HANGZHOU, China, Aug. 14, 2025 /PRNewswire/ — NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, “NetEase” or the “Company”), a leading internet and game services provider, today announced its unaudited financial results for the second quarter ended June 30, 2025.
Second Quarter 2025 Financial Highlights
Net revenues were RMB27.9 billion (US$3.9 billion), an increase of 9.4% compared with the same quarter of 2024.
Games and related value-added services net revenues were RMB22.8 billion (US$3.2 billion), an increase of 13.7% compared with the same quarter of 2024.
Youdao net revenues were RMB1.4 billion (US$197.9 million), an increase of 7.2% compared with the same quarter of 2024.
NetEase Cloud Music net revenues were RMB2.0 billion (US$274.8 million), a decrease of 3.5% compared with the same quarter of 2024.
Innovative businesses and others net revenues were RMB1.7 billion (US$237.2 million), a decrease of 17.8% compared with the same quarter of 2024.
Gross profit was RMB18.1 billion (US$2.5 billion), an increase of 12.5% compared with the same quarter of 2024.
Total operating expenses were RMB9.0 billion (US$1.3 billion), a decrease of 0.6% compared with the same quarter of 2024.
Net income attributable to the Company’s shareholders was RMB8.6 billion (US$1.2 billion). Non-GAAP net income attributable to the Company’s shareholders was RMB9.5 billion (US$1.3 billion).[1]
Basic net income per share was US$0.38 (US$1.88 per ADS). Non-GAAP basic net income per share was US$0.42 (US$2.09 per ADS).[1]
[1] As used in this announcement, non-GAAP net income attributable to the Company’s shareholders and non-GAAP basic and diluted net income per share and per ADS are defined to exclude share-based compensation expenses. See the unaudited reconciliation of GAAP and non-GAAP results at the end of this announcement.
Second Quarter 2025 and Recent Operational Highlights
Extended global traction with new launches across regions:
FragPunk ranked No. 2 on PlayStation’s North America free-to-play download chart in May, following its April 29 global launch on Xbox Series X|S and PlayStation 5.
Dunk City Dynasty gained substantial momentum with its May 22 global launch, topping iOS download charts in multiple regions and reaching No. 2 in the U.S.
MARVEL Mystic Mayhem‘s June 25 launch propelled the game to No. 1 on iOS download charts across multiple regions and No. 2 in the U.S.
Sustained player momentum and operating strength across established franchises:
Sword of Justice (previously Justice mobile game) hit No. 3 on China’s iOS top-grossing chart shortly after its second anniversary update on June 30.
Once Human reached No. 4 on Steam’s global top sellers chart following its anniversary update on July 3.
Identity V ranked No. 6 on the iOS top-grossing chart in China following its seasonal update on July 10.
Naraka: Bladepoint mobile game celebrated its first anniversary with the launch of a new version on July 10, propelling it to No. 6 on China’s iOS top-grossing chart.
Eggy Party reached No. 5 on China’s iOS top-grossing chart on July 11 after a series of third-anniversary events.
Marvel Rivals ranked No. 2 on Steam’s global top-sellers chart and No. 1 in the U.S with its Summer Party Event unveiled on July 17.
Fantasy Westward Journey Online reached a new all-time high with over 2.93 million peak concurrent players in August.
Further captivated players in China with Blizzard titles. Hearthstone ranked No. 5 on China’s iOS top-grossing chart on July 9, fueled by the launch of The Lost City of Un’Goro expansion pack, while World of Warcraft‘s 20th anniversary celebration in China sparked strong community engagement with the announcement of a new China-exclusive server set to launch in November.
Enriched global pipeline with exciting new titles underway, including NetEase’s original ocean adventure RPG Sea of Remnants and story-driven action-adventure game Blood Message, along with plans to bring Sword of Justice and Where Winds Meet to the global market.
“In the second quarter, we grew our player community with thrilling new content that reinforces our position as a creator of high-impact, genre-defining games,” said Mr. William Ding, Chief Executive Officer and Director of NetEase. “At the core of our expansion is product innovation, disciplined execution and deep community engagement, all capabilities we have honed over many years and powered by our strong technological foundation. We will continue to push the boundaries of player experiences, scaling original IP to build lasting franchises and growing alongside our collaborative global partners.
“Beyond games, we remain focused on innovation, refining our products and content to deliver long-term value for our users, partners and shareholders,” Mr. Ding concluded.
Second Quarter 2025 Financial Results
Net Revenues
Net revenues for the second quarter of 2025 were RMB27.9 billion (US$3.9 billion), compared with RMB28.8 billion and RMB25.5 billion for the preceding quarter and the same quarter of 2024, respectively.
