NetEase, Inc. Q1 FY2025 earnings call

• Started 2025 with strong momentum, total net revenue up 7% y-o-y. - New titles like Marvel Rivals, FragPunk, Once Human, Where Winds Meet performed well. Marvel Rivals launched Dec 2024, Season 2 in April saw high engagement. FragPunk PC launch in March had over 110,000 peak concurrents. Once Human mobile edition launched April 24, top iOS download chart in 160+ regions. Where Winds Meet had over 30M players by end of March. - Blizzard titles robust: Overwatch, World of Warcraft, Hearthstone saw highs. Diablo 3 in technical testing. - Established titles: Fantasy Westward Journey, Identity V, Naraka: Bladepoint continued strong. Identity V had 400M registered players in 7th anniversary. - Eggy Party solidified party game leadership, over 100M players. - Justice Mobile, Dunk City Dynasty, Racing Master showing growth. - Youdao focused on tech innovation, AI subscription sales growth, smart devices segment growth. - Yanxuan had healthy performance in core product categories. - ESG initiatives: 2024 greenhouse gas emissions down 16%, MSCI upgraded to AA.

Total net revenue was RMB28.8 billion, up 7.4% y-o-y. Games and related VAS: Total net revenue RMB24.0 billion, up 12% y-o-y. Online games net revenues RMB23.5 billion, up 14% q-o-q and 15% y-o-y. PC games net revenues accounted for ~34% of total online games revenue, up 13% q-o-q and 85% y-o-y. Youdao: Net revenues RMB1.3 billion, down 7% y-o-y and 3% q-o-q due to strategic structural improvement in learning services. NetEase Cloud Music: Net revenues RMB1.9 billion, down 8% y-o-y and 1% q-o-q due to decreased social entertainment services revenue. Innovative businesses and others: Net revenue RMB1.6 billion, down 17% y-o-y and 29% q-o-q due to decreased revenue from Yanxuan, advertising, etc.

• Robust pipeline of new releases. - Continued global expansion. - Ongoing enhancement of iconic franchises to sustain growth and connect with players worldwide.

Forward-looking statements subject to risks and uncertainties; factors beyond company's control could cause actual results to differ materially from those mentioned.

Q: About Identity V's performance and future growth after higher comp base and implication to other games?

A: William Ding says Identity V, a unique asymmetric PvP game, has been invested in for 6 years, other teams learn from its operations, will keep investing to bring fun to more players.

Q: About Marvel Rivals lifecycle and long-term operation/monetization strategy?

A: William Ding says season two update in April was popular, from season three, season update interval reduced to 2 months, Esports event in May to develop ecosystem, expecting gradual improvement in metrics.

Q: About overseas markets strategy given domestically-developed games' strong performance and overseas studio shutdowns?

A: William Ding says paid attention to overseas markets, closing studios based on product quality, domestically-made games like FragPunk and Marvel Rivals did well overseas, will make more games suitable for global market.

Q: About Where Winds Meet's operation and next steps?

A: William Ding says Where Winds Meet is a 5-year developed game, will keep investing, polish art and gameplay, long-term title, experiences will be deployed to other products.

Q: About Once Human's performance, cross-play, and future commercialization?

A: William Ding says Once Human mobile launched successfully, cross-play allows play on PC and mobile, future will add new gameplays and explore private server ecosystem.

Q: About FragPunk's differentiation in overseas FPS game competition?

A: William Ding says FragPunk has solid foundation, innovative card mechanism, will support long-term operations, invest in overseas markets via tournaments, influencers, etc.

Q: About resource allocation in domestic and overseas markets?

A: William Ding says has sufficient resources for both, accumulated tools and talents, will keep improving understanding of overseas gamers' demands.

Q: About new titles evaluation metrics and Esports strategy?

A: William Ding says new project evaluation starts with core team's passion, future pipeline has good products, invested in Esports, with large stadiums in Hangzhou and Shanghai, will continue investing long-term.

Q: About AI impact on game development and release timing?

A: William Ding says has been using AI in game development for 5 years, AI is critically important, long-term adoption, no specific change in release timing mentioned but AI helps in content update.