NetEase Announces Third Quarter 2024 Unaudited Financial Results

Key insights

6 takeaways

01
NetEase reported Q3 2024 net revenues of RMB 26.2 billion, a 3.9% year-over-year decline, driven largely by a 4.2% drop in gaming and related services revenue to RMB 20.9 billion.See it on page 1
02
Despite revenue contraction, the company maintained strong profitability with a Q3 2024 net income of RMB 6.54 billion and a non-GAAP net income of RMB 7.50 billion.See it on page 3
03
Non-GAAP net income per diluted ADS increased to $13.30 in Q3 2024, up from $12.05 in the same period last year.See it on page 11
04
User engagement was bolstered by the launch of Naraka: Bladepoint mobile and Racing Master, alongside the reintroduction of Blizzard Entertainment titles World of Warcraft and Hearthstone to the Chinese market.See it on page 1
05
The Youdao subsidiary achieved a record-high quarterly operating profit, demonstrating the success of NetEase’s diversified business model beyond its core gaming segment.See it on page 2
06
The company maintains a strong financial position with total assets valued at RMB 184.90 billion.See it on page 6

Summary

NetEase recorded net revenues of RMB 26.2 billion for the third quarter of 2024, representing a 3.9% year-over-year decline. This contraction was primarily driven by a 4.2% decrease in revenue from games and related services, which totaled RMB 20.9 billion. Despite these top-line pressures, the company maintained robust profitability, reporting a net income attributable to shareholders of RMB 6.54 billion. When excluding share-based compensation, non-GAAP net income reached RMB 7.50 billion, underscoring a resilient operational performance. This financial stability is further evidenced by a strong balance sheet, with total assets amounting to RMB 184.90 billion.

The company’s strategic focus remains centered on content innovation and player engagement within the Chinese gaming market. The successful launch of new titles such as Naraka: Bladepoint mobile and Racing Master, combined with the high-profile return of Blizzard Entertainment’s World of Warcraft and Hearthstone to the region, served as critical catalysts for user activity. Beyond the core gaming segment, the Youdao subsidiary achieved a record-high quarterly operating profit, highlighting the effectiveness of the company’s diversified business model.

Profitability metrics per share reflect a positive trajectory despite the broader revenue dip. The non-GAAP net income per diluted ADS rose to $13.30 for the third quarter, an improvement over the $12.05 reported during the same period in 2023. Year-to-date figures further confirm this trend, with non-GAAP net income per diluted ADS reaching $38.79. These results demonstrate that while the company faces cyclical revenue challenges, its underlying operational efficiency and strategic asset management continue to deliver consistent value to shareholders.