Net revenues from games and related value-added services were RMB22.8 billion (US$3.2 billion) for the second quarter of 2025, compared with RMB24.0 billion and RMB20.1 billion for the preceding quarter and the same quarter of 2024, respectively. Net revenues from the operation of online games accounted for approximately 97.1% of the segment’s net revenues for the second quarter of 2025, compared with 97.5% and 96.1% for the preceding quarter and the same quarter of 2024, respectively. The quarter-over-quarter decrease in online games net revenues was due to certain self-developed and licensed games. The year-over-year increase was attributable to higher net revenues from Identity V, our newly launched games Where Winds Meet and Marvel Rivals and certain licensed games.
Net revenues from Youdao were RMB1.4 billion (US$197.9 million) for the second quarter of 2025, compared with RMB1.3 billion each for the preceding quarter and the same quarter of 2024. Net revenues from its online marketing services and learning services increased quarter-over-quarter and year-over-year, while net revenues from its smart devices decreased quarter-over-quarter and year-over-year.
Net revenues from NetEase Cloud Music were RMB2.0 billion (US$274.8 million) for the second quarter of 2025, compared with RMB1.9 billion and RMB2.0 billion for the preceding quarter and the same quarter of 2024, respectively. Net revenues from its online music services increased both quarter-over-quarter and year-over-year, while net revenues from its social entertainment services and others increased quarter-over-quarter but decreased year-over-year.
Net revenues from innovative businesses and others were RMB1.7 billion (US$237.2 million) for the second quarter of 2025, compared with RMB1.6 billion and RMB2.1 billion for the preceding quarter and the same quarter of 2024, respectively. The quarter-over-quarter increase was led by increased net revenues from Yanxuan. The year-over-year decrease was due to decreased net revenues from Yanxuan, advertising services and certain other businesses in this segment.
Cost of Revenues
Cost of revenues for the second quarter of 2025 was RMB9.8 billion (US$1.4 billion), compared with RMB10.3 billion and RMB9.4 billion for the preceding quarter and the same quarter of 2024, respectively, with revenue sharing costs related to platforms and royalties for licensed games decreasing quarter-over-quarter, while royalties for licensed games increased year-over-year.
Gross Profit
Gross profit for the second quarter of 2025 was RMB18.1 billion (US$2.5 billion), compared with RMB18.5 billion and RMB16.0 billion for the preceding quarter and the same quarter of 2024, respectively.
Operating Expenses
Total operating expenses for the second quarter of 2025 were RMB9.0 billion (US$1.3 billion), compared with RMB8.0 billion and RMB9.0 billion for the preceding quarter and the same quarter of 2024, respectively. The quarter-over-quarter increase was primarily due to increased marketing expenditures related to games and related value-added services.
Other Income/(Expenses)
Other income/(expenses) consisted of investment income, interest income, net exchange losses/(gains) and others. The quarter-over-quarter decrease was mainly due to fair value changes of equity security investments, and the year-over-year increase was primarily due to net exchange gains in the second quarter of 2025, compared with net exchange losses recorded in the same quarter of 2024.
Income Tax
The Company recorded a net income tax charge of RMB1.6 billion (US$217.9 million) for the second quarter of 2025, compared with RMB1.9 billion and RMB1.3 billion for the preceding quarter and the same quarter of 2024, respectively. The effective tax rate for the second quarter of 2025 was 14.7%, compared with 15.3% and 16.0% for the preceding quarter and the same quarter of 2024, respectively. The effective tax rate represents certain estimates by the Company as to the tax obligations and benefits applicable to it in each quarter.
Net Income and Non-GAAP Net Income
Net income attributable to the Company’s shareholders totaled RMB8.6 billion (US$1.2 billion) for the second quarter of 2025, compared with RMB10.3 billion and RMB6.8 billion for the preceding quarter and the same quarter of 2024, respectively.
Basic net income was US$0.38 per share (US$1.88 per ADS) for the second quarter of 2025, compared with US$0.45 per share (US$2.27 per ADS) and US$0.29 per share (US$1.47 per ADS) for the preceding quarter and the same quarter of 2024, respectively.
Non-GAAP net income attributable to the Company’s shareholders totaled RMB9.5 billion (US$1.3 billion) for the second quarter of 2025, compared with RMB11.2 billion and RMB7.8 billion for the preceding quarter and the same quarter of 2024, respectively.
Non-GAAP basic net income was US$0.42 per share (US$2.09 per ADS) for the second quarter of 2025, compared with US$0.49 per share (US$2.47 per ADS) and US$0.34 per share (US$1.70 per ADS) for the preceding quarter and the same quarter of 2024, respectively.
Other Financial Information
As of June 30, 2025, the Company’s net cash (total cash and cash equivalents, current and non-current time deposits and restricted cash, as well as short-term investments balance, minus short-term and long-term loans) totaled RMB142.1 billion (US$19.8 billion), compared with RMB131.5 billion as of December 31, 2024. Net cash provided by operating activities was RMB10.9 billion (US$1.5 billion) for the second quarter of 2025, compared with RMB12.1 billion and RMB6.5 billion for the preceding quarter and the second quarter of 2024, respectively.
