Netease ((NTES)) has held its Q1 earnings call. Read on for the main highlights of the call.
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NetEase’s recent earnings call painted a picture of robust growth and strategic foresight, particularly in the gaming sector. The company reported strong revenue growth, driven by innovative content and exceptional operations, despite facing challenges in other segments like Youdao and NetEase Cloud Music. The positive momentum in gaming and ESG achievements were highlighted as key strengths, overshadowing the lowlights of the call.
Strong Start to 2025
NetEase kicked off 2025 with impressive momentum, reporting a 7% year-over-year increase in total net revenue. This growth was largely fueled by the company’s innovative content and exceptional operational strategies, setting a promising tone for the year.
Gaming Revenue Growth
The gaming and value-added services segment was a standout performer, with revenue climbing 12% year-over-year to RMB24.0 billion. This growth was driven by both new titles and flagship games reaching record highs, underscoring NetEase’s strong position in the gaming industry.
Successful Game Launches
NetEase’s recent game launches, including Marvel Rivals and FragPunk, have been met with significant success. Marvel Rivals reclaimed the #1 spot on Steam’s global top seller chart, while FragPunk saw over 110,000 peak concurrent players within just three days of its PC launch.
Identity V and Naraka: Bladepoint Achievements
Identity V and Naraka: Bladepoint have both achieved remarkable milestones. Identity V surpassed 400 million players globally, reaching a new quarterly high, while Naraka: Bladepoint recorded impressive revenue figures. Both games have been selected as official Esports events for the 2026 Asian Games.
Youdao Record High Operating Profit
Despite challenges in revenue, Youdao reported a record high operating profit for the first quarter, driven by a focus on technology-driven innovation and long-term sustainability.
ESG and Sustainability Recognition
NetEase’s commitment to sustainability was recognized with a 16% reduction in greenhouse gas emissions and an upgrade in ESG ratings from MSCI to AA, among other accolades.
Decline in Youdao and NetEase Cloud Music Revenue
NetEase faced challenges with Youdao and NetEase Cloud Music, with revenues declining by 7% and 8% year-over-year, respectively. These declines were attributed to strategic structural improvements and decreased revenue from social entertainment services.
Challenges in Innovative Businesses
The company’s innovative businesses also faced hurdles, with net revenue decreasing by 17% year-over-year. This was largely due to decreased revenue from Yanxuan, advertising services, and other segments.
Forward-Looking Guidance
Looking ahead, NetEase remains optimistic about its growth trajectory. The company reported a 7% year-over-year increase in total net revenue and a 12% rise in gaming and value-added services revenue. With a strong focus on innovation and global expansion, NetEase’s non-GAAP net income grew by 32% year-over-year, highlighting its strategic foresight and operational capabilities.
In summary, NetEase’s earnings call reflected a positive sentiment, with significant achievements in gaming and sustainability. While challenges persist in certain segments, the company’s strategic initiatives and focus on innovation position it well for future growth.