Earnings call transcript: NetEase Q3 2025 results show mixed performance

NetEase Inc. reported its third-quarter 2025 earnings, revealing a modest earnings per share (EPS) beat but a revenue miss compared to forecasts. The company posted an EPS of $3.23, slightly above the anticipated $3.20, marking a 0.94% surprise. Revenue, however, came in at $31.06 billion, falling short of the forecasted $31.68 billion by 1.96%. Following the announcement, NetEase's stock declined by 1.39% in after-hours trading, closing at $215.6.

Key Takeaways

• NetEase reported an EPS of $3.23, surpassing expectations.
• Revenue fell short at $31.06 billion, missing forecasts by 1.96%.
• Stock price decreased by 1.39% in after-hours trading.
• Strong growth in online games revenue, up 13% year-over-year.
• Continued focus on AI integration in game development.

Company Performance

NetEase demonstrated solid performance in its core gaming segment, with online games net revenue increasing by 13% year-over-year to RMB 22.8 billion. This growth underscores the company's strength in the gaming industry, particularly in the domestic market. However, the revenue miss highlights challenges in meeting broader market expectations, potentially due to competitive pressures or market dynamics.

Financial Highlights

• Total net revenue: RMB 28.4 billion ($4 billion), up 8% year-over-year.
• Net revenue from games and related VAS: RMB 23.3 billion, up 12% year-over-year.
• Gross profit: RMB 18.2 billion, up 10% year-over-year.
• Gross profit margin: 64.1%.
• Non-GAAP net income: RMB 9.5 billion ($1.3 billion), up 27% year-over-year.

Earnings vs. Forecast

NetEase's EPS of $3.23 exceeded the forecast of $3.20, resulting in a 0.94% earnings surprise. Despite this positive note, the revenue fell short by 1.96%, missing the $31.68 billion forecast. This mixed performance may reflect both operational strengths in gaming and challenges in other business areas.

Market Reaction

Following the earnings release, NetEase's stock experienced a decline of 1.39% in after-hours trading, closing at $215.6. This movement places the stock below its 52-week high of $248, indicating investor concerns over the revenue shortfall despite the EPS beat.

Outlook & Guidance

NetEase remains committed to expanding its global footprint, with a focus on quality over quantity in game development. The company's strategic initiatives include investment in AI and innovative game technologies, aiming to drive future growth and maintain its competitive edge.

Executive Commentary

William Ding, CEO of NetEase, emphasized the company's focus on high-quality product development, stating, "We believe being focused is one of the core competences a company needs to have." He also highlighted the company's long-standing commitment to quality, adding, "NetEase has been especially for 28 years, and our commitment to creating high-quality products has remained unchanged."

Risks and Challenges

• Competitive pressures in the gaming industry.
• Potential market saturation in key segments.
• Macroeconomic factors affecting consumer spending.
• Dependence on successful game launches.
• Regulatory changes in key markets.

Q&A

During the earnings call, analysts inquired about NetEase's AI integration strategy, game portfolio management, and upcoming titles such as Sea of Remnant. The company addressed these queries, providing insights into its strategic focus and organizational changes.

Full transcript - NetEase Inc (9999) Q3 2025:

Operator: Good day, and welcome to the NetEase Third Quarter 2025 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brandi Piacente. Please go ahead.

Brandi Piacente, Investor Relations Representative, NetEase: Thank you, Operator. Please note that today's discussion will contain forward-looking statements relating to the future performance of the company and are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect NetEase's business and financial results is included in certain filings of the company with the Securities and Exchange Commission, including its annual report on Form 20F and in announcements and filings on the Hong Kong Stock Exchange's website.

The company does not undertake any obligation to update this forward-looking information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the Third Quarter 2025 earnings release issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on the NetEase corporate website at irr.netease.com. Joining us today on the call from NetEase's senior management are Mr. William Ding, Chief Executive Officer, Mr. Zhaoxuan Yang, Executive Vice President, and Mr. Bill Pang, Vice President of Corporate Development. I will now turn the call over to Bill, who will read the prepared remarks on William's behalf.

Bill Pang, Vice President of Corporate Development, NetEase: Thank you, Brandi, and welcome everyone to today's call. Before we begin, I would like to remind everyone that all percentages are based on RMB. The third quarter marked continued momentum and strong execution across our NetEase family. By uniting creativity with exceptional operations, we created more meaningful connections with players. Driven by our diverse portfolio of games that expanded our global reach and reignited our player enthusiasm for key franchises, total revenues increased 8% year over year, reaching RMB 28.4 billion in the third quarter, and revenues from our games and related VAS grew 12% in the third quarter compared with the same period last year. Innovative creativity and long-term operation remain the defining force behind NetEase's ongoing player engagement and global expansion. Whether for new launches or established titles, our teams are dedicated to delivering unexpected gaming experiences and responsive live services that are winning over players worldwide.

This strategic creative approach continued to gain traction overseas, amplifying the influence and excitement of multiple games in the third quarter, including our new releases. Destiny Rising, our new free-to-play mobile sci-fi RPG shooter, quickly topped the iOS download chart in the United States and other major Western markets for its global launch on August 28. The game has received widespread acclaim, securing leading positions on the iOS download chart across nearly 100 markets worldwide. Featuring Destiny's iconic, powerful gunplay across diverse modes set in a new timeline, the game has earned positive feedback from longtime fans while gaining traction within the broader shooter game community. The excitement continued in China, where Destiny Rising debuted on October 16 and immediately topped the iOS downloading chart, drawing in players nationwide to experience the thrilling shooting action at their fingertips. Marvel Rivals continues to captivate the superhero shooter fanbase around the world.

