NetEase, Inc. (NASDAQ:NTES) stock fell Thursday after the company reported first-quarter results.

NetEase Q1 Earnings Beat Expectations

The company reported first-quarter revenue of $4.44 billion, or 30.6 billion Chinese yuan, up 6.1% year over year and above analyst estimates of $4.20 billion.

Adjusted earnings were $2.53 per ADS, topping analyst expectations of $2.02.

Gaming Segment Drives Revenue And Margin Expansion

Revenue from games and related value-added services rose 6.9% to $3.7 billion, while gross margin for the segment improved to 74.79% from 68.83% a year earlier.

Youdao revenue increased 3.8% to $195.4 million, though gross margin declined to 44.68% from 47.31% a year ago.

NetEase Cloud Music revenue rose 6.6% to $287.2 million, while gross margin edged up to 37.06% from 36.73%.

Revenue from innovative businesses and other operations fell 4.6% to $224.6 million. Gross margin for the segment improved to 41.97% from 38.78%.

Cash Position And Dividend Update

As of March 31, 2026, NetEase held $24.3 billion in net cash and generated $2.0 billion in operating cash flow during the quarter.

The company's board approved a first-quarter dividend of 14.4 cents per share, or 72 cents per ADS, down from 23.2 cents per share, or $1.16 per ADS, paid for the fourth quarter of 2025.

NetEase Highlights Global Gaming Momentum

The company highlighted the global success of its game titles, particularly the overseas expansion of games like Whirlwinds Meet and Marvel Rivals, which have gained significant traction in international markets.

Strategic initiatives include continued investment in game development with a focus on innovation, as well as the integration of AI technologies across various business segments.

Management expressed confidence in future growth driven by a pipeline of new game titles, global expansion, and operational excellence, alongside strong community and player engagement.

Stock Performance

NTES Price Action: NetEase shares were down 4.41% at $111.66 at the time of publication on Thursday, according to Benzinga Pro data.

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