Quarterly Dividend
The board of directors approved a dividend of US$0.1140 per share (US$0.5700 per ADS) for the second quarter of 2025 to holders of ordinary shares and holders of ADSs as of the close of business on August 28, 2025, Beijing/Hong Kong Time and New York Time, respectively, payable in U.S. dollars. For holders of ordinary shares, in order to qualify for the dividend, all valid documents for the transfer of shares accompanied by the relevant share certificates must be lodged for registration with the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, no later than 4:30 p.m. on August 28, 2025 (Beijing/Hong Kong Time). The payment date is expected to be September 8, 2025 for holders of ordinary shares and on or around September 11, 2025, for holders of ADSs.
NetEase paid a dividend of US$0.1350 per share (US$0.6750 per ADS) for the first quarter of 2025 in June 2025.
Under the Company’s current dividend policy, the determination to make dividend distributions and the amount of such distribution in any particular quarter will be made at the discretion of its board of directors and will be based upon the Company’s operations and earnings, cash flow, financial condition and other relevant factors.
Share Repurchase Program
On November 17, 2022, the Company announced that its board of directors had approved a share repurchase program of up to US$5.0 billion of the Company’s ADSs and ordinary shares in open market transactions. This share repurchase program commenced on January 10, 2023, and will be in effect for a period not to exceed 36 months from such date. As of June 30, 2025, approximately 22.1 million ADSs had been repurchased under this program for a total cost of US$2.0 billion.
The extent to which NetEase repurchases its ADSs and its ordinary shares depends upon a variety of factors, including market conditions. These programs may be suspended or discontinued at any time.
** The United States dollar (US$) amounts disclosed in this announcement are presented solely for the convenience of the reader. The percentages stated are calculated based on RMB.
Conference Call
NetEase’s management team will host a teleconference call with a simultaneous webcast at 8:00 a.m. Eastern Time on Thursday, August 14, 2025 (Beijing/Hong Kong Time: 8:00 p.m., Thursday, August 14, 2025). NetEase’s management will be on the call to discuss the quarterly results and answer questions.
Interested parties may participate in the conference call by dialing 1-914-202-3258 and providing conference ID: 10049137, 15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 1-855-883-1031 and entering PIN: 10049137. The replay will be available through August 21, 2025.
This call will be webcast live and the replay will be available for 12 months. Both will be available on NetEase’s Investor Relations website at http://ir.netease.com/.
About NetEase, Inc.
NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, “NetEase”) is a leading internet and game services provider centered around premium content. With extensive offerings across its expanding gaming ecosystem, the Company develops and operates some of the most popular and longest-running mobile and PC games available in China and globally.
Powered by one of the largest in-house game R&D teams focused on mobile, PC and console, NetEase creates superior gaming experiences, inspires players, and passionately delivers value for its thriving community worldwide. By infusing play with culture, and education with technology, NetEase transforms gaming into a meaningful vehicle to build a more entertaining and enlightened world.
Beyond games, NetEase service offerings include its majority-controlled subsidiaries Youdao (NYSE: DAO), an intelligent learning and advertising solutions provider, and NetEase Cloud Music (HKEX: 9899), a well-known online music platform featuring a vibrant content community, as well as Yanxuan, NetEase’s private label consumer lifestyle brand.
For more information, please visit: http://ir.netease.com/.
Forward Looking Statements
This announcement contains statements of a forward-looking nature. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar expressions. In addition, statements that are not historical facts, including statements about NetEase’s strategies and business plans, its expectations regarding the growth of its business and its revenue and the quotations from management in this announcement are or contain forward-looking statements. NetEase may also make forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in announcements made on the website of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to: the risk that the online games market will not continue to grow or that NetEase will not be able to maintain its position in that market in China or globally; risks associated with NetEase’s business and operating strategies and its ability to implement such strategies; NetEase’s ability to develop and manage its operations and business; competition for, among other things, capital, technology and skilled personnel; potential changes in regulation environment in the markets where NetEase operates; the risk that NetEase may not be able to continuously develop new and creative online services or that NetEase will not be able to set, or follow in a timely manner, trends in the market; risks related to evolving economic cycles and geopolitical tensions, including the direct or indirect impacts of national trade, investment, protectionist, tax or other laws or policies as well as export controls and economic or trade sanctions; risks related to the expansion of NetEase’s businesses and operations internationally; risks associated with cybersecurity threats or incidents; and fluctuations in foreign currency exchange rates that could adversely affect NetEase’s business and financial results. Further information regarding these and other risks is included in NetEase’s filings with the SEC and announcements on the website of the Hong Kong Stock Exchange. NetEase does not undertake any obligation to update this forward-looking information, except as required under applicable law.
