• Total Net Revenue: RMB26.2 billion (USD3.7 billion), a 3% increase quarter-over-quarter.

• Gaming Division Revenue: RMB20.9 billion, up 4% quarter-over-quarter.

• Online Games Revenue: RMB20.2 billion, up 5% quarter-over-quarter.

• PC Games Revenue: 29.2% of total online game revenue, a 3% increase quarter-over-quarter and 29% year-over-year.

• Youdao Revenue: RMB1.6 billion, a 2% year-over-year increase and 19% quarter-over-quarter increase.

• NetEase Cloud Music Revenue: RMB2 billion, a 1% year-over-year increase and 2% quarter-over-quarter decline.

• Innovative Businesses Revenue: RMB1.8 billion, a 10% decrease year-over-year and 14% quarter-over-quarter decrease.

• Total Gross Profit Margin: 62.9% in the third quarter.

• Games Gross Profit Margin: 68.8% compared to 69% last year.

• Youdao Gross Profit Margin: 50.2% compared to 55.9% last year.

• NetEase Cloud Music Gross Profit Margin: 32.8% compared to 27.2% last year.

• Innovative Businesses Gross Profit Margin: 37.8% compared to 27.3% last year.

• Total Operating Expenses: RMB9.3 billion, 35.6% of net revenues.

• Non-GAAP Net Income: RMB7.5 billion (USD1.1 billion).

• Non-GAAP Basic Earnings per ADS: USD1.67 or USD0.33 per share.

• Cash Position: RMB120 billion as of September 30, 2024.

• Dividend: USD8.7 per share or USD43.5 per ADS for the third quarter.

• Share Buyback: USD543 million repurchased, a 98% increase from the previous quarter.

• Warning! GuruFocus has detected 3 Warning Signs with JG.

Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• NetEase Inc (NASDAQ:NTES) achieved total net revenue of RMB26.2 billion, with a significant contribution from its gaming division.

• The company's popular game titles, such as Identity V and Naraka Bladepoint, reached record high revenues and player engagement.

• NetEase Inc (NASDAQ:NTES) successfully launched Naraka Bladepoint Mobile, which quickly topped the iOS charts and accumulated 50 million new users.

• Youdao, a subsidiary of NetEase Inc (NASDAQ:NTES), reported its first profitable third quarter with significant growth in AI-driven subscription services.

• NetEase Cloud Music saw healthy revenue growth and improved gross profit margins due to increased membership subscriptions and cost optimization.

Negative Points

• Total net revenues from games and related services declined by 4% year-over-year due to adjustments in PC live streaming services.

• Gross profit margin for Youdao decreased year-over-year, primarily due to a decline in revenues from learning services.

• NetEase Cloud Music experienced a 2% quarter-over-quarter decline in net revenues from social entertainment services.

• Innovative businesses and others saw a 10% decrease in net revenue compared to the same quarter of 2023, mainly due to decreased advertising revenues.

• Selling and marketing expenses increased as a percentage of total net revenue, primarily due to higher marketing expenditures for new game launches.