NetEase reported second-quarter earnings that missed analyst forecasts on Thursday, sending its U.S.-listed shares down more than 5% in premarket trading.
The Chinese gaming and media company posted net profit of 12.02 yuan per share, below the 15.54 yuan consensus estimate compiled by Refinitiv. Revenue increased 7.9% year-over-year to 30.11 billion yuan, outpacing the 29.48 billion yuan estimate.
NetEase's core gaming and related value-added services generated 25.0 billion yuan in net revenue, up 9.7% from a year earlier. Youdao, the company's education technology unit, reported net revenue of 1.5 billion yuan, a 3.5% increase. NetEase Cloud Music's revenue remained flat at 2.0 billion yuan, while innovative businesses and other operations posted a 3.5% decline to 1.6 billion yuan.
Total operating expenses rose to 9.1 billion yuan from 8.6 billion yuan in the prior quarter and 9.0 billion yuan a year earlier. The company cited higher marketing, staff-related, and research and development spending for the sequential increase, with R&D costs driving the year-over-year rise.
NetEase's shares fell 5.3% to $142.50 in premarket trading following the results, reflecting investor concern over the earnings miss despite revenue growth.
