Core Insights - NetEase, Inc. (NTES) reported Q4 fiscal 2025 non-GAAP earnings of $1.57 per ADS, missing estimates by 22.66% and down 24.2% year over year [1][9] - Revenues reached $3.94 billion, a 7.5% year-over-year increase, but fell short of estimates by 3.82% [1] Segment Performance - Games and related value-added services revenues increased by 3.4% year over year to RMB22.0 billion ($3.1 billion), driven by self-developed games and new launches [2] - Youdao revenues grew 16.8% year over year to RMB1.6 billion ($223.7 million), supported by online marketing and learning services [3] - NetEase Cloud Music saw a 4.7% year-over-year rise in revenues to RMB2.0 billion ($281.5 million) [3] - Innovative businesses and others experienced a 10.4% year-over-year decline in revenues to RMB2.0 billion ($292.8 million) due to increased inter-segment transaction eliminations [4] Financial Highlights - Gross profit increased 8.7% year over year to RMB17.7 billion ($2.5 billion) [5] - Total operating expenses rose 10.9% year over year to RMB9.4 billion ($1.3 billion) [5] - Net income attributable to shareholders was RMB6.2 billion ($892.6 million), with non-GAAP net income at RMB7.1 billion ($1.0 billion) [5] - The effective tax rate increased to 16.4% from 13.4% year over year [5] Strategic Developments - The integration of artificial intelligence across the game ecosystem is enhancing production scalability and supporting AI-driven gameplay innovations [6] - Strong engagement in established franchises like Fantasy Westward Journey and new titles has maintained healthy player communities [7] - Global portfolio expansion is evident, with titles like Sword of Justice and Where Winds Meet achieving significant player engagement [8] Cash Flow and Balance Sheet - As of December 31, 2025, net cash increased to RMB163.5 billion ($23.4 billion) from RMB153.2 billion ($21.5 billion) as of September 30, 2025 [11] - Net cash provided by operating activities rose to RMB14.8 billion ($2.1 billion) from RMB12.9 billion ($1.8 billion) in the previous quarter [12] - A quarterly dividend of $0.232 per share ($1.16 per ADS) was declared for Q4 2025 [12]

Core Insights - The article highlights NetEase's strong performance in 2025, with a focus on double-digit revenue growth and a long-term strategy centered on proprietary technology and AI integration [3][6]. Financial Performance - NetEase reported a net revenue of CNY 112.6 billion for 2025, reflecting a 10% year-over-year increase [6]. - The company achieved a gross profit margin of 64.3% for 2025, with the fourth-quarter gross margin rising to 64.2% from 60.8% a year earlier [7]. - In the fourth quarter, net revenue from games and related value-added services was CNY 22.0 billion, up 3% year-over-year [2]. Game Portfolio and Performance - The game segment generated CNY 92.1 billion in net revenue for 2025, a 10% increase from 2024 [2]. - Key titles driving growth included "Where Winds Meet" with over 80 million players and "Marvel Rivals," which maintained engagement through seasonal updates [4][15]. - "Fantasy Westward Journey Online" achieved record annual revenue in 2025, supported by innovative content and server models [17]. AI Integration - Management emphasized the integration of AI across various aspects of game development, positioning it as a "force multiplier" rather than a replacement for human creativity [5][12]. - Tools like CodeMaker and DreamMaker are being utilized to enhance programming and art production, respectively [18]. Shareholder Returns - The company returned capital to shareholders through a dividend of $0.232 per share and repurchased approximately 22.1 million ADS for about $2.0 billion under a $5 billion program [10][6]. - NetEase ended 2025 with a net cash position of CNY 163.5 billion, up from CNY 131.5 billion at the end of 2024 [10]. Other Segments - Youdao achieved its first-ever net cash inflow from operating activities in 2025, with net revenues of CNY 5.9 billion, up about 5% [20]. - NetEase Cloud Music reported a net revenue of CNY 7.8 billion for the year, with fourth-quarter revenue increasing 5% year-over-year to CNY 2.0 billion [21].