Kicking off its fourth season on September 12, the game introduced a wealth of refreshing new content, features, special events, and team-ups. Following the update, it reached number three on Steam's global top seller chart. The new map, Kunlun: Heart of Heaven, transported players to the Asian East, while the debut of Angela, an eagerly anticipated vanguard, spurred excitement across the player community. Additionally, inspired by Marvel Animation's Marvel Zombies, a limited-time PvE zombie mode was released, featuring challenging bosses, Zombie Namor and Queen of the Dead, just in time for Halloween. Beyond the game, Marvel Rivals Ignite celebrated its grand finals at DreamHack Atlanta, held in collaboration with ESL FACEIT Group. Elite players from around the world showcased their exceptional skills and strategies, drawing massive engagements both onsite and online, and reflecting Marvel Rivals' growing appeal.

As we continue to enrich our global portfolio through diverse partnerships, our original titles are also gaining increasing momentum worldwide. Delivering a distinctive survival open-world experience to players globally, Once Human launched engaging updates in the third quarter, agonizing its growing global community. On October 30, the game introduced a major new scenario centered on the capture and customization of deviations, alongside a significant refresh of the PvP experience that provides more intense combat options. The highly anticipated collaboration event with the global hit game Palworld also went live on the same day, bringing popular pulse to a dedicated in-game island, which further invigorated the player community. We recently shared some of our upcoming international expansion plans at worldwide gaming events like Gamescom and the Tokyo Game Show 2025, generating even more excitement in the community with engaging player interactions.

We exhibited Where Winds Meet at Gamescom 2025, showcasing our creative ambition in cultural storytelling and next-generation wuxia worldbuilding. In China, Where Winds Meet continued to captivate wuxia fans with its narrative-rich setting, authentic Chinese martial arts themes, and innovative gameplay that combines single and multiplayer. Each newly unveiled district not only engages our existing fans but also attracts new players, driving continued growth in both revenue and monthly active users to new highs in the third quarter. On November 14, we brought Where Winds Meet's Eastern Sea and Open World, featuring dynamic combat, to the global market on both PC and PlayStation 5. Within just two days, we achieved a peak of 190,000 concurrent players, securing the number five spot among the most played games and number four position for top seller globally on Steam.

Additionally, it became one of the top 10 best sellers across the United States, Germany, France, and several other regions on PlayStation. This underscores the widespread appeal of our captivating wuxia universe to an even broader audience. To further enhance community engagement, the mobile version has commenced pre-registration and is set to launch soon. Our highly anticipated title, Ananta, also garnered significant attention at the Tokyo Game Show. Players showed enthusiasm for in-depth game trailers and engaging hands-on playtesting. They were drawn in by the game's imaginative action design, high-fidelity visuals, and modern urban storytelling. Set in a dynamic and immersive city environment, Ananta blends high-energy action with open-world freedom, offering players an experience that goes well beyond conventional gameplay.

We are pleased to see mounting excitement and anticipation among this title, including recognition from the Japan Game Award 2025 Future Division, where it was named as one of the most promising upcoming games. Our groundbreaking MMO, Sword of Justice, went global across mobile and PC platforms on November 7, topping the iOS download chart in multiple regions. The intentional release included AI-powered NPCs and an intelligent face creation system. We showcased this at the Tokyo Game Show in September, highlighting how emerging technologies are reshaping gameplay experiences. Sword of Justice also continued to engage domestic players in the third quarter with its ever-evolving gameplay and rich content. With the global version now live, Sword of Justice is bringing its immersive world and cutting-edge AI enhancements to a broader international audience.

On top of the new releases we have brought to the international stage, our established games are also gaining steam in multiple regions worldwide. Our realistic car simulation game, Racing Master, has continued to gain popularity overseas through localized content, making it highly resonate with players in Japan since it launched there last year. Player engagement spiked in August during its anniversary celebration with carefully designed in-game content, boosting the game's performance in Japan. Exciting esports events like the Racing Master 2025 Legend Cup Finals held in Bangkok in August brought passionate racers and fans from across Asia together, uniting Racing Master's distinctive global community. As firm believers in live operations, we stay closely attuned to players' evolving expectations across every title, and our domestic games continue to deliver strong performances. Each game update presents new opportunities to entertain, engage, and grow our communities.

This approach continues to resonate with players, driving steady growth across our domestic portfolio for both new titles and games that have been around for decades. Fantasy Westward Journey Online, one of our longest-running flagship titles at 22 years and counting, amplifies our dedication to sustain high-quality operations. The game is built around an inclusive ecosystem that allows players of all types to find enjoyment. We continue to inject fresh vitality through new features and mechanics. In July, we launched our innovative unlimited server, which offers classic gameplay under a popular modern model that eliminates the entry barrier of upfront time-based payments. This generated substantial enthusiasm from longtime fans and newcomers alike, significantly boosting player engagement. As a result, it has achieved four successive record-breaking concurrent player counts since the third quarter, reaching a height of 3.58 million in early November.

