NetEase reported second-quarter results that leaned almost entirely on games launched years ago, with total net revenue reaching RMB 30.1 billion, up 7.9% year over year, and the games unit climbing 9.7% to RMB 25 billion. Online games revenue rose 10% to RMB 24.5 billion, driven by franchises like Sword of Justice, which hit a two-year high in concurrent users after its New World anniversary update, and Eggy Party, which crossed 700 million registered users. Gross margin in the games segment jumped to 76.1% from 70.2%, lifting gross profit 17.5%, more than double the pace of revenue. However, non-GAAP net income fell to RMB 7.7 billion due to investment losses, and management acknowledged that the July launch of Sea of Remnants suffered from an insufficiently lowered learning curve for players. The company's fortunes remain tied overwhelmingly to its games business, as Youdao and Cloud Music contribute only RMB 3.5 billion combined, while NetEase holds a net cash pile of RMB 167.5 billion and an active $5 billion buyback.
NetEase IncQ2 revenue rose 7.9% to RMB 30.1B with games gross margin jumping to 76.1% from 70.2%, lifting gross profit 17.5%.
Youdao Inc