NetEase Announces First Quarter 2026 Unaudited Financial Results

HONG KONG, May 21, 2026 /PRNewswire/ -- NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, "NetEase" or the "Company"), a leading internet and game services provider, today announced its unaudited financial results for the first quarter ended March 31, 2026.

First Quarter 2026 Financial Highlights

[1] As used in this announcement, non-GAAP net income attributable to the Company's shareholders and non-GAAP basic and diluted net income per share and per ADS are defined to exclude share-based compensation expenses. See the unaudited reconciliation of GAAP and non-GAAP results at the end of this announcement.

First Quarter 2026 and Recent Operational Highlights

"For the first quarter of 2026, we delivered another solid quarter across our established gaming portfolio, while continuing to make steady progress advancing our pipeline of new titles," said Mr. William Ding, Chief Executive Officer and Director of NetEase. "Our recent global launches have demonstrated strong cross-market appeal, supporting the continued execution of our international expansion strategy.

"Looking ahead, we will continue to strengthen our technological capabilities and focus on innovation across both content and development. By combining evolving technologies with our deep operating expertise, we aim to create exceptional content and experiences that exceed players' expectations and reach an even broader global audience," Mr. Ding concluded.

First Quarter 2026 Financial Results

Net Revenues

Net revenues for the first quarter of 2026 were RMB30.6 billion (US$4.4 billion), compared with RMB27.5 billion and RMB28.8 billion for the preceding quarter and the same quarter of 2025, respectively.

Net revenues from games and related value-added services were RMB25.7 billion (US$3.7 billion) for the first quarter of 2026, compared with RMB22.0 billion and RMB24.0 billion for the preceding quarter and the same quarter of 2025, respectively. Net revenues from the operation of online games accounted for approximately 97.5% of the segment's net revenues for the first quarter of 2026, compared with 96.8% and 97.5% for the preceding quarter and the same quarter of 2025, respectively. The quarter-over-quarter and year-over-year increases were attributable to higher net revenues from self-developed games, such as the Fantasy Westward Journey franchise and Where Winds Meet.

Net revenues from Youdao were RMB1.3 billion (US$195.4 million) for the first quarter of 2026, compared with RMB1.6 billion and RMB1.3 billion for the preceding quarter and the same quarter of 2025, respectively. The quarter-over-quarter decrease was mainly due to decreased net revenues from its learning services and smart devices.

Net revenues from NetEase Cloud Music were RMB2.0 billion (US$287.2 million) for the first quarter of 2026, compared with RMB2.0 billion and RMB1.9 billion for the preceding quarter and the same quarter of 2025, respectively.

Net revenues from innovative businesses and others were RMB1.5 billion (US$224.6 million) for the first quarter of 2026, compared with RMB2.0 billion and RMB1.6 billion for the preceding quarter and the same quarter of 2025, respectively. The quarter-over-quarter decrease was led by decreased net revenues from e-commerce and advertising businesses.

Cost of Revenues

Cost of revenues for the first quarter of 2026 was RMB9.4 billion (US$1.4 billion), compared with RMB9.9 billion and RMB10.3 billion for the preceding quarter and the same quarter of 2025, respectively. The quarter-over-quarter decrease was mainly due to lower product costs. The year-over-year decrease was mainly due to lower revenue-sharing costs related to platforms.

Gross Profit

Gross profit for the first quarter of 2026 was RMB21.2 billion (US$3.1 billion), compared with RMB17.7 billion and RMB18.5 billion for the preceding quarter and the same quarter of 2025, respectively.

Operating Expenses

Total operating expenses for the first quarter of 2026 were RMB8.6 billion (US$1.2 billion), compared with RMB9.4 billion and RMB8.0 billion for the preceding quarter and the same quarter of 2025, respectively. The variances in both the quarter-over-quarter and year-over-year results were primarily attributable to fluctuations in marketing expenses and general and administrative expenses.

Other Income/(Expenses)

Other income/(expenses) consisted of investment income/(loss), interest income, net exchange gains/(losses) and others. The quarter-over-quarter increase was mainly attributable to the gain from the disposal of certain long-term investments and lower investment impairment provisions in the first quarter of 2026. The year-over-year decrease was primarily due to fair value changes of equity security investments and higher foreign exchange losses recognized in the first quarter of 2026.

