Changes in US stocks | NetEase (NTES.US) rose 7%, second-quarter gaming revenue exceeded expectations

The Zhitong Finance App learned that NetEase (NTES.US) rose 7% to $128.29 on Friday. According to the news, on August 20, NetEase announced that total net revenue for the second quarter was 30.11 billion yuan and game revenue of 25.02 billion yuan, all exceeding market expectations; gross profit was 21.22 billion yuan, an increase of 17.5% over the previous year. Online game revenue increased 10% year-on-year to 24.5 billion yuan. The Group's gross margin increased from 64.7% to 70.5%, and the gross margin of games and related services reached 76.1%, mainly due to a decrease in channel sharing costs.

Goldman Sachs released a research report saying that NetEase is a high-quality “non-AI” complex enterprise. Under high AI spending in the industry and pressure on gross margins of some peers, the company's gross margin and free cash flow reached record highs, once again demonstrating the resilience and profitability of its gaming business. At the same time, benefiting from the favorable PC and mobile game portfolio, the decline in iOS/Android channel fees and the shift to in-house channels, the gross margin of games in the second quarter reached a record high. Goldman Sachs believes that gross margin expansion is structural. In line with operational efficiency optimization, operating profit is expected to maintain a high ten-digit year-on-year increase in the second half of the year.