---
title: "NTES (Trans): High bar for '无限大', willing to delay for quality"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/41003500.md"
description: "Below is Dolphin Research's transcript of $NetEase(NTES.US) $NTES-S(09999.HK) 1Q26 earnings call. For our earnings take, see 'NetEase: Making money through the lull; the evergreen franchise keeps gaining value'.I. Key results recap. 1) Shareholder returns. The BOD approved a 1Q26 cash dividend of $0.144 per ordinary share. As of Mar 31, 2026, under the $5bn share repurchase plan, the company had bought back approx. 23.2 mn shares for about $2.1bn..."
datetime: "2026-05-21T16:03:58.000Z"
locales:
  - [en](https://longbridge.com/en/topics/41003500.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/41003500.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/41003500.md)
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

# NTES (Trans): High bar for '无限大', willing to delay for quality

**Below is Dolphin Research's summary of**$NetEase(NTES.US) $NTES-S(09999.HK) **1Q26 earnings call. For our take on the print, see** [**NetEase: Monetizing the lull; evergreen titles still compounding**](https://longbridge.cn/topics/41001605?channel=SH000001&invite-code=355628&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=603808d6-4077-4691-b612-67b01c4884f4)**.**

**I. Key takeaways from the print**

1\. **Shareholder returns**: The BOD approved a 1Q26 cash dividend of $0.144 per ordinary share. As of Mar 31, 2026, under the $5bn buyback program, the company had repurchased ~23.2 mn shares for a total of ~$2.1bn.

2\. **Beat**: 1Q26 revenue was RMB 30.6bn (+6% YoY), ~3% above consensus (RMB 29.6bn). Non-GAAP net income to shareholders was RMB 11.3bn (Approx. $1.6bn), roughly flat YoY; Non-GAAP EPS was $0.51 per ordinary share, beating estimates by 21.6%.

3\. **Cash build**: Net cash reached RMB 167.2bn as of Mar 31, 2026, up RMB 13.7bn vs. year-end 2025 (RMB 153.5bn).

4\. **GPM expansion**: Overall GPM was 69.4%, up sharply vs. 54.1% a year ago. Games and related VAS GPM improved to 74.8% (vs. 68.8% YoY), driven mainly by lower platform revenue share costs.

5\. **Opex mix**: S&M ratio was 11.2% (vs. 9.4% YoY) on heavier game marketing. G&A ratio fell to 2.1% (vs. 3.3% YoY) on continued efficiency gains; R&D ratio was 14.7% (vs. 15.2% YoY), broadly stable; effective tax rate was 18.9%.

**II. Call details**

**2.1 Management remarks**

**1\. Games — Intl**

1\. **Where Winds Meet (燕云十六声)**

a. Since its overseas launch last Nov, the title has sustained strong momentum and become a global phenomenon. It resonates across cultures, with traction far exceeding the initial launch window.

b. The first major expansion dropped in Mar, and the recent v1.6 added a new region and a wind-based exploration mechanic. Post-update, it ranked No. 2 on Steam's global top sellers, and quarterly revenue hit a new high.

c. In its first six months on Steam, the game maintained a 78% positive rating. With each major update, it consistently reached the global top-2 sellers, including in Western markets where Chinese titles typically struggle to penetrate, setting a new benchmark for the genre's overseas push.

d. The team will keep investing, enhancing cross-device compatibility, strengthening global publishing, expanding to more platforms, and deepening localization. The goal is to establish it as another flagship in our global portfolio.

2\. **Marvel Rivals（漫威争锋）**

a. Steady season updates are broadening the audience for hero shooters globally. This supports sustained user engagement and reach.

b. On Apr 10, new co-branded skins (including Deadpool and Jeff) propelled the game to No. 2 on Steam's US top sellers. Community interaction was robust.

c. Season 7 introduced the 'Doomsday Countdown' event and an Infinity Stones-themed roadmap for the year. This aligns with Marvel Studios' new Avengers film slated for Dec, reinforcing user stickiness.

3\. **Other Intl titles**

a. Identity V: In Mar, a collaboration with the Tokyo Ghoul IP drove the game to No. 3 on Japan's LS grossing chart. Community feedback was highly positive.

b. Knives Out: Mar marked the global mobile title's second anniversary, with DAU at an all-time high. The player community remains very vibrant.

