- Veteran title logs fifth record-high player count in eight months
- Gaming remains key earnings driver as overseas expansion gains traction
Chinese gaming company NetEase (网易) posted strong-than-expected first-quarter profit that beat Wall Street predictions, driven by the enduring popularity of its two-decade-old blockbuster game Fantasy Westward Journey (《梦幻西游》) and growth in overseas titles and AI-powered education services.
The Hangzhou-based company reported net income of 10.7 billion yuan ($1.57 billion) for the three months ended March, up 3.6% from a year earlier, while revenue rose 6.1% to 30.6 billion yuan, according to results released May 21.
NetEase earned about 119 million yuan a day during the quarter.
Following the earnings release, analysts at JPMorgan Chase reiterated their overweight rating on NetEase, while UBS and Citigroup maintained buy ratings and raised their price targets, citing better-than-expected gaming momentum and resilient cash flow from legacy franchises.
Gaming remained the company’s core business, contributing 25.7 billion yuan in revenue, or 84% of the total.
The standout performer was Fantasy Westward Journey, which launched more than 20 years ago and reached a record 3.9 million concurrent players on PC during the quarter.
The milestone marked the fifth time in eight months that the game has set a new online-player record.
The title, long considered one of NetEase’s most reliable cash generators, has previously delivered annual revenue exceeding 10 billion yuan at its peak.
Chief Executive Officer Ding Lei said on the earnings call that martial-arts role-playing game Where Winds Meet (《燕云十六声》) had maintained an 87% positive review rate 17 months after launch and climbed to as high as No. 2 on global sales charts following multiple updates.
“Wuxia-themed games have traditionally struggled to break into Western markets, but Where Winds Meet has completely rewritten the overseas record for the genre,” Ding said.
At NetEase’s education technology unit Youdao, Chief Executive Officer Zhou Feng said AI would be the company’s next growth engine.
Youdao’s AI subscription services generated more than 100 million yuan in sales during the quarter, up more than 70% year-on-year.
Sales of its academic-writing AI assistant Xueshucha rose 200%, while revenue from AI simultaneous interpretation services more than doubled. Youdou did not disclose specific growth numbers.
NetEase shares listed in the US closed up 1.9% at $116.55 on May 22, giving the company a market value of about $74.7 billion. Its Hong Kong-listed shares rose 2.6% to HK$186.2 ($23.76) on May 25, valuing the company at HK$594.1 billion.