Income Tax

The Company recorded a net income tax charge of RMB2.5 billion (US$365.9 million) for the first quarter of 2026, compared with RMB1.3 billion and RMB1.9 billion for the preceding quarter and the same quarter of 2025, respectively. The effective tax rate for the first quarter of 2026 was 18.9%, compared with 16.4% and 15.3% for the preceding quarter and the same quarter of 2025, respectively. The effective tax rate represents certain estimates by the Company as to the tax obligations and benefits applicable to it in each quarter.

Net Income and Non-GAAP Net Income

Net income attributable to the Company's shareholders totaled RMB10.7 billion (US$1.5 billion) for the first quarter of 2026, compared with RMB6.2 billion and RMB10.3 billion for the preceding quarter and the same quarter of 2025, respectively.

Basic net income was US$0.48 per share (US$2.42 per ADS) for the first quarter of 2026, compared with US$0.28 per share (US$1.42 per ADS) and US$0.47 per share (US$2.35 per ADS) for the preceding quarter and the same quarter of 2025, respectively.

Non-GAAP net income attributable to the Company's shareholders totaled RMB11.3 billion (US$1.6 billion) for the first quarter of 2026, compared with RMB7.1 billion and RMB11.2 billion for the preceding quarter and the same quarter of 2025, respectively.

Non-GAAP basic net income was US$0.51 per share (US$2.56 per ADS) for the first quarter of 2026, compared with US$0.32 per share (US$1.61 per ADS) and US$0.51 per share (US$2.57 per ADS) for the preceding quarter and the same quarter of 2025, respectively.

Other Financial Information

As of March 31, 2026, the Company's net cash (total cash and cash equivalents, current and non-current time deposits and restricted cash, as well as short-term investments balance, minus short-term and long-term loans) totaled RMB167.5 billion (US$24.3 billion), compared with RMB163.5 billion as of December 31, 2025. Net cash provided by operating activities was RMB13.7 billion (US$2.0 billion) for the first quarter of 2026, compared with RMB14.8 billion and RMB12.1 billion for the preceding quarter and the first quarter of 2025, respectively.

Quarterly Dividend

The board of directors approved a dividend of US$0.144 per share (US$0.720 per ADS) for the first quarter of 2026 to holders of ordinary shares and holders of ADSs as of the close of business on June 5, 2026, Beijing/Hong Kong Time and New York Time, respectively, payable in U.S. dollars. For holders of ordinary shares, in order to qualify for the dividend, all valid documents for the transfer of shares accompanied by the relevant share certificates must be lodged for registration with the Company's Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17 th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, no later than 4:30 p.m. on June 5, 2026 (Beijing/Hong Kong Time). The payment date is expected to be June 15, 2026 for holders of ordinary shares and on or around June 18, 2026, for holders of ADSs.

NetEase paid a dividend of US$0.232 per share (US$1.16 per ADS) for the fourth quarter of 2025 in March 2026.

Under the Company's current dividend policy, the determination to make dividend distributions and the amount of such distribution in any particular quarter will be made at the discretion of its board of directors and will be based upon the Company's operations and earnings, cash flow, financial condition and other relevant factors.

Share Repurchase Program

On November 20, 2025, the Company announced the extension of its previously approved share repurchase program of up to US$5.0 billion of the Company's ADSs and ordinary shares in open market or other transactions for an additional 36 months until January 9, 2029. As of March 31, 2026, approximately 23.2 million ADSs had been repurchased under this program for a total cost of US$2.1 billion.

The extent to which NetEase repurchases its ADSs and its ordinary shares depends upon a variety of factors, including market conditions. These programs may be suspended or discontinued at any time.

** The United States dollar (US$) amounts disclosed in this announcement are presented solely for the convenience of the reader. The percentages stated are calculated based on RMB.

Conference Call

NetEase's management team will host a teleconference call with a simultaneous webcast at 8:00 a.m. Eastern Time on Thursday, May 21, 2026 (Beijing/Hong Kong Time: 8:00 p.m., Thursday, May 21, 2026). NetEase's management will be on the call to discuss the quarterly results and answer questions.