**2\. Games — China**

1\. **Fantasy Westward Journey (FWJ)**

a. The casual server rolled out updates including a family system that lets players form in-game social groups and raise companion pets. This broadened the player base while retaining long-term users.

b. 1Q26 PCU reached 3.9 mn, a record high. Monthly pass revenue set a single-quarter record, validating the endless server as an effective entry point for both new and returning players.

c. The dedicated server kept optimizing its progression systems, steadily expanding the active user base. The 11th-anniversary event in Feb lifted DAU to the highest level since 2017.

d. In Apr, further updates to the in-game economy were rolled out to reinforce long-term ecosystem health.

2\. **Ghost: The Story of A Chinese Beauty (倩女幽魂)**

a. Since its 2016 launch, cumulative registrations surpassed 200 mn, with recent anniversary celebrations showcasing long-cycle ops capabilities. This underscores the team's durability in live ops.

b. The title again partnered deeply with the hit drama 'Love O2O', tapping classic IP nostalgia as it enters its second decade of operations.

3\. **Eggy Party**

a. The game remains a top party title in China, with seasonal and festive events becoming a brand hallmark. These events keep the community tightly knit.

b. In Feb, collaborations with Sanrio and other IPs drove the game to No. 1 on China's iOS grossing chart. This reinforced the title's leadership.

4\. **Identity V**

a. 1Q26 saw stable engagement and revenue, with Lunar New Year events adding new characters and limited-time modes. These updates enriched the gameplay experience.

b. The Mar anniversary update refreshed survivor and hunter mechanics, and the fast-paced IBA mode added new vehicle competition elements. The global finals are being held in Shanghai this month, energizing the community.

6\. **Infinite Lagrange**

a. Preset feature updates simplified time-consuming operations and improved combat pacing. Seasonal content kept iterating on terrain design, character portraits, and IP tie-ups, earning positive player feedback.

b. DAU has improved meaningfully in recent months. This further solidifies the foundation for long-term operations.

7\. **Naraka: Bladepoint**

a. The melee combat experience continues to be refined, with new heroes, maps, and combat mechanics sustaining freshness in its fast-paced gameplay. This supports retention and re-engagement.

b. A collaboration with 'Overwatch' in China broadened cross-audience interactions. This helped reach different player cohorts.

**8\. Justice Online (逆水寒)**

a. The open-world ecosystem keeps evolving, introducing AI-driven item generation and in-game narrative creation. This is building a UGC content ecosystem and deepening player connections.

9\. **Blizzard titles**

a. World of Warcraft's 'Midnight' expansion launched in China on Mar 3 in sync with the global release. With extensive localization and exclusive events, China posted positive YoY growth in 1Q26.

b. Diablo IV's latest expansion launched in China alongside global, while a new DLC for Diablo II: Resurrected drove strong 1Q26 MAU. These attest to the enduring strength of the IPs.

c. Overwatch held two co-branded events with the 'MarkerBot' IP, plus Lunar New Year content. Player activity increased significantly.

**3\. Pipeline**

'Sea of Oblivion' and 'Ananta' are progressing well, with 'Sea of Oblivion' targeting a Q3 launch window. Feedback from the latest test has been favorable.

a. Sea of Oblivion: Following the Feb technical test, we received valuable player feedback and are preparing a larger-scale open test next. It will showcase a more complete world and richer mechanics; monetization centers on character experience and cosmetic customization, preserving fair play with no pay-to-win.

b. Ananta: Positioned as an urban open world, it differs by emphasizing immersive day-to-day city life—shopping, social interactions, exploration, and running businesses—rather than combat-led open-world RPG. The aim is to break the genre ceiling and attract a broader audience intrigued by '3D life' in a virtual city; the team is focused on content polish.

**4\. Youdao**

1\. The AI-native strategy continues to advance, with online learning and AI subscription products delivering strong growth. This reflects healthy demand for AI-enhanced education.

2\. Two new AI-native apps were added to the existing AI Agent suite: Youdao Lobster AI (an open-source personal AI desktop system) and Youdao Vault (a knowledge base for complex information scenarios). These broaden the AI ecosystem.

3\. Online marketing services: Benefiting from a recovery in performance ads, AI-driven precision targeting and content productivity gains added incremental growth. This improved campaign efficiency.

