Brokerage firms predict that NetEase's adjusted net profit in the fourth quarter of last year fell by over 6%, focusing on game business revenue and guidance

AASTOCKS
2026.02.04 09:16

NetEase-S (09999.HK) will announce its fourth-quarter results for last year after the market closes next Wednesday (11th). Although "Fantasy Westward Journey" rebounded, "Party Animals," "Infinite Border," and "Onmyoji" performed steadily, some of this was offset by the weak performance of "Nishuihan" mobile game, "Identity V," and "Hearthstone." Additionally, the increase in marketing expenses and high base effect impacted the results. According to a comprehensive forecast from 8 brokerages, NetEase's non-GAAP net profit for the fourth quarter of 2025 is expected to be between RMB 8.379 billion and RMB 9.643 billion, compared to RMB 9.682 billion in the same period last year, representing a year-on-year decline of 0.4% to 13.5%, with a median of RMB 9.03 billion, a year-on-year decrease of 6.7%.

According to a comprehensive forecast from 5 brokerages, NetEase's net profit for the fourth quarter of 2025 is expected to be between RMB 7.871 billion and RMB 8.741 billion, compared to RMB 8.766 billion in the same period of 2024, representing a year-on-year decline of 0.3% to 10.2%, with a median of RMB 8.232 billion, a year-on-year decrease of 6.1%. According to a comprehensive forecast from 10 brokerages, NetEase's net revenue for the fourth quarter of 2025 is expected to be between RMB 27.676 billion and RMB 29.047 billion, compared to RMB 26.748 billion in the same period of 2024, representing a year-on-year increase of 3.5% to 9.5%, with a median of RMB 28.4475 billion, a year-on-year increase of 6.4%. The market will focus on the management's latest game business guidance and related revenue performance. Recently, Google's launch of the Genie 3 world model has intensified investors' concerns about the development of the gaming industry, and management's comments and strategies regarding this will be observed.

【Brokerages Expect Significant Increase in Marketing Expenses During the Quarter】

Citi estimates that NetEase's GAAP net profit for the fourth quarter of last year was RMB 9.201 billion, a year-on-year decline of 5% (down 3.2% quarter-on-quarter), with net revenue of RMB 29.047 billion, a year-on-year increase of 8.6% (up 2.4% quarter-on-quarter). Among these, net revenue from games and related value-added services is expected to be RMB 23.632 billion, a year-on-year increase of 11.3%, with Youdao business revenue of RMB 1.524 billion, a year-on-year increase of 13.7%, and cloud music business revenue of RMB 2.054 billion, a year-on-year increase of 9.2%. Gross profit is expected to increase by 11.7% year-on-year to RMB 18.174 billion, but operating expenses are estimated to increase by 29.4% year-on-year to RMB 3.648 billion, resulting in an adjusted net profit margin of 31.7%, a year-on-year decline of 4.5 percentage points (down 1.8 percentage points quarter-on-quarter).

Bank of China International predicts that NetEase's revenue for the fourth quarter of last year increased by 3% year-on-year to RMB 27.7 billion, with online game revenue expected to increase by 6% year-on-year to RMB 21.8 billion, and PC game revenue expected to increase by 9% year-on-year to RMB 7.8 billion, mainly contributed by the PC version of "Fantasy Westward Journey," overseas "Marvel Duel," and the global PC version of "Yanyun Sixteen Sounds." Mobile game revenue is expected to increase by 4% year-on-year to RMB 14 billion, mainly driven by the steady performance of "Fantasy Westward Journey" and "Yanyun Sixteen Sounds," partially offset by the mobile version of "Nishuihan," "Identity V," and "Hearthstone." The bank predicts that cash revenue will increase by 1% year-on-year to RMB 20.3 billion. It forecasts that non-GAAP net profit will decrease by 14% year-on-year to RMB 8.4 billion, mainly affected by operating expenses increasing by 11% year-on-year, with a significant rise in the proportion of sales and marketing expenses.

Nomura predicts that NetEase's revenue in the fourth quarter of last year will increase by 4% year-on-year to RMB 27.7 billion, with online game revenue increasing by 5.8% year-on-year to RMB 21.7 billion. The bank indicates that the quarterly results may continue the high base effect from the third quarter of last year, but believes that the strong performance of "Yan Yun Shi Liu Sheng" in overseas markets partially offsets the impact. Despite seasonal factors being weaker than the third quarter, the bank expects NetEase's quarterly deferred revenue to increase by 6.2% quarter-on-quarter. Gross margin may increase by 3.3 percentage points year-on-year to 64.2%. The gross margin of the online gaming business is expected to continue its expansion trend, benefiting from the increased proportion of self-developed game revenue, which is expected to rise by 3 percentage points year-on-year to 69.6%. Due to anticipated increases in operating expenses and slowing revenue growth, the operating profit margin is expected to increase by only 0.2 percentage points year-on-year to 29.4%, while non-GAAP net profit is expected to decrease by 16% year-on-year to RMB 8.1 billion, which may include approximately RMB 600 million in investment losses, compared to RMB 1.4 billion in investment gains in the previous quarter.