Financial Data and Key Metrics Changes - Total annual net revenue for 2025 reached RMB 112.6 billion, representing a 10% increase year-over-year [27] - Fourth quarter total revenues were RMB 27.5 billion, with net revenues from games and related value-added services at RMB 92.1 billion, up 10% from 2024 [27][28] - Gross profit margin for the full year was 64.3%, with the fourth quarter margin increasing to 64.2% from 60.8% year-over-year [30][31] - Non-GAAP net income attributable to shareholders for the fourth quarter totaled RMB 7.1 billion, down 27% year-over-year, while for the full year it was up 11% to RMB 37.3 billion [33][34] Business Line Data and Key Metrics Changes - Online games net revenues for the full year were RMB 89.6 billion, up 11% from 2024, with fourth quarter revenues increasing 4% year-over-year to RMB 21.3 billion [27][28] - Youdao's net revenues increased approximately 5% year-over-year to RMB 5.9 billion, with fourth quarter revenues rising 17% year-over-year to RMB 1.6 billion [28] - NetEase Cloud Music net revenue decreased 2% year-over-year to RMB 7.8 billion for the full year, but fourth quarter revenues increased 5% year-over-year to RMB 2 billion [29] Market Data and Key Metrics Changes - Where Winds Meet surpassed 80 million accumulated players and ranked number 2 on Steam's global top-seller chart, demonstrating strong global traction [17] - Justice expanded internationally, topping download charts in multiple key Asian regions, showcasing the effectiveness of AI-integrated production pipelines [18] - Marvel Rivals was recognized as one of TIME's Best Video Games of 2025 and ranked in Steam's Platinum Tier of Best of 2025, indicating strong global momentum [19] Company Strategy and Development Direction - The company is focused on integrating AI into game development processes, enhancing productivity and player engagement [15][26] - There is a commitment to exploring new frontiers in AI-native gameplay, aiming to dynamically construct in-game worlds tailored to individual player behaviors [15] - The strategy includes maintaining high-intensity investments in AI-native gameplay and nurturing talent to leverage AI technology for high-quality game development [42] Management's Comments on Operating Environment and Future Outlook - Management believes that AI will fundamentally empower creators and reshape interactive entertainment, marking a critical point in the industry's evolution [16][26] - The company is optimistic about the future, viewing the current period as the best time for the industry, with a strong focus on technological advancement and creative innovation [16] - Management acknowledges the challenges posed by AI in terms of integration and control but sees it as an opportunity for excellent teams to innovate [40] Other Important Information - The company has a strong cash position, with net cash of approximately RMB 163.5 billion at year-end, and a dividend of $0.232 per share was approved [34] - The share repurchase program has seen approximately 22.1 million ADS repurchased for a total cost of about $2 billion [34] Q&A Session Summary Question: Impact of AI on the online gaming industry - Management believes the market has misinterpreted AI's impact, stating that while AI lowers entry barriers, it raises the success threshold for top-tier games [37][38] Question: Retention rate and performance of Where Winds Meet - The game has received positive feedback and high retention rates due to its immersive gameplay and continuous updates [45] Question: Future of Marvel Rivals and AI in gameplay design - Marvel Rivals remains stable with ongoing innovative content, while AI is seen as a transformative asset for player experiences [66]

Financial Data and Key Metrics Changes - Total annual net revenue for 2025 reached CNY 112.6 billion, representing a 10% increase year-over-year [27] - Fourth quarter total revenues were CNY 27.5 billion, with net revenues from games and related services at CNY 92.1 billion, up 10% from 2024 [27][28] - Gross profit margin for the full year was 64.3%, with a fourth quarter gross profit margin of 64.2%, up from 60.8% year-over-year [30][31] Business Line Data and Key Metrics Changes - Net revenues from online games for the full year were CNY 89.6 billion, up 11% from 2024, with fourth quarter revenues increasing 4% year-over-year to CNY 21.3 billion [28] - Youdao's net revenues increased approximately 5% year-over-year to CNY 5.9 billion, with fourth quarter revenues rising 17% year-over-year to CNY 1.6 billion [28] - NetEase Cloud Music's full year revenue decreased 2% to CNY 7.8 billion, but fourth quarter revenues increased 5% year-over-year to CNY 2 billion [29] Market Data and Key Metrics Changes - Where Winds Meet surpassed 80 million accumulated players and ranked number 2 on Steam's global top-seller chart [17] - Justice expanded internationally, topping download charts in multiple key Asian regions [18] - Marvel Rivals was recognized as one of TIME's Best Video Games of 2025 and ranked in Steam's Platinum Tier of Best of 2025 [19] Company Strategy and Development Direction - The company is focused on integrating AI into game development processes, enhancing productivity and player engagement [15][26] - There is a strong emphasis on global expansion and cultural resonance in game content, as seen with Where Winds Meet [17] - The company aims to leverage AI to create new interactive experiences and improve game development efficiency [15][26] Management's Comments on Operating Environment and Future Outlook - Management believes AI will fundamentally empower creators and reshape interactive entertainment [16] - The company is optimistic about the future, viewing 2025 as a critical year for AI integration and innovation [15][16] - Management acknowledges the challenges posed by AI but sees opportunities for enhanced creativity and player experiences [40][41] Other Important Information - The company has a strong cash position with net cash of approximately CNY 163.5 billion at year-end [34] - A dividend of $0.232 per share has been approved, and a $5 billion share repurchase program is ongoing [34] Q&A Session Summary Question: Impact of AI on the online gaming industry - Management believes the market has misinterpreted AI's impact, stating that while AI lowers entry barriers, it raises the success threshold for top-tier games [36][37] Question: Retention rate of overseas users for Where Winds Meet - The game has received positive feedback and high retention rates due to its immersive gameplay and continuous updates [44][45] Question: Plans for the Unlimited Server model in other titles - The company plans to replicate the Unlimited Server model across more titles, focusing on restoring classic gameplay while optimizing the gaming process [48][49] Question: Development status of Sea of Dawn - Development is on track for a Q3 launch, with positive feedback from recent testing [51][53] Question: Strategy for entering the auto chess market - The company aims to differentiate its auto chess titles by incorporating unique cultural elements and strong narrative [55][57]

