NetEase Cloud Music (9899) investor relations material

Executive summary

• Revenue grew 3.4% year-over-year to RMB3,958.7 million for the six months ended 30 June 2026, driven by online music services and membership subscriptions.

• Gross profit increased 5.9% to RMB1,474.4 million, with gross margin expanding to 37.2% from 36.4% year-over-year.

• Net profit declined 57.0% to RMB809.2 million, mainly due to a one-time deferred tax credit in the prior year; adjusted net profit fell 55.8% to RMB859.7 million.

• Operating profit decreased 11.6% to RMB746.2 million, impacted by higher promotion and advertising expenses.

Financial highlights

• Online music services revenue rose 3.4% to RMB3,067.4 million, with membership subscription revenue up from RMB2,469.8 million to RMB2,600.9 million.

• Social entertainment and other revenue increased 3.7% to RMB891.3 million.

• Cost of revenue grew 2.0% to RMB2,484.3 million, mainly from higher content service costs.

• Selling and marketing expenses surged 80.7% to RMB295.2 million, while general and administrative expenses fell 10.3% to RMB83.4 million.

• Research and development expenses rose 3.2% to RMB391.0 million, reflecting continued investment in AI.

Outlook and guidance

• Strategic focus remains on enhancing music experience, expanding high-quality content, and deepening user engagement.

• Plans include further content diversification, strengthening independent artist support, and improving profitability through cost optimization.