Fantasy Westward Journey Mobile also continues to evolve as we regularly introduce new features that players love. To meet player demands, we launched our new casual server, which is designed for fun and streamlined play. It offers Fantasy Westward Journey Mobile's signature gameplay in a lighter format, featuring simple progression, low thresholds, and intuitive controls. With the surge of new and returning players, monthly active users reached a two-year high in September. Another long-developed MMO, Tien Xiang, continues to engage its community with deeply resonant updates. In October, we concluded close beta testing for Tien Xiang 2 Classic. This version recreates the game's iconic art style and slower-paced gameplay, allowing players to experience its distinctive Chinese cultural essence. Meanwhile, the existing Tien Xiang client will undergo a complete upgrade, with player progression seamlessly shared with Tien Xiang Wanxiang, the brand-new cross-platform client powered by Messiah, our flagship in-house engine.

The upgrade will both enhance graphic quality and expand access for players across PC and mobile platforms, allowing them to experience the Tien Xiang universe everywhere. Identity V's fanbase maintained a high engagement level in the third quarter, supported by our steady cadence of seasonal updates and partnerships. New characters released along with each season update, including Hunter of Cues and the Survivor of Lunterness in the third quarter, infused new energy into Identity V's distinctive world, reinforcing Identity V as a top destination for asymmetric gameplay fans. In addition, the game's collaboration with the Palace Museum Classic on September 25 added majestic rooftops of the Forbidden City to Identity V's banner, adding a new layer of cultural depth. Anki Party also experienced robust growth with its third anniversary celebration in July, sparking renewed enthusiasm across the player community.

Daily active users exceeded 30 million, and average playtime hit a record high, driving historical engagement levels. Two new gameplay modes quickly followed in September. Spooky Treasure Squad presents an intense extraction experience, and Crazy Farm introduces a casual and social farming simulator. Both were highly praised and attracted a wave of returning users during the National Day holiday. Meanwhile, we continue to evolve Anki Party's AI-powered EGC2, making its map design faster, easier, and more enjoyable. We believe that, together, these innovations are keeping Anki Party fresh and its community inspired. Thanks to this ongoing effort, we saw Anki Party's performance recover to historical peak level in both daily active users and average playtime, which we expect will pave the way for smooth development in the coming years.

Another example of our player-first philosophy and commitment to innovative, high-quality content is Onmyoji, one of China's earliest and most iconic anime-style games. On September 10, we launched its ninth anniversary celebration, featuring rich new content and gameplay updates shaped by player feedback. A highlight was the new character, Yuki Gosen, whose beautifully crafted CG trailer gained widespread attention on social media from both longtime fans and the broader anime community. It was broadly heralded for its innovative use of stereoscopic screen and 2D animation text to create a naked-eye 3D visual effect. With strong community support, Onmyoji quickly entered China's top 10 iOS gaming chart, demonstrating the vitality of this enduring IP and the strength of our long-term operations. Our commitment to engaging players and continuous innovation is also evident in Naraka: Bladepoint.

In the third quarter, we rolled out new heroes and exciting collaborations, such as Armor Hero in September and a time-limited return of Nier in October. Naraka: Bladepoint esports presents is also growing. The 2025 Naraka: Bladepoint Pro League (NBPL) autumn season marked its first professional league since being selected for the 2026 Aichi Nagoya Asian Games, culminating its rolling finals in October. Now in its fourth year, NBPL has become the cornerstone of Naraka's esports ecosystem and China's top professional league for the title, driving increasing social media engagement across major platforms. We continue to expand our domestic portfolio with new, light-hearted experiences that appeal to a wider range of audiences. Shoutao Moshian, our MMO featuring magical, heartwarming creatures inspired by Chinese fairy tales, has built a dedicated fanbase since its launch in August.

Designed with a portrait interface for easy one-handed play, the game combines the joy of capturing and nurturing creatures with strategic turn-based combat and building a homeland for them to thrive in. Backed by our players and supported by world-class partners and global teams, we are building enduring collaborations that keep expanding what's possible in gaming. Blizzard titles continue to elevate the gaming experience for Chinese players. World of Warcraft rolled out updates across both classic and modern servers during the third quarter, sustaining strong engagement among longtime fans and newcomers alike. To further enhance the localized experience, the game just launched a highly anticipated China-exclusive Titan Reforged server this week. Blending the nostalgia of classic expansions with modern gameplay elements, the new server fulfills players' long-awaited expectations and has reignited excitement across the World of Warcraft community.

Overwatch 2 has also recently introduced a new Chinese hero, Wu Yang, further deepening the game's diverse roster of characters. Meanwhile, Hearthstone celebrated its 11th anniversary, amassing over 100 million registered players in China. A series of special anniversary events drove enthusiastic participation from both loyal fans and newcomers to the game. The Diablo franchise also continued to capture attention. Diablo II: Resurrected, the legendary remaster of the installment that helped define the franchise, returned to China on August 27. Newest season, released in October, pushed the game's daily active player base to a record high. In parallel, Diablo IV, the latest blockbuster bringing the series' signature dark aesthetic to a new height, will launch in China on December 12. Furthermore, the genre-defining real-time strategy game, StarCraft II, also returned on October 28, triggering excitement among fans.

Minecraft China Edition, the localized version of the globally popular sandbox game, reached 1.25 million concurrent players on August 17, an impressive milestone in its eighth year of operation. Committed to nurturing its EGC ecosystem, the game continues to enhance creation tools and expand exposure for community creators, now supporting over 300,000 creators. By delivering enriched, locally tailored experiences, Minecraft China Edition has fostered a highly engaged and loyal player community. Beyond the above titles, other globally renowned franchises in our portfolio also continue to thrive in China, engaging vast creative community and expanding local ecosystems. Along with our expanding global presence and evolving development capabilities, our domestic community continues to thrive. Regardless of geographies or genre, we'll continue to put players first and work closely with our partners to deliver memorable, high-quality experiences across our beloved franchises and existing new titles still yet to come.

