China-based NetEase has released its latest financial report covering its Q3 period up to September 30 2023, revealing rising revenues and profits carried by its games catalogue.
In fact, net revenues rose by 11.6% compared to Q3 2022, reaching an impressive CN¥1.5 billion ($3.7 billion) with over 80% coming from games and related services.
A strong quarter
In the third quarter, NetEase’s games and related services revenues rose by 16.5% compared to Q3 2022 to CN¥21.8 billion ($3 billion), while search engine Youdao increased 9.7% to CN¥1.5 billion ($210.9 million).
On the other hand, Cloud Music actually fell in net revenue, decreasing by 16.3% compared to 2022’s Q3 down to CN¥2 billion ($270.4 million), meaning games played an important part in the overall 11.6% revenue rise.
Gross profit also rose in the latest quarter, up 23.4% from Q2 2022 and now reaching CN¥17.0 billion ($2.3 billion). This was an increase from Q2 2023 too, where CN¥13.7 billion ($1.9 billion) gross profit was recorded.
Quarter-over-quarter increases in games’ gross profits have been attributed to newly launched mobile games Justice and Racing Master, while the year-on-year rise largely comes from the new titles and Egg Party’s continued operation. In fact, 93.7% of games earnings have come from online operations.
NetEase also has fewer royalty fees than last year after ending services of certain licensed games like Warcraft, further increasing its overall profits. Its total operating expenses did rise 4.5% to CN¥9.4 billion ($1.3 billion) this quarter, however.
"Our robust and increasingly diversified games portfolio led our strong results in the third quarter, with total net revenues reaching CN¥27.3 billion for a year-over-year increase of nearly 12%," NetEase CEO and director William Ding said. "Our newest innovative, first-rate games in various genres, including Racing Master, Justice mobile game and Dunk City Dynasty, also quickly gained widespread acclaim.
"Looking forward, creating products and content with a passion that invigorates the market and shapes resonant experiences will drive value for our users and for our company."
Towards the end of Q3, NetEase made its first ever Tokyo Game Show appearance where it featured more than 10 games, including upcoming free-to-play title Project Mugen. NetEase continued to dominate on mobile into October too, as one of China's top publishers.