NetEase recorded strong first quarter results with substantial year-on-year increases in net revenues and gross profit, tempering lower gaming growth at home with overseas market earnings, particularly Japan.
Driven by strong performance in online game services and e-commerce, gross profit also jumped by nearly 36% year on year to RMB 8 billion, continuing growth from the previous quarter.
Net revenues grew close to 30% year-on-year to RMB 18.36 billion ($2.74 billion), driven by increased online game service and e-commerce revenues and beating analyst estimates by a notable margin.
Online game revenue increased by more than 35% year-on-year to RMB 11.85 billion, thanks to the steady performance of legacy flagship titles such as “Fantasy Westward Journey” as well as popular overseas mobile titles such as “Knives Out” and “Night Falls: Survival.” Mobile games accounted for 72% of net revenues from online game services.
While Tencent’s game revenues took a heavy hit in the first quarter due to more stringent licensing rules, NetEase hedged regulatory risks by emphasizing overseas markets, specifically Japan and South Korea.
NetEase’s “Knives Out,” for instance, was a top earner on iOS in Japan in March.