NetEase Announces Second Quarter and Interim 2026 Unaudited Financial Results
Rhea-AI Summary
NetEase (NASDAQ: NTES; HKEX: 9999) reported unaudited second quarter 2026 net revenues of RMB30.1 billion, up 7.9% year over year, driven by games and related value‑added services revenue of RMB25.0 billion, up 9.7%. Q2 gross profit rose 17.5% to RMB21.2 billion as cost of revenues declined.
For the first half of 2026, net revenues reached RMB60.7 billion, up 7.0%, and gross profit increased 16.2% to RMB42.4 billion. However, Q2 net income attributable to shareholders fell to RMB7.0 billion, and first‑half net income declined to RMB17.7 billion, impacted by higher effective tax rates and lower investment‑related gains.
Positive
- Q2 2026 net revenues RMB30.1 billion, +7.9% YoY
- Q2 games revenue RMB25.0 billion, +9.7% YoY, 97.7% from online games
- H1 2026 net revenues RMB60.7 billion, +7.0% YoY
- Q2 gross profit RMB21.2 billion, +17.5% YoY on lower revenue‑sharing and product costs
- H1 gross profit RMB42.4 billion, +16.2% YoY
- Total operating expenses up only 1.5% YoY in Q2 versus 17.5% gross profit growth
Negative
- Q2 net income RMB7.0 billion, down from RMB10.7 billion QoQ and RMB8.6 billion YoY
- Q2 non‑GAAP net income RMB7.7 billion, down from RMB11.3 billion QoQ and RMB9.5 billion YoY
- H1 2026 net income RMB17.7 billion, down from RMB18.9 billion YoY
- H1 2026 non‑GAAP net income RMB19.0 billion, down from RMB20.8 billion YoY
- Effective tax rate rose to 25.5% in Q2 and 21.7% for H1, from 14.7% and 15.0%
- Innovative businesses revenues fell 3.5% YoY in Q2 and 4.0% YoY in H1
- Other income pressured by fair value declines and impairment provisions on equity investments
News Explained
The
Key Figures
Previous Earnings Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| May 21 | Q1 earnings report | Negative | -6.9% | Revenue increased, but gross margin and operating income declined materially. |
| May 21 | Q1 earnings report | Positive | -6.9% | Revenue, games revenue, gross profit and net cash increased year over year. |
| Feb 11 | FY2025 earnings report | Negative | -3.6% | Revenue grew, while gross margin declined and smart-device revenue weakened. |
| Feb 11 | FY2025 earnings report | Positive | -3.6% | Annual revenue, non-GAAP income and net cash reached reported levels. |
| Nov 20 | Q3 earnings report | Negative | -8.1% | Revenue increased, but gross margin and operating income fell sharply. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Earnings-tagged events had an average 24-hour move of -5.82%, with negative reactions also occurring after favorable NetEase results.
Key Terms
non-gaap financial
ads financial
effective tax rate financial
large language model technical
AI-generated analysis. How Rhea-AI works. Not financial advice.
In this results announcement, "we", "us", and "our" refer to the Company and where the context otherwise requires, the Group.
"Our robust performance in the first half of 2026 reflects players' growing enthusiasm for both our newly launched and established games, underscoring our ability to create distinctive and refreshing experiences with lasting appeal," said Mr. William Ding, Chief Executive Officer and Director of NetEase. "As we continue to strengthen both our live game operations and new title pipeline, we are sharpening our focus on original gameplay, cutting-edge technology and deeper global reach to support our enduring growth.
"Looking ahead, we will remain committed to creating original content that shapes industry trends, building evergreen franchises, and cultivating vibrant communities that sustain player engagement. Backed by disciplined execution and an expanding global presence, we aim to keep pushing creative boundaries, delivering exceptional gaming experiences and creating long-term value for our players, partners and shareholders," Mr. Ding concluded.
FINANCIAL HIGHLIGHTS
Second Quarter 2026 Financial Highlights
- Net revenues were
RMB30.1 billion (US ), an increase of$4.4 billion 7.9% compared with the same quarter of 2025.- Games and related value-added services net revenues were
RMB25.0 billion (US ), an increase of$3.7 billion 9.7% compared with the same quarter of 2025. - Youdao net revenues were
RMB1.5 billion (US ), an increase of$216.2 million 3.5% compared with the same quarter of 2025. - NetEase Cloud Music net revenues were
RMB2.0 billion (US ), which was relatively stable compared with the same quarter of 2025.$291.4 million - Innovative businesses and others net revenues were
RMB1.6 billion (US ), a decrease of$241.6 million 3.5% compared with the same quarter of 2025.
