By Sherry Qin

NetEase is scheduled to report first-quarter results on Thursday. Here's what you need to know:

NET PROFIT FORECAST: The Chinese videogame giant is expected to post a 8.5% rise in net profit to 8.28 billion yuan, equivalent to $1.15 billion, according to the consensus estimate of 14 analysts in a FactSet poll.

ADJUSTED NET PROFIT: Excluding share-based compensation expenses, adjusted net profit is expected at 8.95 billion yuan, according to FactSet, up from 8.51 billion yuan in the same period last year.

REVENUE FORECAST: Revenue likely rose 4.7% to 28.11 billion yuan, according to FactSet. NetEase's mobile-game sector likely continued to recover, with flat revenue growth for the first quarter after a decline in the final quarter of 2024, Nomura analysts said in a research note. Its PC game segment likely remained robust with a 71% jump in revenue, supported by both Blizzard's titles and self-developed ones such as "Marvel Rivals," Nomura added.

NetEase's Hong Kong-listed shares have risen 19% so far this year after gaining 14% in the first quarter. Analysts reckon that NetEase's stock could be an appealing choice during market volatility as its online gaming business isn't exposed to macro weakness or geopolitical headwinds.

WHAT TO WATCH:

--While the return of Blizzard-licensed titles likely boosted NetEase's revenue, the Chinese videogame maker's gross margin could be weighed as Blizzard-licensed titles' margins are lower than those of self-developed ones.

--Markets are still awaiting NetEase's next blockbuster title. A key event to watch is NetEase's annual game conference on May 20, where it could reveal more updates on launch schedule and new game highlights. Key titles that are in the pipeline include "Diablo 3," "Frost Punk: Rise of City," and "Ananta."

--Due to strong initial performance of new titles "Marvel Rivals," "FragPunk" and "Overwatch" China, Citi expects strong deferred revenue in December and early in the first quarter for NetEase, which could translate into stronger PC game growth in the first quarter and thereafter.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

May 13, 2025 00:07 ET (04:07 GMT)

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