Turning to Youdao, Youdao continues to solidly execute its AI-native strategy in the third quarter, with healthy development of both its education and advertising businesses. For learning services, Youdao Ling Shi grew gross billing by over 40% year over year in the third quarter, notably in partnership with the Yang Mathematical Science Center of Tsinghua University, providing technical support to a platform which is designed to identify and support mathematically gifted students. The platform is currently being piloted in top-tier schools, with the national rollout plan following further refinements. Youdao's online marketing services achieved a robust growth in the third quarter. As we advance the use of AI across multiple advertising processes, we further enhance our expertise in programmatic advertising and influencer marketing campaigns, elevating the efficiency and effectiveness of advertising. For smart devices, we continue to enrich our offerings with technology upgrades.

In the third quarter, we launched a new tutoring pen, Youdao Space X, which features a series of intelligent capabilities, such as precise scanning for long-form and multi-graphic problems, to help students learn more effectively. Turning to Yanxuan, the business continues to perform well across major e-commerce platforms, led by steady development in its core categories, such as pet food, home sense, and home goods. Propelling technology-driven innovations, Yanxuan's product launches have consistently stood out in the market. Its new pet food product uses a refined production process, making it smoother and easier for pets to digest, earning it widespread praise for addressing common digestive issues. Across the NetEase family of businesses, we continue to build on a foundation of creativity, quality, and disciplined execution.

Looking ahead, we are focused on advancing our development capabilities and global reach, scaling our original IP into lasting franchises, and elevating every experience we deliver. Guided by innovation and the trust of our communities, we are shaping a future defined by meaningful growth and enduring impact. That concludes William's comments. I will now provide a brief review of our 2025 third-quarter financial result. Given the limited time of today's call, I'll be presenting abbreviated financial highlights. We encourage you to read through our press release issued earlier today for further details. As a reminder, all lines are in CNY, as otherwise stated. Total net revenue for the third quarter will CNY 28.4 billion, or $4 billion, representing an 8% increase year over year. Total net revenue from our games and related VAS will CNY 23.3 billion, up 12% year over year.

Specifically, net revenues from online games were RMB 22.8 billion, up 3% quarter over quarter and 13% year over year. The quarter over quarter increase in online games net revenue was due to higher net revenues from self-developed games such as Fantasy Westward Journey Online and Sword of Justice, as well as certain licensed games. The year-over-year increase was attributable to higher net revenue from self-developed games such as Fantasy Westward Journey Online, Anki Party, and newly launched Where Winds Meet and Marvel Rivals, as well as certain licensed games. Youdao's net revenue reached RMB 1.6 billion, representing a 15% increase quarter over quarter, driven by growth in smart devices and online marketing services. Year over year, revenue rose by 4%, attributed to a higher contribution from online marketing services. NetEase Cloud Music's net revenue was RMB 2 billion, stable quarter over quarter, but down 2% year over year.

Notably, revenue from membership subscriptions continued to show healthy growth both sequentially and year over year. Revenues from social entertainment services and others, though still lower compared with the same period last year, stabilized quarter over quarter. Net revenues for innovative business and others were RMB 1.4 billion, down 15% quarter over quarter and 19% year over year. The sequential decline was mainly driven by Yanxuan due to its high base during the 618 e-commerce festival. The year-over-year decrease reflected an increase in certain intersegment transaction elimination and, to a lesser extent, decreased net revenue from Yanxuan and certain other businesses. Gross profit for the third quarter of 2025 was RMB 18.2 billion, up 10% year over year, primarily driven by increased net revenue from online games. This quarter, our total gross profit margin was 64.1%.

Looking at our third-quarter margin in more detail, gross profit margin was 69.3% for online games and related VAS, compared with 68.8% in the same period of last year. The improvement was mainly driven by a higher mix of PC games in China, which typically have higher margins. Our gross profit margin for Youdao was 42.2%, compared with 50.2% in the same period last year. The decrease was mainly due to the declined gross profit margin of online marketing services. Gross profit margin for NetEase Cloud Music was 35.4% in the third quarter, versus 32.8% in the same period a year ago. The margin improvement was primarily driven by steady growth in our core online music business, with lower contributions from social entertainment and other lower-margin services. For our innovative business and others, gross profit margin was 43.0%, compared with 37.8% in the third quarter of 2024.

Despite the impact of intersegment elimination mentioned earlier, the improvement was mainly driven by better margins at Yanxuan and the higher revenue contribution from certain innovative business with relatively stronger margins. The total operating expenses for the third quarter was RMB 10 billion, or 36% of our net revenues. Taking a closer look at our cost composition, our sales and marketing expenses as a percentage of total net revenue were 15.7%, compared with 14.5% for the same period last year, primarily due to increased marketing expenditure related to online games. Our R&D expenses maintained stable at 16% of total net revenues in the third quarter, compared with 16.9% for the same period last year, reflecting our consistent investment in content creation and product development. The effective tax rate was 13% for the third quarter.

As a reminder, the effective tax rate is presented on an accrual basis in accordance with operable policies and our operations. Our non-GAAP net income attributable to shareholders for the third quarter totaled RMB 9.5 billion, or $1.3 billion, up 27% year over year. Non-GAAP basic earnings per ADS for the quarter was $2.09, or $0.42 per share. Additionally, our cash position remains robust, with net cash of approximately RMB 153.2 billion as of September 30, 2025, compared with RMB 142.1 billion at the end of last quarter. In accordance with our dividend policy, we are pleased to report that our board of directors has approved a dividend of $0.114 per share, or $0.57 per ADS.