Interested parties may participate in the conference call by dialing 1-914-202-3258 and providing conference ID: 10054538, 15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 1-855-883-1031 and entering PIN: 10054538. The replay will be available through May 28, 2026.

This call will be webcast live, and the replay will be available for 12 months. Both will be available on NetEase's Investor Relations website at http://ir.netease.com/.

About NetEase, Inc.

NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, "NetEase") is a leading internet and game services provider centered around premium content. With extensive offerings across its expanding gaming ecosystem, the Company develops and operates some of the most popular and longest-running mobile and PC games available in China and globally.

Powered by one of the largest in-house game R&D teams focused on mobile, PC and console, NetEase creates superior gaming experiences, inspires players, and passionately delivers value for its thriving community worldwide. By infusing play with culture, and education with technology, NetEase transforms gaming into a meaningful vehicle to build a more entertaining and enlightened world.

Beyond games, NetEase service offerings include its majority-controlled subsidiaries Youdao (NYSE: DAO), an intelligent learning and advertising solutions provider, and NetEase Cloud Music (HKEX: 9899), a well-known online music platform featuring a vibrant content community, as well as Yanxuan, NetEase's private-label consumer lifestyle brand.

For more information, please visit: http://ir.netease.com/.

Forward Looking Statements

This announcement contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar expressions. In addition, statements that are not historical facts, including statements about NetEase's strategies and business plans, its expectations regarding the growth of its business and its revenue and the quotations from management in this announcement are or contain forward-looking statements. NetEase may also make forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in announcements made on the website of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to: the risk that the online games market will not continue to grow or that NetEase will not be able to maintain its position in that market in China or globally; risks associated with NetEase's business and operating strategies and its ability to implement such strategies; NetEase's ability to develop and manage its operations and business; competition for, among other things, capital, technology and skilled personnel; potential changes in regulatory environment in the markets where NetEase operates; the risk that NetEase may not be able to continuously develop new and creative online services or that NetEase will not be able to set, or follow in a timely manner, trends in the market; risks related to evolving economic cycles and geopolitical tensions, including the direct or indirect impacts of national trade, investment, protectionist, tax or other laws or policies as well as export controls and economic or trade sanctions; risks related to the expansion of NetEase's businesses and operations internationally; risks associated with cybersecurity threats or incidents; and fluctuations in foreign currency exchange rates that could adversely affect NetEase's business and financial results. Further information regarding these and other risks is included in NetEase's filings with the SEC and announcements on the website of the Hong Kong Stock Exchange. NetEase does not undertake any obligation to update this forward-looking information, except as required under applicable law.

Non-GAAP Financial Measures

NetEase considers and uses non-GAAP financial measures, such as non-GAAP net income attributable to the Company's shareholders and non-GAAP basic and diluted net income per ADS and per share, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

NetEase defines non-GAAP net income attributable to the Company's shareholders as net income attributable to the Company's shareholders excluding share-based compensation expenses. Non-GAAP net income attributable to the Company's shareholders enables NetEase's management to assess its operating results without considering the impact of share-based compensation expenses. NetEase believes that this non-GAAP financial measure provides useful information to investors in understanding and evaluating the Company's current operating performance and prospects in the same manner as management does, if they so choose. NetEase also believes that the use of this non-GAAP financial measure facilitates investors' assessment of its operating performance.

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP net income attributable to the Company's shareholders is that it does not reflect all items of expense/ income that affect our operations. Share-based compensation expenses have been and may continue to be incurred in NetEase's business and are not reflected in the presentation of non-GAAP net income attributable to the Company's shareholders. In addition, the non-GAAP financial measures NetEase uses may differ from the non-GAAP measures used by other companies, including peer companies, and therefore their comparability may be limited.

NetEase compensates for these limitations by reconciling non-GAAP net income attributable to the Company's shareholders to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company's performance. See the unaudited reconciliation of GAAP and non-GAAP results at the end of this announcement. NetEase encourages you to review its financial information in its entirety and not rely on a single financial measure.

