NetEase (NTES) has unveiled updated data and insights for its performance in the first quarter of 2024 and February 2024, revealing positive trends in its gaming segment and overall outlook for the year ahead.
Over the past two years, NetEase has been actively expanding its presence overseas, establishing 22 game studios in key markets. This strategic move underscores NetEase's commitment to global expansion and diversification, with a particular focus on developing its own studios.
The introduction of new games has been a significant driver of revenue growth for NetEase. Recent releases such as Justice Mobile, Dunk City Dynasty, and Racing Master have made meaningful contributions to the company's top-line performance. With five new games launched since June 2023, NetEase anticipates further revenue acceleration in the coming quarters.
During the Spring Festival, Eggo Party, one of NetEase's flagship games, notably widened its lead over Tencent's Dream Party, reaffirming its popularity among gamers. This success reflects NetEase's ability to capture and retain a significant share of the gaming market.
NetEase boasts a robust pipeline of over 50 games, with licenses secured for 22 titles since September 2022, including one granted in January 2024. This pipeline positions NetEase for continued innovation and revenue growth in the months ahead.
Looking ahead, NetEase's revenue outlook for 1Q24 and 4Q23 is promising, with estimated figures surpassing consensus estimates. Revenue for 1Q24E is projected to reach RMB27,805.0M, marking an 11.0% year-on-year increase, while 4Q23E revenue is expected to reach RMB28,081.2M, reflecting a 10.8% year-on-year growth.
In terms of game performance, NetEase's mobile games have maintained a strong presence, despite a slight decline in popularity attributed to fewer new releases. Flagship titles such as Eggy Party and Justice Mobile continue to garner significant user engagement and revenue.
In the PC gaming segment, NetEase has maintained stable server counts and concurrent user numbers, with the introduction of "New Ghost" contributing to the overall performance.
Additionally, NetEase is optimizing its business model by downsizing its pan-live streaming business under Cloud Music. This strategic move aims to enhance net margins and improve overall business efficiency.
Overall, NetEase's strong game performance and strategic initiatives position the company for continued growth and success in the competitive gaming market.