The company announced today that its previously approved share repurchase program of up to $5 billion for the company's ADS and ordinary shares in open market or other transactions will be extended for an additional 36 months until January 9, 2029. As of September 30, 2025, approximately 22.1 million ADS has been repurchased under this program for a total cost of approximately $2 billion. Thank you for your attention. We would now like to open the call to your questions. Operator, please. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question.

For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Please limit your questions to one at a time. If you wish to have follow-up questions, please rejoin the queue. Your first question concerns Yu Qingzeng with CICC. 嗨，感谢管理层接受我的提问。公司一直记录稳健的业绩表现。那我的问题是关于梦幻西游的，梦幻西游PC版今年暑期至今是持续创下了同时在线人数的新高。那想请公司分享一下对这款长青游戏的一个运营思路。那也有几个小问题啊。首先的话，畅玩服的一个索性驱动因素是什么？然后它的用户画像是怎么样的？回流的玩家和新玩家的比例如何？那最后也想了解一下这种模式是否可以复制到其他旗舰产品上面。啊，谢谢。 thanks management for taking my question and the congratulations on the third quarter. my question about your Fantasy Westward Journey. given that Fantasy Westward Journey PC has consistently set new records for online player count, since this summer, we would appreciate that the company sharing its operational strategy for this evergreen title. We have several follow-up questions on it. firstly, what's the core driving factors behind the unlimited player server? secondly, what's the user profile? what's the ratio of returning players to new players? lastly, is this model replaceable across other flagship titles?

Thank you. Okay, 梦幻西游具有极其稳定的经济系统，独特且非常丰富的游戏体验。这是其他很多游戏所不能提供的。而且我们的团队一直坚持为用户提供游戏的乐趣和稳定的游戏生态，以及创新的游戏内容。目前这些坚持也得到了用户的认可。畅玩服务我们去掉了时间收费，简化了系统和玩法。在保留了时间服多年积累下来的优化设计的同时，也进一步提供了简复的玩法设计。相对于时间服务器所提供的完善且全面的游戏内容体验，畅玩服给用户提供的乐趣来得更加简单直接。畅玩服拥有更低的学习门槛，吸引了大量长期流失的用户以及全新的玩家。这是畅玩服的主要构成。同时，因为畅玩服优质的体验也给我们这个收费服带来了额外的新增和回流。梦幻西游端游作为一个运营了22年的经典游戏，我们始终坚持创新和多样化的趣味体验，持续满足玩家和社区的需求。未来也会力求持续发展，为广大游戏提供一个多样化的选择。谢谢。 Okay, I'll do the translation. The longevity of Fantasy Westward Journey Online PC is based on its highly stable economy system and unique, enriched gaming experiences, which are very rare in most other games. Our team has been dedicated to providing a sustainable fun experience, stable ecosystem, and innovative content. This commitment has been recognized and appreciated by our players as well, as you can see from the market. In the unlimited server, we have removed the upfront time-based payment, streamlined the gameplay and systems, offered a lighter gameplay format, while preserving the core designs that have evolved in our classic server over time. Compared with the comprehensive and diverse in-game experience on the content, unlimited server offers enjoyable experiences in the more simple and direct manner.

With a smooth learning curve, unlimited server has attracted both many former players back to the game as well as new players. This user demographic of unlimited server actually also benefits the classic server by introducing additional new and returning players. Fantasy Westward Journey Online as a legacy game has been operated for 22 years. You know, we remain committed to the innovation and the diversified experience to continuously meet the demands from our community. Looking ahead, we will continue to focus on long-term development, providing our broad player community with various choices in one game. Thank you. Your next question. Operator, next question, please. Comes from Thomas Chang with Jefferies. 晚上好，谢谢管理层介绍我的提问。管理层可以对中国以及海外游戏市场未来的趋势的一个看法可以分享一下吗？另外的话，管理层可以分享一下我们在海外的游戏的一个扩张的一个战略。 Hi, good evening. Thanks management for taking my question. Can management comment about the gaming trend in China as well as overseas? On the other hand, can management also talk about the overseas expansion strategy? Thank you.

我们在海外游戏这个经营过程中，有非常丰富的成功的经验，而且这些成功的经验都是来自于公司内部强大的开发力量。在日本，我们有荒野行动和第五人格。那在去年12月的时候，我们在海外上线了漫威争锋。刚刚在这个月的15号，我们上线了燕云16声。这些产品在海外都取得了非常强烈的和成功的反响。我们已经看到在海外的市场中，网易作为一个世界上最重要的游戏开发公司，我们所具备的能力。我们是国内唯一一个把中国的题材带到海外取得成功的大型游戏公司。我指的是燕云16声。这是一个完完全全的中国的武侠题材。那在未来的路上，我相信我们在海外取得的成功会越来越多。我们也会坚持不懈地用我们的力量去为全世界的游戏爱好者提供优质的内容和优质的服务。谢谢。 Okay, I will do the translation. During our business operations process of doing business in overseas markets, we have accumulated successful experiences, which is powered by the strong development capability we have in-house here. For example, in Japan, we have Knives Out and Identity V, been very popular national level games. Last December, we released Marvel Rivals globally, super successful. Just November 15th this month, we released Where Winds Meet in global markets. All this product achieved a very good level of success overseas, and we hear a lot of positive feedback from the community as well. What we see is that in the overseas market, NetEase is one of the most prominent game developing powerhouses in our industry. We are the only company that brings the purely, truly Chinese authentic online games to global market.