Financial Data and Key Metrics Changes - Total annual net revenue for 2025 reached CNY 112.6 billion, representing a 10% increase year-over-year [28] - For Q4 2025, total revenues were CNY 27.5 billion, with net revenues from games and related services at CNY 92.1 billion, up 10% from 2024 [29] - Gross profit margin for the full year was 64.3%, with Q4 margin increasing to 64.2% from 60.8% year-over-year [32] Business Line Data and Key Metrics Changes - Net revenues from online games for 2025 were CNY 89.6 billion, up 11% from 2024, with Q4 revenues increasing 4% year-over-year to CNY 21.3 billion [29] - Youdao's net revenues increased approximately 5% year-over-year to CNY 5.9 billion, with Q4 revenues rising 17% year-over-year to CNY 1.6 billion [30] - NetEase Cloud Music's full-year revenue decreased 2% to CNY 7.8 billion, but Q4 revenues increased 5% year-over-year to CNY 2 billion [31] Market Data and Key Metrics Changes - "Where Winds Meet" surpassed 80 million accumulated players and ranked number 2 on Steam's global top-seller chart [19] - "Justice" expanded internationally, topping download charts in multiple key Asian regions [20] - "Marvel Rivals" was recognized as one of TIME's Best Video Games of 2025 and ranked in Steam's Platinum Tier of Best of 2025 [20] Company Strategy and Development Direction - The company is focused on integrating AI into game development processes, enhancing productivity and player engagement [27] - Plans to explore new frontiers in AI-native gameplay, aiming to dynamically construct in-game worlds tailored to individual player behaviors [17] - The company aims to maintain high-intensity investments in AI-native gameplay and talent nurturing to expand advantages in game development [44] Management Comments on Operating Environment and Future Outlook - Management believes AI will fundamentally empower creators and reshape interactive entertainment, marking a paradigm shift in the industry [18] - The company is optimistic about the future, viewing 2025 as a critical year for AI integration and innovation [17] - Management acknowledges the challenges posed by AI but emphasizes the importance of integrating AI technology with complex game systems [40] Other Important Information - The effective tax rate was 14.8% for the full year and 16.4% for Q4 [34] - The company approved a dividend of $0.232 per share or $1.16 per ADS [35] - The current share repurchase program has seen approximately 22.1 million ADS repurchased for a total cost of about $2 billion [36] Q&A Session Summary Question: Impact of AI on the online gaming industry - Management believes the market has misinterpreted AI's impact, stating that while AI lowers entry barriers, it raises the success threshold for top-tier games [39] Question: Retention rate of overseas users for "Where Winds Meet" - The game has received widespread acclaim for its immersive experience and operational focus on free-to-play and high-frequency updates [47] Question: Replication of the Unlimited Server model across other titles - Management confirmed plans to introduce updates across more titles, maintaining close interaction with the player community [51] Question: Current development status of "Sea of Dawn" - Development is on track for a Q3 launch, with positive feedback from recent testing [55] Question: Strategy for entering the auto chess market - The company aims to differentiate its auto chess titles by incorporating unique cultural elements and strong narrative potential [59] Question: Global expansion strategies and talent development - Management emphasized the importance of cultivating top-tier creative minds in China to deliver premium games for global markets [63]

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].

