In its 2024 Third Quarter Earnings Conference Call, NetEase, Inc. (NASDAQ: NASDAQ:NTES) announced a total net revenue of RMB 26.2 billion ($3.7 billion), marking a 3% increase from the previous quarter. The growth was primarily driven by the company's gaming division, with online games generating RMB 20 billion. Notably, PC games experienced a 29% year-over-year and 30% quarter-over-quarter growth. The education technology arm Youdao (NYSE:DAO) reported its first profitable quarter, and NetEase Cloud Music continued to expand its content ecosystem. Key launches like the mobile version of NARAKA: BLADEPOINT and the upcoming open-world RPG Where Winds Meet demonstrate NetEase's commitment to innovation and global market expansion.
Key Takeaways
- NetEase's total net revenue reached RMB 26.2 billion, with gaming contributing RMB 20 billion.
- PC games saw significant growth, with a 29% increase year-over-year.
- Youdao achieved its first profitable quarter, with over RMB 100 million in operating income.
- NetEase Cloud Music generated RMB 2 billion in revenue, primarily from subscription growth.
- The company announced a dividend of $0.87 per share and repurchased shares worth $543 million.
- Upcoming game titles include Marvel Rivals and FragPunk, highlighting NetEase's strategy for global expansion.
Company Outlook
- NetEase is focusing on immersive open-world experiences with both single-player and multiplayer modes.
- The company plans to enrich content for ongoing titles like Justice Mobile and Eggy Party, balancing commercialization and user experience.
- Global expansion strategies include developing games through overseas studios and leveraging domestic studios for global releases.
Bearish Highlights
- Despite strong performance, Eggy Party faces short-term monetization challenges.
Bullish Highlights
- The relaunch of World of Warcraft and Hearthstone in China exceeded expectations.
- Fantasy Westward Journey PC and Naraka: Bladepoint Mobile show stable performance and high user engagement.
Misses
- The company did not provide specific dates for the anticipated releases of Overwatch and other future titles.
Q&A Highlights
- Executives discussed the differentiated content for Naraka: Bladepoint Mobile to cater to mobile gamers' distinct needs.
- Project Mugen, a future ACG game, is expected to undergo offline testing within 2023.
- The company maintains a long-term positive outlook for its gaming division, especially for titles like Naraka: Bladepoint Mobile and Fantasy Westward Journey PC.
NetEase's third-quarter performance reflects its robust position in the gaming industry and its successful ventures into music and edtech. With a diverse portfolio and strategic global expansion plans, NetEase continues to demonstrate its capacity for growth and innovation in the competitive digital entertainment market.
InvestingPro Insights
NetEase's strong third-quarter performance is further supported by key financial metrics and insights from InvestingPro. The company's market capitalization stands at $49.48 billion, reflecting its significant presence in the entertainment industry.
One of the most notable InvestingPro Tips is that NetEase holds more cash than debt on its balance sheet, which aligns with the company's ability to fund its growth initiatives and global expansion plans. This strong financial position is particularly important as NetEase continues to invest in new game development and international market penetration.
The company's P/E ratio of 12.92 suggests that it's trading at a relatively low earnings multiple, which could be attractive to value investors. This is especially interesting given NetEase's revenue growth of 8% over the last twelve months, reaching $14.69 billion. The low P/E ratio, combined with the company's growth, supports the InvestingPro Tip that NetEase is trading at a low P/E ratio relative to its near-term earnings growth.
NetEase's dividend policy also stands out, with the company having raised its dividend for 5 consecutive years. This is reflected in the current dividend yield of 3.27%, which is particularly attractive given the company's growth profile and the recent dividend announcement of $0.87 per share mentioned in the earnings call.
The company's profitability is evident from its impressive gross profit margin of 62.62% and operating income margin of 27.21% over the last twelve months. These figures underscore NetEase's ability to maintain strong margins while investing in new game development and expanding its global footprint.
It's worth noting that InvestingPro lists 11 additional tips for NetEase, offering investors a comprehensive view of the company's financial health and market position. These insights, available through the InvestingPro product, can provide valuable context for investors analyzing NetEase's recent earnings and future prospects in the competitive digital entertainment landscape.
