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1Q25 Investor PresentationInvestor Relations May 15, 2025 NetEase
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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, statementsthat 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 beimpacted 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 suchstrategies; NetEase’s ability to develop and manage its operations and business; competition for, among other things, capital, technologyand 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. SAFE HARBOR STATEMENT
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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 withtechnology, 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/.
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MARKET SNAPSHOTIn USD Notes: 1Market Cap is calculated usingthe closing price on NASDAQ; Our market cap is HK$525.9 billion based on the closing price on the Hong Kong Stock Exchange2Net cash refers to 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 loans3The result is based on the latest update in October 2024 $67.8 billionMarket Cap 1(5/14/25)Shares Outstanding,Diluted (1Q25) 3.2billionBasic Net Income per ADS (GAAP) (1Q25) $2.24 Net Revenues (1Q25) $4.0billion Net income attributable to the Company's shareholders (GAAP) (1Q25) $1.4billionNet cash 2(3/31/25) $18.9billionAAMSCI ESG Rating 3
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2,957 2,927 3,314 69.5%66.7%68.8% -10.0%0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0% - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 1Q244Q241Q25 Online GamesRelated VASGross Margin GAMES AND RELATED VALUE-ADDED SERVICES Games and Related Value-added Services Net Revenues and Gross Margin Note: 1 US$1.00 = RMB7.2567 on March 31, 2025. Same exchange rate is applied to all years for illustrative purposes Online Games98% (1Q25)RelatedVAS USD million1
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•Successofrecentlyreleasedtitlesdroveincreasedtractionintheglobalgamemarketandfurtherdiversifiedourportfolioacrossgenres.•MarvelRivalstoppedSteam’sglobaltopsellerschartshortlyafteritsSeason2updateinApril2025.•WhereWindsMeethasmaintainedstrongpopularitysinceitsDecember2024launch,surpassing30millionregisteredplayersasofMarch2025.•FragPunk’sMarch2025launchignitedplayerenthusiasm,rankingNo.6onSteam’sglobaltopsellerschartandamassingover110,000peakconcurrentplayersinthreedays.•OnceHumanmobilegamequicklyclaimedtheNo.1positionontheiOSdownloadchartsinmorethan160regionsuponitsApril2025launch,garneringsignificantglobalattention.•Blizzardtitlessustainedrobustmomentum,withWorldofWarcraftandHearthstoneengaginglocalcommunitiesthroughcustomizedregionaleventsinChina.Additionally,thereturnofOverwatchpusheditsregionalpeakconcurrentplayersinChinatoanewrecordhigh.WithtechnicaltestinginitiatedonApril16,2025,Diablo3isalsoontrackforitsreturntoChina.•Increasedthepopularityofestablishedtitlesthroughtargetedeventsandcrossoversynergies,includingFantasyWestwardJourneyOnlineandmobilegame,InfiniteBorders,IdentityV,EggyParty,Naraka:BladepointfranchisesandJusticefranchises,highlightingNetEase’sstrengthinlong-termgameoperations.•Strengthened global game pipeline with multiple new titles under development, including MARVEL Mystic Mayhem, Destiny: Risingand Ananta. ONLINE GAMES PC & CONSOLE GAMESMOBILE GAMESFlagship Self-Developed PC & Console TitlesSelf-Developed Mobile Games Licensed Mobile Games From Overseas Developers Mobile Games in Overseas Markets
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192 185 179 49.0%47.8%47.3% -30.0%-20.0%-10.0%0.0%10.0%20.0%30.0%40.0%50.0% 130 136 142 148 154 160 166 172 178 184 190 196 202 1Q244Q241Q25 Net RevenuesGross Margin YOUDAO Youdao Net Revenues and Gross MarginUSD million1 •Youdaoachieved record-high first-quarter operating profit, maintaining the profitability momentum of previous quarters.•Learning services focused on high-demand subjects, advanced quality operations, and further strengthened profitability.•Online marketing services remained focused on high-quality growth, and boosted operational efficiency through advanced technologies.•Smart devices segment maintained strengths in China’s dictionary pen market, and continued to launch innovative products.Note: 1 US$1.00 = RMB7.2567 on March 31, 2025. Same exchange rate is applied to all years for illustrative purposes