Non-GAAP Financial Measures
NetEase considers and uses non-GAAP financial measures, such as non-GAAP net income attributable to the Company’s shareholders and non-GAAP basic and diluted net income per ADS and per share, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
NetEase defines non-GAAP net income attributable to the Company’s shareholders as net income attributable to the Company’s shareholders excluding share-based compensation expenses. Non-GAAP net income attributable to the Company’s shareholders enables NetEase’s management to assess its operating results without considering the impact of share-based compensation expenses. NetEase believes that this non-GAAP financial measure provides useful information to investors in understanding and evaluating the Company’s current operating performance and prospects in the same manner as management does, if they so choose. NetEase also believes that the use of this non-GAAP financial measure facilitates investors’ assessment of its operating performance.
Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP net income attributable to the Company’s shareholders is that it does not reflect all items of expense/ income that affect our operations. Share-based compensation expenses have been and may continue to be incurred in NetEase’s business and are not reflected in the presentation of non-GAAP net income attributable to the Company’s shareholders. In addition, the non-GAAP financial measures NetEase uses may differ from the non-GAAP measures used by other companies, including peer companies, and therefore their comparability may be limited.
NetEase compensates for these limitations by reconciling non-GAAP net income attributable to the Company’s shareholders to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company’s performance. See the unaudited reconciliation of GAAP and non-GAAP results at the end of this announcement. NetEase encourages you to review its financial information in its entirety and not rely on a single financial measure.
Contact for Media and Investors:
Email: ir@service.netease.com
Tel: (+86) 571-8985-3378
NETEASE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
June 30,
June 30,
2024
2025
2025
RMB
RMB
USD (Note 1)
Assets
Current assets:
Cash and cash equivalents
51,383,310
54,430,728
7,598,237
Time deposits
75,441,355
75,277,705
10,508,362
Restricted cash
3,086,405
3,731,100
520,841
Accounts receivable, net
5,669,027
5,776,412
806,356
Inventories
571,548
591,756
82,606
Prepayments and other current assets, net
6,416,868
6,161,982
860,179
Short-term investments
10,756,143
16,980,429
2,370,376
Total current assets
153,324,656
162,950,112
22,746,957
Non-current assets:
Property, equipment and software, net
8,520,101
8,447,022
1,179,159
Land use rights, net
4,172,465
4,111,093
573,886
Deferred tax assets
1,113,435
2,190,156
305,734
Time deposits
3,025,000
2,935,000
409,710
Restricted cash
5,208
5,266
735
Other long-term assets
25,830,685
27,860,004
3,889,107
Total non-current assets
42,666,894
45,548,541
6,358,331
Total assets
195,991,550
208,498,653
29,105,288
Liabilities, Redeemable Noncontrolling Interests
and Shareholders’ Equity
Current liabilities:
Accounts payable
720,549
695,414
97,076
Salary and welfare payables
4,683,009
3,560,061
496,965
Taxes payable
2,759,185
3,796,135
529,920
Short-term loans
11,805,051
11,276,303
1,574,111
Contract liabilities
15,299,222
16,966,562
2,368,441
Accrued liabilities and other payables
14,400,641
14,157,432
1,976,301
Total current liabilities
49,667,657
50,451,907
7,042,814
Non-current liabilities:
Deferred tax liabilities
2,173,117
2,724,485
380,323
Long-term loans
427,997
–
–
Other long-term liabilities
1,228,641
1,218,109
170,041
Total non-current liabilities
3,829,755
3,942,594
550,364
Total liabilities
53,497,412
54,394,501
7,593,178
Redeemable noncontrolling interests
84,272
87,741
12,248
NetEase, Inc.’s shareholders’ equity
138,685,606
149,587,316
20,881,584
Noncontrolling interests
3,724,260
4,429,095
618,278
Total equity
142,409,866
154,016,411
21,499,862
Total liabilities, redeemable noncontrolling
interests and shareholders’ equity
195,991,550
208,498,653
29,105,288
The accompanying notes are an integral part of this announcement.