Full transcript - NetEase Inc (NTES) Q3 2024:
Operator: Good day, and welcome to the NetEase 2024 Third Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brandi Piacente. Please go ahead.
Brandi Piacente: Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the future performance of the company and are intended to qualify for the safe harbor from my ability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect NetEase's business and financial results is included in certain filings of the company with the Securities and Exchange Commission including its Annual Report on Form 20-F and in announcements and filings on the website of the Hong Kong Stock Exchange. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the 2024 third quarter earnings news release issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on NetEase's corporate website at ir.netease.com. Joining us today on the call from NetEase's senior management are Mr. William Ding, Chief Executive Officer; Mr. Bill Pang, the Vice President of Corporate Development. I will now turn the call over to Bill, who will read the prepared remarks on behalf of William.
William Ding: Thank you, Brandi, and thank you everyone, for participating in today's call. Before we begin, I would like to remind everyone that all percentages are based on RMB. At NetEase, we are constantly evolving to ensure the delivery of superior content through innovation across our NetEase family of businesses. During the quarter, we further strengthened our foundation for sustainable long-term growth and achieved total net revenue of RMB26.2 billion. In our Gaming division, our popular titles gained even more traction while newer releases successfully expanded our player community. Total (EPA:TTEF) online games net revenue reached around RMB20 billion. PC games, in particular, registered robust growth with net revenue up around 29% year-over-year and 30% quarter-over-quarter. Several of our games celebrated anniversaries in the third quarter, prompting some of our beloved established titles to set brand new records and reach new milestones. These achievements highlight our strength in long-term game operations and how we continue to drive game longevity. With operations across our legacy franchises, Fantasy Westward Journey and the Westward Journey Online continue to through players with the enduring popularity. In the third quarter, we brought players a new chapter in Fantasy Westward Journey Mobile, setting the structured Kingdom (TADAWUL:4280). Here, new characters and someone offer diverse technical choices. While new boss brings more compact challenges, infusing the game with fresh vitality. Additionally, Westward Journey Online II achieved record high quarterly revenue with excitement generated from its anniversary expansion path. Players eagerly export new content and joined carnival events in Xi'an immersing themselves in the [indiscernible] Asian capital. This blend of fresh in-game experiences and real-world festivities captured our communities imagination, deepening their connection to the game and driving remarkable engagement. Identity V reached record high revenues for the third consecutive quarter. The game also saw unprecedented DAUs and record high global concurrent online players in Q3. This milestone achievement reflects the success of our comprehensive operational strategy to maximize engagement and player stickiness. Our multifaceted entertainment approach, blended, translating our design, captivating story line, lessened IP core branding events and the dynamic eSports competitions for wholly immersed brand experience. This holistic strategy not only enhanced player engagement, but also establish Identity V as a premier competitive platform, offering players around the world arena to embrace challenges and enjoy fresh content. NARAKA: BLADEPOINT also celebrated its third anniversary in the third quarter, making another milestone for this unique action-driven PVP game designed to meet the robust and under addressed demand for action-based competitive plan. NARAKA: BLADEPOINT continue to lead innovation in this genre. With recent introduction of new Heroes, Maps and Mechanics, the anniversary updates reach content spark fresh excitement within the player community, driving concurrent players to a new peak. Following the success, co-branding events featuring popular like The Lost Tomb and The Tomb Raider further amplified enthusiasm. All these activities collectively contributed to record high revenue in Q3. Following its success on PC and console, we extended NARAKA: BLADEPOINT's reach, launching NARAKA: BLADEPOINT mobile domestically in July to widespread market client. The mobile game ranked #3 on the iOS top working chart shortly after its release. With its seasonal update in September, NARAKA: BLADEPOINT Mobile returned to the fourth position on the iOS top-watching chart and was featured as an app store editor's choice during the summer. In our newer releases, Justice Mobile celebrated its first anniversary at the end of June. As a title that push the boundaries of traditional MMOs and establish a large user base. Justice Mobile continues to drive innovation in more areas. Building on the success of AI-driven MPCs, which created immense player interest with lifelike interactions, players can now access tools to create their own AI companies to explore the vast Wuxia world with overwhelming player enthusiasm. Justice Mobile now