NetEase (NASDAQ:NTES) outlined a year of double-digit revenue growth in 2025 while using its fourth-quarter earnings call to emphasize a long-term strategy centered on proprietary technology, large-scale AI integration, and global expansion of its game portfolio. Management highlighted record performance from long-running franchises, traction from newer global titles, and a strong balance sheet that supported dividends and ongoing buybacks.
2025 results: revenue up 10% as games remained the core driver
NetEase reported total net revenue of CNY 112.6 billion ($16.1 billion) for 2025, a 10% increase year-over-year. Fourth-quarter total net revenue was CNY 27.5 billion ($3.9 billion).
Management said the quarter-over-quarter decline in online game net revenue reflected seasonal effects, as the prior quarter benefited from summer holiday events. Year-over-year growth in the fourth quarter was attributed to higher net revenues from self-developed games, including Fantasy Westward Journey Online, as well as newly launched titles such as Where Winds Meet and Marvel Rivals.
Margins, expenses, and shareholder returns
For 2025, NetEase’s total gross profit margin was 64.3%. In the fourth quarter, gross margin rose to 64.2% from 60.8% a year earlier. Games and related VAS gross margin improved to 70.5% in the fourth quarter from 66.7%, which management attributed to product mix—specifically, a lower proportion of licensed games, which generally carry lower margins than self-developed titles.
Fourth-quarter operating expenses totaled CNY 9.4 billion, representing 34% of net revenues. Selling and marketing expenses were 14.1% of net revenue in the fourth quarter (and 13% for the full year, broadly in line with the prior year). R&D expenses were 16.1% of net revenues in the fourth quarter (and 15.7% for the full year), also broadly in line with 2024, reflecting what management described as consistent investment in content creation and product development.
Non-GAAP net income attributable to shareholders was CNY 7.1 billion ($1.0 billion) in the fourth quarter, down 27% year-over-year. Non-GAAP net income attributable to shareholders for the full year was CNY 37.3 billion ($5.3 billion), up 11%.
NetEase ended 2025 with a net cash position of about CNY 163.5 billion, up from CNY 131.5 billion at the end of 2024. The board approved a dividend of $0.232 per share, or $1.16 per ADS. Under its $5 billion repurchase program, the company said it had repurchased approximately 22.1 million ADS as of Dec. 31, 2025, for a total cost of about $2.0 billion.
AI as a production “force multiplier” and a gameplay frontier
A major portion of the call focused on NetEase’s multi-year buildout of AI capabilities and how management sees AI reshaping the game industry. The company described AI as a “force multiplier” rather than a replacement for human creativity and said it has integrated AI across internal workflows including design, programming, art, and QA.
Management highlighted several internally developed tools and applications:
- CodeMaker for AI-assisted programming, which has expanded from code completion to “agent-level services,” with internal data showing developers shifting from line-level assistance to task-level problem solving.
- DreamMaker and Danqing for art and animation, aimed at accelerating early-stage creative exploration and speeding production.
- AI-driven QA that models more than 1 million diverse player behaviors to validate stability and balance in complex game worlds.
On gameplay innovation, management cited earlier work in Justice with intelligent NPC systems powered by large language models and said Where Winds Meet has deployed over 10,000 AI-powered NPCs capable of natural-language interaction and dynamic story outcomes. The company also pointed to features such as the Voice AI Teammate system in Naraka: Bladepoint Mobile and AI workflows for player-created content in Justice and Eggy Party.
In Q&A, management argued that market commentary about new AI tools lowering barriers to entry (including references to Google’s “Genie”) misunderstands the impact on competition. While AI may reduce production costs and enable more creative experimentation, the company said it also raises the bar for top-tier games by shifting the key moat toward “integration capabilities”—including the ability to blend AI with complex game systems, long-term economies, and social ecosystems. NetEase added it is prioritizing game-focused, vertical AI expertise rather than pursuing general-purpose foundation models, emphasizing private data, practical scenarios, and a cross-disciplinary talent base spanning algorithms, engines, and game design.
Game portfolio: global traction, franchise resilience, and upcoming launches
Management positioned 2025 as a year of global expansion gains, led by Where Winds Meet, which it said surpassed 80 million accumulated players through a staged cross-platform rollout. The company said the game ranked No. 2 on Steam’s global top-seller chart after launch, won PlayStation’s November Players’ Choice Award, and topped iOS download charts in more than 60 regions. NetEase added that live-service updates helped sustain engagement, and the title delivered its highest monthly revenue and daily active users on record in China in December.
Marvel Rivals was also highlighted for sustaining engagement through seasonal updates and character releases. Management noted that Season 6 featuring Deadpool helped drive strong rankings globally and in specific markets, and in Q&A said the game remained “stable” one year after launch, with continued emphasis on new heroes, new gameplay modes, and social interaction features.
In the pipeline, NetEase said Sea of Dawn began technical testing across China and selected global markets earlier in the month, and later stated in Q&A that development is on track with an expected Q3 official launch. The company said the current round of technical testing started Feb. 5, with a promotional video surpassing 10 million views on Bilibili. NetEase also said development is progressing on Neverness to Everness, with the team refining systems and content based on prior testing insights.
For domestic franchises, management said Fantasy Westward Journey Online delivered record high annual revenue in 2025, driven by a fourth-quarter peak. The company credited content innovation and singled out the Unlimited Server as effective in lowering barriers to entry while preserving key features such as free trading and classic mechanics. Fantasy Westward Journey Mobile also delivered record annual revenue, supported by diversified server models and content initiatives.
During Q&A, NetEase said a closed test for Infinite in January met expectations, and reiterated a goal of simultaneous global launch across platforms including PC, mobile, and console. The company also discussed plans for new auto chess titles, describing the category as mature and stating it intends to differentiate through theme—specifically Chinese demon-and-ghost culture—and upgraded gameplay within that proven format.
Other segments: Youdao operating milestone and Cloud Music subscription growth
Outside of games, management said Youdao advanced an AI-native strategy and achieved its first-ever net cash inflow from operating activities in 2025. Financially, Youdao net revenues were CNY 5.9 billion for the year, up about 5%, and CNY 1.6 billion in the fourth quarter, up 17% year-over-year, driven by online marketing services and learning services.
NetEase Cloud Music net revenue was CNY 7.8 billion for the year, down 2%, while fourth-quarter net revenue increased 5% year-over-year to CNY 2.0 billion. Management attributed the quarterly growth to continued healthy growth in membership subscriptions, while noting social entertainment services and other revenue remained lower than the prior-year period.
Net revenues from innovative business and others were CNY 6.8 billion for 2025. Fourth-quarter net revenues were CNY 2.0 billion, down 10% year-over-year but up 42% quarter-over-quarter, with the year-over-year decline tied to increased intersegment transaction eliminations and the sequential increase led by Yanxuan advertising services and other businesses within the segment.
About NetEase (NASDAQ:NTES)
NetEase, Inc (NASDAQ: NTES) is a Chinese technology company headquartered in Hangzhou that develops and operates Internet services and products. Founded in 1997 by William Ding (Ding Lei), the company has grown from an early web portal and e-mail provider into a diversified online services group. William Ding has served as the company’s founder and long-time leader, guiding its expansion into games, digital content and consumer services.
The company’s primary business is interactive entertainment: NetEase Games designs, develops and publishes PC and mobile games for domestic and international audiences, offering a mix of self-developed franchises and titles published under licensing and strategic partnerships.