For example, Where Winds Meet is a very Chinese Wuxia setup, and we're the only big successful companies that bring this level of authentic experience to the online gamers globally and receive very positive feedback. Looking ahead, we believe we have the capability to bring more and more success cases to overseas markets and provide gamers from the globe with more and more high-quality content and services. We have confidence in that. Thank you. Operator, next question. 我再补充一下。不，我再补充一下。对，我再补充一下。我们在这个月也上线了逆水寒的手游在海外市场。目前的反响也是很好。在三年前，我们还上线了永劫无间的PC端在海外，也是取得了很大的成功。目前整个市场对我们明年即将上线的无限大Ananta也有巨大的期望。我们这一次在9月25号的东京游戏展上，无限大取得了最成功、最期待的玩家的一个作品，这个大赏。所以我们在网易在立足中国的市场的同时，也积极地在开拓海外用户的市场。 Yeah, there are some further comments from William. One is that actually still in this month, we also rolled out our Sword of Justice into global market. Of course, three years ago, we rolled out Naraka: Bladepoint PC on global markets. As you heard, we showed our games to the public for both Ananta and Sea of Remnant. The market has very big expectations.

We showed Ananta at Tokyo Game Show this year, and it's been named one of the most promising upcoming games by the Japan Games Award 2025 Future Division. NetEase, we are based in China, and we are also carving our territory in the global market. That is what we have been doing. We have some successes, and we're going to keep doing. Thank you. Operator, next question. Comes from Richard Sun with HSBC. 管理层，谢谢你们接受我的提问。想先问一下，第五人格在近几个月在收入和DAU方面的波动比较大。请问管理层能否说明一下背后的原因，还有后续的一些改善的策略？另外就是魔兽世界还有炉石的其实回归中国市场已经满一年了，即将面临比较高的同比的基数。管理层能否分享一下他们当前的表现指标和一年前相比有什么变化？未来如何持续实现增长？另外暗黑四即将回归，在当前ARPG市场竞争比较激烈的背景下，管理层如何看待这个作品的商业化潜力？ Thank you management for taking my questions. Regarding Identity V, we have seen the volatility in growth and DAU in recent months. Can management discuss the reasons behind it and the strategy to improve the performance? Secondly, World of Warcraft and Hearthstone have returned to China for one year already and are about to face tough comms.

Can management discuss the performance metrics now versus one year ago and plans to drive sustainable growth in the future? Diablo IV is also coming back soon. Can management discuss the monetization potential considering the more intense competition in the ARPG genre? Thank you. 第五人格在首期受到一些竞品的影响，尤其是在一些下层市场是有影响的。但开学后这个影响已经开始回退了。实际数据是我们开学后就9月份后，第五人格的数据比历年的同期创了新高。另外第四季度向来不是第五人格数据的高点，无论是内容还是宣发都在为我们的未来的春节做一个准备。 在未来我们会看到喜欢第五人格美术风格的玩家会对玩法层面有更多的需求。我们的产品会逐步考虑满足这些用户需求的玩法。谢谢。 Okay, I will translate this part first. Indeed, it is true that there has been some influence from competing products during the summer holidays, particularly among general users in lower-tier cities. However, we also have noticed that the impact has eased since the start of back-to-school time. In fact, talking about September, Identity V's metric has reached historical highs starting from the new semester compared to the same period in previous years. While Q4 historically has never been the peak season for Identity V, the team is focusing on preparing new content and marketing campaigns for the Chinese New Year cycle.

During this period, we observed there are diversified demands on diversified gameplays from community. So we have been preparing more comprehensive and large-scale side game modes. While on the other hand, we're also working on the next chapters of the game. Yeah. 我想回答一下关于就是报纸游戏的问题。这个报纸游戏活跃了一年多了。魔兽世界目前处于难民模式，那么宣布开始活动下降是比较合理的。传说一年以来一直保持一个正常的资料片上线的节奏。想由于运营方式不一样，魔兽世界和炉石传说表现依然是远高于官服以前的数据。那未来会通过更加深入的合作开发保持两款产品在中国市场独一无二的竞争力。我想前两天刚刚开服的泰坦时光服就是一个非常好的例证。这是一个由东方团队和西方团队共同设定计划目标以同步研发的一个新的版本。开服之后取得非常好的效果。泰坦时光服是具有独树一帜的品质。我们也有崭新的商业计划。我们相信在开服之后这个产品能获得ARPG市场应有的份额和商业表现。另外星际争霸2上线之后也创造了历史最高的一个活跃度，激活了RTX产品。 Okay, thank you. As we approach the end of current expansion of World of Warcraft, it is indeed expected to see a decline in performance compared to its launch period. Meanwhile, Hearthstone has steadily maintained its cadence of expansion pack updates over the past years. With different operation strategies from the past, the performance of both games actually maintained higher status than when the operation closed previously. Moving forward, we'll continue to deepen our collaboration to sustain our unique competitive offerings in the China market. One specific example I want to give here is the Titan Reforged server of World of Warcraft.