accommodates over 8 million intelligence entities, giving each player a unique and personalized journey and redefining what is possible in mobile MMOs. Similarly, we are forcing players creativity in party through enhanced features that empower creators to explore innovative ideas and receive rewards for their creations. We were thrilled to see a search in community engagement with many new creators dedicating themselves as full-time map creators. Beyond UGC content, we elevated Eggy Party with inspiring culture material from external collaborators. In the third quarter, we strategically partnered with the People's Literature Publishing House bringing the rich catalog of our original works to Eggy Party and encouraging players to explore a world enriched by science and literature. For Racing Master's first anniversary, we launched an exciting annual updates, introducing legendary car models, including the Lamborgini Reventon and the [indiscernible] bringing players even more dedicated and responsive driving experiences. The update also features several highly acclaimed new maps, each offering a unique recent experience from renowned pivoting track like [indiscernible] to an exotic Goldrush journey set in the desert of Colorado plateau. Through our dedicated operational efforts, Racing Master sustained strong popularity with our player community, solidifying its market position in the racing genre. As we continue to diversify our portfolio across various genres, we pave the way to extend the success of our established titles into new regions. In August, we brought Racing Master to Japan, a quickly top the App Store and Google (NASDAQ:GOOGL) Play free chart and stay in the Top 7 of the iOS downloading chart highlighting its appeal to local players. In addition to Racing Master, we are gearing up to expand several of our games international footprint. Justice Mobile will be hitting the Hong Kong, Macau and Taiwan market in November, while Dunk City Dynasty is preparing for global release. On top of our expansion plans for these titles, we are advancing our robust game pipeline with plans to release several highly anticipated titles in coming months. Our eagerly awaited open-world action adventure RPG Where Winds Meet is on track for the domestic release in December. This gameplay is designed to meet diversifying player demand offering both single player and multiplayer mode across PC and mobile platforms. With top-notch graphic utilizing retreating technology, Where Wind Meets is gaining increasing attention from the gaming community as we get closer to the launch phase. The Super Hero team-based PvP shooter game, Marvel Rivals, is slated for global release on December 6 as part of the Marvel Rivals global launch campaign, Marvel just announced a special season on November 11 in collaboration with multiple popular titles, including FORTNITE, Mobile ParcelQuest, Future Fight and Marvel Snap creating a Marvel Rival in the season for fans worldwide and promising a fantastic celebration across games. We are also excited about FragPunk, a fast-paced 5 versus 5 shooter game. Closed beta testing in October attracted over 1 million applicants and with its distinctive mechanics and vibrant carnival inspired our design, ranking as the top trending upcoming game in free-to-play section. Building on this momentum, FragPunk's first testing phase in China will begin this December, aiming to capture the interest of an even broader audience and further showcase its unique appeal. We are also planning to start around a regional off-line technical test soon for our eagerly anticipated open-world adventure title Project MUGEN. After another year of intense development and refinement, Project MUGEN is ready to captivate ACG fans with a fresh urban exploration experience. Next (LON:NXT) up, we are thrilled to announce our latest product, MARVEL Mystic Mayhem. Set in the heart of Marvel universe. In this team-based technical RPG, players who are drawing force will be loved Superheros as they clash with a signature force of Super villain Nightmare and witness to the inner fears of iconic heroes and villains throughout their journey. In November, we started closed beta testing for Destiny: Rising, the first mobile game in the Destiny franchise, rooted in the intriguing Destiny universe. Destiny: Rising will offer a brand new adventure set in the alternative pipeline, featuring a wide area of characters and various game mode, Destiny: Rising introduced new ways to play. Beyond our in-house development games, the return of Blizzard games in China as we met with an presenting enthusiasm from the gaming community to ensure we meet expectations, we stay closely attuned to the voice of Chinese players. This commitment has rekindled the loyalty of long-time fans eager to return to us and also captivated new players eager to embark on epic adventures. We are seeing strong player engagement following the relaunch. World of Warcraft saw a 50% increase in active players as compared to the level before the shutdown, while Hearthstone achieved over 150% growth. Our partnership with Blizzard build on mutual trust and respect and supported by a dedicated fan community has delivered results far exceeding expectations from both sides, whether self-developed or in partnership, we always strive to bring players new exciting gaming experiences. We're executing the strategy at a very high level bringing more games and content to