US Stock Market Movement | NetEase (NTES.US) rises 7%, Q2 gaming revenue exceeds expectations

Zhitong Finance APP reported that on Friday, NetEase (NTES.US) rose by 7% to 128.29 US dollars. According to the news, on August 20, NetEase announced total net revenue of 30.11 billion yuan and game revenue of 25.02 billion yuan for the second quarter, both surpassing market expectations; gross profit was 21.22 billion yuan, up 17.5% year-on-year. Online game revenue grew by 10% year-on-year to 24.5 billion yuan, group gross margin increased from 64.7% to 70.5%, and the gross margin for games and related services reached 76.1%, mainly due to a decrease in channel cost sharing.

Goldman Sachs released a research report stating that NetEase is a high-quality “non-AI” diversified company. Despite high industry AI spending and margin pressure on some peers, the company’s gross margin and free cash flow both reached record highs, once again demonstrating the resilience and profitability growth of its gaming business. Meanwhile, benefiting from a favorable mix of PC and mobile games, lower iOS/Android channel expenses, and the shift towards its own channels, second-quarter game gross margin reached a historic high. Goldman Sachs believes this margin expansion is structural, and with operational efficiency improvements, expects operating profit to maintain high double-digit year-on-year growth in the second half of the year.