- Games and related value-added services net revenues were
- Gross profit was
RMB21.2 billion (US ), an increase of$3.1 billion 17.5% compared with the same quarter of 2025. - Total operating expenses were
RMB9.1 billion (US ), an increase of$1.3 billion 1.5% compared with the same quarter of 2025. - Net income attributable to the Company's shareholders was
RMB7.0 billion (US ). Non-GAAP net income attributable to the Company's shareholders was$1.0 billion RMB7.7 billion (US ).[1]$1.1 billion - Basic net income per share was
US ($0.32 US per ADS). Non-GAAP basic net income per share was$1.61 US ($0.36 US per ADS).[1]$1.78
[1] As used in this announcement, non-GAAP net income attributable to the Company's shareholders and non-GAAP basic and diluted net income per share and per ADS are defined to exclude share-based compensation expenses. See the unaudited reconciliation of GAAP and non-GAAP results within this announcement. |
Six Months Ended June 30, 2026 Financial Highlights
- Net revenues were
RMB60.7 billion (US ), an increase of$8.9 billion 7.0% compared with the same period of 2025.- Games and related value-added services net revenues were
RMB50.7 billion (US ), an increase of$7.5 billion 8.3% compared with the same period of 2025. - Youdao net revenues were
RMB2.8 billion (US ), an increase of$414.9 million 3.6% compared with the same period of 2025. - NetEase Cloud Music net revenues were
RMB4.0 billion (US ), an increase of$583.4 million 3.4% compared with the same period of 2025. - Innovative businesses and others net revenues were
RMB3.2 billion (US ), a decrease of$469.9 million 4.0% compared with the same period of 2025.
- Games and related value-added services net revenues were
- Gross profit was
RMB42.4 billion (US ), an increase of$6.3 billion 16.2% compared with the same period of 2025. - Total operating expenses were
RMB17.7 billion (US ), an increase of$2.6 billion 3.9% compared with the same period of 2025. - Net income attributable to the Company's shareholders was
RMB17.7 billion (US ). Non-GAAP net income attributable to the Company's shareholders was$2.6 billion RMB19.0 billion (US ). [1]$2.8 billion - Basic net income per share was
US ($0.81 US per ADS). Non-GAAP basic net income per share was$4.06 US ($0.88 US per ADS).[1]$4.38
[1] As used in this announcement, non-GAAP net income attributable to the Company's shareholders and non-GAAP basic and diluted net income per share and per ADS are defined to exclude share-based compensation expenses. See the unaudited reconciliation of GAAP and non-GAAP results within this announcement. |
BUSINESS OVERVIEW
We continue to drive innovation across both newly launched and established titles, while further advancing our pipeline of titles in development.
Below are some recent highlights from our key products and services:
Games and related value-added services
The Fantasy Westward Journey franchise, Identity V, Eggy Party, Sword of Justice and Where Winds Meet sustained solid momentum through ongoing content updates, gameplay innovation and vibrant community activities.
We also advanced our global strategy and enhanced player engagement through strong live operations. For example, Where Winds Meet and Marvel Rivals further broadened their international reach with a steady stream of fresh content and community-focused initiatives in various markets including
With respect to our pipeline of new titles, Sea of Remnants launched in
Youdao
Youdao advanced its AI-native strategy and deepened AI-driven innovation across its ecosystem. In the second quarter, it launched the large language model, Confucius 4, which delivers leading mathematical reasoning capabilities at lower inference costs compared to its previous version. Youdao also advanced its AI agent capabilities toward the autonomous execution of complex work and learning tasks.
NetEase Cloud Music
NetEase Cloud Music further developed its music-centric ecosystem by nurturing its distinctive community and enriching its differentiated content offering with original music, thereby driving stronger community engagement. It also further improved music-oriented monetization through continued growth in subscription-based memberships.
Innovative businesses and others
Innovative businesses and others remained focused on sustainable development and efficient operations, with Yanxuan maintaining leading positions on major e-commerce platforms in
FINANCIAL REVIEW
Second Quarter 2026 Financial Results
Net Revenues
Net revenues for the second quarter of 2026 were
Net revenues from games and related value-added services were
Net revenues from Youdao were
Net revenues from NetEase Cloud Music were
Net revenues from innovative businesses and others were
Cost of Revenues
Cost of revenues for the second quarter of 2026 was
Gross Profit
Gross profit for the second quarter of 2026 was
Operating Expenses
Total operating expenses for the second quarter of 2026 were
Other Income/(Expenses)
Other income/(expenses) consisted of net investment income/(loss), interest income, net exchange gains/(losses) and others. The quarter-over-quarter and year-over-year fluctuations in other income/(expenses) were mainly due to a decline in the fair value of equity security investments and impairment provisions made during the second quarter of 2026.
