NetEase Inc (NASDAQ:NTES), a leading internet and game services provider, stock fell 1.83% (As on August 14, 11:31:03 AM UTC-4, Source: Google Finance) after the company’s profit and revenue rose in the second quarter but missed market expectations as the videogame giant faced intensifying competition in China’s gaming industry amid a slowing economy. The Chinese company behind hit games such as “Marvel Rivals” said that its second-quarter net profit climbed 27% to 8.60 billion yuan, equivalent to $1.20 billion. That was lower than the 9.135 billion yuan consensus estimate in a FactSet poll. Adjusted net profit, a closely watched metric that excludes share-based compensation expenses, increased 22% from a year earlier to 9.53 billion yuan.
Moreover, Sales from games and value-added services rose by 13.7% to 22.8 billion yuan, driven by higher revenues from “Identity V” and new launches “Where Winds Meet” and “Marvel Rivals” as well as certain licensed games. NetEase launched the new superhero team-based tactical role-playing game “Marvel Mystic Mayhem” and brought back Blizzard’s “Diablo III” to China during the period. Youdao net revenues were RMB1.4 billion (US$197.9 million), an increase of 7.2% compared with the same quarter of 2024. NetEase Cloud Music net revenues were RMB2.0 billion (US$274.8 million), a decrease of 3.5% compared with the same quarter of 2024. Innovative businesses and others net revenues were RMB1.7 billion (US$237.2 million), a decrease of 17.8% compared with the same quarter of 2024. Enriched global pipeline with exciting new titles underway, including NetEase’s original ocean adventure RPG Sea of Remnants and story-driven action-adventure game Blood Message, along with plans to bring Sword of Justice and Where Winds Meet to the global market.
NTES in the second quarter of FY25 has reported the adjusted earnings of 14.81 Chinese renminbi ($2.06) per diluted American depositary share, missing the analysts’ estimates for the adjusted earnings per ADS of 14.90 renminbi, according to analysts polled by FactSet. The company had reported the adjusted revenue growth of 9.4 percent to 27.89 billion renminbi in the second quarter of FY25, missing the analysts’ estimates for revenue of 28.41 billion renminbi. Gross profit was RMB18.1 billion (US$2.5 billion), an increase of 12.5% compared with the same quarter of 2024.
Additionally, the firm approved a second-quarter dividend of $0.1140 per share, payable around Sept. 8 and Sept. 11, respectively, to holders of ordinary shares and ADSs as of Aug. 28.