NetEase (NASDAQ:NTES) stock slid after it reported fiscal third-quarter results on Thursday.
The company’s quarterly revenue increased 8.2% year-on-year to $3.98 billion (28.36 billion Chinese yuan), missing the analyst consensus estimate of $4.11 billion.
The Chinese gaming player’s adjusted EPADS of $2.09 beat the analyst consensus estimate of $1.88.
Also Read: NetEase’s Gaming Momentum Is Strong, But Investors Wary Of Slumping Units
Games and related value-added services revenues rose 11.8% to $3.28 billion. The corresponding gross margin increased by 51 bps to 69.3% attributable to higher net revenues from self-developed games such as Fantasy Westward Journey Online, Eggy Party and newly-launched Where Winds Meet and Marvel Rivals, as well as certain licensed games.
Youdao (NYSE:DAO) revenue rose by 3.6% to $228.76 million. However, the corresponding gross margin declined by 796 bps to 42.2%.
NetEase Cloud Music’s revenues were $275.89 million, down 1.8%, while its gross margin expanded by 260 bps to 35.4%.
Innovative businesses and other revenue declined 18.9% to $202.07 due to certain inter-segment transaction elimination. However, the gross margin increased by 518 bps to 43.0%.
As of September 30, 2025, NetEase held $21.5 billion in cash and equivalents and generated $1.8 billion in operating cash flow.
The board of directors approved a dividend of 57 cents per ADS for the third quarter of 2025, in line with the second quarter.
The company extended the duration of its previously approved share repurchase program of up to $5.0 billion ADSs for an additional 36 months until January 9, 2029.
NetEase CEO William Ding emphasized that NetEase has continuously strengthened its innovation capabilities by releasing sophisticated titles that build a solid foundation at home while expanding reach to players worldwide.
He added that NetEase will continue collaborating with global partners and top talent to create more value for players and maintain momentum across key markets.
Price Action: NetEase stock was trading lower by 3.00% to $129.42 premarket at last check Thursday.
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