Income Tax
The Group recorded a net income tax charge of
Net Income and Non-GAAP Net Income
Net income attributable to the Company's shareholders totaled
Basic net income was
Non-GAAP net income attributable to the Company's shareholders totaled
Non-GAAP basic net income was
Six Months Ended June 30, 2026 Financial Results
Net Revenues
Net revenues for the six months ended June 30, 2026 were
Net revenues from games and related value-added services were
Net revenues from Youdao were
Net revenues from NetEase Cloud Music were
Net revenues from innovative businesses and others were
Cost of Revenues
Cost of revenues for the six months ended June 30, 2026 was
Gross Profit
Gross profit for the six months ended June 30, 2026 was
Operating Expenses
Total operating expenses for the six months ended June 30, 2026 were
Other Income/(Expenses)
Other income/(expenses) consisted of net investment income/(loss), interest income, net exchange gains/(losses) and others. The fluctuation in other income/(expenses) was mainly due to a decline in the fair value of equity security investments, increased net exchange losses, and impairment provisions made during the six months ended June 30, 2026.
Income Tax
The Group recorded a net income tax charge of
Net Income and Non-GAAP Net Income
Net income attributable to the Company's shareholders totaled
Basic net income was
Non-GAAP net income attributable to the Company's shareholders totaled
Non-GAAP basic net income was
OTHER FINANCIAL INFORMATION
As of June 30, 2026, the Company's net cash (total cash and cash equivalents, current and non-current time deposits and restricted cash, as well as short-term investments balance, minus loans) totaled
EXCHANGE RATE INFORMATION
The conversion of Renminbi (RMB) into US$ is based on the noon buying rate of
CONFERENCE CALL
NetEase's management team will host a teleconference call with a simultaneous webcast at 8:00 a.m. Eastern Time on Thursday, August 20, 2026 (
Interested parties may participate in the conference call by dialing 1-914-202-3258 and providing conference ID: 10056362, 15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 1-855-883-1031 and entering PIN: 10056362. The replay will be available through August 27, 2026.
This call will be webcast live, and the replay will be available for 12 months. Both will be available on NetEase's Investor Relations website at http://ir.netease.com/.
ABOUT NETEASE, INC.
NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, "NetEase") is a leading internet and game services provider centered around premium content. With extensive offerings across its expanding gaming ecosystem, the Company develops and operates some of the most popular and longest-running mobile and PC games available in China and globally.
Powered by one of the largest in-house game R&D teams focused on mobile, PC and console, NetEase creates superior gaming experiences, inspires players, and passionately delivers value for its thriving community worldwide. By infusing play with culture, and education with technology, NetEase transforms gaming into a meaningful vehicle to build a more entertaining and enlightened world.
Beyond games, NetEase service offerings include its majority-controlled subsidiaries Youdao (NYSE: DAO), an intelligent learning and advertising solutions provider, and NetEase Cloud Music (HKEX: 9899), a well-known online music platform featuring a vibrant content community, as well as Yanxuan, NetEase's private-label consumer lifestyle brand.
For more information, please visit: http://ir.netease.com/.
Contact for Media and Investors:
Email: ir@service.netease.com
FORWARD-LOOKING STATEMENTS
This announcement contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar expressions. In addition, statements that are not historical facts, including statements about NetEase's strategies and business plans, its expectations regarding the growth of its business and its revenue and the quotations from management in this announcement are or contain forward-looking statements. NetEase may also make forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in announcements made on the website of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to: the risk that the online games market will not continue to grow or that NetEase will not be able to maintain its position in that market in China or globally; risks associated with NetEase's business and operating strategies and its ability to implement such strategies; NetEase's ability to develop and manage its operations and business; competition for, among other things, capital, technology and skilled personnel; potential changes in regulatory environment in the markets where NetEase operates, including policy or rule changes on taxation; the risk that NetEase may not be able to continuously develop new and creative online services or that NetEase will not be able to set, or follow in a timely manner, trends in the market; risks related to evolving economic cycles and geopolitical tensions, including the direct or indirect impacts of national trade, investment, protectionist, tax or other laws or policies as well as export controls and economic or trade sanctions; risks related to the expansion of NetEase's businesses and operations internationally; risks associated with cybersecurity threats or incidents; and fluctuations in foreign currency exchange rates that could adversely affect NetEase's business and financial results. Further information regarding these and other risks is included in NetEase's filings with the SEC and announcements on the website of the Hong Kong Stock Exchange. NetEase does not undertake any obligation to update this forward-looking information, except as required under applicable law.
