Against the backdrop of the high revenue base of games in Q1 last year, this year's Q1$NetEase (NTES.US)$The game still achieved a 7% increase in revenue, and many of its products reached record highs, and a steady questionnaire was handed over. Recently, more than 10 new game developments were released in one go, and there was plenty of “ammunition” for the second half of the year.

Today,$NTES-S (09999.HK)$Announced the results for the first quarter of 2024. Among them, revenue from games and related value-added services was 21.5 billion yuan, an increase of 7% over the previous year, accounting for 80% of the company's total revenue, which is basically in line with institutional expectations.

As of press release, NetEase's US stock fell nearly 4% in the premarket, having previously fallen by more than 7%.

Further dismantling, revenue from online games accounted for 95.2% of the above business revenue, compared to 93.4% and 92.7% in the previous quarter and the same period last year, respectively. Among these, revenue from mobile games accounted for 78.6% of online game revenue, compared to 76.7% and 72.3% in the previous quarter and the same period last year, respectively.

The growth in performance was supported by products, and Q1 NetEase's various games recorded record revenue highs. These include long-time operating products such as the “Dream West Journey” mobile game, “The Fifth Personality”, and “Sudogahama.” The performance of the new game was also impressive. “Out of the World” was launched in January and topped the iOS download list, and reached the third best seller list in March and May. “All-Star Street Ball Party” and “Peak Speed” entered the Hong Kong, Macao and Taiwan markets, topping the download lists and best sellers in many places.

As new games are being reserved, especially major games, are launched one after another, institutional sources believe that NetEase games will have a strong momentum for subsequent growth. Recently, at the NetEase Games 520 press conference, more than 10 new games, more than 30 popular games/IPs, and platform products took the stage one after another to release updated news. The first major open world martial arts game “The Sixteen Sounds of Yan Yun” was announced to be officially released for public beta on July 26. Another well-known IP, Eternity, also announced the latest development progress and actual machine demo of the “Everlasting” mobile game.

In the new product section, another notable international IP product was unveiled — “Marvel's Ultimate Reversal”. The 2022 overseas card “Dark Horse” was announced to be distributed domestically by NetEase. In addition to developing new games, more than 30 popular games in operation have also released new content for the second half of the year.

It is worth mentioning that NetEase, Blizzard, and Microsoft jointly announced the resumption of cooperation in April of this year, and Blizzard's national service is expected to return this summer. This move has attracted market attention. Institutional sources believe that IP players such as Warcraft are expected to return, and development cooperation for future IP sequels is worth looking forward to. However, at present, NetEase has not disclosed the latest progress in the return of Blizzard's national service.

According to other financial data, in the first quarter of 2024, NetEase achieved revenue of 26.9 billion yuan, an increase of 7.2% over the previous year; under non-GAAP, net profit attributable to the company's shareholders was 8.5 billion yuan, an increase of 11.8% over the previous year. Among them, Youdao's revenue was 1.4 billion yuan, up 19.7% year on year; Cloud Music's revenue was 2 billion yuan, up 3.6% year on year; and revenue from innovation and other businesses was 2 billion yuan, up 6.1% year on year.

Editor/Jeffrey