NetEase, Inc.

Net revenue for Q2 2026 was RMB 30.1 billion (USD 4.4 billion). Games and related value-added services net revenue was RMB 25 billion, and online games net revenue was RMB 24.5 billion, up 10% year over year but down 2% quarter over quarter. Gross profit margin was 70.5%, versus 64.7% in the prior-year quarter; games and related VAS gross margin was 76.1% versus 70.2%. Non-GAAP net income attributable to shareholders was RMB 7.7 billion, and non-GAAP basic EPS was USD 1.78 per ADS, or USD 0.36 per share. For the first half, total net revenue was RMB 60.7 billion, up 7% year over year, and non-GAAP net income attributable to shareholders was RMB 19 billion, down 8% year over year. Management did not provide formal next-quarter or full-year revenue/EPS guidance on the call. Commentary centered on continued strength in core games, ongoing AI-driven improvements at Youdao, and steady growth at Cloud Music, while reiterating cash strength and the dividend/share repurchase program.

The strategic message from management was that NetEase is doubling down on innovation, long-term live operations, and high-quality content across both new and existing games. William Ding’s remarks emphasized broad portfolio strength, stronger global reach, and the view that AI can accelerate development and improve player experience. Tone-wise, the call was confident and constructive, but also candid about needing to reduce the early learning curve in Sea of Remnants and continue polishing upcoming titles.

Aileen Mo highlighted that first-half total net revenue reached RMB 60.7 billion, up 7% year over year, while Q2 revenue was RMB 30.1 billion. She pointed to margin expansion, with Q2 gross margin at 70.5% versus 64.7% last year, and games gross margin at 76.1% versus 70.2%, mainly from lower platform revenue-sharing costs. She also noted Q2 operating expenses of RMB 9.1 billion, representing 30% of revenue, and said net cash was RMB 167.5 billion at June 30, 2026, up from RMB 163.5 billion at the end of 2025. Capital returns remained active, with a quarterly dividend of USD 0.096 per share, or USD 0.48 per ADS, and about 24.8 million ADS repurchased for roughly USD 2.3 billion under the current USD 5 billion buyback program.

Analysts focused on the game pipeline, growth drivers, and monetization potential of in-development titles. On Sea of Remnants, management said it received some critical user feedback because the bold visual style and roguelike/open-world design created a learning curve, and it plans to streamline early-game content while continuing high-frequency updates. On Ananta, management said development is on track, expects to show the latest progress at Gamescom, and believes its urban open-world theme, narrative identity, gameplay design, and monetization approach can differentiate it. On the broader growth strategy, management said it will keep investing in premium-quality games and sees AI as an amplifier that can speed development and improve user experience. For Beneath The Mist and Tamas: Shadowveil, management said both are still in intensive refinement and will launch only once they meet user-experience standards.