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NETEASE CLOUD MUSIC, INNOVATIVE BUSINESSES AND OTHERS •163.com Portal & WangyiXinwen App: Delivering quality content across news, sports, technology, fashion, and entertainment •Leading private-label consumer lifestyle brand in China•Continued to strengthen its brand presence with highly popular products in focused categories•Maintained leading sales positions on e-commerce platforms for categories like pet products and household cleaning productsNetEaseYanxuan WangyiXinwen •China’sleading e-mail service provider since 1997E-mail Services NetEaseCloud Music •One of the leading online music platforms in China, featuring an interactive content community for music enthusiasts in terms of user scale and engagement•Provide community-centric online music services and social entertainment services•Leveraging its iconic cornerstone product and ancillary, and social entertainment products, NetEase Cloud Music empowers music enthusiasts with a wide variety of technology-driven tools to discover, enjoy, share and create diverse music and music-inspired content and to interact with each other •Net revenues from NetEase Cloud Music were RMB1.9 billion for 1Q25, compared with RMB2.0 billion for 1Q24, reflecting decreased net revenues from its social entertainment services. Innovative Businesses and Others•Net revenues from innovative businesses and others were RMB1.6 billion for 1Q25, compared with RMB2.3 billion and RMB2.0 billion for 4Q24 and 1Q24, respectively, primarily due to decreased net revenues of Yanxuan, advertising services and certain other businesses in this segment.NetEaseCloud Music Business
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3.84.95.5 1.7 FY2022FY2023FY20241Q 25 13.314.314.5 4.0 FY2022FY2023FY20241Q 25 FINANCIAL HIGHLIGHTS Net Revenues Net Income Attributable to Shareholders(GAAP) Operating Cash FlowValue Returned to ShareholdersUS$FY2022FY2023FY20241Q25Dividend per ADS (declared)$1.38700$2.56485$2.58525$0.67500 Total Dividends (declared)$906 m$1,649 m$1,651 m$428 m Share Buyback$1,187 m$687 m$1,230 m$46 m 2.8 4.14.1 1.4 FY2022FY2023FY20241Q 25 Notes: 1US$1.00 = RMB7.2567 on March 31, 2025. Same exchange rate is applied to all years for illustrative purposes2Total dividends (declared) equals to dividend per ADS (declared) multiplied by each quarter’s corresponding weighted average number of ADS outstanding, basic USD billion1 2
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ESG PERFORMANCE MSCI RatingsS&P Global ESG ScoreSustainalyticsRatings Last Updated: May 2025According to MSCI’s evaluation,NetEase is a leader among 232 companies in the media & entertainment industry AALast Updated: September 2024NetEase has been selected as a member of the 2022 Dow Jones Sustainability World Index and Dow Jones Sustainability Emerging Markets Index. The Company is also included in the S&P Global Sustainability Yearbook 2025 and 2022 52 15.9Last Updated: March2025NetEase is rated as a low-risk companyNetEase has been included in Sustainalytics’list of top ESG rated badges for 2023
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BALANCE SHEET SUMMARY 2024 Dec 31, RMB Mar 31, RMB Mar 31, USD (Unaudited) (Unaudited) ASSETS Current assets: Cash and cash equivalents 51,383 41,749 5,753 Time deposits 75,441 81,008 11,163 Other current assets 26,501 34,914 4,812 Total current assets 153,325 157,671 21,728 Property, equipment and software, net 8,520 8,454 1,165 Other non-current assets 34,147 34,733 4,786 Total assets 195,992 200,858 27,679 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & SHAREHOLDERS’ EQUITY Current liabilities: Contract liabilities 15,299 17,749 2,446 Other current liabilities 34,369 31,389 4,325 Total current liabilities 49,668 49,138 6,771 Total liabilities 53,497 52,989 7,302 Redeemable noncontrolling interests 85 86 12 Total equity 142,410 147,783 20,365 Total liabilities, redeemable noncontrolling interests and shareholders’ equity 195,992 200,858 27,679 in millions 2025
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INCOME STATEMENT SUMMARY Note: All percentages are calculated based on numbers in millions except per ADS data 1Q24 4Q24 1Q25 1Q25 QoQ YoY RMB RMB RMB USD Change Change (Unaudited) (Unaudited) Total net revenues: 26,852 26,748 28,829 3,973 7.8% 7.4% Games and related value-added services 21,460 21,242 24,048 3,314 13.2% 12.1% Youdao 1,392 1,340 1,298 179 -3.1% -6.8% NetEase Cloud Music 2,030 1,880 1,858 256 -1.2% -8.5% Innovative businesses and others 1,970 2,286 1,625 224 -28.9% -17.5% Gross profit 17,016 16,272 18,479 2,547 13.6% 8.6% Gross profit margin 63.4% 60.8% 64.1% 64.1% Operating profit 7,622 7,821 10,441 1,439 33.5% 37.0% Operating profit margin 28.4% 29.2% 36.2% 36.2% Net income attributable to the Company’s shareholders 7,634 8,766 10,301 1,420 17.5% 34.9% Diluted net income per ADS ¥11.75 ¥13.67 ¥16.06 $2.21 17.5% 36.7% in millions except per ADS data & percentage data
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THANK YOU