NetEase, Inc, the 2nd highest grossing gaming company in China

Founded by Lei Ding in June 1997 and headquartered in Beijing, China, NetEase, Inc. (NetEase) is one of China’s largest gaming players behind Tencent and a provider of online internet technology services. According to Statista, it also ranked as China’s second-highest-grossing gaming company in 2023. As of 31 December 2023, NetEase had 29,128 full-time employees. NetEase is publicly traded on the Hong Kong Stock Exchange, with a strong presence in both the gaming and technology sectors.

As per its Forbes profile, NetEase is comprised of several business units, namely online games, e-commerce, advertising services, emails, and more. More specifically:

• The company has developed and continues to operate some of the longest running role-playing and multiplayer mobile, PC and console games in China and across the globe.
• Its e-commerce segment delivers a variety of services including platforms for online sales and payments, e-reading applications, matchmaking services, digital music streaming, social networking, custom photo products, and game-related accessories.
• The advertising unit focuses on banner ads, channel sponsorships, email marketing, interactive media, sponsored events, contests, and games.
• The email services segment offers both free and premium subscription-based services.

NetEase service offerings also include its majority-controlled subsidiaries Youdao (NYSE: DAO), an intelligent learning company with industry-leading technology, and 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.

Additional services include Yanxuan, a private label consumer lifestyle brand, the www.163.com portal and related mobile app (Wangyi Xinwen), NetEase Pay, an online payment platform, NetEase Mail, China’s leading email service provider since 1997, among others.

The company has garnered numerous accolades for its performance and sustainability efforts. In 2023, it was recognized on TIME’s World’s Best Companies list and Sustainalytics’ Top-Rated ESG Companies List.

It also made the Bloomberg Gender-Equality Index (GEI) in both 2020 and 2023 and was acknowledged as an ESG leader in Bloomberg’s 2022 Green ESG Pioneers-Projects.

Additionally, it was included in S&P Global’s 2022 Dow Jones Sustainability World and Emerging Markets Indexes. Forbes honoured the company as one of the World’s Best Employers, and it received the ATD Excellence in Practice and ATD Best Awards from the Association for Talent Development.

Further reflecting its commitment to ESG initiatives, the company was awarded the ESG Care label by UNESCO HK Association Global Peace Centre, Rotary Action Group for Peace, and SocietyNext Foundation.

Market capitalisation and NetEase stock listings

NetEase American Depositary Shares (ADS’s) have been listed on Nasdaq since 30 June 2000, under the ticker symbol #NTES. The company’s market capitalisation as of 27 September is valued at US$58.73 billion, with revenue of US$106.75 billion, and a net income of US$28.81 billion. In addition, its ordinary shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since 11 June 2020, under the stock code “9999.HK.”

NetEase stock performance

On 9 September, Yahoo Finance reported that while NetEase Nasdaq #NTES stock declined 16% over the past three months, its strong financials could mean that the stock could potentially see an increase in value in the long-term, given how markets usually reward companies with good financial health.

”Saying that, the article further reports that “the company’s ROE compares quite favourably to the industry average of 12%. This probably laid the ground for NetEase’s significant 20% net income growth seen over the past five years.“

NetEase announces 2^nd quarter 2024 unaudited Financial Results

On 22 August 2024 NetEase announced its unaudited financial results for the second quarter ended 30 June 2024.

Net revenues reached RMB25.5 billion (US$3.5 billion), marking a 6.1% year-over-year growth. Games and related value-added services generated RMB20.1 billion (US$2.8 billion), up 6.7%, while Youdao’s net revenues increased by 9.5% to RMB1.3 billion (US$181.9 million) compared with the same quarter in 2023.

Cloud Music earned RMB2.0 billion (US$280.8 million), reflecting a 4.7% rise, and innovative businesses contributed RMB2.1 billion (US$284.5 million), showing relative stability. The company’s gross profit rose 11.6% to RMB16.0 billion (US$2.2 billion), while total operating expenses grew 8.9% to RMB9.0 billion (US$1.2 billion) compared with Q2 in 2023.

Net income attributable to shareholders was RMB6.8 billion (US$930.0 million), with non-GAAP net income at RMB7.8 billion (US$1.1 billion). Basic net income per share stood at US$0.29 (US$1.45 per ADS), while non-GAAP basic net income per share was US$0.33 (US$1.67 per ADS).

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