NETEASE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data or per ADS data)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
June 30,
June 30,
2024
2025
2025
2025
2024
2025
2025
RMB
RMB
RMB
USD (Note 1)
RMB
RMB
USD (Note 1)
Net revenues
25,485,805
28,828,545
27,891,664
3,893,526
52,337,546
56,720,209
7,917,836
Cost of revenues
(9,443,587)
(10,349,139)
(9,839,182)
(1,373,497)
(19,279,408)
(20,188,321)
(2,818,181)
Gross profit
16,042,218
18,479,406
18,052,482
2,520,029
33,058,138
36,531,888
5,099,655
Operating expenses:
Selling and marketing expenses
(3,501,737)
(2,695,597)
(3,578,174)
(499,494)
(7,523,941)
(6,273,771)
(875,785)
General and administrative expenses
(1,091,441)
(956,337)
(1,056,578)
(147,493)
(2,287,916)
(2,012,915)
(280,992)
Research and development expenses
(4,455,717)
(4,386,313)
(4,356,646)
(608,164)
(8,630,475)
(8,742,959)
(1,220,470)
Total operating expenses
(9,048,895)
(8,038,247)
(8,991,398)
(1,255,151)
(18,442,332)
(17,029,645)
(2,377,247)
Operating profit
6,993,323
10,441,159
9,061,084
1,264,878
14,615,806
19,502,243
2,722,408
Other income/(expenses):
Investment income, net
103,674
692,751
328,444
45,849
282,965
1,021,195
142,553
Interest income, net
1,186,219
1,060,886
953,490
133,102
2,463,816
2,014,376
281,196
Exchange (losses)/gains, net
(239,375)
1,803
114,037
15,919
(224,364)
115,840
16,171
Other, net
85,694
255,315
192,167
26,825
279,582
447,482
62,466
Income before tax
8,129,535
12,451,914
10,649,222
1,486,573
17,417,805
23,101,136
3,224,794
Income tax
(1,300,939)
(1,905,143)
(1,560,757)
(217,873)
(2,786,849)
(3,465,900)
(483,821)
Net income
6,828,596
10,546,771
9,088,465
1,268,700
14,630,956
19,635,236
2,740,973
Accretion of redeemable noncontrolling
interests
(960)
(1,049)
(1,051)
(147)
(1,918)
(2,100)
(293)
Net income attributable to noncontrolling
interests and redeemable noncontrolling
interests
(68,887)
(244,565)
(486,404)
(67,899)
(236,343)
(730,969)
(102,039)
Net income attributable to the
Company’s shareholders
6,758,749
10,301,157
8,601,010
1,200,654
14,392,695
18,902,167
2,638,641
Net income per share *
Basic
2.10
3.25
2.70
0.38
4.48
5.94
0.83
Diluted
2.08
3.21
2.67
0.37
4.43
5.88
0.82
Net income per ADS *
Basic
10.50
16.23
13.49
1.88
22.39
29.71
4.15
Diluted
10.42
16.06
13.36
1.87
22.17
29.41
4.11
Weighted average number of ordinary
shares used in calculating net income
per share *
Basic
3,217,699
3,173,899
3,188,634
3,188,634
3,214,682
3,181,307
3,181,307
Diluted
3,243,056
3,206,362
3,214,681
3,214,681
3,246,254
3,210,563
3,210,563
* Each ADS represents five ordinary shares.
The accompanying notes are an integral part of this announcement.
NETEASE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
June 30,
June 30,
2024
2025
2025
2025
2024
2025
2025
RMB
RMB
RMB
USD (Note 1)
RMB
RMB
USD (Note 1)
Cash flows from operating activities:
Net income
6,828,596
10,546,771
9,088,465
1,268,700
14,630,956
19,635,236
2,740,973
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization
631,957
480,761
428,427
59,806
1,199,880
909,188
126,918
Fair value changes of equity security and other investments
(7,887)
(558,499)
55,715
7,778
(376,145)
(502,784)
(70,186)
Impairment losses on investments
210,741
89,071
161,463
22,539
339,158
250,534
34,973
Fair value changes of short-term investments
(128,295)
(201,609)
(344,604)
(48,105)
(189,105)
(546,213)
(76,248)
Share-based compensation cost
1,079,056
951,872
946,395
132,112
1,973,356
1,898,267
264,988
Allowance for expected credit losses
9,281
16,771
153,179
21,383
20,881
169,950
23,724
(Gains)/losses on disposal of property, equipment and software
(326)
20,293
(30,920)
(4,316)
1,806
(10,627)
(1,484)
Unrealized exchange gains
(209,311)
(28,453)
(165,662)
(23,126)
(226,820)
(194,115)
(27,097)
(Gains)/losses on disposal of long-term investments,
business and subsidiaries
(141,114)
11,675
(141,078)
(19,694)
(154,601)
(129,403)
(18,064)
Deferred income taxes
(1,280,076)
328,272
(853,764)
(119,181)
(795,022)
(525,492)
(73,356)
Share of results on equity method investees
39,200
(18,668)
13,479
1,882
203,471
(5,189)
(724)
Changes in operating assets and liabilities:
Accounts receivable
1,410,478
(1,088,960)