the domestic market while expanding our global reach. Now let's move to Youdao. During the third quarter, we significantly improved our profitability with income from operations exceeding RMB100 million. This marks our first profitable third quarter and set a new record for quarterly operating profit, a testament to our commitment to high-quality growth. For digital content services, we have remained committed to enhancing the product experience. The Youdao intelligent learning system expanded its knowledge category to nearly 40,000 videos across four difficulty levels, providing comprehensive coverage of essential topics throughout students learning journey. Additionally, Youdao literature introduced AI power writing enhancement to help students level up their written word, resulting in an increased user engagement. We also maintained strong growth momentum in AI-driven subscription services fueled by our AI power tool, which enhanced functionality and user appeal. For Youdao Dictionary, we launched simultaneous interpretation powered by our large language model Ziyue. It achieved over 4 million users in the debut quarter, boasting exceptional accuracy and fluency. Hi Echo has also gained increasing popularity. A leading AI application ranking chart in China shows Hi Echo as one of the most popular domestic apps highlighting its high user number and retention rate. Online marketing services saw rapid growth as well. Our expansions into new sectors and advance data applications to optimize ad performance net revenue from real-time API doubling year-over-year. Additionally, key opinion leader advertising was a key growth engine for revenue in Q3, with outbound advertising demand surging in several sectors. The Smart Devices segment saw solid year-over-year growth, showcasing our commitment to product innovation. With the launch of X7 Pro, the latest iteration of our flagship digital dictionary path, we introduced the industry's first learning device capable of off-line large language model translation. The X7 Pro also boost robust accuracy better than online AMT. Overall, customer feedback on our new products and their innovative upgrades has been excellent. This year's product launches, mainly the X7 and X7 Pro were key in driving Q3 as over 50% year-over-year net revenue growth for our digital dictionary path series. Turning to NetEase Cloud Music. During the third quarter, we continued to propel our quality development across our music-centric ecosystem, broadening our subscriber base and leading to healthy revenue growth momentum for online music. To further enrich our content ecosystem, we continuously expand our music offerings to meet diverse audience demand, especially trending interest from younger generation. We reintroduced our partnership. We reinforced our partnership with various music labels in the third quarter. Building our earlier collaboration with Kakao Entertainment and JYP Entertainment, we reintroduced music from CGEM during the third quarter, enhancing our K-Pop library with popular original soundtracks from Korean dramas and performance show tracks. We are also amplifying the impact of our in-house music forcing a unique and differentiated content ecosystem. Multiple in-house traps have come viral our community and beyond. For example, our direct version of [indiscernible] which plans companies and French with [indiscernible] inspired a large number of UGC content featuring on the track. On other popular sound, each with a unique style are also gaining significant popularity. We continue strengthening our music-focused monetization capabilities providing distinctive features that unleash creativity and express individuality. The AI powered tool that we recently launched allow users to recreate sounds with their own voices. We also offer a two for members to customize their music train interface with their chosen background and manual players catering to users' personalized interest. The increasing accessibility to individual expression through customization and content creation continues to drive engagement on our platform, in broadening membership privileges for our subscriber our collaboration with popular IP provides exclusive skins and decorations to our members that our members love prompting robust user engagement and boosting our commercialization potential. Taking a look at Yanxuan. We continue to strengthen its brand equity within private label consumer market. We achieved notable growth in GMV across key categories by consistently and successfully introducing products and expanding sales through our omnichannel strategy. In the third quarter, sales of pet products and household cleaning items grew by double-digits year-over-year. Notably, to further strengthen our competitiveness in the fast food [ph] sector, we established a dedicated factory in partnership with a leading fast food manufacturer. This collaboration significantly improved our ability to deliver high-quality fast food on a larger scale reinforcing Yanxuan's position in this fast-growing category. Innovation is the heart of our NetEase family of businesses and the core components of our competitive edge, along with deep gaming operating capabilities and commitment to quality and user experience. We'll continue to bring our community impactful games, product and services that create value for low community and meaningful returns to our shareholders. That concludes William's comment.
