NetEase Cloud Music (9899) Q2 2025 earnings summary

Executive summary

• Revenue for the six months ended 30 June 2025 was RMB3,827.1 million, down 6.0% year-over-year, mainly due to a decline in social entertainment services revenue.

• Net profit surged 132.4% year-over-year to RMB1,882.1 million, driven by a significant deferred income tax credit and improved operating efficiency.

• Adjusted net profit (non-IFRS) rose 121.0% to RMB1,946.4 million, reflecting strong core profitability after excluding share-based payments.

• Online music services revenue grew 15.9% year-over-year, offsetting a 43.1% drop in social entertainment services.

• Gross margin improved to 36.4% from 35.0% a year ago, supported by cost optimization and business scale.

Financial highlights

• Gross profit was RMB1,392.5 million, down 2.3% year-over-year.

• Operating profit increased 40.8% to RMB844.5 million, mainly due to reduced promotion and advertising expenses.

• Selling and marketing expenses dropped 55.8% to RMB163.4 million.

• Research and development expenses decreased 4.2% to RMB378.9 million.

• Basic earnings per share rose to RMB8.96 from RMB3.88 year-over-year.

Outlook and guidance

• Focus remains on enriching music content, innovating products, and deepening user engagement.

• Strategic priorities include expanding differentiated content, optimizing user experience, and improving profitability through cost control.