953,295
133,075
51,767
(135,665)
(18,938)
Inventories
29,552
53,773
(73,944)
(10,322)
120,930
(20,171)
(2,816)
Prepayments and other assets
530,856
(295,178)
583,484
81,451
856,996
288,306
40,246
Accounts payable
(126,862)
(148,076)
119,644
16,702
(133,863)
(28,432)
(3,969)
Salary and welfare payables
879,058
(2,085,111)
920,662
128,520
(1,299,550)
(1,164,449)
(162,551)
Taxes payable
(1,462,700)
1,796,123
(764,372)
(106,702)
(190,878)
1,031,751
144,027
Contract liabilities
(1,270,324)
2,526,198
(718,719)
(100,329)
303,762
1,807,479
252,314
Accrued liabilities and other payables
(490,048)
(290,374)
530,718
74,085
(247,978)
240,344
33,551
Net cash provided by operating activities
6,531,832
12,106,652
10,861,863
1,516,258
16,089,001
22,968,515
3,206,281
Cash flows from investing activities:
Purchase of property, equipment and software
(168,880)
(454,071)
(189,842)
(26,501)
(583,898)
(643,913)
(89,887)
Proceeds from sale of property, equipment and software
660
1,336
21,499
3,001
4,166
22,835
3,188
Purchase of intangible assets, content and licensed copyrights
(399,533)
(298,771)
(313,349)
(43,742)
(588,354)
(612,120)
(85,449)
Net changes of short-term investments with terms of three months or less
(8,194,289)
(6,138,556)
776,428
108,385
(5,792,640)
(5,362,128)
(748,524)
Purchase of short-term investments with terms over three months
–
(2,970,000)
(5,800,000)
(809,649)
–
(8,770,000)
(1,224,245)
Proceeds from maturities of short-term investments with terms over three months
–
2,708,601
5,745,454
802,034
–
8,454,055
1,180,141
Investment in long-term investments and acquisition of subsidiaries
(193,450)
(90,966)
(2,741,641)
(382,718)
(675,254)
(2,832,607)
(395,417)
Proceeds from disposal of long-term investments, businesses,
subsidiaries and other financial instruments
840,649
77,428
784,855
109,562
926,105
862,283
120,370
Placement/rollover of matured time deposits
(61,775,606)
(49,601,807)
(27,980,605)
(3,905,942)
(96,334,442)
(77,582,412)
(10,830,087)
Proceeds from maturities of time deposits
55,211,839
43,926,482
33,617,510
4,692,823
101,260,221
77,543,992
10,824,724
Change in other long-term assets
(172,543)
(678)
(27,367)
(3,820)
(207,168)
(28,045)
(3,915)
Net cash (used in)/provided by investing activities
(14,851,153)
(12,841,002)
3,892,942
543,433
(1,991,264)
(8,948,060)
(1,249,101)
Cash flows from financing activities:
Net changes from loans with terms of three months or less
(2,085,053)
(2,254,415)
2,017,570
281,642
(2,484,779)
(236,845)
(33,062)
Proceeds of loans with terms over three months
1,069,020
2,747,550
1,231,000
171,841
8,067,270
3,978,550
555,384
Payment of loans with terms over three months
(10,681,827)
(2,935,677)
(1,804,730)
(251,930)
(11,638,827)
(4,740,407)
(661,735)
Net amounts received related to capital contribution from
of noncontrolling interests shareholders
50,572
42,517
42,400
5,919
92,786
84,917
11,854
Cash paid for repurchase of NetEase’s ADSs/purchase of
subsidiaries’ ADSs and shares
(2,007,030)
(303,601)
(355,563)
(49,635)
(3,240,810)
(659,164)
(92,016)
Dividends paid to NetEase’s shareholders
(2,264,799)
(5,584,532)
(3,082,122)
(430,248)
(7,209,815)
(8,666,654)
(1,209,818)
Net cash used in financing activities
(15,919,117)
(8,288,158)
(1,951,445)
(272,411)
(16,414,175)
(10,239,603)
(1,429,393)
Effect of exchange rate changes on cash, cash equivalents and
restricted cash held in foreign currencies
8,234
(56,932)
(31,749)
(4,432)
(34,904)
(88,681)
(12,380)
Net(decrease)/ increase in cash, cash equivalents and restricted cash
(24,230,204)
(9,079,440)
12,771,611
1,782,848
(2,351,342)
3,692,171
515,407
Cash, cash equivalents and restricted cash, at the beginning of the period
46,085,520
54,474,923
45,395,483
6,336,965
24,206,658
54,474,923
7,604,406
Cash, cash equivalents and restricted cash, at end of the period
21,855,316
45,395,483
58,167,094
8,119,813
21,855,316
58,167,094
8,119,813
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net
2,848,493
1,206,555
2,184,556
304,952
4,031,204
3,391,111
473,381
Cash paid for interest expenses
152,943
97,424
64,366
8,985
299,398
161,790
22,585
The accompanying notes are an integral part of this announcement.
NETEASE, INC.
