Netease investor

For the third quarter of fiscal 2022 that ended 9/30/22 NetEase (NASDAQ: NTES) revenue increased 10% to RMB 24.4 billion ($3.4 billion) with games up 9.1% to RMB 18.7 billion ($2.6 billion) over Q3 2021.  For the first nine months of 2022, revenue was up 13% to RMD 71.1 billion ($9.9 billion).

Analysis

Games and their related services accounted for 77% of NetEase’s revenue in the third quarter.  Mobile games accounted for 69% of game revenue with PC and console games the other 31%.

It is good to see NetEase has been able to see steady revenue and profit growth in the tough China environment.  However, the bigger news is that NetEase and Activision Blizzard have not been able to come to terms on the license partnership for NetEase to operate Blizzard games in China.  The 15-year deal expires on January 23, 2023.

Licensed games accounted for 9.5% of NetEase’s total revenue in 2021 and Blizzard was defined by NetEase as having the “flagship licensed titles.”  It will be interesting to see how NetEase handles the licensing situation.  Microsoft, another major partner, has a licensing deal set to expire in August 2023.

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