NetEase Inc. (NASDAQ:NTES) stock slid after it reported dismal fiscal fourth-quarter results on Wednesday.

The company’s quarterly revenue increased 3.0% year-on-year to $3.94 billion (27.55 billion Chinese yuan), missing the analyst consensus estimate of $4.10 billion.

The Chinese gaming player’s adjusted EPADS of $1.57 missed the analyst consensus estimate of $1.85.

Segments And Margins

Games and related value-added services revenues rose 3.4% to $3.14 billion. The corresponding gross margin increased by 384 bps to 70.5%, attributable to higher net revenues from self-developed games, such as Fantasy Westward Journey Online and newly launched games Where Winds Meet and Marvel Rivals.

Youdao (NYSE:DAO) revenue rose by 16.8% to $223.75 million. However, the corresponding gross margin declined by 274 bps to 45.1%.

NetEase Cloud Music’s revenues were $281.46 million, up 4.7%, while its gross margin expanded by 273 bps to 34.7%.

Innovative businesses and other revenue declined 10.4% to $292.77. However, the gross margin increased by 176 bps to 39.6%.

As of December 31, 2025, NetEase held $23.4 billion in cash and equivalents. The company generated $2.12 billion in operating cash flow during the quarter.

Dividend

The board of directors approved a dividend of 23.2 cents per share ($1.16 per ADS) for the fourth quarter of 2025 to holders of ordinary shares and holders of ADSs. NetEase paid a dividend of 11.4 cents per share (57 cents per ADS) for the third quarter of 2025 in December 2025.

NetEase CEO William Ding emphasized that AI has become a core component of their development and operations, significantly enhancing production efficiency and creating new interactive experiences for players.

“AI has become a foundational competency for our development and operations,” Ding said.

NTES Price Action: NetEase shares were down 4.13% at $118.42 during premarket trading on Wednesday, according to Benzinga Pro data.

Photo by Sergei Elagin via Shutterstock