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 the absence of a large deferred tax credit recognized in the prior year; adjusted net profit dropped 55.8% to RMB859.7 million.

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

• The platform enhanced user engagement, expanded content offerings, and improved product features, supporting steady growth in daily active users and membership retention.

Financial highlights

• Revenue: RMB3,958.7 million (+3.4% YoY); gross profit: RMB1,474.4 million (+5.9% YoY).

• 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.

• 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

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

• Strategic priorities include diversifying content, optimizing recommendations, strengthening community, and improving profitability through cost control.

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