NTES(NTES) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Total net revenue for Q3 2024 was RMB 26.2 billion ( $3.7 billion), a 3% increase quarter-over-quarter [40] - Online games net revenue reached RMB 20.2 billion, up 5% quarter-over-quarter, driven by PC games like World of Warcraft and Naraka: Bladepoint, as well as mobile games like Identity V [41] - PC games revenue accounted for 29.2% of total online game revenue, with a 30% quarter-over-quarter and 29% year-over-year increase [41] - Net revenue from games and VAS declined by 4% year-over-year, mainly due to adjustments in PC live streaming services [42] - Youdao's net revenue was RMB 1.6 billion, a 2% year-over-year increase, driven by online marketing services and smart device sales [43] - NetEase Cloud Music's net revenue was RMB 2 billion, a 1% year-over-year increase, primarily due to higher membership subscriptions [44] - Gross profit margin for Q3 2024 was 62.9%, compared to 62.2% in Q3 2023 [45] Business Line Performance - Gaming division achieved total online games net revenue of RMB 20 billion, with PC games growing 29% year-over-year and 30% quarter-over-quarter [8] - Identity V reached record high revenues for the third consecutive quarter, with unprecedented DAUs and global concurrent online players [11] - Naraka: Bladepoint Mobile launched in July, ranking 3 on the iOS top working chart and achieving record high revenue in Q3 [14] - Justice Mobile celebrated its first anniversary, with over 8 million intelligence entities and strong player engagement [15] - Racing Master expanded to Japan, topping the App Store and Google Play free charts [18] Market Performance - NetEase Cloud Music expanded its K-Pop library through partnerships with Kakao Entertainment and JYP Entertainment, enhancing its content ecosystem [34] - Yanxuan achieved double-digit year-over-year growth in pet products and household cleaning items, strengthening its position in the fast-growing fast food sector [37] Strategic Direction and Industry Competition - NetEase is diversifying its portfolio across various genres and expanding its games internationally, with plans to release several highly anticipated titles in the coming months [19] - The company is focusing on high-quality growth and innovation, with a strong commitment to R&D and content creation [49] - NetEase is leveraging its partnership with Blizzard to rekindle loyalty among long-time fans and attract new players, with World of Warcraft and Hearthstone showing strong engagement post-relaunch [25] Management Commentary on Operating Environment and Future Outlook - Management emphasized the importance of innovation and long-term game operations, highlighting the success of established titles like Fantasy Westward Journey and Westward Journey Online [9][10] - The company is optimistic about the future of its gaming pipeline, with upcoming releases like Where Winds Meet and Marvel Rivals expected to drive growth [20][21] - NetEase is committed to expanding its global reach, with a focus on both domestic and international markets [25] Other Important Information - NetEase repurchased shares worth$ 543 million in Q3 2024, marking a 98% increase from the previous quarter [52] - The company declared a dividend of $0.87 per share or$ 0.435 per ADS for Q3 2024 [51] Q&A Session Summary Question: Launch schedule and monetization strategy for Where Winds Meet - Where Winds Meet PC is slated for launch by the end of December 2024, with the mobile version following shortly after [56] - The game will focus on tier-based cosmetic offerings and lighter monetization models to create a healthier social ecosystem [58] Question: Operational strategy for Justice Mobile and Eggy Party - Justice Mobile is focusing on balancing commercialization and user experience, with plans to enrich content and explore innovative monetization strategies [62] - Eggy Party is investing in long-term content creation, with confidence in its unique market position and future commercialization opportunities [64] Question: Globalization strategy and performance of Once Human - NetEase is leveraging both overseas first-party studios and domestic studios to produce games for global markets, with Once Human performing well since its release [67] - Upcoming global releases include Marvel Rivals and FragPunk, with high expectations for their performance [68] Question: Performance of Naraka: Bladepoint Mobile - Naraka: Bladepoint Mobile has accumulated 50 million new users since its launch in July 2024, with differentiated content for mobile and PC players [89] - The game is in a healthy and stable status, with long-term confidence in its performance [90]