Shulou(Shulou.com)11/24 Report--

According to news on the evening of August 18, Beijing time, NetEase (Nasdaq: NTES;HKEX: 9999) today released its financial results for the second quarter of 2022, which ended June 30. According to the financial report, NetEase's net income in the second quarter was 23.2 billion yuan, an increase of 12.8% over the same period last year. Net profit was 4.6666 billion yuan ($696.7 million), compared with 4.394 billion yuan in the previous quarter and 3.5418 billion yuan in the same period last year. Based on non-Non-GAAP, the net profit from continuing operations attributable to NetEase's shareholders was 5.4098 billion yuan ($807.7 million), compared with 5.1176 billion yuan in the previous quarter and 4.2279 billion yuan in the same period last year.

After the release of the results, senior executives such as NetEase CEO Ding Lei, CFO Yang Zhaoyi and Vice President Hu Zhipeng attended the subsequent earnings call to interpret the main points of the results and answer analysts' questions.

The following is the main content of the analyst Q & A session in this conference call: Haitong International analyst Natalie Wu: recently, there are rumors that the development of the Warcraft player version has been suspended. I want to confirm whether this is an independent incident. Do we need to worry about our current and future cooperation with Blizzard, especially after being acquired by Microsoft next year? The second question is about the "endless Lagrange" asked above. Is there a relatively large increase recently from the Douyin issuer plan? If so, what is the current profit margin? Is the corresponding distribution cost higher?

Ding Lei: about the mobile game of Blizzard World of Warcraft, as you said, this is an independent event. Our cooperation with Blizzard has been very good so far. We have just released Diablo: immortality, which has achieved good results all over the world.

Yang Zhaoyi: on the second question, the company will continue to monitor and explore effective ways of user acquisition and marketing, including through Douyin. Douyin is very effective for the marketing of some types of games. Endless Lagrange is an example, but when we observe the profit margin level of a game as a whole, we will consider many factors, marketing channels and expenditure is one of them. The reason why this game can achieve the favor and success of users, I do not think that a specific marketing channel has played a decisive role, may have played some role, but what is more important is the expansion package that the game is constantly updating and launching. in particular, the expansion package we released in the second quarter played a big role.

Morgan Stanley analyst Alex Poon: first of all, is there any obvious difference in design between domestic games and overseas games in terms of monetization and krypton mechanisms? For example, when Diablo was just launched, some American players will think that Krypton is relatively heavy. Will the company gradually get used to the Krypton model in the global mobile game business in the future, or will it need to be mildly done in terms of design? make some adjustments? The second question is, how does Forever robbery perform on the Xbox platform? What is the schedule for the launch of the game on PS5 and other devices? How does the company predict revenue from console games?

Hu Zhipeng: our game products provide a very high-quality game experience for all users, not just games that serve a small number of big R players (users who create 80% or even more than 90% of revenue). On the contrary, regardless of the players' ability, we hope they can get a very high quality game experience in our game. As far as I know, many domestic and overseas players around me can experience Diablo very well without spending money. There are different cultural backgrounds, different users' game habits and consumption habits in different countries and regions of the world. We will carry out our global game development and operation according to these differences. We will also try our best to meet the special and differentiated needs of users in different markets.

With regard to the performance of "Forever robbery" on the Xbox platform, we also disclosed in the financial report that we joined the membership mechanism, which brought a large number of new users after launch, allowing more top players to experience the charm of the game. We plan to launch PS5 at the end of this year or early next year, and we believe that more players will have a chance to play this game.

Related readings:

"NetEase's net profit of 12.9 billion yuan in the second quarter increased by 15.7% over the same period last year, and cloud music revenue increased by 29.5%."

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