NetEase revenue rises 6% in Q1 but US-listed shares dip

NetEase Inc. reported a 6.1 percent rise in first-quarter revenue, beating estimates, but its US-listed shares fell as growth in its core gaming division was offset by a decline in its innovation arm.

"For the first quarter of 2026, we delivered another solid quarter across our established gaming portfolio, while continuing to make steady progress advancing our pipeline of new titles," William Ding, Chief Executive Officer of NetEase, said in a statement.

The Chinese gaming giant posted net revenues of RMB 30.6 billion ($4.4 billion), with its games and related value-added services segment growing 6.9 percent to RMB 25.7 billion. Net income attributable to the company's shareholders was RMB 10.7 billion, a 3.6 percent increase from the same period in 2025.

The results highlight NetEase's reliance on its gaming segment to drive growth. Despite the revenue beat, US-listed shares fell 1.6 percent in pre-market trading, suggesting investor concern over slowing growth in other areas and rising operating expenses, which climbed 6.5 percent year-over-year.

Segment Performance

The company saw continued strength in its main business, with established titles such as the Fantasy Westward Journey franchise and Eggy Party supporting the 6.9 percent revenue growth in games.

Net revenues from its majority-controlled subsidiary Youdao, an AI-powered learning company, increased 3.8 percent to RMB 1.3 billion. NetEase Cloud Music also saw revenues climb 6.6 percent to RMB 2.0 billion. However, the innovative businesses and others segment posted a 4.6 percent decrease in revenue to RMB 1.5 billion.

Gross profit for the quarter was RMB 21.2 billion ($3.1 billion), an increase of 14.8 percent compared with the first quarter of 2025.

Shareholder Returns

NetEase announced a dividend of US$0.144 per share, or US$0.720 per ADS, for the first quarter. The company also continued its share repurchase program, having bought back approximately 23.2 million ADSs for a total cost of US$2.1 billion as of March 31, 2026.

The earnings beat shows NetEase's gaming franchises remain highly profitable, but the negative stock reaction indicates investors are watching for broader growth drivers. The market will look to the global performance of new titles like Marvel Rivals and Where Winds Meet as the next major catalyst.

This article is for informational purposes only and does not constitute investment advice.