NTES ADR US

NetEase 2Q26 First Take: Q2 results were decent, but headline profit looked like a miss, mainly due to investment losses. Alibaba and PDD fell over 20% in Q2, leading to an approx. RMB 3 bn net loss on the investment portfolio. Ex-portfolio swings, the core OP rose 33% YoY, which is solid.

Profit growth outpaced revenue as high-GPM self-developed titles took a larger mix, including self-developed PC games such as 'Where Winds Meet‌' and contribution from evergreen franchises. Further helped by tighter S&M and G&A, with lower employee incentives and controlled external UA.

A weak spot was deferred revenue. While it beat BBG consensus, estimates may have been skewed; on the data, deferred revenue fell 12% QoQ in Q2, wider than typical seasonality.

Beyond Cloud Music’s impact, this also underscores a lack of new launches. With 'Sea of Oblivion' underperforming and distribution-access tailwinds already played out, the H2 pipeline gap may continue to cap upside.

On the plus side, high-margin evergreen titles provide a firm floor, and the Apple tax cut offers some incremental benefit. On a low base, NetEase is still positioned to deliver relatively steady performance in H2. $NTES(09999.HK) $NetEase(NTES.US)

$NetEase(NTES.US) Double Beat? Not enough for Mr. Market

$NetEase(NTES.US) showing signs of reversal daily. None here observation

Source: Sunrise Trader

$ISHARESHSTECH(03067.HK)

I keep investing regularly (DCA) into this ETF because I believe:

❤️China’s tech sector will grow over the long term.

❤️Prices are still relatively cheap after the past downturn.

❤️It is an easy way to invest in the whole tech sector and not just one company.

The ETF includes major companies like Tencent, Alibaba, Meituan, Xiaomi, BYD, and NetEase.

I see this as one of the cheapest ways to invest in an entire sector, while also lowering risk compared to buying just one stock.

NetEase Q4 FY25 First Take: Q4 came in below consensus, likely on softer mobile game performance, which also helps explain the recent share pullback. That said, deferred revenue held up, underpinned by a strong year-end anniversary event for 'Yanyun' (mobile) and a rebound in 'Eggy Party', which should add some upside to Q1 revenue.

Core profitability improved on tighter opex. Total cost of revenue, R&D, and G&A all declined YoY. Selling expenses rose YoY off a low base during the prior year's anti-fraud clean-up, alongside necessary launch marketing for new titles.

Adj. profit fell 27% YoY, materially below expectations, though the headline looks worse than the underlying. Beyond the top-line miss, the shortfall mainly reflected mark-to-market swings on its PDD stake, with total investment losses of RMB 1.7bn, RMB 1.2bn wider YoY.

After the game VAT rumor and the short-term hit from Genie, the stock has barely rebounded in recent days, yet valuation is already near historical trough levels. Conversely, this also reflects concerns that the recent slowdown in bookings could persist.

We are not more bearish on the mid-to-long term. For near-term price action, clear guidance on the new title cycle is critical, especially launch plans for 'Sea of Oblivion' and 'Infinity'—worth watching on the call. $NTES(09999.HK) $NetEase(NTES.US)

NetEase 3Q25 Quick Interpretation: Overall, the third-quarter performance fell short of Bloomberg consensus expectations, with the main expectation gaps in gaming revenue and sales expenses.

However, the market may have already been somewhat prepared, as some institutions mentioned earlier this month that current market expectations were too high and that results might miss.

Among the underperforming metrics, the only bright spot was deferred revenue, which provided some comfort: Despite a higher base, the year-on-year growth rate accelerated slightly compared to the previous quarter.

Given that PC games and overseas games were the main sources of growth this quarter, Dolphin Research believes that the revenue expectation gap is likely related to changes in the deferred recognition cycle for games. The market may not be satisfied with this quarter's results, but since the stock price has been adjusting recently and the long-term resilience of games remains strong, the punishment might be somewhat mitigated.

The most critical focus now is the launch plans and revenue targets for next year's two major games, "Forgotten Sea" and "Infinity," and it is advisable to pay attention to the upcoming earnings call.

1. Slowing Game Growth: Third-quarter game growth did not accelerate as expected by the market compared to Q2. The expectation gap may primarily lie in PC games, although, in terms of absolute growth rates, the pressure is on mobile games. However, during the summer season in Q3, "Eggy Party" and "Yan Yun: Sixteen Tones" released content updates, driving domestic mobile game revenue back to positive growth. Overseas mobile games also performed well due to the contribution from the new game "Destiny: Stars."

Therefore, Dolphin Research speculates that market expectations for PC game revenue were too high. There is no reliable third-party data source for tracking PC games, so it is understandable that institutions had significant expectation gaps. Although there was growth from the Blizzard series games in Q3, competition in PC games intensified, especially from Tencent's titles like "Delta Action," which may have had a 分流 effect.

2. Deferred Revenue Shows It Wasn’t That Bad: Notably, Q3 deferred revenue significantly exceeded market expectations, and its growth rate was better than seasonal changes in previous periods, similar to Q3 last year when Blizzard had just returned. Therefore, this quarter's revenue performance may also be related to the deferred recognition cycle. Generally, overseas games and PC games have slightly longer deferred cycles than domestic mobile games. The growth in Q3 mainly came from overseas mobile games and domestic PC game revenue.

3. Other Businesses Mostly Fell Short of Expectations: Among non-gaming businesses, Youdao Education and Cloud Music slightly missed Bloomberg expectations, but the larger drag was from Yanxuan.

4. Stable Gross Margin, High Expense Growth: On the profit side, gross margin remained relatively stable. Gaming and value-added services gross margin declined slightly quarter-on-quarter but increased by 1 percentage point year-on-year, mainly due to a higher proportion of self-developed games. Sales expenses surged 17% year-on-year in Q3 due to promotions for new games and summer version marketing for existing games, missing market expectations by nearly 500 million yuan.

Additionally, administrative expenses returned to positive growth this quarter, but given the team optimization and restructuring efforts by NetEase since Q3, we do not expect sustained significant expansion in this expense item.

Ultimately, Non-GAAP net profit was 9.5 billion yuan, which met expectations mainly due to adjustments for SBC expenses and items like investment income (up 800 million year-on-year). Core operating profit from the main business was 8 billion yuan, below market expectations. $NTES(09999.HK) $NetEase(NTES.US)

$NTES(09999.HK) $NetEase(NTES.US) Latest earnings report is out!