That indeed was initiated together by our Chinese team and the US team together. We set the target and design together and developed specific for this demand. The result is very good. That is one example to see by working closer together, we can achieve better results compared to the past. Talking about Diablo, Diablo IV has its own unique quality, and we have brand new business plans in place for it. We believe it will secure its deserved market share and commercial performance in the ARPG segment after launch. In addition, StarCraft II has achieved record-high user engagement since its launch, infusing vitality into the RTS genre. Thank you. Operator, next question, please. Your next question comes from Alicia Yap with Citi Group. 嗨，谢谢接受我的提问。管理层晚上好。我想跟进一下我们刚刚说到的无限大最近在东京电玩展这边展出。刚刚管理层也说到，其实整个反馈也很不错，很好。然后想具体细说一下用户的一些反馈，如果能够再具体说一下。然后另外就是怎么思考无限大这款游戏在市场上的定位和差异化。然后我们看到游戏内其实也包含了很丰富的内容和创新的玩法。然后也想管理层说一下有没有一个关于下一次测试和2026年正式上线时间的最新进展可以分享。自己翻译一下。 Just wanted to follow up.

I think management earlier mentioned Ananta was recently showcased at the Tokyo Game Show and has a pretty good feedback. I just wanted to know more details about the user feedback. How should we think about the market positioning and also the differentiations of this game? It also seems that the game included pretty decent rich content and also the innovative gameplay. Any comments on that? Are there any updates regarding the next testing timing and also the official launch timing in 2026 that you can share? Thank you. 好，我要回答一下这个问题。无限大刚才也讲了，在东京电玩展上我们放出了最新的进展和试玩内容。在全球的社交媒体上我们都获得了巨大的感想，并且在展会期间是获得了日本游戏大奖的未来期待奖。那么我们期望用主积极的内容质量、创新的商业和长期运营模式的组合，能够创造一种全新的产品生态位。产品近期会进一步提升研发的进度。目前我们的进度是符合预期的。后续的测试和上线都是在进一步计划以内逐一进行。适当时候我们会放出消息。 We showcased the latest update and play testing of Ananta at the Tokyo Game Show, which attracted significant attention on social media across the world, winning one of the most promising upcoming titles by the Japan Game Award 2025 Future Division.

We believe with a blend of console quality, content, innovative monetization strategy, as well as our focus on long-term operations, we anticipate the game will secure a new position within the industry ecosystem. We are currently planning to further enhance our development process. The development process is on track now, and we will proceed with testing and launches as scheduled. When the time comes, we have further updates to share. Yeah. Thank you. Operator, next question, please. Your next question comes from Jia Yuang Xi with Nomura. 晚上好，William MD。谢谢接受我的提问。我们从一些媒体渠道观察到，就是咱们公司每年发行的新的游戏，对比前些年似乎是少了许多。我不确定我们这样的观察是不是正确。如果是正确的话，就是想请教一下网易现在新的游戏核心布局的思路是怎么样的？展望未来几年，网易在推动游戏业务增长的总体策略是什么？我自己翻译一下。 We noticed from media it seems to us the number of new games in your pipeline every year is smaller than in the past few years. If our observation is correct, just wonder what is your current strategy towards launching new games into the market?

If that does not launch as many new games each year, what will be the growth driver for your online gaming business? Thank you. 我回答你这个问题。第一个就是整个公司会非常专注在已经有的那些成功产品中。在这些成功的产品里面，我们要精益求精，要更加专注，不要分散精力去搞一些把握不大的新项目。第二个，对于新项目我们会非常的谨慎和重视。我们一定要做出自己产品新游戏有竞争力的内容到市场上去。所以这两个是不矛盾的。我觉得专注是一家公司应有的核心的优势。谢谢。 Okay, I will do the translation. The whole company will be very focused on our success products. Among the already success products, we'll keep refining and keep focusing. We don't want to distract too much focus onto charter many, many new products which we don't have super confidence. For new projects, we'll look at new products more prudently and more focused, making sure that whatever new product we're building, it has confidence power in the content market. We actually don't see this to contradict with each other. We believe being focused is one of the core competence a company needs to have. That's our view. Thank you. Your next question, please. Comes from Felix Liu with UBS.

谢谢管理层接受我的提问。我的问题是关于最近公司的一些人员变动。我们注意到近期游戏业务有部分高管离职。想请问此类变动是否会影响相关游戏的短期运营？另外在目前的游戏战略背景下，公司会如何看待现有的组织架构，以及未来是否会有更多的调整？ Thank you, management, for taking my question. My question is on the recent news of organizational changes in your game department. Will these changes impact the near-term operations of the related games? How does management think about the current organizational structure under the context of your game strategy? Should we expect more changes to come? Thank you. 我想这些人员的流动是比较正常的，是在不影响我们日常游戏运营的前提下进行的。目的是让我们整个组织变得更加专注高效，能够集中力量打造网易游戏的长青和精品。对于我们目前的长青项目，我们要求团队不断精进优化。对于具备长青品质的新项目，我们会下重大的力量，加大投入，不停地优化产品。对于没有跟上市场节奏、用户需求的团队，我们要果断地修剪，确保主干的茁壮成长。网易成立28年，打造精品的原则始终没有变。我们会把更多的资源倾泻给长青项目，也会给有创新肯创新的团队更多的机会。 Okay, I will do the translation. Regarding the recent adjustment and changes, it's part of the company's normal personnel turnover process, and that's been carried out without impacting daily operations of our game. That's the short. The adjustment is aiming to make the organization more focused and efficient, allowing us to keep concentrating on creating enduring high-quality products. For example, for existing evergreen titles, we ask our teams to stay focused, continuously refining and optimizing the games.