NON-GAAP FINANCIAL MEASURES
NetEase considers and uses non-GAAP financial measures, such as non-GAAP net income attributable to the Company's shareholders and non-GAAP basic and diluted net income per ADS and per share, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP.
NetEase defines non-GAAP net income attributable to the Company's shareholders as net income attributable to the Company's shareholders excluding share-based compensation expenses. Non-GAAP net income attributable to the Company's shareholders enables NetEase's management to assess its operating results without considering the impact of share-based compensation expenses. NetEase believes that this non-GAAP financial measure provides useful information to investors in understanding and evaluating the Company's current operating performance and prospects in the same manner as management does, if they so choose. NetEase also believes that the use of this non-GAAP financial measure facilitates investors' assessment of its operating performance.
Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP net income attributable to the Company's shareholders is that it does not reflect all items of expense/income that affect the Company's operations. Share-based compensation expenses have been and may continue to be incurred in NetEase's business and are not reflected in the presentation of non-GAAP net income attributable to the Company's shareholders. In addition, the non-GAAP financial measures NetEase uses may differ from the non-GAAP measures used by other companies, including peer companies, and therefore their comparability may be limited.
NetEase compensates for these limitations by reconciling non-GAAP net income attributable to the Company's shareholders to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company's performance. NetEase encourages you to review its financial information in its entirety and not rely on a single financial measure.
The unaudited reconciliation of GAAP and non-GAAP results is set out as follows in RMB and US$ (in thousands, except per share data or per ADS data):
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | |||||||||||||
2025 | 2026 | 2026 | 2026 | 2025 | 2026 | 2026 | |||||||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||
Net income attributable to the | 8,601,010 | 10,674,106 | 6,980,656 | 1,028,821 | 18,902,167 | 17,654,762 | 2,601,989 | ||||||||||||
Add: Share-based compensation | 930,921 | 600,718 | 766,058 | 112,903 | 1,866,491 | 1,366,776 | 201,438 | ||||||||||||
Non-GAAP net income attributable | 9,531,931 | 11,274,824 | 7,746,714 | 1,141,724 | 20,768,658 | 19,021,538 | 2,803,427 | ||||||||||||
Non-GAAP net income per share | |||||||||||||||||||
Basic | 2.99 | 3.53 | 2.42 | 0.36 | 6.53 | 5.94 | 0.88 | ||||||||||||
Diluted | 2.96 | 3.49 | 2.40 | 0.35 | 6.46 | 5.90 | 0.87 | ||||||||||||
Non-GAAP net income per ADS | |||||||||||||||||||
Basic | 14.95 | 17.63 | 12.09 | 1.78 | 32.64 | 29.72 | 4.38 | ||||||||||||
Diluted | 14.81 | 17.46 | 12.02 | 1.77 | 32.32 | 29.49 | 4.35 | ||||||||||||
NETEASE, INC. | ||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(in thousands) | ||||||
December 31, | June 30, | June 30, | ||||
2025 | 2026 | 2026 | ||||
RMB | RMB | US$ | ||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | 47,167,904 | 22,814,542 | 3,362,447 | |||
Time deposits | 92,639,378 | 101,978,645 | 15,029,792 | |||
Restricted cash | 4,319,344 | 4,447,483 | 655,478 | |||
Accounts receivable, net | 5,337,819 | 5,746,080 | 846,867 | |||
Inventories | 689,183 | 511,896 | 75,444 | |||
Prepayments and other current assets, net | 7,658,346 | 5,965,371 | 879,188 | |||
Short-term investments | 22,803,503 | 50,599,638 | 7,457,464 | |||
Total current assets | 180,615,477 | 192,063,655 | 28,306,680 | |||
Non-current assets: | ||||||