UNAUDITED SEGMENT INFORMATION
(in thousands)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
June 30,
June 30,
2024
2025
2025
2025
2024
2025
2025
RMB
RMB
RMB
USD (Note 1)
RMB
RMB
USD (Note 1)
Net revenues:
Games and related value-added services
20,055,819
24,048,007
22,806,459
3,183,659
41,516,197
46,854,466
6,540,631
Youdao
1,321,721
1,298,262
1,417,541
197,881
2,713,580
2,715,803
379,111
NetEase Cloud Music
2,040,952
1,858,388
1,968,729
274,824
4,070,493
3,827,117
534,245
Innovative businesses and others
2,067,313
1,623,888
1,698,935
237,162
4,037,276
3,322,823
463,849
Total net revenues
25,485,805
28,828,545
27,891,664
3,893,526
52,337,546
56,720,209
7,917,836
Cost of revenues:
Games and related value-added services
(6,008,604)
(7,495,262)
(6,792,240)
(948,161)
(12,563,915)
(14,287,502)
(1,994,458)
Youdao
(684,942)
(684,035)
(808,181)
(112,817)
(1,395,298)
(1,492,216)
(208,305)
NetEase Cloud Music
(1,385,756)
(1,175,777)
(1,258,855)
(175,729)
(2,644,762)
(2,434,632)
(339,862)
Innovative businesses and others
(1,364,285)
(994,065)
(979,906)
(136,790)
(2,675,433)
(1,973,971)
(275,556)
Total cost of revenues
(9,443,587)
(10,349,139)
(9,839,182)
(1,373,497)
(19,279,408)
(20,188,321)
(2,818,181)
Gross profit:
Games and related value-added services
14,047,215
16,552,745
16,014,219
2,235,498
28,952,282
32,566,964
4,546,173
Youdao
636,779
614,227
609,360
85,064
1,318,282
1,223,587
170,806
NetEase Cloud Music
655,196
682,611
709,874
99,095
1,425,731
1,392,485
194,383
Innovative businesses and others
703,028
629,823
719,029
100,372
1,361,843
1,348,852
188,293
Total gross profit
16,042,218
18,479,406
18,052,482
2,520,029
33,058,138
36,531,888
5,099,655
The accompanying notes are an integral part of this announcement.
NETEASE, INC.
NOTES TO UNAUDITED FINANCIAL INFORMATION
Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00 = RMB7.1636 on the last trading day of June 2025 (June 30, 2025) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on June 30, 2025, or at any other certain date.
Note 2: Share-based compensation cost reported in the Company’s unaudited condensed consolidated statements of comprehensive income is set out as follows in RMB and USD (in thousands):
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
June 30,
June 30,
2024
2025
2025
2025
2024
2025
2025
RMB
RMB
RMB
USD (Note 1)
RMB
RMB
USD (Note 1)
Share-based compensation cost included in:
Cost of revenues
319,949
233,711
291,326
40,668
574,884
525,037
73,292
Operating expenses
Selling and marketing expenses
42,865
32,578
37,300
5,207
60,734
69,878
9,755
General and administrative expenses
286,350
261,259
207,202
28,924
575,986
468,461
65,395
Research and development expenses
429,892
424,324
410,567
57,313
761,752
834,891
116,546
The accompanying notes are an integral part of this announcement.
Note 3: The financial information prepared and presented in this announcement might be different from those published and to be published by NetEase’s listed subsidiary to meet the disclosure requirements under different accounting standards requirements.
Note 4: The unaudited reconciliation of GAAP and non-GAAP results is set out as follows in RMB and USD (in thousands, except per share data or per ADS data):
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
June 30,
June 30,
2024
2025
2025
2025
2024
2025
2025
RMB
RMB
RMB
USD (Note 1)
RMB
RMB
USD (Note 1)
Net income attributable to the Company’s shareholders
6,758,749
10,301,157
8,601,010
1,200,654
14,392,695
18,902,167
2,638,641
Add: Share-based compensation
1,059,939
935,570
930,921
129,952
1,936,837
1,866,491
260,552
Non-GAAP net income attributable to the Company’s shareholders
7,818,688
11,236,727
9,531,931
1,330,606
16,329,532
20,768,658
2,899,193
Non-GAAP net income per share *
Basic
2.43
3.54
2.99
0.42
5.08
6.53
0.91
Diluted
2.41
3.50
2.96
0.41
5.03
6.46
0.90
Non-GAAP net income per ADS *
Basic
12.15
17.70
14.95
2.09
25.40
32.64
4.56
Diluted
12.05
17.51
14.81
2.07
25.15
32.32
4.51
* Each ADS represents five ordinary shares.
The accompanying notes are an integral part of this announcement.
Note 5: Reconciliation between U.S. GAAP and IFRS Accounting Standards
The unaudited condensed consolidated financial information is prepared in accordance with U.S. GAAP, which differ in certain respects from IFRS Accounting Standards. The effects of material differences between the unaudited condensed consolidated financial information prepared under U.S. GAAP and IFRS Accounting Standards (“Reconciliation Statement”) are as follows in RMB (in thousands).
PricewaterhouseCoopers, the auditor of the Company in Hong Kong, has performed a limited assurance engagement on the Reconciliation Statement in accordance with International Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information”.
