $3184 million in net revenues[12] - Youdao's net revenues were $198 million[20] - NetEase Cloud Music's net revenues reached $275 million[23] - Innovative businesses and others contributed $237 million in net revenues[26] Games Performance - Online games accounted for 97% of games and related value-added services revenue in 2Q25[12] - Fantasy Westward Journey Online reached over 293 million peak concurrent players in August[18] ESG Ratings - NetEase received an AA rating from MSCI[9, 40] - NetEase's Sustainalytics rating indicates a low-risk company[40]