On Thursday, February 29th, after the Hong Kong stock market closed and before the US stock market opened, NetEase announced its fourth-quarter and full-year performance as of December 31.
According to the financial report, NetEase achieved a revenue of 27.14 billion yuan in the quarter, a 7% year-on-year increase, flat on a quarter-on-quarter basis, falling short of the market's expectation of 28.2 billion yuan. Among them, online game revenue reached 20.92 billion yuan, up by 9.6% year-on-year and 2% quarter-on-quarter, below the market expectation of 21.83 billion yuan.
In the quarter, NetEase's net profit attributable to the company was 6.58 billion yuan, a 67% year-on-year increase, a 16% quarter-on-quarter decrease, lower than the market expectation of 6.85 billion yuan. Under the Non-GAAP, net profit surged by 54% to 7.4 billion yuan, but still below the market expectation of 7.86 billion yuan. The EPS for the fourth quarter was 1.60 US dollars, a 49.53% increase from 1.07 US dollars in the same period last year, falling short of analysts' expectation of 1.73 US dollars.
For more details, please refer to the press release: NetEase Announces Fourth Quarter and Fiscal Year 2023 Unaudited
As of the time of publication, NetEase's US stock price fell by over 5% before the market opened.
<h2>&#34;Egg Party&#34; Spring Festival Daily Active Users Exceed 40 Million</h2>
NetEase's largest department and revenue pillar, the online gaming business, achieved a revenue of 20.9 billion yuan in the last quarter, a 9.6% year-on-year increase, but only a 2% quarter-on-quarter increase, still falling short of the market's expectation by 900 million yuan.
In the last quarter, NetEase achieved a gross profit of 16.8 billion yuan, a 27.0% year-on-year increase, almost flat compared to the third quarter. Among them, the gross profit from network game services was 14.54 billion yuan, a 29% year-on-year increase, a 3% decrease from the previous quarter's 15.03 billion yuan, lower than the market expectation of 14.37 billion yuan. The gross profit margin of network game services was 69.5%, higher than the market expectation of 68.6%, with both year-on-year and quarter-on-quarter increases, 69% in the third quarter and 59.1% in the same period last year.
NetEase explained in the financial report that the growth in company profits was mainly driven by the popularity of games such as &#34;Justice&#34; and &#34;Egg Party&#34;.
Regarding the recent operation of its games, NetEase disclosed in the financial report:
<blockquote>
With the regular release of new content, major games such as &#34;Fantasy Westward Journey&#34; and &#34;Journey to the West&#34; have maintained lasting user appeal.
Since its launch in 2022, &#34;Egg Party&#34; has accumulated over 500 million registered players, with over 40 million daily active users during the Lunar New Year.
</blockquote>
The mobile game &#34;Swords of Legends&#34; has reached 100 million active users, with rich content and in-game activities widely welcomed by players.
&#34;Top Speed&#34; has performed excellently in Hong Kong, Macau, and Taiwan, topping the iOS download and bestseller charts in Taiwan within the first week of its release.
Looking ahead, NetEase still has a lineup of heavyweight products, including &#34;Endless of Time&#34; mobile game, &#34;The Legend of the Condor Heroes&#34; trilogy IP (already licensed), &#34;Sixteen Songs of the Swallows&#34; (already licensed), &#34;Code: World&#34; (Onmyoji IP, open world), and &#34;Code: ATLAS&#34; (ocean theme, open world), focusing on open world and martial arts IP elements.
<h2>Outstanding performance in innovative businesses, YoY revenue decline of over 16% for Cloud Music</h2>
Apart from games, NetEase's other departments have shown outstanding performance in innovative businesses (Yanxuan, NetEase Live, advertising services, high-end email, and other value-added services). The revenue from innovative businesses and other sectors in the last quarter was 28 billion yuan, a 12.9% increase from the fourth quarter of 2022, exceeding market expectations of 25.6 billion yuan.
NetEase Youdao generated revenue of 15 billion yuan, a YoY growth of 1.8%, with the company stating that Youdao achieved record operating cash flow last quarter; Cloud Music revenue was 20 billion yuan, a YoY decrease of 16.4%.
In the fourth quarter, NetEase's total operating expenses were 100 billion yuan, a 13% increase from the same period last year.
Regarding the last quarter's performance, NetEase CEO Ding Lei stated:
<blockquote>
For NetEase games, 2023 is another milestone year where we continue to innovate across categories, expanding and diversifying our strong game portfolio. The success of games like &#34;Egg Party,&#34; as well as new games like &#34;Top Speed&#34; and &#34;All-Star Streetball Party,&#34; highlights our ability to bring dynamic original products of various genres to players. At the same time, we maintain our strategic advantage in MMOs, driving the &#34;Swords of Legends&#34; mobile game beyond the boundaries of traditional MMO games.
As our business grows, we are taking on more social responsibilities. By integrating the &#34;minor mode&#34; in our domestic game lineup, we have strengthened existing anti-addiction systems and continue to guide the gaming ecosystem towards a healthier track through innovative products and technologies.
In addition to games, our various business departments, such as Cloud Music and Youdao, continue to operate normally, consistently providing high-quality content. Within the entire NetEase family, we prioritize creating innovative and high-quality products and services to increase our global appeal, enhance user experience, and drive innovation.
</blockquote>

09999

NTES

09899

In this quarter, NetEase's net profit attributable to shareholders was 6.58 billion yuan, a year-on-year increase of 67%, but a decrease of 16% compared to the previous quarter. The profit growth was mainly driven by games such as "Revelation" and "Egg Party".

LB Select

NTES-S

NetEase

NETEASE MUSIC

NetEase's pre-market trading fell by over 5%, with a 16% decrease in net profit QoQ in Q4. The daily active users of "Egg Party" during the Spring Festival exceeded 40 million.