Technology Author:EqualOcean News , Jiahui Liao Editor:Yiru Qian Mar 01, 2024 04:59 PM (GMT+8)

NetEase invested CNY 16.5 billion in R&D throughout the year, and several self-developed games have obtained operating licenses.

Netease

On February 29, NetEase released its financial report for the fourth quarter of 2023 and the entire year.

The financial data shows that NetEase (09999:HK; NTES:NASDAQ) achieved a total revenue of CNY 103.5 billion in 2023. Under non-GAAP, the net profit attributable to the company's shareholders from continuing operations was CNY 32.6 billion. NetEase's Q4 revenue was CNY 27.1 billion, with a non-GAAP net profit of CNY 7.4 billion.

During the reporting period, NetEase's gaming division generated an annual revenue of CNY 81.6 billion, with Q4 revenue reaching CNY 20.9 billion. NetEase Cloud Music achieved an annual revenue of CNY 7.9 billion, marking its first annual profit, with Q4 revenue at CNY 2 billion and a gross profit margin increase to 30.3%. NetEase Youdao released the "Confucius" educational model 2.0, which has been implemented in the education and advertising fields, driving the annual revenue to CNY 5.4 billion, with Q4 revenue at CNY 1.5 billion.

In 2023, NetEase's innovation and other businesses achieved an annual revenue of CNY 8.6 billion, with Q4 revenue at CNY 2.8 billion. Thanks to the improvement in gross profit margins of NetEase Yanxuan and advertising services, the innovation sector's quarterly gross profit margin doubled to 34.4% year-on-year. NetEase Yanxuan focused on "treasured Chinese products," maintaining a leading position in pet and home cleaning categories, with a 57% year-on-year growth in Pro membership revenue.

NetEase CEO William Ding stated that the company's performance in 2023 showed healthy growth, with many business segments developing well. NetEase will continue to provide innovative, high-quality products and services, continuously deliver premium content, enhance user experience, accelerate cross-industry innovation integration, and promote industry progress through practical applications.

In 2023, NetEase continued to consolidate its advantages in casual parties, MMO, and expanded the influence of its self-developed products.

Additionally, NetEase continues to insist on self-developing key technologies such as AI, accelerating technological applications to achieve business breakthroughs. NetEase increased its R&D investment throughout the year, reaching a record high of CNY 16.5 billion. Self-developed technologies such as AI large models have fully penetrated and empowered core businesses, rapidly landing in digital content and industrial manufacturing fields, creating dual commercial and social value.

Last year, NetEase accelerated the implementation of AI in the fields of education services and music composition, achieving significant progress.

NetEase Youdao released the "Confucius" Education Large Model 2.0, introducing multiple native applications of large models such as the virtual human language coach Hi Echo 2.0 and the AI home tutor Xiao P Teacher. With the support of AI technology, Youdao's online marketing services saw a consecutive five-quarter year-on-year increase of over 50%, with a Q4 revenue growth of 96.9%, reaching a new high.

NetEase Cloud Music deepened the application of AI technology across the entire music production, consumption, and recommendation process. The AI Music Laboratory developed a one-stop AI music composition tool, which was showcased on the CCTV New Year special program "Taking New Steps," generating song demos in 10 seconds based on three keywords. Beyond AI technology applications, NetEase Cloud Music further strengthened its membership commercialization, achieving an annual revenue of CNY 7.9 billion, marking the first annual profit after years of losses, and a Q4 revenue of CNY 2 billion, with a gross profit margin increased to 30.3%.

Over the past year, NetEase has contributed to the advancement of cutting-edge technologies through the open-sourcing of resources in large models, low-code development, cloud-native solutions, and big data. NetEase Fuxi and the China Computer Federation established the "CCF-NetEase Thunder Fire Joint Fund," attracting nearly a hundred research teams from prestigious universities such as Tsinghua University, Peking University, and Zhejiang University, dedicated to promoting research collisions and industrial applications in China's cutting-edge technology fields such as artificial intelligence.

While exploring various categories such as gaming, NetEase has also been active overseas. Since 2019, NetEase has successively established 15 gaming studios in countries and regions such as Japan, North America, including Spliced, Anchor Point Studios, Bad Brain Game Studios, PinCool, T-Minus Zero Entertainment, and Fantastic Pixel Castle. According to the latest announcement, NetEase Games has established the 3A game studio BulletFarm in Los Angeles, led by the designer of the "Call of Duty" series, David Vonderhaar. The studio plans to develop a 3A game emphasizing cooperative gameplay. William Ding stated that NetEase is very confident that in the coming years, works from overseas studios will be launched, serving both the overseas and Chinese markets. NetEase can collaborate with these work teams, sharing creative experiences for mutual benefit.

As of the time of this report, NetEase's Hong Kong stock was priced at HKD 174.20 per share, with a total market value of HKD 561.6 billion. Its US stock was priced at USD 107.92 per share, with a total market value of USD 69.579 billion.