NetEase Inc (NASDAQ:NTES) stock fell 0.95% (As on February 12, 11:25:56 AM UTC-4, Source: Google Finance) after the company delivered quarterly performance that fell short of analyst expectations. Games and related value-added services revenues rose 3.4% to $3.14 billion. The corresponding gross margin increased by 384 bps to 70.5%, attributable to higher net revenues from self-developed games, such as Fantasy Westward Journey Online and newly launched games Where Winds Meet and Marvel Rivals. Youdao DAO revenue rose by 16.8% to $223.75 million. However, the corresponding gross margin declined by 274 bps to 45.1%. NetEase Cloud Music’s revenues were $281.46 million, up 4.7%, while its gross margin expanded by 273 bps to 34.7%. Innovative businesses and other revenue declined 10.4% to $292.77. However, the gross margin increased by 176 bps to 39.6%. Youdao net revenues were RMB1.6 billion (US$223.7 million), an increase of 16.8% compared with the same quarter of 2024. As of December 31, 2025, NetEase held $23.4 billion in cash and equivalents. The company generated $2.12 billion in operating cash flow during the quarter.

NTES in the fourth quarter of FY25 has reported the adjusted EPADS of $1.57, missing the analysts’ estimates for the adjusted EPADS of $1.85. The company’s quarterly revenue increased 3.0% year-on-year to $3.94 billion (27.55 billion Chinese yuan), missing the analyst consensus estimate of $4.10 billion. Gross profit was RMB17.7 billion (US$2.5 billion), an increase of 8.7% compared with the same quarter of 2024. Total operating expenses were RMB9.4 billion (US$1.3 billion), an increase of 10.9% compared with the same quarter of 2024. Non-GAAP net income attributable to the Company’s shareholders was RMB7.1 billion (US$1.0 billion).

Additionally, there is Sustained strong engagement across the Company’s established franchises, demonstrating the durability of its long-term operating capabilities. Key titles, including the Fantasy Westward Journey franchise, Identity V, Eggy Party, Sword of Justice and Where Winds Meet, continued to introduce high-quality content and maintain healthy player communities. NTES further strengthened the game portfolio globally. Sword of Justice received a strong reception following its global launch, and Where Winds Meet gained traction on multiple platforms, surpassing 80 million cumulative players and delivering high engagement worldwide. Marvel Rivals also further expanded its global influence through player engagement and industry recognition. Blizzard titles delivered sustained engagement in China through enriched content and localized experiences, achieving record-high annual revenue and reaffirming NetEase’s long-term commitment to the market.