Bill Pang: I will now provide a brief review of our 2024 third quarter financial results. Given the limited time on today's call, I will present some abbreviated financial highlights. We encourage you to read through our press release issued earlier today for further details. As a reminder, all amounts are in RMB unless otherwise stated. Total net revenue for the third quarter were RMB26.2 billion or $3.7 billion representing a 3% increase quarter-over-quarter. Meanwhile, current contract liabilities were RMB15.5 billion, up 14% quarter-over-quarter. Total net revenues from our games and related VAS were RMB20.9 billion, up 4% quarter-over-quarter. Specifically, net revenues from online games were RMB20.2 billion, up 5% quarter-over-quarter. This growth was primarily driven by increased revenue contributions from key PC games, such as World of Warcraft and the Naraka: Bladepoint as well as mobile games like Identity V and the recent launch of Naraka: Bladepoint Mobile. Notably, net revenue from our PC games accounted for approximately 29.2% of our total online game revenue, representing an increase of 30% quarter-over-quarter and an increase of 29% year-over-year. On a year-over-year basis, total net revenues from games and VAS declined by 4%, mainly due to adjustments in our PC live streaming service. These changes, in turn enhance our margin profile and contributed to long-term business sustainability. Excluding the impact of this adjustment, our online games revenue remained relatively stable on a year-over-year basis, with 1% decrease. Youdao's net revenue were RMB1.6 billion, a year-over-year increase of 2%, primarily due to the increased revenue contribution from Youdao's online marketing services and a 19% quarter-over-quarter increase driven mainly by higher net revenues from the sales of smart devices and learning services. NetEase Cloud Music's net revenue were RMB2 billion, a 1% increase compared to the same period last year, primarily due to higher net revenue from membership subscriptions and a 2% quarter-over-quarter decline due to a decline in net revenues from NetEase Cloud Music, social entertainment services. Net revenue for innovative businesses and others were RMB1.8 billion, a 10% decrease compared with the same quarter of 2023, mainly due to the decrease of advertising revenues of our news related products and several other businesses, including within the segment, and the 14% quarter-over-quarter decrease due to the effect of seasonality on Yanxuan sales. The total gross profit margin was 62.9% in the third quarter compared with 62.2% for the same period in 2023. Looking at our third quarter margin in more detail. Gross profit margin was 68.8% for our games and related VAS compared with 69% in the same period last year. The year-over-year decrease was mainly attributable to changes in product mix. Gross profit margin for Youdao was 50.2% compared with 55.9% in the same period last year. The year-over-year decrease was primarily due to the decrease in net revenues from learning services. Gross profit margin for NetEase Cloud Music reached 32.8% versus 27.2% in the same period last year. The margin improvement primarily resulted from increased net revenue from membership subscriptions and continued cost optimization measures. For innovative businesses and others, gross profit margin was 37.8% compared with 27.3% in the third quarter of 2023. The year-over-year increase was mainly due to increased gross margin -- gross profit margin from several other businesses included within the segment. Total operating expenses for the third quarter were RMB9.3 billion or 35.6% of our net revenues. Taking a closer look at our cost composition. Our selling and marketing expenses as a percentage of total net revenue was 14.5% compared with 13.1% in the same quarter last year. The increase was primarily due to higher marketing expenditures associated with online game services for new game launches. Our R&D expenses as a percentage of total net revenue was 16.9% in the third quarter compared with 15.9% for the same period last year. We remain committed to investing into content creation and product development to keep our product and content at the forefront of the industry. We believe that our investment in R&D will remain a key catalyst for future growth over the longer term. The effective tax rate was 16.1% for the third quarter. As a reminder, the effective tax rate is presented on an accrual basis, depending on the applicable policies and our operations. Our non-GAAP net income attributable to shareholders for third quarter totaled RMB7.5 billion or $1.1 billion. Non-GAAP basic earnings per ADS for the third quarter were $1.67 or $0.33 per share. Additionally, our cash position remains robust with net cash of approximately RMB120 billion as of September 30, 2024, compared with RMB110.9 billion at the end of 2023. In accordance with our dividend policy, we are pleased to report that our Board of Directors has approved a dividend of $0.87 per share or $0.435 per ADS for the third quarter. Lastly, we continue to conduct our share buyback during the third quarter. We repurchased shares in the amount of $543 million, marking a 98% increase from the previous quarter. Under our current $5 billion share repurchase program, which started in mid-January last year. We have repurchased approximately 18 million ADS as of September 30, 2024, for a total cost of approximately $1.6 billion. Thank you for your attention. We would now like to open the call to your questions. Operator, please?
