Chinese gaming major NetEase posts 13% rise in its Q2 2021 revenue

Gaming company NetEase generated 20.5 billion yuan (US$3.17 billion) in total revenue in Q2 2021, up 12.9% year-on-year and ahead of market expectations, according to the company’s latest financial results announced on Tuesday.

Photo credit: Raysonho @ Open Grid Scheduler / Grid Engine

The company generated a net income of 3.5 billion yuan (US$548.5 million) during the June quarter, down from 4.5 billion yuan (US$700 million) in Q2 2020, when the gaming industry in China was boosted by pandemic-induced lockdowns.

NetEase’s mobile games business accounted for 72% of total revenues, while sales in overseas markets accounted for 10% during the period. The company has high expectations for its upcoming title based on the legendary Harry Potter series, which is set for a September 9 release.

NetEase’s latest financial results come just one day after China’s National Press and Public Administration announced new rules limiting gamers under 18 years old to just three hours of gameplay per week.

But NetEase remained bullish in the face of the latest policy changes. “Less than 1% of our revenue comes from minors,” NetEase’s investor relations director Margaret Shi said on the earnings call. “We are interested in making high-quality games that appeal to adult audiences around the world. We are not interested in making a profit through minors,” she added.

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The company voiced its support for the new regulations, having previously noted the negative impact certain games can have on children. Earlier this month, Chinese state media derided video games as a form of “spiritual opium” in a viral article that was later deleted.

On another regulatory front, NetEase acknowledged that the company’s status is changing. “Certain industries, including ecommerce and gaming are no longer eligible for the key software qualification. As a result, we can no longer enjoy the 10% preferential tax rate,” CFO Charles Yang told investors. NetEase’s share price on the Nasdaq increased by 8.7% to US$97.42 in Tuesday trading following the earnings announcement.

Currency converted from Chinese yuan to US dollar: US$1 = 6.46 yuan.

This report was first published on KrAsia.