NetEase Cloud Music (9899) Q2 2024 earnings summary

Executive summary

• Revenue grew 4.1% year-over-year to RMB4,070.5 million for the six months ended 30 June 2024, driven by strong growth in online music services and improved monetization of core music business.

• Net profit surged 175.7% year-over-year to RMB809.9 million, with adjusted net profit up 165.4% to RMB880.7 million, reflecting enhanced operating leverage and a one-off copyright cost adjustment.

• Gross margin improved significantly to 35.0% from 24.7% in the prior year period, aided by economies of scale and cost control.

• The user base remained stable, with DAU/MAU ratio above 30% and strong engagement from online music subscribers.

Financial highlights

• Revenue: RMB4,070.5 million, up 4.1% year-over-year.

• Gross profit: RMB1,425.7 million, up 47.7% year-over-year.

• Net profit: RMB809.9 million, up 175.7% year-over-year.

• Adjusted net profit: RMB880.7 million, up 165.4% year-over-year.

• Gross margin: 35.0%, up from 24.7% in the prior year, with a 2.6 percentage point boost from a one-off copyright cost adjustment.

• EPS: Basic RMB3.88, Diluted RMB3.84 (vs. RMB1.39 and RMB1.38 in prior year, respectively).

Outlook and guidance

• Plans to further diversify and enhance differentiated content offerings, deepen collaboration with copyright holders, and strengthen independent artist incubation.

• Focus on nurturing the music-oriented community, improving user experience, and expanding interactive features.

• Continued efforts to improve profitability through economies of scale and operational efficiency.