#China #Hong Kong #Youdao #NetEase #Cloud Music

Overview

NetEase, Inc. has unveiled its unaudited financial results for the first quarter of 2026, revealing notable growth across various business segments. As a leading internet services and game provider, NetEase continues to showcase its strength in the gaming industry while expanding its service offerings.

Financial Highlights

For the quarter ending March 31, 2026, NetEase reported net revenues of RMB 30.6 billion (approximately USD 4.4 billion), marking a 6.1% increase compared to the same period last year. Revenue from games and associated services specifically reached RMB 25.7 billion (USD 3.7 billion), up by 6.9% year-on-year. This positive trend reflects strong player engagement and continued success in the gaming market.

Segment Contributions

The diversified offerings of NetEase contributed to its robust financial performance:

• - Games and Related Services: This sector remains the largest contributor, accounting for a significant portion of total revenues. Titles like Fantasy Westward Journey and Identity V drove much of the growth, supported by frequent content updates.
• - Youdao: Net revenues from Youdao, the intelligent learning platform, amounted to RMB 1.3 billion (USD 195.4 million), which is a 3.8% increase. However, some fluctuations were observed due to decreased revenue from its learning services and smart devices.
• - NetEase Cloud Music: The platform generated RMB 2.0 billion (USD 287.2 million) in revenues, a 6.6% increase, underlining the appeal of its extensive music library and community engagement.
• - Innovative Businesses and Others: This segment saw a decline to RMB 1.5 billion (USD 224.6 million), primarily due to lower earnings from e-commerce initiatives.

Profitability and Operating Expenses

NetEase achieved a gross profit of RMB 21.2 billion (USD 3.1 billion), reflecting a 14.8% increase from the same quarter in 2025. The company’s operating costs were recorded at RMB 8.6 billion (USD 1.2 billion), up 6.5% year-over-year, indicating increased investment in marketing and operational efficiencies.

Net income attributable to shareholders reached RMB 10.7 billion (USD 1.5 billion), with earnings per share (EPS) calculated at USD 0.48. The non-GAAP net income was reported at RMB 11.3 billion (USD 1.6 billion), corresponding to a non-GAAP EPS of USD 0.51.

Strategic Outlook

Mr. William Ding, CEO of NetEase, stated that the company is committed to advancing its gaming portfolio. The significant cross-market appeal of new titles such as Where Winds Meet and Marvel Rivals underlines the effectiveness of their international expansion strategy. NetEase aims to merge evolving technological advancements with innovative content, enhancing gaming experiences for users worldwide.

Operational Highlights

Key highlights for the quarter include:

• - A sustained engagement in established gaming titles, bolstered by continuous content updates and gameplay innovation.
• - Successful international expansions with new game titles contributing to a deeper engagement with global players.
• - Stable operations maintained for Blizzard titles in China, with ongoing rollout of localized content enhancing user experience.

Future Perspectives

Looking forward, NetEase is set to strengthen its technological capabilities, focusing on innovation across content creation and game development. The company expresses its intent to craft exceptional experiences that resonate with a broader audience, utilizing its extensive in-house R&D resources.

NetEase also announced a quarterly dividend of USD 0.144 per share (USD 0.720 per ADS) payable to shareholders, emphasizing its commitment to delivering returns to its investors.

Conclusion

The first quarter results demonstrate NetEase's resilience and growth potential amidst a competitive landscape. With a clear focus on innovation and community engagement, NetEase is poised to enhance its market leadership in the gaming and internet service sectors while achieving new milestones in the coming quarters.