Citi predicts that the market will focus on NetEase's AI strategy and planning, the release schedule for "Infinite", the development progress of other new titles, the performance of "Dream Journey" on PC and mobile, the performance of other core games, marketing expenditure status, and shareholder return policies. The bank forecasts that NetEase's revenue in the fourth quarter of last year will increase by 6.5% year-on-year to RMB 28.5 billion, while non-GAAP net profit is expected to decrease by 9% year-on-year to RMB 8.8 billion. The bank predicts that online game revenue will increase by 9.2% year-on-year to RMB 23.2 billion, mainly benefiting from the stable performance of the PC version of "Dream Journey", the rebound in performance of "Yan Yun Shi Liu Sheng", and the stable operations of "Shuai Tu Zhi Bin" and "Fifth Personality". Quarterly marketing expenditure is expected to increase by 57% year-on-year to RMB 4.4 billion, accounting for 15.5% of total revenue.

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According to a comprehensive forecast from 8 brokerages, NetEase's non-GAAP net profit for the fourth quarter of 2025 is expected to be between RMB 8.379 billion and RMB 9.643 billion, compared to RMB 9.682 billion in the same period last year, representing a year-on-year decline of 0.4% to 13.5%, with a median of RMB 9.03 billion, a year-on-year decrease of 6.7%.

Brokerage│2025 Q4 Non-GAAP Net Profit (RMB) Forecast│Year-on-Year Change

Haitong International│RMB 9.643 billion│-0.4%

Citi│RMB 9.201 billion│-5%

UBS│RMB 9.131 billion│-5.7%

Barclays│RMB 9.036 billion│-6.6%

Jianyin International│RMB 9.023 billion│-6.8% Citigroup │ RMB 8.778 billion │ -9.3%

Goldman Sachs │ RMB 8.579 billion │ -11.4%

BOCI │ RMB 8.373 billion │ -13.5%

Based on NetEase's non-GAAP net profit of RMB 9.682 billion for Q4 2024.

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According to the forecasts of 5 brokerages, NetEase's net profit for Q4 2025 is expected to be between RMB 7.871 billion and RMB 8.741 billion, compared to RMB 8.766 billion in the same period of 2024, representing a year-on-year decline of 0.3% to 10.2%, with a median of RMB 8.232 billion, a year-on-year decrease of 6.1%.

Brokerage │ Q4 2025 Net Profit Forecast (RMB billion) │ Year-on-Year Change

Haitong International │ RMB 8.741 billion │ -0.3%

CITIC International │ RMB 8.276 billion │ -5.6%

Citi │ RMB 8.232 billion │ -6.1%

UBS │ RMB 8.228 billion │ -6.1%

Citigroup │ RMB 7.871 billion │ -10.2%

Based on NetEase's net profit of RMB 8.766 billion for Q4 2024.

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According to the comprehensive forecasts of 10 brokerages, NetEase's net revenue for Q4 2025 is expected to be between RMB 27.676 billion and RMB 29.047 billion, compared to RMB 26.748 billion in the same period of 2024, representing a year-on-year increase of 3.5% to 9.5%, with a median of RMB 28.4475 billion, a year-on-year increase of 6.4%.

Brokerage │ Q4 2025 Net Revenue Forecast (RMB) │ Year-on-Year Change

Citi │ RMB 29.047 billion │ +8.5%

JP Morgan │ RMB 28.988 billion │ +8.4%

Barclays │ RMB 28.945 billion │ +8.2%

Haitong International │ RMB 28.589 billion │ +6.9%

Citigroup │ RMB 28.496 billion │ +6.5%

CITIC International │ RMB 28.399 billion │ +6.2%

Goldman Sachs │ RMB 28.333 billion │ +5.9%

UBS │ RMB 28.121 billion │ +5.1%

Nomura │ RMB 27.697 billion │ +3.5%

BOCI │ RMB 27.676 billion │ +3.5%

Based on the company's net revenue of RMB 26.748 billion for the same period last year

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