Chinese Internet Tech Firm NetEase’s Revenue Rises 6.3% YoY, Reaching CNY 25 Bn in Q1 2023

Technology Author: Zhisheng Wang, Yiran Xing Editor: Yiran Xing May 26, 2023 04:07 PM (GMT+8)

NetEase continues to invest in self-research key technologies such as AI big models this quarter, with R&D investment of CNY 3.7 billion, accounting for 15% of the total revenue.


NetEase, Inc. (hereinafter referred to as "NetEase", Chinese: 网易, NASDAQ: NTES, HKEX: 9999), headquartered in Guangzhou, recently released its first 2023 quarterly report. In Q1 2023, NetEase reported revenue of CNY 25.1 billion (USD 3.5 billion), up 6.3% year-over-year, and net income attributable to NetEase shareholders was CNY 6.8 billion, an increase of 53.7% from the same period last year.

In terms of business segments, net revenue from games and related value-added services was CNY 20.1 billion, up 7.6% year-on-year; net revenue from NetEase Cloud Music was CNY 2 billion, 5.2% lower than in the previous year; net revenue from NetEase Youdao was CNY 1.2 billion, a decrease of 3.1% from the same period last year; and net revenue from NetEase Innovative businesses and others was CNY 1.9 billion, 12.8% higher than in the previous year.

Revenue from games and related value-added services remained NetEase's main source of revenue, and the percentage was increasing. NetEase's game product Eggy Party has topped China's iOS games download chart several times in a row; the revenue in March this year even hit a record high, with over 30 million daily players in the first quarter.

Founded in 1997, NetEase is a leading global Internet and game service provider. Powered by one of the largest in-house game R&D teams focused on mobile, PC and console, NetEase creates superior gaming experiences, and delivers value for its thriving community worldwide. In addition to games, NetEase also covers businesses like portals, email, online education, e-commerce, music, and live streaming.

NetEase insists on globalization strategy, and has released nearly 30 products for the overseas market, covering more than 200 countries and regions worldwide. In 2022, NetEase launched its IP masterpiece based on its self-developed Messiah engine, topping the charts at home and abroad. After its global release, Diablo Immortal quickly topped the iOS download charts in over 100 countries and regions, with a cumulative global player base of over 30 million. In February 2023, NetEase established Spliced, a new overseas game studio dedicated to creating "world-class online gaming experiences" using original IP, with an office in Manchester, UK.

NetEase's market-leading ESG initiatives are among the most recognized in the global media and entertainment industry, earning it inclusion in 2022 Dow Jones Sustainability World Index, 2022 Dow Jones Sustainability Emerging Markets Index, and 2023 Bloomberg Gender-Equality Index, as well as receiving an "A" rating from MSCI.

In terms of R&D investment, NetEase continued to invest in its self-research key technologies such as AI big models in the first quarter, with R&D investment of CNY 3.7 billion, accounting for 15% of revenue. Moreover, NetEase has achieved 90% efficiency improvement in key aspects of digital content production using self-research technologies. Since 2023, NetEase's AI applications in fields such as education and cultural entertainment have made phased progress. On May 5, NetEase Youdao's official video account released a demonstration video of an AI speaking teacher developed based on the "Ziyue" large model, which was the first to implement AIGC technology in domestic education scenarios.

The major competitors of NetEase include Chinese companies such as Tencent (Chinese: 腾讯), Alibaba (Chinese: 阿里巴巴), Baidu (Chinese: 百度), as well as international players such as Google and Amazon from the US.

As of press time, NetEase closed at USD 85.73 apiece, with a market cap of USD 55.29 billion.