Property, equipment and software, net | 8,425,327 | 8,180,276 | 1,205,623 | |||
Land use rights, net | 4,047,355 | 3,982,017 | 586,877 | |||
Deferred tax assets | 2,831,423 | 2,695,809 | 397,313 | |||
Time deposits | 2,995,000 | 260,000 | 38,319 | |||
Restricted cash | 3,893 | 3,775 | 556 | |||
Long-term investments | 18,462,883 | 21,336,343 | 3,144,588 | |||
Other long-term assets | 4,033,702 | 3,686,261 | 543,287 | |||
Total non-current assets | 40,799,583 | 40,144,481 | 5,916,563 | |||
Total assets | 221,415,060 | 232,208,136 | 34,223,243 | |||
Liabilities, Redeemable noncontrolling interests and | ||||||
Current liabilities: | ||||||
Accounts payable | 643,164 | 702,263 | 103,501 | |||
Salary and welfare payables | 4,889,708 | 3,764,789 | 554,861 | |||
Taxes payable | 3,874,143 | 3,720,498 | 548,334 | |||
Short-term loans | 6,384,417 | 12,604,170 | 1,857,625 | |||
Contract liabilities | 20,514,540 | 19,297,191 | 2,844,054 | |||
Accrued liabilities and other payables | 16,062,984 | 15,529,221 | 2,288,724 | |||
Total current liabilities | 52,368,956 | 55,618,132 | 8,197,099 | |||
Non-current liabilities: | ||||||
Deferred tax liabilities | 2,637,258 | 3,727,316 | 549,338 | |||
Other long-term liabilities | 1,304,837 | 1,300,994 | 191,742 | |||
Total non-current liabilities | 3,942,095 | 5,028,310 | 741,080 | |||
Total liabilities | 56,311,051 | 60,646,442 | 8,938,179 | |||
Redeemable noncontrolling interests | 91,319 | 94,938 | 13,992 | |||
Shareholders' equity: | ||||||
Ordinary shares | 2,631 | 2,632 | 388 | |||
Additional paid-in capital | 9,837,460 | 8,781,946 | 1,294,299 | |||
Treasury stock | (1,518,573) | (1,617,961) | (238,458) | |||
Statutory reserves | 2,457,371 | 2,457,371 | 362,172 | |||
Accumulated other comprehensive loss | (237,770) | (1,644,123) | (242,314) | |||
Retained earnings | 149,755,000 | 159,110,675 | 23,450,011 | |||
NetEase, Inc.'s shareholders' equity | 160,296,119 | 167,090,540 | 24,626,098 | |||
Noncontrolling interests | 4,716,571 | 4,376,216 | 644,974 | |||
Total equity | 165,012,690 | 171,466,756 | 25,271,072 | |||
Total liabilities, redeemable noncontrolling interests and | 221,415,060 | 232,208,136 | 34,223,243 | |||
NETEASE, INC. | ||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND | ||||||||||||||||
(in thousands except per share data or per ADS data) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | ||||||||||
2025 | 2026 | 2026 | 2026 | 2025 | 2026 | 2026 | ||||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||
Net revenues | 27,891,664 | 30,591,281 | 30,106,546 | 4,437,156 | 56,720,209 | 60,697,827 | 8,945,753 | |||||||||
Cost of revenues | (9,839,182) | (9,374,209) | (8,889,221) | (1,310,109) | (20,188,321) | (18,263,430) | (2,691,697) | |||||||||
Gross profit | 18,052,482 | 21,217,072 | 21,217,325 | 3,127,047 | 36,531,888 | 42,434,397 | 6,254,056 | |||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing expenses | (3,578,174) | (3,441,485) | (3,678,809) | (542,189) | (6,273,771) | (7,120,294) | (1,049,401) | |||||||||
General and administrative | (1,056,578) | (636,597) | (805,268) | (118,682) | (2,012,915) | (1,441,865) | (212,505) | |||||||||
Research and development | (4,356,646) | (4,482,157) | (4,643,910) | (684,428) | (8,742,959) | (9,126,067) | (1,345,016) | |||||||||
Total operating expenses | (8,991,398) | (8,560,239) | (9,127,987) | (1,345,299) | (17,029,645) | (17,688,226) | (2,606,922) | |||||||||
Operating profit | 9,061,084 | 12,656,833 | 12,089,338 | 1,781,748 | 19,502,243 | 24,746,171 | 3,647,134 | |||||||||
Other income/(expenses): | ||||||||||||||||
Investment income/(loss), net | 328,444 | 5,472 | (2,953,671) | (435,317) | 1,021,195 | (2,948,199) | (434,511) | |||||||||
Interest income, net | 953,490 | 890,267 | 863,201 | 127,220 | 2,014,376 | 1,753,468 | 258,429 | |||||||||
