NetEase Inc (NASDAQ:NTES), a leading internet and game services provider, stock rose 1.80% (As on February 21, 11:23:37 AM UTC-4, Source: Google Finance) after the company returned to profit growth in the fourth quarter, in a sign that its online-gaming business is turning a corner and could witness stronger growth momentum this year thanks to a solid game pipeline. Gross profit was RMB16.3 billion (US$2.2 billion), a decrease of 3.3% compared with the same quarter of 2023. Non-GAAP net income attributable to the Company’s shareholders was RMB9.7 billion (US$1.3 billion). As of December 31, 2024, the Company’s net cash (total cash and cash equivalents, current and non-current time deposits and restricted cash, as well as short-term investments balance, minus short-term and long-term loans) totaled RMB131.5 billion (US$18.0 billion), compared with RMB110.9 billion as of December 31, 2023.
Net profit rose 33% to 8.77 billion yuan, equivalent to $1.20 billion, NetEase said Thursday, beating the 7.70 billion yuan estimate from a FactSet poll of analysts. Its adjusted net profit, a closely watched metric that excludes share-based compensation expenses, rose 31% to 9.68 billion yuan. The Hangzhou-based company’s revenue slipped 1.4%, weighed by its nongame businessses, but came in slightly better than analysts’ expectations. Youdao net revenues were RMB1.3 billion (US$183.6 million), a decrease of 9.5% compared with the same quarter of 2023. NetEase Cloud Music net revenues were RMB1.9 billion (US$257.6 million), a decrease of 5.3% compared with the same quarter of 2023. Innovative businesses and others net revenues were RMB2.3 billion (US$313.1 million), a decrease of 17.0% compared with the same quarter of 2023.
Moreover, sales from its games and value-added services increased 1.5% as its PC games continued to support overall gaming revenue on the resumption of popular Blizzard titles and new releases. Mobile game revenue remained soft, with its contribution to total gaming revenue falling to 65% from 71% in the third quarter. NetEase launched its long-anticipated titles “Where Winds Meet” and “Marvel Rivals” in December. The former surpassed three million downloads in China within four days of its PC launch, while the latter, a free-to-play game, gained solid traction from the hero shooter space, boasting over 40 million users to date. Analysts said ahead of the results that NetEase’s online-gaming business has likely bottomed out, and revenue growth could improve as the new titles pave the way for stronger momentum.