Q1 2026 NetEase Inc Earnings Call Transcript
Key Points
- NetEase Inc (NTES) reported a solid start to 2026 with total revenue reaching RMB30.6 billion, driven by strong performance in its games business.
- The company's games and related value-add services generated net revenues of RMB25.7 billion, reflecting strength in long-term game operations and growing global appeal.
- NetEase's flagship MMORPG, Fantasy Welcome Journey Online, achieved a new high of 3.9 million peak concurrent users and recorded its highest ever quarterly revenue.
- The company continues to expand its global reach with titles like 'Where Wings Meet' becoming a global phenomenon and maintaining strong momentum across markets.
- NetEase's gross profit margin increased year-over-year to 69.4%, driven by lower revenue sharing costs related to platforms.
- NetEase's Youdao segment experienced a 14% quarter-over-quarter decrease in net revenue due to declines in learning services and smart devices.
- The company's innovative business and others segment saw a 5% year-over-year and 24% quarter-over-quarter decrease in net revenue.
- Selling and marketing expenses increased to 11.2% of total net revenues, up from 9.4% in the same period last year, primarily due to increased marketing expenses.
- The gross profit margin for Youdao decreased to 44.7% from 47.3% in the same period last year, mainly due to a decline in smart devices gross margins.
- Despite strong performance, the competitive landscape in the open-world gaming genre remains crowded, posing challenges for new titles like Ananta to stand out.
Good day and welcome to the NetEase First Quarter 2026 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brandy Piacenti. Please go ahead.
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
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