Key Takeaways:
Chinese videogame maker NetEase Inc. reported first-quarter revenue of RMB 30.6 billion ($4.4 billion), a 6.1 percent year-over-year increase that beat market expectations on the strength of its core gaming business.
"By combining evolving technologies with our deep operating expertise, we aim to create exceptional content and experiences," Chief Executive William Ding said in a statement.
The company posted stronger-than-expected net profit of RMB 10.67 billion, with adjusted net income holding steady at RMB 11.3 billion, or $1.6 billion. Revenue from games and related value-added services climbed 7.1 percent to RMB 25.7 billion, accelerating from the previous quarter. Nomura analysts noted ahead of the results that the company's favorable mix of higher-margin self-produced titles could lead to a performance ahead of muted expectations.
The growth was driven by sustained performance from established franchises and newer titles. The long-running Fantasy Westward Journey franchise saw its online version hit a new peak concurrent user record of 3.9 million. Newer titles also showed strong momentum, with Where Winds Meet hitting No. 2 on Steam’s global top seller chart after a March update and Marvel Rivals reaching No. 2 on the U.S. top seller chart following an April content drop.
Management highlighted a robust pipeline, with the highly anticipated title Sea of Elements targeting a third-quarter launch. The company is also developing Ananta, an urban open-world game intended to differentiate itself from traditional role-playing titles.
NetEase ended the quarter with a net cash position of RMB 167.5 billion. The board approved a first-quarter dividend of $0.144 per share and continued its $5 billion share repurchase program, under which it has bought back approximately $3.1 billion in stock.
The strong results and improved margins signal that NetEase's focus on content updates for legacy games and developing new global hits is paying off. Investors will now watch for the successful launch of Sea of Elements in the third quarter to see if the company can accelerate its growth trajectory.
This article is for informational purposes only and does not constitute investment advice.
