NetEase (9999) Q2 2024 earnings summary

Executive summary

• Q2 2024 net revenue reached RMB 25.5 billion (US$3.5 billion), up 6.1% year-over-year, driven by strong mobile game and diversified business segment performance.

• Major new game launches and updates, including Once Human, Naraka: Bladepoint Mobile, and Justice Mobile, contributed to record user engagement and revenue highs.

• International expansion and partnerships, such as the return of World of Warcraft and new Marvel titles, broadened global reach and engagement.

• Net income attributable to shareholders was RMB 6.8 billion (US$930 million), with non-GAAP net income at RMB 7.8 billion (US$1.1 billion); diluted net income per ADS was $1.43.

• Board declared a Q2 dividend of $0.087 per share ($0.435 per ADS), payable in September 2024.

Financial highlights

• Net revenue from games and related VAS was RMB 20.1 billion (US$2.76 billion), up 6.7% year-over-year; mobile games accounted for 76.4% of online game revenue.

• Youdao net revenue grew 10% year-over-year to RMB 1.3 billion (US$182 million), driven by online marketing and AI subscription services.

• Cloud Music revenue increased 5% year-over-year to RMB 2 billion (US$268 million), mainly from membership subscriptions.

• Gross profit margin improved to 62.9% from 59.9% a year ago; games and related VAS margin rose to 70%.

• Net cash position as of June 30, 2024 was RMB 116.1 billion (US$16.0 billion).

Outlook and guidance

• Focus remains on innovation, expanding game genres, and international growth, with several high-profile launches planned for late 2024 and 2025.

• Continued investment in R&D, AI, and content creation to sustain long-term growth in gaming, education, and music.