Key Takeaways:
- NetEase Q2 revenue rose 7.9% to RMB30.1 billion, beating consensus.
- Adjusted EPS of $1.77 missed the $2.28 estimate by 22%.
- Net income fell 18.6% on investment losses and a higher tax rate.
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NetEase Q2 revenue rises 7.9% as adjusted EPS misses estimates
NetEase reported second-quarter revenue of RMB30.1 billion (US$4.4 billion), up 7.9% from a year earlier and beating the consensus estimate of RMB29.45 billion, while adjusted earnings of $1.77 per ADS missed the $2.28 forecast by 22%.
"Our robust performance in the first half of 2026 reflects players' growing enthusiasm for both our newly launched and established games," Chief Executive Officer William Ding said in the results statement. "We aim to keep pushing creative boundaries, delivering exceptional gaming experiences and creating long-term value for our players, partners and shareholders."
Games and related value-added services, the core business, generated RMB25.0 billion in the quarter, up 9.7% year over year and about 83% of total revenue, supported by self-developed titles including the Fantasy Westward Journey franchise and Where Winds Meet. Gross profit rose 17.5% to RMB21.2 billion, while operating expenses edged up 1.5% to RMB9.1 billion. Net income attributable to shareholders fell 18.6% to RMB7.0 billion, dragged by a decline in the fair value of equity security investments, impairment provisions and an effective tax rate that climbed to 25.5% from 14.7% a year earlier.
The company did not provide formal guidance. Net cash totaled RMB167.5 billion (US$24.7 billion) as of June 30, up from RMB163.5 billion at the end of 2025. The board approved a second-quarter dividend of US$0.096 per share (US$0.480 per ADS), payable to holders of record as of Sept. 3, and repurchased about 2.8 million ADSs for US$324.1 million during the period. NetEase's conversion to dual-primary listing status on the Hong Kong Stock Exchange took effect June 30.
For the first half, revenue rose 7.0% to RMB60.7 billion, with non-GAAP net income of RMB19.0 billion. NetEase, which has returned 19.44% annually over the past 15 years and holds a market capitalization of about $80.69 billion, faces a test of whether the gaming growth can hold as competition intensifies. Investors will watch the launch of Sea of Remnants in China and the pipeline titles Ananta and Blood Message for the next catalyst.
This article is for informational purposes only and does not constitute investment advice.
[1] NetEase Q2 revenue 30.1 billion yuan, adjusted EPS of 12.02 yuan misses expectations | Financial News[2] NetEase Q2 adjusted EPS misses estimates despite revenue beat[3] NetEase Cloud Music H1 2026 Results: Revenue up 3%, profit down[4] NetEase Q2 revenue rises to RMB30.1B, profit down | NTES SEC Filing - Form 6-K[5] NetEase Q2 Revenue Hits RMB30.1 Billion, Up 7.9% YoY; Adjusted Net Profit Falls Nearly 20% — BigGo Finance