Reconciliation of unaudited condensed consolidated statements of income (Extract):
For the Six Months Ended June 30, 2024
Amounts as reported
under U.S. GAAP
Investments measured at fair
value
Redeemable
noncontrolling interests
Amounts as
reported under
IFRS Accounting
Standards
(Note (a))
(Note (b))
Fair value changes of redeemable noncontrolling interests
–
–
(571)
(571)
Investment income, net
282,965
(108,548)
–
174,417
Income before tax
17,417,805
(108,548)
(571)
17,308,686
Income tax
(2,786,849)
7,127
–
(2,779,722)
Net income
14,630,956
(101,421)
(571)
14,528,964
Accretion of redeemable noncontrolling interests
(1,918)
–
1,918
–
Net income attributable to noncontrolling interests and
redeemable noncontrolling interests
(236,343)
–
571
(235,772)
Net income attributable to the Company’s shareholders
14,392,695
(101,421)
1,918
14,293,192
For the Six Months Ended June 30, 2025
Amounts as reported
under U.S. GAAP
Investments measured at fair
value
Redeemable
noncontrolling interests
Amounts as
reported under
IFRS Accounting
Standards
(Note (a))
(Note (b))
Investment income, net
1,021,195
(167,094)
–
854,101
Income before tax
23,101,136
(167,094)
–
22,934,042
Income tax
(3,465,900)
7,924
–
(3,457,976)
Net income
19,635,236
(159,170)
–
19,476,066
Accretion of redeemable noncontrolling interests
(2,100)
–
2,100
–
Net income attributable to noncontrolling interests and
redeemable noncontrolling interests
(730,969)
–
–
(730,969)
Net income attributable to the Company’s shareholders
18,902,167
(159,170)
2,100
18,745,097
Reconciliation of unaudited condensed consolidated balance sheets (Extract):
As of December 31, 2024
Amounts as reported
under U.S. GAAP
Investments measured at fair
value
Redeemable
noncontrolling interests
Amounts as
reported under
IFRS Accounting
Standards
(Note (a))
(Note (b))
Other long-term assets
25,830,685
(13,800,189)
–
12,030,496
Financial assets at fair value through profit or loss
–
15,682,924
–
15,682,924
Total Assets
195,991,550
1,882,735
–
197,874,285
Deferred tax liabilities
2,173,117
26,600
–
2,199,717
Total Liabilities
53,497,412
26,600
–
53,524,012
Redeemable noncontrolling interests
84,272
–
(84,272)
–
Total equity
142,409,866
1,856,135
84,272
144,350,273
Total liabilities, redeemable noncontrolling interests
and shareholders’ equity
195,991,550
1,882,735
–
197,874,285
As of June 30, 2025
Amounts as reported
under U.S. GAAP
Investments measured at fair
value
Redeemable
noncontrolling interests
Amounts as
reported under
IFRS Accounting
Standards
(Note (a))
(Note (b))
Other long-term assets
27,860,004
(15,990,681)
–
11,869,323
Financial assets at fair value through profit or loss
–
17,706,322
–
17,706,322
Total Assets
208,498,653
1,715,641
–
210,214,294
Deferred tax liabilities
2,724,485
18,676
–
2,743,161
Total Liabilities
54,394,501
18,676
–
54,413,177
Redeemable noncontrolling interests
87,741
–
(87,741)
–
Total equity
154,016,411
1,696,965
87,741
155,801,117
Total liabilities, redeemable noncontrolling interests
and shareholders’ equity
208,498,653
1,715,641
–
210,214,294
Notes:
Basis of Preparation
The Company is responsible for preparation of the Reconciliation Statement in accordance with the relevant requirements of the Hong Kong Listing Rules and relevant guidance in HKEX-GL111-22. The Reconciliation Statement was prepared based on the Company’s unaudited condensed consolidated financial information for the six months ended June 30, 2025 prepared under U.S. GAAP, with material adjustments made (if any) thereto in arriving at the unaudited financial information of the Company prepared under IFRS Accounting Standards. The adjustments reflect the material differences between the Company’s accounting policies under U.S. GAAP and IFRS Accounting Standards.
Note a. Investments measured at fair value
Under U.S. GAAP, NetEase applied the measurement alternative to record the investments in equity securities (including preferred shares and ordinary shares without significant influence) without readily determinable fair values at cost, less impairment, and plus or minus subsequent adjustments for observable price changes recognized in the consolidated income statements.
Under IFRS Accounting Standards, these investments were classified as financial assets at fair value through profit or loss and measured at fair value with changes in fair value recognized through profit or loss.
Note b. Redeemable noncontrolling interests
Under U.S. GAAP, SEC guidance provides for mezzanine-equity (temporary equity) category in addition to the financial liability and permanent equity categories. The purpose of this “in-between” category is to indicate that a security whose redemption is outside the control of the issuer may not be classified as a permanent part of equity. NetEase classified the redeemable preferred shares issued by certain subsidiaries as redeemable noncontrolling interests in the condensed consolidated balance sheets and recorded them initially at fair value, net of issuance costs. NetEase recognized accretion to the respective redemption value of the redeemable preferred shares over the period starting from issuance date to the earliest redemption date.
Under IFRS Accounting Standards, there is no concept of mezzanine or temporary equity classification. NetEase designated the redeemable preferred shares as financial liabilities at fair value through profit or loss which are measured at fair value. Subsequent to initial recognition, the amounts of changes in fair value that were attributed to changes in credit risk of the issuer were recognized in other comprehensive income, and the remaining amounts of changes in fair value were recognized in the profit or loss.