Operator: Thank you. [Operator Instructions]. Your first question comes from Lincoln Kong with Goldman Sachs. Lincoln Kong, your line is open.
Lincoln Kong: [Foreign Language]. Thank you for taking my question. So my first question is about Where Winds Meet. So what's the latest launch schedule for this gaming PC and mobile version? Based on last time feedback, there are some user pay around the positioning of this game, how to better integrate the single player model versus the multiplayer one? And how to design the monetization here. So any of the update or programs of this game lately. Thank you.
William Ding: [Foreign Language]. Okay. Yes, I will do the translation. First of all, Where Winds Meet, PC is slated to launch by the end of December. And the mobile will be slightly later than that, but the gap won't be too long. And now we're doing a final stage optimization to make sure that the game could be played on as many devices as possible. That's our goal now. And regarding your question about the positioning of the game, the core game play is positioned to provide high-quality open world exploration and also cash or social experiences in the open background kind of world. We're aiming at engaging players who are looking for high fidelity immersive experience, open world exploration as well as relaxing casual social game play. About the single player versus multiplayer mode, we hope in every single each of our expansions, players could start with single-player content to enjoy that content first and over time, smoothly translate into multiplayer mode and enjoy social gaming with a period between expansion path. That's the plan. In terms of monetization, we'll focus on a tier-based cosmetic offerings, alongside with other lighter monetization models like better cost. But we want to make sure that our game could alleviate the pressures from complicated -- traditional complicated cultivation and monetization, forcing a healthier social ecosystem and relaxed social environment where players can immerse themselves with light effort to match up with other players and lower barriers for the all players to return to game. We aim to achieve a better operational performance in the long-term. That's our goal. Thank you for your question.
Lincoln Kong: [Foreign Language]. Thank you. So my second question is about Justice Mobile and Eggy Party. So based on some third-party data, it seems the games have some pressure in terms of the grossing trend recently. Could management elaborate how they are seeing internally for these two games in terms of their operational strategy, especially in what direction. Could we expect to extend the life cycle of these two games? Thank you.
William Ding: [Foreign Language]. Yes. So allow us to track the Justice Mobile part first. As you know, during Q3, we finished the celebration of the first anniversary of the game. And players show very good stickiness to the game and players coming back, actually, the rate of player coming back exceeded our expectations. What we are trying to do here is to balance the commercialization and user experience as well in the long run. We're pretty sure that what we have achieved is that while making sure the players have enough fun game, and we can do the commercialization exploration in the meantime to satisfy big players. Looking at the future, what we're going to keep doing is keep enriching the content of the game, provide multi-tier of content and pursuing for the players. And in the meantime, explore innovative commercializations to make sure the game has a long-term housing environment. That's a part of the Justice Mobile. [Foreign Language]. Okay. So for the question about Eggy Party. Now one thing you can be sure that we are still doing a big effort and keep investing into building more content for the game. So again, we have -- we are very confident for the Eggy Party in the long-term run. It's actually one of the highest DAU products of NetEase in the history. And as you noted from other sources of data, commercialization, we run into some short-term challenges However, we take that as a great opportunity to accumulate experiences in how to develop a key relevant franchise. We strongly believe this franchise is a very unique offering in the market. And our focus the long-term content operation. We believe in the long-term, while we're doing more content, will provide more opportunities for commercialization in the future. Thank you.
