NetEase's Profit Falls on Weaker Mobile Gaming Revenue — Update
Date: Nov 14, 2024 | Time: 16:48 GMT+5:30
Stock Symbol: NTES | Current Stock Performance: -2.79%
Author: Sherry Qin
Chinese gaming giant NetEase reported a 17% drop in net profit for the second consecutive quarter, totaling 6.54 billion yuan ($905.3 million), falling short of analysts’ expectations of 7.45 billion yuan. Adjusted net profit, excluding share-based compensation expenses, also dropped by 13% to 7.5 billion yuan. This profit decline was primarily due to weaker performance in its mobile gaming segment.
The company's overall revenue declined by 3.9% to 26.21 billion yuan, slightly missing market forecasts. Gaming and value-added services revenue fell by 4.2% from a year earlier, with mobile gaming, which constitutes three-quarters of NetEase’s total gaming revenue, showing a particularly soft performance. This softness was attributed to a high base set by the previous year’s success of "Justice Mobile."
Meanwhile, PC games performed better, benefiting from the reintroduction of popular Blizzard titles like "World of Warcraft," which saw a 50% increase in daily active players, and "Hearthstone," with a 150% growth in player activity. NetEase's key competitor Tencent reported better-than-expected results, marking a contrast in fortunes with a 40% share increase this year, while NetEase's shares have dropped by 15%.
Looking ahead, NetEase plans to launch two major titles in December: "Where Winds Meet" and "Marvel Rivals," which analysts expect could boost NetEase’s game lineup. The company is also enhancing "Fantasy Westward Journey" to improve its performance in 2025, as per Nomura’s recent analysis.
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