NetEase, Inc: 1Q26 Review: past the inflection point, multiple catalysts ahead

Research evidence excerpt

NetEase, Inc: 1Q26 Review: past the inflection point, multiple catalysts ahead

iQprofile SM NetEase, Inc

Key Income Statement Data (Dec) 2024A 2025A 2026E 2027E 2028E Company Sector

(CNY Millions) Internet/e-Commerce

Sales 105,295 112,626 123,902 138,314 148,046

Gross Profit 65,807 72,402 83,302 92,128 99,165

Sell General & Admin Expense (17,524) (17,799) (19,462) (23,194) (23,687) Company Description Operating Profit 29,584 35,835 45,386 48,463 53,271

Net Interest & Other Income 6,134 4,996 4,272 5,238 5,238 NetEase was incorporated in June 1997 and listed in

Associates NA NA NA NA NA Nasdaq in July 2000. It provides web portal services, online

Pretax Income 35,718 40,830 49,659 53,701 58,509 value added services such as audio content, education and

Tax (expense) / Benefit (5,461) (6,033) (9,118) (10,203) (11,702) smart devices, eCommerce and online games business. In-

Net Income (Adjusted) 33,511 37,344 42,604 45,263 48,621

house developed games include Fantasy Westward Journey,

Average Fully Diluted Shares Outstanding 646 644 646 649 652

Westward Journey Online, The Ghost, Onmyoji etc. NetEase

Key Cash Flow Statement Data

is also publishing games in overseas markets including but

Net Income 29,698 33,760 39,854 42,812 46,121

not limited to Japan. Depreciation & Amortization 2,418 2,247 1,615 1,528 1,484

Change in Working Capital 3,652 8,721 3,531 3,377 3,012

Deferred Taxation Charge NA NA NA NA NA

Other Adjustments, Net 3,910 6,011 347 0 0 Investment Rationale

Cash Flow from Operations 39,677 50,740 45,347 47,717 50,616 We expect NetEase to maintain a solid revenue base with

Capital Expenditure (1,275) (1,065) (1,332) (1,665) (2,081) its existing core games, which consist mainly of high-

(Acquisition) / Disposal of Investments 20,515 (31,214) (9,629) (9,623) (9,616)