Contact for Media and Investors:

Email: [email protected]

Tel: (+86) 571-8985-3378

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

December 31,

March 31,

2025

2026

RMB

USD (Note 1)

Assets

Current assets:

Cash and cash equivalents

47,167,904

50,815,211

7,366,659

Time deposits

92,639,378

80,109,903

11,613,497

Restricted cash

4,319,344

4,502,968

652,793

Accounts receivable, net

5,337,819

6,492,901

941,273

Inventories

689,183

546,030

79,158

Prepayments and other current assets, net

7,658,346

6,212,901

900,682

Short-term investments

22,803,503

39,978,723

5,795,698

Total current assets

180,615,477

188,658,637

27,349,760

Non-current assets:

Property, equipment and software, net

8,425,327

8,311,363

1,204,895

Land use rights, net

4,047,355

4,014,831

582,028

Deferred tax assets

2,831,423

2,894,530

419,619

Time deposits

2,995,000

3,045,000

441,432

Restricted cash

3,893

3,344

485

Other long-term assets

22,496,585

24,469,340

3,547,309

Total non-current assets

40,799,583

42,738,408

6,195,768

Total assets

221,415,060

231,397,045

33,545,528

Liabilities, Redeemable Noncontrolling Interests

and Shareholders' Equity

Current liabilities:

Accounts payable

643,164

780,921

113,210

Salary and welfare payables

4,889,708

2,642,579

383,094

Taxes payable

3,874,143

5,765,891

835,878

Short-term loans

6,384,417

10,955,460

1,588,208

Contract liabilities

20,514,540

21,811,530

3,162,008

Accrued liabilities and other payables

16,062,984

15,480,778

2,244,242

Total current liabilities

52,368,956

57,437,159

8,326,640

Non-current liabilities:

Deferred tax liabilities

2,637,258

3,232,494

468,613

Other long-term liabilities

1,304,837

1,377,929

199,758

Total non-current liabilities

3,942,095

4,610,423

668,371

Total liabilities

56,311,051

62,047,582

8,995,011

Redeemable noncontrolling interests

91,319

93,143

13,503

NetEase, Inc.'s shareholders' equity

160,296,119

164,722,217

23,879,707

Noncontrolling interests

4,716,571

4,534,103

657,307

Total equity

165,012,690

169,256,320

24,537,014

Total liabilities, redeemable noncontrolling

interests and shareholders' equity

221,415,060

231,397,045

33,545,528

The accompanying notes are an integral part of this announcement.

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data or per ADS data)

Three Months Ended

March 31,

December 31,

March 31,

2025

2026

RMB

USD (Note 1)

Net revenues

28,828,545

27,546,973

30,591,281

4,434,804

Cost of revenues

(10,349,139)

(9,854,598)

(9,374,209)

(1,358,975)

Gross profit

18,479,406

17,692,375

21,217,072

3,075,829

Operating expenses:

Selling and marketing expenses

(2,695,597)

(3,888,256)

(3,441,485)

(498,911)

General and administrative expenses

(956,337)

(1,050,701)

(636,597)

(92,287)

Research and development expenses

(4,386,313)

(4,434,260)

(4,482,157)

(649,776)

Total operating expenses

(8,038,247)

(9,373,217)

(8,560,239)

(1,240,974)

Operating profit

10,441,159

8,319,158

12,656,833

1,834,855

Other income/(expenses):

Investment income/(loss), net

692,751

(1,669,086)

5,472

793

Interest income, net

1,060,886

1,002,404

890,267

129,062

Exchange gains/(losses), net

1,803

(517,965)

(622,108)

(90,187)

Other, net

255,315

485,863

438,978

63,638

Income before tax

12,451,914

7,620,374

13,369,442

1,938,161

Income tax

(1,905,143)

(1,250,430)

(2,523,838)

(365,880)

Net income

10,546,771

6,369,944

10,845,604

1,572,281

Accretion of redeemable noncontrolling

interests

(1,049)

(1,122)

(1,104)

(160)

Net income attributable to noncontrolling

interests and redeemable noncontrolling

interests

(244,565)

(126,866)

(170,394)

(24,702)

Net income attributable to the

Company's shareholders

10,301,157

6,241,956

10,674,106

1,547,419

Net income per share *

Basic

3.25

1.96

3.34

0.48

Diluted

3.21

1.93

3.31

0.48

Net income per ADS *

Basic

16.23

9.78

16.69

2.42

Diluted

16.06

9.66

16.53

2.40

Weighted average number of ordinary

shares used in calculating net income

per share *

Basic

3,173,899

3,191,805

3,198,123

Diluted

3,206,362

3,227,907

3,227,325

* Each ADS represents five ordinary shares.