4\. Smart hardware: The unit adheres to financial discipline prioritizing profitability over scale. Expansion remains prudent while staying profitable.

**5\. Yanxuan**

1\. Celebrating its 10th anniversary in 2026, the focus is on building out the pet category. R&D, supply chain, quality control, and membership ops continue to be strengthened.

2\. Core categories such as home goods maintain a leading position across e-commerce platforms. New products are launched continuously.

**8\. ESG**

1\. Published the seventh annual ESG report; MSCI rating was raised to AAA, ranking among the top within 200 global media & entertainment peers. Sustainalytics maintains a Low Risk rating; the company has been on Forbes' World's Best Employers list for nine straight years.

2\. Data center GHG emissions fell 12% YoY. Oversight by the BOD and management over key issues continues to improve.

**2.2 Q&A**

**Q: Please share the latest on 'Sea of Oblivion'—monetization design, gameplay, and user feedback since early this year, as well as the global and multi-platform launch timeline.**

A: After the Feb technical test, we received valuable player feedback and are preparing a larger-scale open test. This build will present a bigger world and richer mechanics, with a target launch window in Q3.

On monetization, we see it as a natural extension of the experience, with character at the core of gameplay and cosmetics at the core of monetization. We aim for rich content without over-commercialization. Please stay tuned for the upcoming test and subsequent announcements for more details.

**Q: What is Ananta's competitive strategy in the open-world category? With several new peers launching this year and potential impact from blockbusters like GTA at year-end, how will Ananta stand out and drive incremental user growth?**

A: We do not shy away from competition, but our focus is differentiation. The open-world track is indeed crowded in 2026, and players have more choices than ever.

On the other hand, this also implies a high ceiling and robust demand. Our industry's competition is not zero-sum—great products can expand the overall market rather than just fight for a fixed share.

**Ananta's edge lies in** a city-centric open world that fundamentally differs from traditional open-world RPGs or action RPGs—across IP building, genre framework, and gameplay design. We are not following a set formula, but creating a city where players truly feel they 'live within'—shopping, socializing, exploring, and running businesses. This strong immersion in everyday urban life is the crux of our differentiation.

The team is focused on content quality. We believe player appetite for innovative, polished experiences remains strong; success hinges on how unique and excellent the experience is, not on how many titles launch in the same window.

We would rather take the time to get it right than rush out something mediocre. Lastly, we do not view Ananta as a traditional action game; within the urban open-world space, our goal is a genre breakthrough to attract those drawn to a '3D life' in a virtual city, so direction, narrative tone, and mechanics are tuned for broader appeal.

In short, a unique urban open-world positioning, relentless pursuit of quality, and an unbounded vision are the foundations for Ananta to stand out. Competition is real, but we are confident in our chosen path.

**Q: Please update on 'Where Winds Meet' overseas expansion and your view on MMO opportunities globally.**

A: Where Winds Meet has shown strong and sustained momentum globally. In the first six months on Steam, it achieved a 78% positive rating and reached the global top-2 sellers with each major update, including in Western markets that Chinese games traditionally find hard to penetrate, setting a new benchmark for the genre.

This shows overseas players embrace the immersive experience and our 'high quality, free-to-play, no pay-to-win' model. It underscores the title's unique experience and global resonance.

Looking ahead, we will keep unlocking overseas growth by improving cross-device compatibility, strengthening global publishing, expanding to more platforms, and deepening localization. We will continue to invest to make Where Winds Meet another flagship in our global lineup, targeting sustainable success worldwide.

**Q: 'Fantasy Westward Journey' PC endless server has been live for nearly a year. Please share the latest and how you plan to maintain or even extend its success.**

A: FWJ set another record with 3.9 mn PCU in 1Q26, proving the endless server has expanded the overall player base. Beyond the endless server's strength, the time-based classic server is also growing steadily.

Backed by years of live-ops know-how, the game's overall ecosystem is healthy, and key KPIs are moving in the right direction. We will stick to a long-term ops strategy and keep exploring new growth opportunities along the way.

**Risk disclosure and disclaimers:**[**Dolphin Research Disclaimer and General Disclosures**](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

### Related Stocks

- [NTES.US](https://longbridge.com/en/quote/NTES.US.md)
- [09999.HK](https://longbridge.com/en/quote/09999.HK.md)
- [09899.HK](https://longbridge.com/en/quote/09899.HK.md)