NetEase Cloud Music Reports Q1 2025 Earnings: Revenue Down 6%, Operating Profit Up 41%

NetEase Cloud Music Inc. reported a 6% decrease in total revenue to RMB 3.8 billion in H1 2025, but a 40.8% increase in operating profit to RMB 844.5 million and a 132% surge in net profit to RMB 1,882.1 million. The company's focus on core music services and cost optimization drove the growth in profits. However, revenue from social entertainment services and others fell significantly to RMB 859.8 million.

NetEase Cloud Music Inc. (NCM) reported a 6% decrease in total revenue to RMB 3.8 billion for the first half of 2025, according to its latest earnings report. Despite this revenue drop, the company saw a significant increase in operating profit and net profit. Operating profit surged by 40.8% to RMB 844.5 million, while net profit jumped by 132% to RMB 1,882.1 million [1].

The company's focus on core music services and cost optimization drove the growth in profits. Revenue from music services, including streaming and subscriptions, grew by 15.9% year-over-year (YoY) to RMB 2.97 billion, driven by an increase in the subscriber base and improved user engagement [2].

However, revenue from social entertainment services and other segments fell significantly to RMB 859.8 million, marking a 43.1% YoY decline. This decrease was attributed to a crackdown on online gambling by Chinese authorities, which has impacted the revenue of both NCM and its competitor, Tencent Music Entertainment [2].

NCM's gross profit declined by 2.3% YoY to RMB 1.39 billion, but its operating profit improved due to a deferred tax credit of RMB 849.8 million from cumulative tax losses incurred by a wholly-owned subsidiary. The company's gross margin also improved to 34.6%, reflecting increased business scale and strong monetization of its core online music business [2].

The company's stock closed the trading day on August 14 down 4.8% on the Hong Kong Stock Exchange, trading at HKD $270.20 (USD $34.50) per share.

References:
[1] Reuters, "NetEase Q2 2025 revenue up 9.4% yr/yr to RMB27.9 bln" [URL](https://www.tradingview.com/news/reuters.com,2025:newsml_PLX58DC5A:0-chinese-gaming-company-netease-s-q2-revenue-rises-9-4/)
[2] Music Business Worldwide, "Netease Cloud Music sees 15.2% growth in streaming and music subscription revenue" [URL](https://www.musicbusinessworldwide.com/netease-cloud-music-sees-15-2/)