NetEase Q2 2025 Earnings Call Highlights: Gaming Revenue Surges Amid Mixed Performance in Other Segments

NetEase Inc (NTES) reported a 9% YoY increase in total revenues, driven by a 14% increase in gaming revenue. The company launched several new global titles and achieved a record high in concurrent players for its long-standing game, Fantasy Westward Journey Online. However, net revenue from innovative businesses and others declined 18% YoY, and gross profit margin for YouDao decreased to 43% from 48.2% last year. NetEase Cloud Music saw a 4% decline in net revenue from the same period last year.

NetEase Inc (NTES) reported a 9% year-over-year (YoY) increase in total revenues for the second quarter of 2025, driven primarily by a 14% increase in gaming revenue. The company's strong performance in the gaming segment was bolstered by the launch of several new global titles and a record high in concurrent players for its long-standing game, Fantasy Westward Journey Online, which surpassed 2.93 million players [1].

However, the company faced challenges in other segments. Net revenue from innovative businesses and others declined by 18% YoY, while gross profit margin for YouDao decreased to 43% from 48.2% in the same period last year. NetEase Cloud Music also saw a 4% decline in net revenue from the same period last year, despite a 6% increase from the previous quarter [1].

The gaming segment, which accounts for a significant portion of NetEase's revenue, saw a robust performance. The company's PC games, in particular, showed strong growth, with revenue increasing by 29% year-over-year and 30% quarter-over-quarter. The success of titles such as "Identity V" and "Naraka: Bladepoint" contributed to this growth [2].

Despite these positive trends, the company's overall net revenue in the third quarter decreased by nearly 4% year-on-year, with net income decreasing by 16.7% year-on-year. The decline in gaming-related business revenue by 4.2% year-on-year, coupled with a 43.1% drop in social entertainment services, led to a total revenue fall of 6.0% to RMB 3.8 billion ($525.3 million) [2].

NetEase's pre-market trading surged by 5.51% as of press time, indicating investor confidence in the company's long-term growth prospects. The company's CEO, Ding Lei, emphasized the company's commitment to innovation and player needs, aiming to drive development and bring excellent gaming experiences to more players both domestically and internationally [2].

References:
[1] https://www.gurufocus.com/news/3063979/netease-inc-ntes-q2-2025-earnings-call-highlights-strong-growth-in-gaming-revenue-amidst-mixed-segment-performance
[2] https://www.moomoo.com/news/post/64107964/record-tr4cking-news-wholesale-prices-post-biggest-surge-in-three-years-ppi-shows