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pww.comNetEase, Inc., Q3 2024 Earnings Call, Nov 14, 2024 - SEHK:9999

SEHK:9999

Unknown Executive [Executives] 💬

**- The executive provided updates on the launch schedule and positioning of "Where Winds Meet," emphasizing the game's focus on high-quality open-world exploration and social experiences in a Wuxia setting.

  • For "Justice Mobile" and "Eggy Party," the executive highlighted strategies to extend the lifecycle of these games, including balancing commercialization and user experience, enriching game content, and exploring innovative commercialization methods.

  • Regarding overseas game strategy, the executive discussed the dual approach of developing games for Western and Japanese markets through overseas studios and releasing global titles from domestic studios, citing "Once Human" and upcoming titles like "Marvel Rivals" and "FragPunk."

  • For flagship evergreen games like "Fantasy Westward Journey Mobile," the executive emphasized continuous innovation and new content additions to maintain player engagement.

  • On "Marvel Rivals," the executive noted its unique gameplay and positive reception during beta tests, expressing confidence in its potential and global launch.

  • For the relaunch of "World of Warcraft" and "Hearthstone" in China, the executive highlighted successful marketing and product strategies, including cross-brand collaborations and innovative social media usage, leading to strong player engagement and financial performance.

  • The executive provided updates on the game pipeline, including "Frostpunk" and "Project Mugen," noting their expected test phases and high expectations for these titles.

  • For "Naraka: Bladepoint Mobile," the executive shared positive performance metrics, including 50 million new users, and discussed the differentiated content and promotional strategies tailored for mobile gamers.**

Bill Pang [Vice President of Corporate Development] 💬

**- Financial Performance: NetEase reported total net revenue of RMB 26.2 billion for Q3 2024, representing a 3% increase quarter-over-quarter. Online games net revenue reached RMB 20 billion, with PC games showing robust growth, up 29% year-over-year and 30% quarter-over-quarter.

  • Game Highlights:

    • Fantasy Westward Journey Mobile: Released a new chapter, attracting new characters and content, infusing the game with fresh vitality.
    • Westward Journey Online II: Achieved record-high quarterly revenue with an anniversary expansion pack, enhancing player engagement.
    • Identity V: Recorded record-high revenues for the third consecutive quarter, with unprecedented DAUs and global concurrent online players.
    • Naraka: Bladepoint: Celebrated its third anniversary with new heroes, maps, and mechanics, achieving record-high revenue and concurrent players. The mobile version launched in July, ranking #3 on the iOS top-grossing chart.
    • Justice Mobile: Celebrated its first anniversary, introducing AI-driven NPCs and tools for creating AI companions, driving innovation and player engagement.
    • Eggy Party: Enhanced features for creators, leading to a surge in community engagement and full-time map creators.
    • Racing Master: Launched an annual update with legendary car models and new maps, maintaining strong popularity.
    • Upcoming Releases:
      • Where Winds Meet: Scheduled for domestic release in December, offering both single-player and multiplayer modes.
      • Marvel Rivals: Global release on December 6, with a special season in collaboration with other Marvel titles.
      • FragPunk: Closed beta testing attracted over 1 million applicants, with a first testing phase in China starting in December.
      • Project Mugen: Regional offline technical test planned, aiming to captivate ACG fans.
      • MARVEL Mystic Mayhem: Announced as a team-based tactical RPG set in the Marvel universe.
      • Destiny: Rising: Closed beta testing began in November, offering a new adventure in the Destiny universe.

  • Blizzard Games Return: Strong player engagement following the relaunch of World of Warcraft and Hearthstone, with a 50% increase in big active players and over 150% growth in Hearthstone. Deep collaboration with Blizzard ensured local appreciation and high player satisfaction.

  • Youdao: Achieved profitability with income from operations exceeding RMB 100 million, marking the first profitable third quarter. Enhanced product experience with AI-powered writing enhancement and simultaneous interpretation.

  • NetEase Cloud Music: Continued quality development, expanding music offerings and strengthening in-house music content. Increased user engagement through AI-powered tools and exclusive collaborations.

  • Yanxuan: Achieved notable growth in GMV across key categories, particularly in pet products and household cleaning items. Established a dedicated factory for high-quality pet food production.

  • Financial Metrics: Gross profit margin was 62.9%, with a 4% increase in operating expenses. Non-GAAP net income was RMB 7.5 billion, and the company repurchased shares worth USD 543 million, marking a 98% increase from the previous quarter.

  • Future Plans: Emphasis on continuous innovation, content enrichment, and global expansion to maintain long-term growth and sustainability.**

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