NetEase Q4 Earnings & Sales Miss Estimates, Revenues Increase Y/Y

NetEase, Inc. NTES reported fourth-quarter fiscal 2025 non-GAAP earnings of $1.57 per ADS (American Depositary Share), which missed the Zacks Consensus Estimate by 22.66%. The figure decreased 24.2% year over year.

Revenues of $3.94 billion increased 7.5% year over year. However, the figure fell short of the Zacks Consensus Estimate by 3.82%. In domestic currency, revenues increased to RMB27.55 billion, up 3% year over year.

NTES’ Q4 Segment Details

NetEase delivered mixed but resilient segment performance in the quarter, led by a 3.4% year-over-year increase in Games and related value-added services revenues to RMB22.0 billion ($3.1 billion). The year-over-year increase was attributable to higher net revenues from self-developed games, such as Fantasy Westward Journey Online, and newly launched games, Where Winds Meet and Marvel Rivals.

Youdao revenues grew 16.8% year over year to RMB1.6 billion ($223.7 million). The year-over-year increase was driven by higher net revenues from its online marketing services and learning services.

NetEase, Inc. Price, Consensus and EPS Surprise

NetEase, Inc. price-consensus-eps-surprise-chart | NetEase, Inc. Quote

NetEase Cloud Music recorded a steady 4.7% year-over-year rise to RMB2.0 billion ($281.5 million). 

These gains were partially offset by a 10.4% year-over-year decline in Innovative businesses and others’ revenues to RMB2.0 billion ($292.8 million). The year-over-year decrease reflected an increase in certain inter-segment transaction eliminations.

NTES’ Q4 Operating Highlights

Gross profit increased 8.7% year over year to RMB17.7 billion ($2.5 billion).

Total operating expenses increased 10.9% year over year to RMB9.4 billion ($1.3 billion).

Net income attributable to the company’s shareholders totaled RMB6.2 billion ($892.6 million), while non-GAAP net income attributable to shareholders reached RMB7.1 billion ($1.0 billion).

The effective tax rate increased year over year to 16.4% from 13.4%.

NetEase’s fourth-quarter operational performance highlighted the growing impact of its long-term investment strategy, particularly the integration of artificial intelligence across its game ecosystem. Management reported that AI is now embedded throughout the full development cycle — spanning art, design, programming, animation and quality assurance — enabling higher production scalability and supporting the rollout of AI-driven gameplay innovations in flagship titles.

The company continued to benefit from strong engagement across its established franchises, underscoring the durability of its long-term operating capabilities. Titles such as Fantasy Westward Journey, Identity V, Eggy Party, Sword of Justice and Where Winds Meet maintained healthy player communities through consistent content updates.

Global portfolio expansion remained another key theme. Sword of Justice recorded a solid reception following its international release, while Where Winds Meet surpassed 80 million cumulative players across platforms, indicating broad global traction. Marvel Rivals further strengthened its worldwide presence through high engagement and industry recognition.

Meanwhile, Blizzard-operated titles in China continued to generate sustained engagement through localized content and enriched experiences, achieving record annual revenues and reinforcing NetEase’s strategic positioning in the domestic market.

NTES’ Balance Sheet & Cash Flow

As of Dec. 31, 2025, net cash — including cash and cash equivalents, current and noncurrent time deposits and restricted cash, as well as short-term investments balance, minus short-term and long-term loans — increased to RMB163.5 billion (US$23.4 billion), up from RMB153.2 billion (US$21.5 billion) as of Sept. 30, 2025, reflecting continued balance sheet strength.

In the fiscal fourth quarter, net cash provided by operating activities increased to RMB14.8 billion ($2.1 billion) from RMB12.9 billion ($1.8 billion) in the preceding quarter.

The board of directors declared a fourth-quarter 2025 dividend of $0.232 per share ($1.16 per ADS), to be paid to its shareholders on record as of March 16, 2026.

NTES’ Zacks Rank & Stocks to Consider

Currently, NetEase carries a Zacks Rank #3 (Hold).

IPG Photonics IPGP, MKS Inc. MKSI and MongoDB MDB are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Currently, each stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

IPG Photonics shares have appreciated 76.3% over the past year. IPGP is set to report its fourth-quarter 2025 results on Feb. 12, 2026.

MKS shares have soared 149.5% over the past year. MKSI is scheduled to report its fourth-quarter 2025 results on Feb. 17, 2026.

MongoDB shares have returned 24.4% over the past year. MDB is scheduled to report its fourth-quarter fiscal 2026 results on March 2.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research