Exchange gains/(losses), net | 114,037 | (622,108) | (436,492) | (64,331) | 115,840 | (1,058,600) | (156,018) | |||||||||
Other, net | 192,167 | 438,978 | 62,858 | 9,264 | 447,482 | 501,836 | 73,961 | |||||||||
Income before tax | 10,649,222 | 13,369,442 | 9,625,234 | 1,418,584 | 23,101,136 | 22,994,676 | 3,388,995 | |||||||||
Income tax | (1,560,757) | (2,523,838) | (2,458,674) | (362,364) | (3,465,900) | (4,982,512) | (734,331) | |||||||||
Net income | 9,088,465 | 10,845,604 | 7,166,560 | 1,056,220 | 19,635,236 | 18,012,164 | 2,654,664 | |||||||||
Accretion of redeemable | (1,051) | (1,104) | (1,087) | (160) | (2,100) | (2,191) | (323) | |||||||||
Net income attributable to | (486,404) | (170,394) | (184,817) | (27,239) | (730,969) | (355,211) | (52,352) | |||||||||
Net income attributable to the | 8,601,010 | 10,674,106 | 6,980,656 | 1,028,821 | 18,902,167 | 17,654,762 | 2,601,989 | |||||||||
Net income | 9,088,465 | 10,845,604 | 7,166,560 | 1,056,220 | 19,635,236 | 18,012,164 | 2,654,664 | |||||||||
Other comprehensive income | ||||||||||||||||
Foreign currency translation | (389,857) | (728,683) | (770,419) | (113,546) | (628,819) | (1,499,102) | (220,940) | |||||||||
Total comprehensive income | 8,698,608 | 10,116,921 | 6,396,141 | 942,674 | 19,006,417 | 16,513,062 | 2,433,724 | |||||||||
Comprehensive income | (470,857) | (121,843) | (140,619) | (20,725) | (690,158) | (262,462) | (38,682) | |||||||||
Comprehensive income | 8,227,751 | 9,995,078 | 6,255,522 | 921,949 | 18,316,259 | 16,250,600 | 2,395,042 | |||||||||
Net income per share | ||||||||||||||||
Basic | 2.70 | 3.34 | 2.18 | 0.32 | 5.94 | 5.52 | 0.81 | |||||||||
Diluted | 2.67 | 3.31 | 2.17 | 0.32 | 5.88 | 5.47 | 0.81 | |||||||||
Net income per ADS | ||||||||||||||||
Basic | 13.49 | 16.69 | 10.90 | 1.61 | 29.71 | 27.58 | 4.06 | |||||||||
Diluted | 13.36 | 16.53 | 10.83 | 1.60 | 29.41 | 27.37 | 4.03 | |||||||||
Weighted average number of | ||||||||||||||||
Basic | 3,188,634 | 3,198,123 | 3,203,046 | 3,203,046 | 3,181,307 | 3,200,598 | 3,200,598 | |||||||||
Diluted | 3,214,681 | 3,227,325 | 3,221,637 | 3,221,637 | 3,210,563 | 3,224,495 | 3,224,495 | |||||||||
NETEASE, INC. | |||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||
(in thousands) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | |||||||||||
2025 | 2026 | 2026 | 2026 | 2025 | 2026 | 2026 | |||||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net income | 9,088,465 | 10,845,604 | 7,166,560 | 1,056,220 | 19,635,236 | 18,012,164 | 2,654,664 | ||||||||||
Adjustments to reconcile net income to net cash | |||||||||||||||||
Depreciation and amortization | 428,427 | 430,583 | 439,439 | 64,765 | 909,188 | 870,022 | 128,225 | ||||||||||
Fair value changes of equity security, other | 55,715 | 1,117,717 | 2,023,477 | 298,224 | (502,784) | 3,141,194 | 462,955 | ||||||||||
Impairment losses on investments | 161,463 | 344,871 | 1,281,917 | 188,931 | 250,534 | 1,626,788 | 239,759 | ||||||||||
Share-based compensation cost | 946,395 | 616,180 | 781,656 | 115,202 | 1,898,267 | 1,397,836 | 206,015 | ||||||||||
Allowance for expected credit losses | 153,179 | 6,719 | 1,309 | 193 | 169,950 | 8,028 | 1,183 | ||||||||||
Gains on disposal of property, equipment and | (30,920) | (565) | (13,983) | (2,061) | (10,627) | (14,548) | (2,144) | ||||||||||
Unrealized exchange (gains)/losses | (165,662) | 643,942 | 487,982 | 71,920 | (194,115) | 1,131,924 | 166,825 | ||||||||||
(Gains)/losses on disposal of long-term investments | (141,078) | (1,071,442) | 5,550 | 818 | (129,403) | (1,065,892) | (157,093) | ||||||||||
Deferred income taxes | (853,764) | 532,257 | 693,742 | 102,245 | (525,492) | 1,225,999 | 180,690 | ||||||||||
Share of results on equity method investees | 13,479 | 442,575 | 96,645 | 14,244 | (5,189) | 539,220 | 79,471 | ||||||||||