Operator: Your next question comes from Xueqing Zhang with CICC.
Xueqing Zhang: [Foreign Language]. Thanks management for taking my questions. I have two questions, and I will address one by one. My first question about [indiscernible] strategy. How is your current situation with the overseas first-party studios, we have seen that Once Human has performed well since this year. Could management share more specific details and what's our plan for globalizations of domestic studio game? Thank you.
William Ding: [Foreign Language]. So thank you for your question. As you can tell that we are having two legs in our -- when we go after the global market. One leg is we have oversea first-party, making games in the region in Western market, in Japan for the Western and Japan market. In the meantime, the second leg is that we have our studios -- domestic studios making game for global to release not only in China but in Europe market, North American market and Japanese market as well. You're right that Once Human was the game we released early summer this year and performance really well. And looking forward, immediately, we have two titles. One is Marvel Rivals in December and the other one is FragPunk in early next year that we're going to release towards the global market. Both of these are shooter-based PVP game on PC and console. We believe our domestic studios will be capable of producing more and more products suitable for global market. Actually, this is not our first wave of success in global market outside of China market. You probably recorded our lifestyles and add, actually work fairly well in Japan market and gain a lot of claim there. And looking forward, we have confidence that our domestic studies and our overseas studios will be able to produce more and more worldwide suitable content. Thank you.
Xueqing Zhang: [Foreign Language]. My second question is about the flagship evergreen games. How do the first games such as [indiscernible] joining mobile remains strong? How are the gross billings in recent months? Thank you.
William Ding: [Foreign Language]. Yes. So actually, and that is, we have quite a selection of franchises that has more than 10 years old. Like Fantasy Journey, Westward Journey Online, the world, even our license title World of Warcraft. We will keep doing -- what we'll keep doing is continuously add new game play, try new things, new fun staff and content into the game. We believe the core of game business is for innovation to keep providing fun, innovative new content to the players. And in every single game, we'll keep doing that, and that's something you can be assured of. Thank you.
Operator: Your next question comes from Ritchie Sun with HSBC.
Ritchie Sun: [Foreign Language]. First of all, for Marvel rivals, can management contrast the potential of this title against other PVP shooting titles in the market? And how long would it take for the game to ramp up to its full potential? And what metrics should we monitor to track its progress?
William Ding: [Foreign Language]. Yes. So for your question about Marvel Rivals. Marvel Rivals is a new generation superhero based team-based competitive shooting game. It actually has very unique game experiences, and we hope it could open the new track in this big genre. And the product actually facilitated large scale PCN console post-beta tests in north [indiscernible], in the overseas market. The performance data was excellent. Steam positive review rate was close to 95%. The player's feedback are very positive. And in the meantime, it also ranked seven on a steam wish list now. We do have confidence that we're doing the time we have before launch, we'll keep optimizing the product cheap option of product. One product -- when the product is released on December 6 globally on PC and console, it could be operate aspect of pro experience to the users. We hope this one could provide an unique experience to the players worldwide. Thank you.
Ritchie Sun: [Foreign Language]. Thank you. I have a second question is about Blizzard. The reception of the relaunch of World of Warcraft and Hearthstone in China is much better than expected. So what have we done differently than the past to drive such results? And would this mean the annual revenue contribution from Blizzard in the future will be higher than in 2022? And when will Overwatch return to China? Thank you.
