NetEase's Q2 Revenue Rises 9.4% YoY, Gaming Business Resilient Amid Headwinds

NetEase reported Q2 revenue of $3.89 billion, a 9.4% YoY increase, beating analyst estimates. Gaming revenue rose 13.7% to $3.18 billion, with a gross margin of 64.7%. However, Youdao revenue fell 7.2%, and NetEase Cloud Music revenue decreased 3.5%. Despite strong gaming momentum, the stock dropped 4.17% to $129.28.

NetEase Inc. (HK:9999, NASDAQ:NTES) reported mixed second-quarter earnings, with gaming revenue surging but overall revenue and several segments falling short of analyst expectations. The company's stock dropped 4.17% to $129.28 on Thursday morning following the announcement.

Key Financials:
- NetEase reported Q2 revenue of $3.89 billion, a 9.4% year-over-year (YoY) increase, beating the consensus estimate of $3.85 billion [1].
- Gaming revenue rose 13.7% to $3.18 billion, with a gross margin of 64.7% [1].
- Youdao revenue fell 7.2% to $197.9 million [1].
- NetEase Cloud Music revenue decreased 3.5% to $274.8 million [1].
- Innovative businesses and other segments brought in $237.2 million, a 17.8% decline [1].

Outlook:
NetEase's CEO, William Ding, emphasized the company's focus on product innovation and global expansion. "Beyond games, we remain focused on innovation, refining our products and content to deliver long-term value for our users, partners and shareholders," he said [1].

Stock Performance:
Despite strong gaming momentum, the stock dropped 4.17% to $129.28, indicating market concerns over the missed revenue expectations in other segments.

Analyst Coverage:
The current average analyst rating on the shares is "buy," with 20 "strong buy" or "buy" recommendations, 1 "hold," and 1 "sell" or "strong sell" [2]. The median 12-month price target for NetEase Inc. is HK$226.10, about 4.7% above its August 13 closing price of HK$215.40 [2].

References:
[1] https://finance.yahoo.com/news/netease-misses-q2-top-bottom-091321947.html
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_PLX58DC5A:0-chinese-gaming-company-netease-s-q2-revenue-rises-9-4/