Fair value changes of short-term investments | (344,604) | (385,395) | (372,234) | (54,861) | (546,213) | (757,629) | (111,661) | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||
Accounts receivable | 953,295 | (1,188,837) | 726,762 | 107,111 | (135,665) | (462,075) | (68,101) | ||||||||||
Inventories | (73,944) | 143,099 | 34,048 | 5,018 | (20,171) | 177,147 | 26,108 | ||||||||||
Prepayments and other assets | 583,484 | 116,152 | (16,816) | (2,478) | 288,306 | 99,336 | 14,640 | ||||||||||
Accounts payable | 119,644 | 134,445 | (105,340) | (15,525) | (28,432) | 29,105 | 4,290 | ||||||||||
Salary and welfare payables | 920,662 | (2,253,559) | 1,107,729 | 163,259 | (1,164,449) | (1,145,830) | (168,874) | ||||||||||
Taxes payable | (764,372) | 1,895,324 | (2,038,642) | (300,459) | 1,031,751 | (143,318) | (21,122) | ||||||||||
Contract liabilities | (718,719) | 1,384,445 | (2,511,144) | (370,097) | 1,807,479 | (1,126,699) | (166,055) | ||||||||||
Accrued liabilities and other payables | 530,718 | (21,044) | 184,272 | 27,158 | 240,344 | 163,228 | 24,057 | ||||||||||
Net cash provided by operating activities | 10,861,863 | 13,733,071 | 9,972,929 | 1,469,827 | 22,968,515 | 23,706,000 | 3,493,832 | ||||||||||
Cash flows from investing activities: | |||||||||||||||||
Purchase of property, equipment and software | (189,842) | (312,148) | (18,785) | (2,769) | (643,913) | (330,933) | (48,774) | ||||||||||
Proceeds from sale of property, equipment and | 21,499 | 1,673 | 14,539 | 2,143 | 22,835 | 16,212 | 2,389 | ||||||||||
Purchase of intangible assets, content and licensed | (313,349) | (290,019) | (61,554) | (9,072) | (612,120) | (351,573) | (51,815) | ||||||||||
Net changes of short-term investments with terms of | 776,428 | (15,766,308) | (1,594,496) | (235,000) | (5,362,128) | (17,360,804) | (2,558,666) | ||||||||||
Purchase of short-term investments with terms over | (5,800,000) | (5,885,000) | (12,851,707) | (1,894,107) | (8,770,000) | (18,736,707) | (2,761,449) | ||||||||||
Proceeds from maturities of short-term investments | 5,745,454 | 4,861,483 | 3,515,814 | 518,167 | 8,454,055 | 8,377,297 | 1,234,661 | ||||||||||
Investment in equity method investees | (100,986) | (94,021) | (3,040,753) | (448,152) | (155,089) | (3,134,774) | (462,009) | ||||||||||
Investment in other equity investments | (2,640,655) | (3,110,374) | (453,871) | (66,892) | (2,677,518) | (3,564,245) | (525,304) | ||||||||||
Proceeds from disposal of long-term investments | 784,855 | 1,353,947 | 50,733 | 7,477 | 862,283 | 1,404,680 | 207,024 | ||||||||||
Placement/rollover of matured time deposits | (27,980,605) | (30,608,133) | (50,216,128) | (7,400,941) | (77,582,412) | (80,824,261) | (11,912,022) | ||||||||||
Proceeds from maturities of time deposits | 33,617,510 | 42,018,869 | 30,056,765 | 4,429,819 | 77,543,992 | 72,075,634 | 10,622,634 | ||||||||||
Change in other long-term assets | (27,367) | 65,909 | (58,891) | (8,679) | (28,045) | 7,018 | 1,034 | ||||||||||
Net cash provided by/(used in) investing activities | 3,892,942 | (7,764,122) | (34,658,334) | (5,108,006) | (8,948,060) | (42,422,456) | (6,252,297) | ||||||||||
Cash flows from financing activities: | |||||||||||||||||
Net changes from loans with terms of three months or | 2,017,570 | 1,182,383 | 420,940 | 62,039 | (236,845) | 1,603,323 | 236,300 | ||||||||||
Proceeds of loans with terms over three months | 1,231,000 | 6,134,520 | 1,326,090 | 195,441 | 3,978,550 | 7,460,610 | 1,099,558 | ||||||||||
Payment of loans with terms over three months | (1,804,730) | (2,620,900) | — | — | (4,740,407) | (2,620,900) | (386,273) | ||||||||||
Dividends paid to shareholders | (3,082,122) | (5,156,320) | (3,138,873) | (462,613) | (8,666,654) | (8,295,193) | (1,222,560) | ||||||||||