The accompanying notes are an integral part of this announcement.

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three Months Ended

March 31,

December 31,

March 31,

2025

2026

RMB

USD (Note 1)

Cash flows from operating activities:

Net income

10,546,771

6,369,944

10,845,604

1,572,281

Adjustments to reconcile net income to net cash provided

by operating activities:

Depreciation and amortization

480,761

720,367

430,583

62,421

Fair value changes of equity security, other investments and

financial instruments

(558,499)

1,308,861

1,117,717

162,035

Impairment losses on investments

89,071

857,796

344,871

49,996

Fair value changes of short-term investments

(201,609)

(283,560)

(385,395)

(55,871)

Share-based compensation cost

951,872

847,194

616,180

89,329

Allowance for expected credit losses

16,771

17,478

6,719

974

Losses/(gains) on disposal of property, equipment and software

20,293

(20,063)

(565)

(82)

Unrealized exchange (gains)/losses

(28,453)

514,469

643,942

93,352

Losses/(gains) on disposal of long-term investments and subsidiaries

11,675

(273,438)

(1,071,442)

(155,326)

Deferred income taxes

328,272

204,920

532,257

77,161

Share of results on equity method investees

(18,668)

153,645

442,575

64,160

Changes in operating assets and liabilities:

Accounts receivable

(1,088,960)

594,561

(1,188,837)

(172,345)

Inventories

53,773

(51,881)

143,099

20,745

Prepayments and other assets

(295,178)

701,921

116,152

16,839

Accounts payable

(148,076)

(59,225)

134,445

19,490

Salary and welfare payables

(2,085,111)

1,859,384

(2,253,559)

(326,698)

Taxes payable

1,796,123

(436,268)

1,895,324

274,764

Contract liabilities

2,526,198

1,048,151

1,384,445

200,702

Accrued liabilities and other payables

(290,374)

749,075

(21,044)

(3,051)

Net cash provided by operating activities

12,106,652

14,823,331

13,733,071

1,990,876

Cash flows from investing activities:

Purchase of property, equipment and software

(454,071)

(137,818)

(312,148)

(45,252)

Proceeds from sale of property, equipment and software

1,336

21,790

1,673

243

Purchase of intangible assets, content and licensed copyrights

(298,771)

(183,986)

(290,019)

(42,044)

Net changes of short-term investments with terms of three months or less

(6,138,556)

(400,836)

(15,766,308)

(2,285,635)

Purchase of short-term investments with terms over three months

(2,970,000)

(5,600,000)

(5,885,000)

(853,146)

Proceeds from maturities of short-term investments with terms over three months

2,708,601

7,695,328

4,861,483

704,767

Investment/prepayment for investment in long-term investments and

acquisition of subsidiaries

(90,966)

(1,617,947)

(3,204,395)

(464,540)

Proceeds from disposal of long-term investments and subsidiaries

77,428

624,662

1,353,947

196,281

Placement/rollover of matured time deposits

(49,601,807)

(39,787,587)

(30,608,133)

(4,437,247)

Proceeds from maturities of time deposits

43,926,482

39,781,381

42,018,869

6,091,457

Change in other long-term assets

(678)

(7,658)

65,909

9,555

Net cash (used in)/provided by investing activities

(12,841,002)

387,329

(7,764,122)

(1,125,561)

Cash flows from financing activities:

Net changes from loans with terms of three months or less

(2,254,415)

(56,405)

1,182,383

171,410

Proceeds of loans with terms over three months

2,747,550

92,700

6,134,520

889,319

Payment of loans with terms over three months

(2,935,677)

(975,000)

(2,620,900)

(379,951)

Net amounts received/(paid) related to capital contribution from or repurchase of

noncontrolling interests shareholders

42,517

819

(23,418)

(3,395)

Net amounts paid related to repurchase of NetEase's ADSs/purchase of

subsidiaries' shares

(303,601)

(15,398)

(1,314,003)

(190,490)

Dividends paid to NetEase's shareholders

(5,584,532)

(2,575,287)

