By WU Yangyu
Chinese internet technology company NetEase released its Q2 financial report on August 24. The company saw its net revenue up to 24 billion yuan (US$3.3 billion) from 23.2 billion yuan in the same period last year. Under non-GAAP accounting standards, the net profit attributable to shareholders was 9 billion yuan, compared to 5.4 billion yuan in the same period last year.
In Q2, NetEase's revenue from its core business, games was 18.8 billion yuan, compared to 18.1 billion yuan in the same period last year, with a year-on-year growth rate of only 3.9 percent. In contrast, the growth rate for this business was 16.2 percent in Q1 of this year and 15.0 percent in Q2 of last year.
However, the gross profit margin for the game business increased from 64.9 percent in the same period last year to 67.4 percent, with a gross profit increase of about 900 million yuan.
At the end of June, NetEase launched its martial arts game "Justice" and racing game "Peak Speed." "Justice" had over 40 million players in its first month of release, and Peak Speed consistently ranked first on the iOS download chart for the first 10 days after its launch.
In terms of other businesses, NetEase Cloud Music's Q2 revenue was 1.9 billion yuan, compared to 2.2 billion yuan in the same period last year. Gross profit margin doubled to 27 percent year-on-year. The platform's monthly active users increased by 14 percent in the first half of the year to over 200 million people.
R&D has been the focus of NetEase's financial reports in recent years. In Q2, NetEase invested 3.9 billion yuan in research and development. Over the past five years, NetEase has spent nearly 60 billion. As of now, NetEase has more than 10,000 publicly disclosed patent applications and over 4,000 authorized patents, primarily in digital industries such as artificial intelligence, blockchain, and audio-video technologies.