Aug. 20 at 10:55 AM
$NTES NetEase's profit appears to have missed, but the cause was investment losses: holdings in Alibaba and PDD each fell over 20% in the quarter, producing a net loss of nearly RMB 3B.
Excluding that, core operating profit grew 33% — far faster than revenue, thanks to a higher share of high-margin self-developed and evergreen games, plus lower staff incentives and controlled user acquisition spending.
The weak spot is deferred revenue, down 12% sequentially, more than normal seasonal swings, reflecting both Cloud Music and a shortage of new game releases.
With Sea of Oblivion underperforming, that gap continues into the second half, though evergreen titles and a lower Apple fee rate provide support.
