Netease's second -quarter revenue and net profit double -increase game out of the sea

Economic Observation Network reporter Zhou Yingmei On August 18th, Netease (Nasdaq's stock code: NTES; Hong Kong Stock Exchange stock code: 9999) released the second quarter of 2022 financial results. In the second quarter, NetEase achieved revenue of 23.159 billion yuan, an increase of 12.8%year -on -year; net profit attributable to shareholders was 5.291 billion yuan, of which the continuous operating net profit was 4.667 billion yuan, an increase of 31.76%year -on -year, an increase of 6.21%month -on -month. In addition, 625 million yuan of non -continuous operating profit -related net profit related to the sale of Koala business is also included.

"In the case of the overall income of the entire Internet industry or loss, NetEase's financial report data is generally better. Its overall business is more obvious." Zhang Yi, CEO of Ai Media, told Economic Observation Network reporter.

With the decline in industry game business, NetEase Games has increased by 15%in the second quarter. Earlier, NetEase's buying out of the game "Yongjie Wuxia", in June this year, exceeded 10 million, breaking the record of domestic buying off game sales. The ARPG game "Diablo of Diablo: Immortal" jointly developed by Netease and Activision Blizzard was the first to be listed overseas this year, and reached the top 100 countries and regions iOS download rankings. However, the reputation of this game has caused controversy.

New game blessing

NetEase's game business has continued to grow. In the second quarter, NetEase's game and related value -added services revenue was 18.14 billion yuan, an increase of 15%year -on -year. This part of business accounts for 78%of the total revenue, and it is also the "cash cow" business of NetEase.

Since the second quarter of 2022, Netease's previous "online game service" was renamed "Game and related value -added services", and some business lines related to or affiliated with games were adjusted from "innovation and other businesses" And related value -added services ".

In the second quarter, the gross profit margin of NetEase Games and related value -added services was 64.9%, which increased compared with the previous quarter and the same period last year. According to the financial report, the year -on -year growth of gross profit is mainly due to the increase in net income of mobile games and end games, including the newly launched game "Eternal Harmony" and "Harry Potter: Magic Awakening" and NetEase's in the third quarter of 2021 PC version of the old game "Fantasy Westward Journey".

New games are still the key to income growth. The financial report released by Tencent on August 17 shows that the revenue of local market game has dropped by 4%. Tencent's financial report mentioned that the local market has gone through the adjustment period, including the decline in the number of large games, the decrease in user consumption, and the implementation of the protection of minors. In terms of a single game, existing game revenue such as "Peace Elite", "Crossing Fire Mobile Games" and "DNF" under Tencent declined seasonality. The newly launched "Return to the Empire" and "League of Legends Mobile Games" brought income increase.

In June this year, the game "Diablo Dark God: Immortal" jointly launched by NetEase and Activision Blizzard officially launched the international market and reached the iOS download list of more than 100 countries and regions. On July 25, the national service was officially launched. "Diablo: Immortal" officially announced on July 30 that global downloads have exceeded 30 million. Statistics of third -party data agency Sensor Tower shows that as of the end of July, the total overseas revenue of Diablo Immortal exceeded $ 100 million, ranking 4th in the overseas income list of Chinese mobile game products in July.

Zhang Yi said that there is actually a great growth opportunity for overseas markets. "Netease has a channel problem in the domestic market. There are no good channels. Now it is Tencent's good channels, but lack of good products."

However, Metacritic, a well -known overseas rating website, showed data that the user score of "Diablo: Immortal" is only 0.4 points. The editor -in -chief of the Dream video game told reporters that there are currently many players who retreat after the national service "Diablo: Immortal". "Netease Baobao" Eternal High -Rush ", a Chinese -style chicken, can eat explosive models."

Although large platforms continue to launch new games, explosive games like "Glory of the King" and "Original God" are still difficult to produce. "The explosion of the game is harder than the movie explosion. The game research and development cycle is relatively long, and the content of the content is deeper. It is not finished like a movie watching it for one hour or two. The game may play for 7 days and 7 nights. . So in theory, it is really difficult to turn around or turn to the product. "Zhang Yi said.

Zhang Yi said that the basic elements of explosive games include good themes, high degree of exquisiteness, and promotion that can trigger group resonance, but there are also accidental factors. "When the original God came out, the industry was dismissive of the two -dimensional theme. Later, everyone followed up. Boutique is the foundation, and accidental factors are also important."

Yun Yinle and Youdao's losses narrowed

In addition to the game business, Netease's main business also includes cloud music, Youdao, innovation and other businesses. In this quarter, the loss of Dao and Netease Cloud music were narrowing.

Netease Cloud Music's revenue in the second quarter was 2.191 billion yuan, a year -on -year increase of 29.42%. The interim report released by Netease Cloud Music showed that NetEase Cloud Music lost 270 million yuan in the first half of the year, a year -on -year narrowing of 92.9%. The gross profit margin in the second quarter was 13%, the same period last year was 4.1%, and the previous quarter was 12.2%.

According to the financial report, the growth of gross profit is mainly due to the overall improvement of the income growth and cost management of membership subscriptions and social entertainment services. In the first half of the year, the online music service payment users were 37.613 million, an increase of 30.52%compared to the same period last year, and the number of social entertainment service payment users was 1.235,400, an increase of 148.87%compared to the same period last year. However, the total number of users began to decline from last year to the decline of this year. In the first half of the year, the number of monthly active users of Netease Cloud Music was 181.9 million, compared with 184.5 million people in the same period in 2021. In order to increase user links and open up strangers interaction, Netease Cloud Music will launch a music social APP MUS in the near future, and explore new realization possibilities through this app.

Zhang Yi believes that the overall population dividend of the online music platform has been saturated, and NetEase Cloud Music can at least be divided into some users from Tencent Music, but this amount is very limited. Nowadays, the number of paying households is being activated. In the future, more applicable scenarios should be developed, such as smart car products adaptation, smart home product adaptation, etc.

In the second quarter, there was a net income of 956 million yuan, a year -on -year decrease of 2.4%; net loss was 461 million yuan, and the loss narrowed by 12.3%year -on -year. In the second quarter, the gross profit margin was 42.8%, the same period last year was 52.3%, and the previous quarter was 53.1%. The financial report mentioned that the year -on -year decline in gross profit was due to the stopping service of extracurricular training businesses in disciplines, and the decline in the month -on -month decline was reduced due to the decline in the net income of learning service business.

Youdao's revenue in the second quarter was 564 million yuan, a decrease of 7.3%from the same period in 2021. However, the financial report mentioned that the decline in the revenue of the second quarter of learning services was short. In the second quarter of the new courses, the new courses increased by more than 60%from the previous quarter. Youdao's intelligent hardware continued to lay out, with intelligent hardware income of 240 million yuan in the second quarter, a year -on -year increase of 16.3%. In addition, there are three -digit growth year -on -year growth in the J2 of adults and vocational education courses.

In innovation and other businesses, revenue in the second quarter was 1.872 billion yuan, a year -on -year increase of 6.12%. This part of the business gross profit margin was 25.8%, and the same period last year was 27.3%, which mainly reflected the gross profit of advertising services.

In terms of cost, the total operating expenses of NetEase in the second quarter increased by 7.995 billion yuan, which was increased year -on -year and the month -on -month. It was mainly due to the increase in the promotion expenditure, R & D investment, and personnel cost of the game and related value -added service markets.

As of June 30, 2022, NetEase's cash, cash equivalent and short -term investment balance was 87.7 billion yuan.

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