For new titles that show evergreen potentials, we'll allocate sufficient resources to develop them into evergreen, long-lasting, successful games. However, for teams that are not keeping pace with the market trends or user demands, we also must train decisively to make sure a healthy development of our core initiatives. NetEase has been especially for 28 years, and our commitment to creating high-quality products has remained unchanged. We'll allocate more resources to evergreen titles and provide more opportunities to teams who are creative and willing to innovate. Thank you. Operator, next question, please. Your next question comes from Linking Kong with Goldman Sachs. 谢谢管理层接受我的提问。我第一个问题是想问AI和游戏。其实我们也看到蛋仔派对、逆水寒情里面已经有不少的这种AI相关的一些尝试了。从后续公司对于AI在我们这些已有的这些游戏组合和可能的这些新游戏上的赋能的一些机会，不知道现在有没有一些新的一些想法和思考。然后第二，我还想再简单地问一下咱们未来的一些游戏的一些重点开发的一些方向。因为刚才也说到我们现在已经要采取更精品化的这些开发策略，未来对于可能的一些创新的方向，我们是会去更多的关注呢？会有哪些品类呢？相关的其实涉及的品类就是全球，包括我们的军队，其实他们都做得很强。我不知道对这种品类，我们网易这边的话，后续的这些布局和差异化会有怎样的一些思路。 Thank you, management, for taking my question. My first question is about AI. We have actually seen some of the games like Egg Party, Justice Mobile, has already integrated with AI applications.

Going forward, for our existing portfolio and the new games, how should we think about AI can bring additional opportunities to our gamers? The second question is in terms of the future new games, given that the company now focuses more on quality of those new games, how should we think about the potential important game genre going forward? Specifically, for the shooting game genre, globally, I think we have seen rapid growth. How would NetEase sort of differentiate ourselves in this shooting genre? Thank you. 对，就是关于AI应用我们的一些观点，包括对现有的游戏和未来游戏上怎么应用，以及刚才问了一下未来内容的方向，包括对射击品类的布局的想法吧。对，AI对我们游戏的开发和运营是非常重要。我们比海外的团队、国外的团队有更多AI开发层面和运营层面的积累。我们部署了大量的资源在研究AI如何应用在游戏开发、创新和运营层面。我觉得用户的体验是对我们这个方向最好的回答。具体怎么用，我就在这里不做回答了。第二个就是说，在未来的游戏开发方面，公司会采取精品化和有把握的方向。我们不会盲目地去开发一些产品，一定是有的放肆，重点投入。在未来几年的游戏方向上，我相信网易比世界上绝大多数游戏公司都有更加清晰的把握。我们也会在这个方面取得重大的突破。谢谢。 Okay, I will do the translation. First of all, regarding the question on AI, we have been using AI in development, and AI is very important in game development and operation. We have accumulated tons of hands-on experience in this area.

Especially compared to many of our peer companies from overseas, we have more hands-on experience in this area. We have deployed massive resources in the research of AI and how to use AI in the process of game development, innovation, and operation. Actually, the user experience is the best answer to guide us on how we should deploy technologies. We do not think we have time here today for detailed specific user experience explanations. Regarding your next question on the future direction of product, as we explained, we will focus on concentrating resources on building really high-quality flagship products, the product that we have conviction on the success. We will not do aggressively, blindly open many products. That is not our direction. We will do focused, targeted approach to do new products.

In the future coming years, we believe NetEase, compared to most many other companies in our industry globally, we are one of the companies that has a clear vision on the future innovations, future products, and we will make grand breakthroughs. Thank you. Operator, next question, please. Your next question, Felix Liu, with Morgan Stanley. 提问的机会。晚上好，管理层。感谢提问的机会。我的问题是关于遗忘之海这款游戏的。能不能请管理层分享一下这款新游戏的研发进度和预计的上线时间？然后这款游戏在商业化上会采取什么样的策略？然后目前有没有比较直接的竞品？然后会如何和竞品做差异化？ Let me translate my question. My question is about the Sea of Remnant, this new game. Could management share about the R&D development and expected launch timing? And what will be the commercial strategy for this title? And is there any direct peers or competitors for this game? And what NetEase can do to differentiate? Thank you. 我们对遗忘之海这个游戏非常重视。做遗忘之海的团队在公司里面也有非常丰富的开发经验和运营经验。这个游戏采用网易自研的引擎开发，我们同时会上PC端、手机端和主机端。至于说这个游戏的具体的玩法和内容，我相信我们有非常清晰的决策。我相信这是一款令人耳目一新的开放世界的多角色养成类的游戏，而不是传统的二次元风格。而且海上的航行体验和通过非常丰富的角色和职业的组合，构成更加多样的战斗流派，带来不一样的海上世界的体验。谢谢。 Okay, I will do the translation. First of all, the Sea of Remnant is a very important product to us. We focus on that very much.

The team has very rich development and operation experience in the company. The game is built on our self-developed game engine to support both PC, mobile, and console as well. On the detailed gameplay and content, we believe we have clear decisions on how to do that. We believe it's going to be a fresh experience in the market. It's going to be a multi-character cultivation kind of type, but not the traditional way. The sailing experience on the ocean as well as the rich combination between characters and classes, we believe will bring a fresh, unexperienced ocean experience to the gamers. Thank you. That concludes the question and answer session. I would like to turn the conference back over to Brandi Piacente for any additional or closing remarks. Thank you once again for joining us today.

If you have any further questions, please feel free to contact us directly. Have a great day. Thank you.

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