(5,156,320)

(747,509)

Net cash used in financing activities

(8,288,158)

(3,528,571)

(1,797,738)

(260,616)

Effect of exchange rate changes on cash, cash equivalents and

restricted cash held in foreign currencies

(56,932)

(175,895)

(340,829)

(49,410)

Net (decrease)/increase in cash, cash equivalents and restricted cash

(9,079,440)

11,506,194

3,830,382

555,289

Cash, cash equivalents and restricted cash, at the beginning of the period

54,474,923

39,984,947

51,491,141

7,464,648

Cash, cash equivalents and restricted cash, at the end of the period

45,395,483

51,491,141

55,321,523

8,019,937

Supplemental disclosures of cash flow information:

Cash paid for income taxes, net

1,206,555

1,068,868

1,464,650

212,330

Cash paid for interest expenses

97,424

18,313

78,326

11,355

The accompanying notes are an integral part of this announcement.

NETEASE, INC.

UNAUDITED SEGMENT INFORMATION

(in thousands)

Three Months Ended

March 31,

December 31,

March 31,

2025

2026

RMB

USD (Note 1)

Net revenues:

Games and related value-added services

24,048,007

21,966,634

25,712,975

3,727,598

Youdao

1,298,262

1,564,692

1,348,022

195,422

NetEase Cloud Music

1,858,388

1,968,270

1,981,234

287,219

Innovative businesses and others

1,623,888

2,047,377

1,549,050

224,565

Total net revenues

28,828,545

27,546,973

30,591,281

4,434,804

Cost of revenues:

Games and related value-added services

(7,495,262)

(6,472,229)

(6,482,431)

(939,755)

Youdao

(684,035)

(859,314)

(745,729)

(108,108)

NetEase Cloud Music

(1,175,777)

(1,285,937)

(1,247,066)

(180,787)

Innovative businesses and others

(994,065)

(1,237,118)

(898,983)

(130,325)

Total cost of revenues

(10,349,139)

(9,854,598)

(9,374,209)

(1,358,975)

Gross profit:

Games and related value-added services

16,552,745

15,494,405

19,230,544

2,787,843

Youdao

614,227

705,378

602,293

87,314

NetEase Cloud Music

682,611

682,333

734,168

106,432

Innovative businesses and others

629,823

810,259

650,067

94,240

Total gross profit

18,479,406

17,692,375

21,217,072

3,075,829

The accompanying notes are an integral part of this announcement.

NETEASE, INC.

NOTES TO UNAUDITED FINANCIAL INFORMATION

Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00 = RMB 6.8980 on the last trading day of March 2026 (March 31, 2026) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on March 31, 2026, or at any other certain date.

Note 2: Share-based compensation cost reported in the Company's unaudited condensed consolidated statements of comprehensive income is set out as follows in RMB and USD (in thousands):

Three Months Ended

March 31,

December 31,

March 31,

2025

2026

RMB

USD (Note 1)

Share-based compensation cost included in:

Cost of revenues

233,711

212,072

269,336

39,046

Operating expenses

718,161

635,122

346,844

50,283

The accompanying notes are an integral part of this announcement.

Note 3: The financial information prepared and presented in this announcement might be different from those published and to be published by NetEase's listed subsidiary to meet the disclosure requirements under different accounting standards requirements.

Note 4: The unaudited reconciliation of GAAP and non-GAAP results is set out as follows in RMB and USD (in thousands, except per share data or per ADS data):

Three Months Ended

March 31,

December 31,

March 31,

2025

2026

RMB

USD (Note 1)

Net income attributable to the Company's shareholders

10,301,157

6,241,956

10,674,106

1,547,419

Add: Share-based compensation

935,570

831,031

600,718

87,086

Non-GAAP net income attributable to the Company's shareholders

11,236,727

7,072,987

11,274,824

1,634,505

Non-GAAP net income per share *

Basic

3.54

2.22

3.53

0.51

Diluted

3.50

2.19

3.49

0.51

Non-GAAP net income per ADS *

Basic

17.70

11.08

17.63

2.56

Diluted

17.51

10.95

17.46

2.53

* Each ADS represents five ordinary shares.

The accompanying notes are an integral part of this announcement.

SOURCE NetEase, Inc.