NetEase Quarterly Profit Falls as Revenue Growth Slows

By Sherry Qin

NetEase's profit fell and revenue growth eased in the second quarter as its gaming segment growth faced some headwinds amid adjustments to its flagship game.

The Chinese videogame giant's net profit dropped 18% from a year earlier to 6.76 billion yuan, equivalent to $947.7 million, missing expectations of 7.24 billion yuan in a FactSet poll of analysts. Its bottom line was mainly weighed by net exchange losses in the quarter.

Adjusted net profit, a closely watched metric that excludes share-based compensation expenses, fell 13% to 7.82 billion yuan.

The Hangzhou-based company's revenue rose 6.1% to 25.485 billion yuan, with sales from games and related value-added services climbing 6.7%. That slowed from the 7% growth in the previous quarter.

NetEase's PC game segment struggled in the first half of the year following in-game adjustments to signature title "Fantasy Westward Journey." The company implemented changes to FWJ's trading platform for virtual items in May to ensure the stability of the in-game economic system. Analysts at Citi said they expect the move to affect PC game revenue for the rest of 2024.

NetEase's gross profit reached 16.04 billion yuan, up 12% from the year-ago period.

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

(END) Dow Jones Newswires

August 22, 2024 05:58 ET (09:58 GMT)

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