Core Viewpoint - The company is expected to report weak financial results for 4Q25, with a forecasted 6% year-over-year growth in pure online game revenue and an adjusted net profit of RMB8.4 billion, both missing consensus estimates [1] Group 1: Financial Forecasts - Total revenue for 4Q25 is projected to be RMB27.7 billion, reflecting a 3% year-over-year increase but missing consensus by 4% [3] - Pure online game revenue is expected to reach RMB21.8 billion, a 6% year-over-year increase, also missing consensus by 5% [3] - Adjusted net profit is forecasted to decline by 14% year-over-year to RMB8.4 billion, missing street expectations by 9% [3] Group 2: Game Development and Operations - The company is focusing on improving resource utilization and allocation efficiency through streamlining new game development and existing game operations [2] - New game pipelines across various genres and platforms are anticipated to contribute incrementally starting from 2H26, despite a stable forecast in 1H26 due to existing franchises [2] Group 3: Operational Costs and Adjustments - Total operating expenses are expected to increase by 11% year-over-year, primarily due to sales and marketing expenses [3] - Adjusted earnings per share estimates for FY2025-27 have been cut by 2-7% due to increased operating expenses and revised game forecasts [2] Group 4: Valuation and Investment Outlook - The company maintains a "BUY" rating with a revised target price of US$160.0/HK$250.0, based on projected earnings and asset valuations [4] - The valuation includes contributions from stakes in Youdao and Cloud Music, as well as net cash [4]

Core Insights - NetEase reported mixed results for Q3, with adjusted earnings of $2.09 per share on sales of $4 billion, falling short of analyst expectations of $2.06 per share and $4.05 billion in sales [1] Company Performance - NetEase's stock declined following the earnings report, indicating market disappointment with the sales figures [1] - The year-over-year performance details were not provided, but the context suggests potential challenges in meeting growth expectations [1] Market Context - The broader stock market experienced volatility but ended the week positively, with Nvidia and Walmart's upcoming earnings being closely watched [2] - Other companies in the gaming sector, such as Take-Two Interactive, saw stock price increases due to positive developments, contrasting with NetEase's performance [4]

Financial Data and Key Metrics Changes - Total revenues increased by 8% year over year, reaching RMB 28.4 billion in Q3 2025 [4][26] - Revenues from games and related VAS grew by 12% year over year, totaling RMB 23.3 billion [26] - Gross profit for Q3 2025 was RMB 18.2 billion, up 10% year over year, with a total gross profit margin of 64.1% [28][29] - Non-GAAP net income attributable to shareholders for Q3 totaled RMB 9.5 billion, or $1.3 billion, up 27% year over year [31][32] Business Line Data and Key Metrics Changes - Net revenues from online games were RMB 22.8 billion, up 3% quarter over quarter and 13% year over year [27] - Youdao's net revenue reached RMB 1.6 billion, representing a 15% increase quarter over quarter and a 4% increase year over year [27] - NetEase Cloud Music's net revenue was RMB 2 billion, stable quarter over quarter but down 2% year over year [27] - Revenues from innovative business and others were RMB 1.4 billion, down 15% quarter over quarter and 19% year over year [28] Market Data and Key Metrics Changes - The new game "Destiny Rising" topped the iOS download chart in the U.S. and other major Western markets shortly after its launch [5] - "Where Winds Meet" achieved a peak of 190,000 concurrent players within two days of its global launch, securing a top position on Steam [8][9] - "Racing Master" saw increased popularity in Japan, particularly during its anniversary celebration [12] Company Strategy and Development Direction - The company aims to advance development capabilities and global reach while scaling original IP into lasting franchises [26] - Focus on long-term development and providing diverse choices within games, particularly for established titles like "Fantasy Westward Journey" [38] - The strategy includes a prudent approach to launching new games, concentrating resources on high-quality flagship products [59][68] Management Comments on Operating Environment and Future Outlook - Management noted that the gaming trend in China and overseas is positive, with successful experiences in international markets [44] - The company is confident in its ability to bring high-quality content and services to global gamers [45] - Management acknowledged the impact of competition but highlighted a recovery in metrics for "Identity V" since the start of the school year [50] Other Important Information - The board of directors approved a dividend of $0.114 per share, or $0.57 per ADS [32] - The share repurchase program of up to $5 billion has been extended for an additional 36 months [33] Q&A Session Summary Question: Operational strategy for "Fantasy Westward Journey" - Management highlighted the stable economy system and enriched gaming experiences as core drivers, with the unlimited server attracting both new and returning players [36][37] Question: Gaming trends in China and overseas expansion strategy - Management discussed successful titles in overseas markets and the unique position of NetEase in bringing authentic Chinese games globally [43][44] Question: Performance of "Identity V" and future plans - Management acknowledged recent volatility but noted a recovery in metrics and preparations for new content and marketing campaigns [49][50] Question: Impact of organizational changes on game operations - Management stated that recent adjustments are part of normal personnel turnover and aim to enhance focus and efficiency without impacting daily operations [61][62] Question: AI integration in games and future game genres - Management emphasized the importance of AI in game development and operation, with a focus on high-quality flagship products rather than a large quantity of new releases [65][68]