#China #Hangzhou #Netease Cloud Music #Music Streaming #2024 Financials

NetEase Cloud Music Inc. FY 2024 Financial Results

NetEase Cloud Music Inc. (HKEX: 9899) has reported a successful fiscal year 2024, ending December 31, with impressive growth across its core music services. The company has posted a revenue of RMB 7.95 billion, reflecting a year-on-year increase of 1.1% from RMB 7.87 billion in FY 2023. Significantly, the company’s gross profit surged to RMB 2.68 billion, marking a notable growth of 27.5% compared to the previous year.

Financial Highlights

The financial data revealed that NetEase's online music services revenue reached RMB 5.4 billion, showcasing a substantial increase of 23.1% from RMB 4.4 billion in 2023. The rise in revenue from subscription sales was particularly encouraging, jumping to RMB 4.5 billion, driven by enhanced product offerings and an expanding user base.

However, revenues from social entertainment services saw a decline to RMB 2.6 billion, down from RMB 3.5 billion in 2023. This decline was primarily influenced by a strategic shift towards focusing on core music services and adopting a more cautious approach to social entertainment operations.

Enhanced Profitability

NetEase’s profitability figures are equally impressive. The profit before tax skyrocketed to RMB 1.57 billion, nearly doubling the previous year's profit of RMB 767.68 million. The net profit for the fiscal year stood at RMB 1.57 billion, a massive increase of 113.2% from RMB 734.18 million in FY 2023. Furthermore, the adjusted net profit swelled to RMB 1.70 billion from the previous RMB 818.5 million.

Business Strategy and User Engagement

Throughout 2024, NetEase concentrated heavily on solidifying its core music service business while simultaneously fostering a vibrant and engaged music community. The company made strides in enhancing its offerings, which included expanding its content library, improving personalized recommendations powered by user insights, and introducing innovative features to boost user interaction.

With the rollout of enhanced membership benefits, the company witnessed a rapid increase in subscription-based memberships, which directly contributed to notable revenue growth in its primary online music sector. The monthly active user base saw a steady rise, maintaining a DAU/MAU ratio above 30%, alongside efforts to improve music discovery through personalized experiences.

Collaboration with NetEase games also contributed to expanding music consumption scenarios, further deepening user engagement and interaction with the app.

Expansion of Content Offerings

In 2024, NetEase actively enriched its library by acquiring new music from popular Korean labels and emphasizing the promotion of high-quality Chinese original music. The celebration of the 10th anniversary of its independent musician platform marked a significant milestone, as independent artists contributed significantly to music content, totaling approximately 4.4 million tracks created by over 773,500 registered users.

Notably, in-house produced tracks gained traction, with several hip-hop songs accessing mainstream popularity. The innovative approach towards nurturing independent musicians through various support initiatives also showed promising results, enhancing the overall music ecosystem on the platform.

Looking Ahead

As the company sets its sights on FY 2025, the strategic focus is expected to remain on offering exceptional music experiences and strengthening community engagement through innovative features. Key objectives include:

• - Diversifying content offerings with a robust emphasis on copyright collaborations.
• - Developing dynamic community engagement initiatives to provide immersive user experiences.
• - Continuing efforts to drive user subscriptions through enhanced benefits and operational efficiencies.
• - Focusing on optimizing profitability while maintaining cost control and improving operational efficiency.

In conclusion, NetEase Cloud Music Inc.’s remarkable growth in FY 2024 underlines its commitment to not only enhance its offerings but also sustain a vibrant community of music enthusiasts. With continuous improvements and user-driven enhancements, the company is poised for a promising future in the interactive music streaming arena.