NetEase's First-Quarter Profit Rose on Game Revenue Strength — Update

By Sherry Qin

NetEase reported higher profit in the first quarter, supported by its games segment, as the Chinese videogame giant looks to better compete with Tencent with a strong pipeline this year.

The Hangzhou-based company said Thursday that its net profit increased 12% from a year earlier to 7.6 billion yuan ($1.05 billion), missing the estimate of CNY8.015 billion in a FactSet poll of analysts.

Adjusted net profit, a closely watched metric that excludes share-based compensation expenses, climbed 12% to CNY8.5 billion.

Revenue rose 7.2% to CNY26.9 billion, short of analysts' estimate of CNY27.35 billion.

Revenue from games and related value-added services--NetEase's largest segment--climbed 7.0% to CNY21.5 billion.

NetEase's top line was helped by its popular titles, including "Eggy Party" and "Identity V."

NetEase competes with Tencent, the world's largest gaming company by revenue, and their rivalry has grown as the companies accelerate title releases after China's gaming regulator eased its grip on the sector.

Tencent released its long-awaited game title "Dungeon & Fighter Mobile" earlier this week after reporting a 62% net profit rise in the first quarter earlier this month.

NetEase has a strong pipeline of games that will hit the market in the next few months, including "Where Winds Meet" and "Naraka: Bladepoint Mobile."

NetEase and Blizzard Entertainment's renewed agreement will also bring its blockbuster titles back to China this summer, including "World of Warcraft" and "Hearthstone."

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

May 23, 2024 07:03 ET (11:03 GMT)

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