Nasdaq-listed NetEase, China’s second-largest online game producer, announced Wednesday its fourth quarter 2019 revenue of RMB 15.7 billion (USD 2.3 billion), a 9.2% increase year-over-year. Net revenue for the fiscal year 2019 was RMB 59.2 billion (USD 8.5 billion).
Beating market expectations on both revenue and net income in Q4, NetEase now took over Baidu as the fifth most valued Chinese internet companies, trailing after Alibaba, Tencent, Meituan Dianping, and JD.com.
After selling its cross-border e-commerce unit, NetEase Kaola, once a drag on its gross profit margin, NetEase recalibrated its business to focus on gaming, its language learning platform Youdao, as well as music streaming service NetEase Cloud Music. The better-than-expected Q4 is a positive reflection of the company’s now more consolidated strategy.
That said, the Guangzhou-based company is still quite dependent on its gaming business, which brought in a revenue of RMB11.6 billion (USD1.7 billion) in the last quarter of 2019, the ninth consecutive month for the business to exceed RMB 10 billion.
Though dwarfed by Tencent Gaming’s RMB 28.6 billion (USD 4.08 billion) revenue (2019 Q3), NetEase is still the second-largest online game player in China.
“NetEase has attracted a large group of loyal fans using its distinctive art style and rich background stories”, said app data service AppAnnie in its 2010s mobile application report.
In the quarter past, NetEase games also did well overseas. The company tops App Annie’s list of Chinese publishers by overseas earnings in November 2019. For instance, Knives Out topped the iOS Japan chart many times during the quarter, according to NetEase’s earnings release. MARVEL Super War, the result of the collaboration between NetEase and the U.S. comics publisher, also gained wide popularity in South East Asia after the launch.