Net amounts received/(paid) related to capital | 42,400 | (23,418) | 4,874 | 718 | 84,917 | (18,544) | (2,733) | ||||||||||
Net amounts paid related to repurchase of NetEase's | (355,563) | (1,314,003) | (1,795,596) | (264,638) | (659,164) | (3,109,599) | (458,298) | ||||||||||
Net cash used in financing activities | (1,951,445) | (1,797,738) | (3,182,565) | (469,053) | (10,239,603) | (4,980,303) | (734,006) | ||||||||||
Effect of exchange rate changes on cash, cash | (31,749) | (340,829) | (187,753) | (27,671) | (88,681) | (528,582) | (77,903) | ||||||||||
Net increase/(decrease) in cash, cash equivalents | 12,771,611 | 3,830,382 | (28,055,723) | (4,134,903) | 3,692,171 | (24,225,341) | (3,570,374) | ||||||||||
Cash, cash equivalents and restricted cash, at the | 45,395,483 | 51,491,141 | 55,321,523 | 8,153,384 | 54,474,923 | 51,491,141 | 7,588,855 | ||||||||||
Cash, cash equivalents and restricted cash, at end of | 58,167,094 | 55,321,523 | 27,265,800 | 4,018,481 | 58,167,094 | 27,265,800 | 4,018,481 | ||||||||||
Supplemental disclosures of cash flow information: | |||||||||||||||||
Cash paid for income taxes, net | 2,184,556 | 1,464,650 | 2,487,225 | 366,572 | 3,391,111 | 3,951,875 | 582,434 | ||||||||||
Cash paid for interest expenses | 64,366 | 78,326 | 25,374 | 3,740 | 161,790 | 103,700 | 15,283 | ||||||||||
Supplemental schedule of non-cash investing and | |||||||||||||||||
Fixed asset purchases financed by accounts payable | 744,596 | 463,033 | 522,371 | 76,988 | 744,596 | 522,371 | 76,988 | ||||||||||
NETEASE, INC. | ||||||||||||||
UNAUDITED SEGMENT INFORMATION | ||||||||||||||
(in thousands) | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | ||||||||
2025 | 2026 | 2026 | 2026 | 2025 | 2026 | 2026 | ||||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||
Net revenues: | ||||||||||||||
Games and related value-added services | 22,806,459 | 25,712,975 | 25,022,788 | 3,687,903 | 46,854,466 | 50,735,763 | 7,477,527 | |||||||
Youdao | 1,417,541 | 1,348,022 | 1,466,861 | 216,189 | 2,715,803 | 2,814,883 | 414,862 | |||||||
NetEase Cloud Music | 1,968,729 | 1,981,234 | 1,977,472 | 291,443 | 3,827,117 | 3,958,706 | 583,441 | |||||||
Innovative businesses and others | 1,698,935 | 1,549,050 | 1,639,425 | 241,621 | 3,322,823 | 3,188,475 | 469,923 | |||||||
Total net revenues | 27,891,664 | 30,591,281 | 30,106,546 | 4,437,156 | 56,720,209 | 60,697,827 | 8,945,753 | |||||||
Cost of revenues: | ||||||||||||||
Games and related value-added services | (6,792,240) | (6,482,431) | (5,973,965) | (880,453) | (14,287,502) | (12,456,396) | (1,835,846) | |||||||
Youdao | (808,181) | (745,729) | (749,986) | (110,534) | (1,492,216) | (1,495,715) | (220,441) | |||||||
NetEase Cloud Music | (1,258,855) | (1,247,066) | (1,237,231) | (182,345) | (2,434,632) | (2,484,297) | (366,140) | |||||||
Innovative businesses and others | (979,906) | (898,983) | (928,039) | (136,777) | (1,973,971) | (1,827,022) | (269,270) | |||||||
Total cost of revenues | (9,839,182) | (9,374,209) | (8,889,221) | (1,310,109) | (20,188,321) | (18,263,430) | (2,691,697) | |||||||
Gross profit: | ||||||||||||||
Games and related value-added services | 16,014,219 | 19,230,544 | 19,048,823 | 2,807,450 | 32,566,964 | 38,279,367 | 5,641,681 | |||||||
Youdao | 609,360 | 602,293 | 716,875 | 105,655 | 1,223,587 | 1,319,168 | 194,421 | |||||||
NetEase Cloud Music | 709,874 | 734,168 | 740,241 | 109,098 | 1,392,485 | 1,474,409 | 217,301 | |||||||
Innovative businesses and others | 719,029 | 650,067 | 711,386 | 104,844 | 1,348,852 | 1,361,453 | 200,653 | |||||||
Total gross profit | 18,052,482 | 21,217,072 | 21,217,325 | 3,127,047 | 36,531,888 | 42,434,397 | 6,254,056 | |||||||
View original content:https://www.prnewswire.com/news-releases/netease-announces-second-quarter-and-interim-2026-unaudited-financial-results-302856259.html
SOURCE NetEase, Inc.