William Ding: [Foreign Language]. Yes. So the -- we have done quite many things on both marketing as well as product is a modified effort approach to operate with the product. World of Warcraft is in for some power. However, a multiple, multiple cross-branding collaborations with other brands we brought that into an even bigger impact in the society, and that help us to attract a lot of new players to the game as well. For Hearthstone, you probably heard that we announced the returning of Hearthstone at ChinaJoy, and that became one of the most exciting things during ChinaJoy time. And also the return of -- on the sports side, the golden league the impact on the [indiscernible] involvement that's all helped. And also will be innovative in how to spread out the brand message and how to interact with the players. For example, social media is something we have done more innovatively compared to the past. The videos on social media has been -- the click of the video on social media video has more than 10 billion times now. And also, none of this could be realized without a deep collaboration, deep trust and deep collaboration with Blizzard. Now both on the product and marketing side, we have very big working relationship now. And we believe with the innovations we're doing here in China, focusing on how to present more locally appreciated product and service to the Chinese players. We can maintain and the players also showed us the level of activeness and level of payment intention is really high. And we are very confident that it will have a very good result in the long run. That's for World of Warcraft and Hearthstone. For Overwatch, we don't have anything specific to disclose now regarding the launch date. But Overwatch is going to be the next product -- next reserve product we launch in China. Thank you.
Operator: Your next question comes from Felix Liu with UBS.
Felix Liu: [Foreign Language]. Thank you management for taking my question. My question is on your pipeline. You mentioned some titles earlier in the call, but could you provide more details on the game genre and the expected launch time for the key titles in 2025. Additionally, I would like to ask a question on Project Mugen game, what is the latest status of the game and expected launch time?
William Ding: [Foreign Language]. Yes. So let's talk about the FragPunk and Project Mugen. FragPunk, as we mentioned that we're going to have a test within this year in December. And based on the test result, we'll decide want to launch this game officially. That's for FragPunk. And for Project Mugen, as we mentioned that we're going to have the first offline test within this year. And we do have high expectations for Project Mugen, not only because we invested a tremendous amount of R&D resources into this product, but also our expectation is this game is not going to be only another open world ACG game. It will carry NetEase's thinking about future ACG game. And based on our 20 years' experience, knowledge of the Chinese game -- of the gamers and observational gamers, we got lot of thinking into what the future of this type of game should be and that will be reflected in the game. We do have high expectations there.
Felix Liu: [Foreign Language]. Thank you management. My follow-up question is on the latest trends on Fantasy Westward Journey PC. Its operational trends as well as cash growth in trend? And what are the user feedbacks to our changes made in the first half? Thank you.
William Ding: [Foreign Language]. Yes, thank you for your question on Fantasy Westward Journey PC. Fantasy Westward Journey PC now all the performance metrics are very stable. As a matter of fact, August was the highest revenue months in this year for this game. And now after the adjustment the DAU is stable. Not only stabilized, but keep improving now. And we released a series of adjusted content from August to October time. And the player feedback regarding this new content is a very welcoming attitude. And in the meantime, we're going to release new expansion pack by the end of this year and more optimization and refresh content to maintain the final play of the game and maintain the stableness of the game operation. Thank you. Operator, given the time limit, we probably have time for one more question.
Operator: Thank you. Your next question comes from Alicia Yap with Citigroup (NYSE:C).
Alicia Yap: [Foreign Language]. Thanks for taking my question. Could management share with us your thoughts and on the performance of Naraka: Bladepoint Mobile since the launch in July. Has that met your expectations? What are some of the upcoming content and promotional events update plans for this game? Any meaningful difference in terms of the gamer profile for the mobile version versus the PC version? Thank you.
William Ding: [Foreign Language]. Yes. To answer your question, we actually have accumulated 50 million new users across the four months of operation. And one thing we learned is that even both the PC and mobile are competitive action-based competitive games. The PC gamers and the mobile gamers their needs and demands are, to some extent, different. The mobile gamers, the demand are more diversified. They are hardcore competitive players. There are social type players. There are also players enjoy collecting the cosmetic stuffs. So what we do is that we embrace -- we understand and we embrace the difference in the gamers' needs, and we provide different content, differentiated content to both PC and mobile version. And for example, the -- we might provide more new content that are not available on PC, but for mobile players only to provide new gameplays, new content, everything. And the game actually is very -- in a very healthy status and very stabilized, very stable, very healthy status, and we have long-term confidence in this product. Thank you.
Operator: And that concludes the question-and-answer session. I would like to turn the conference back over to Brandi Piacente for any closing comments.
Brandi Piacente: Thank you again for joining us today. If you have any further questions, please feel free to contact the IR team at NetEase. Have a great day. Thank you.
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