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What changed in NetEase, Inc.'s 20-F — 2024 vs 2025

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Paragraph-level year-over-year comparison of NetEase, Inc.'s 2024 and 2025 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+731 added−761 removedSource: 20-F (2026-04-15) vs 20-F (2025-04-15)

Top changes in NetEase, Inc.'s 2025 20-F

731 paragraphs added · 761 removed · 579 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

259 edited+66 added−76 removed614 unchanged
Biggest change“Key Information—Risk Factors.” ​ Risks Related to Our Business and Industry ● Risks Related to Our Games and Related Value-added Services; ● Risks relating to developing new online games and growing the popularity of existing online games; ● Risks relating to claims regarding our gaming contents resulting in negative publicity or a governmental response; 8 Table of Contents ● Risks relating to additional restrictions to limit online game playing by the Chinese government; ● Risks relating to uncertainties in obtaining approval for new games; ● Risks relating to laws, regulations policies and guidelines applicable to the live streaming and online entertainment industries; ● Risks relating to international operations of our online games; ● Risks relating to third-party platforms that distribute our mobile games and collect payments; ● Risks relating to maintaining our existing licenses of game or intellectual property; ● Risks relating to illegal game servers, acts of cheating by players and sales and purchases by players of our game accounts and virtual items through third-party auction websites; ● Risks Related to Our Other Businesses; ● Risks relating to Youdao business’s compliance with the relevant after-school tutoring regulations and rules issued by the relevant PRC government authorities; ● Risks relating to changes in user acceptance of Youdao, and market trend of integration of technology and learning, and the development and application of Youdao’s technologies to support and expand its product and services; ● Risks relating to changes in Youdao’s business strategies and offerings; ● Risks relating to obtaining legal and regulatory approvals, licenses or permits of our intelligent learning, music streaming, e-commerce, advertising and other innovative businesses; ● Risks relating to obtaining licenses for the music content necessary to provide our music streaming services, and our ability to attract and retain users; ● Risks relating to generating and maintaining significant advertising revenue; ● Risks relating to growing our e-commerce business; ● Risks Related to Our Operations Overall; ● Risks relating to competing successfully against new entrants and established industry competitors and keeping up with rapid changes in technologies and user behavior and innovating and exploring new areas of operations; ● Risks relating to gross profit margin and profitability affected by changes in our mix of revenues; ● Risks relating to credit risk on our accounts receivable; ● Risks relating to a prolonged slowdown in the economies of the countries or regions where we operate; ● Risks relating to economic uncertainty and capital market disruptions caused by rising inflation and geopolitical instability; ● Risks relating to compliance with laws and other obligations regarding data protection in China and outside of China; ● Risks relating to breaches of our information technology systems and system failure or performance inadequacy that causes interruptions of our services; 9 Table of Contents ● Risks relating to our ability to retain our existing key employees and to add and retain qualified senior and mid-level managers to our management; ● Risks relating to natural disasters, widespread public health problems, other outbreaks and epidemics and other events; ● Risks relating to the expansion of our businesses and operations internationally; ● Risks relating to being deemed an “Investment Company” under the Investment Company Act of 1940.
Biggest change“Key Information—Risk Factors.” ​ Risks Related to Our Business and Industry ● Risks Related to Our Games and Related Value-added Services; ● Risks relating to developing new online games and growing the popularity of existing online games; ● Risks relating to claims regarding our gaming content resulting in negative publicity or a governmental response; 8 Table of Contents ● Risks relating to additional restrictions to limit online game playing by the PRC government; ● Risks relating to uncertainties in obtaining approval for new games; ● Risks relating to international operations of our online games; ● Risks relating to third-party platforms that distribute our games and collect payments; ● Risks relating to maintaining our existing game licenses or intellectual property; ● Risks relating to illegal game servers, acts of cheating by players and sales and purchases by players of our game accounts and virtual items through third-party auction websites; ● Risks Related to Our Other Businesses; ● Risks relating to changes in the user acceptance of Youdao, the market trends relating to the integration of technology and learning, and the development and application of Youdao’s technologies to support and expand its product and services; ● Risks relating to changes in Youdao’s business strategies and offerings; ● Risks relating to Youdao business’s compliance with the relevant after-school tutoring regulations and rules issued by the relevant PRC government authorities; ● Risks relating to obtaining legal and regulatory approvals, licenses or permits of our intelligent learning, music streaming, e-commerce, advertising and other innovative businesses; ● Risks relating to obtaining licenses for the music content necessary to provide our music streaming services, and our ability to attract and retain users; ● Risks relating to generating and maintaining significant advertising revenue; ● Risks relating to growing our e-commerce business; ● Risks Related to Our Operations Overall; ● Risks relating to competing successfully against new entrants and established industry competitors and keeping up with rapid changes in technologies and user behavior and innovating and exploring new areas of operations; ● Risks relating to gross profit margin and profitability affected by changes in our mix of revenues; ● Risks relating to credit risk on our accounts receivable; ● Risks relating to a prolonged slowdown in the economies of the countries or regions where we operate; ● Risks relating to economic uncertainty and capital market disruptions caused by rising inflation and geopolitical instability; ● Risks relating to compliance with laws and other obligations regarding data protection in China and outside of China; ● Risks relating to breaches of our information technology systems and system failure or performance inadequacy that causes interruptions of our services; ● Risks relating to our ability to retain our existing key employees and to add and retain qualified senior and mid-level managers to our management; 9 Table of Contents ● Risks relating to natural disasters, widespread public health problems, other outbreaks and epidemics and other events; ● Risks relating to the expansion of our businesses and operations internationally; ● Risks relating to being deemed an “Investment Company” under the Investment Company Act of 1940.
We must also collect and analyze player behavior data and feedback from our online community in a timely manner, and we must utilize this information to effectively incorporate features into our updates and expansion packs to improve the variety and attractiveness of our gameplay and any virtual items sold within the games. 11 Table of Contents In the course of operating online games, including the release of updates and expansion packs to existing games, certain game features may periodically be introduced, changed or removed.
We must also collect and analyze player behavior data and feedback from our online community in a timely manner and utilize this information to effectively incorporate features into our updates and expansion packs to improve the variety and attractiveness of our gameplay and any virtual items sold within the games. 11 Table of Contents In the course of operating online games, including the release of updates and expansion packs to existing games, certain game features may periodically be introduced, changed or removed.
On December 22, 2023, the NPPA publicly solicited opinions on the Draft Administrative Measures for Online Games which, if adopted, would stipulate, among other requirements, that online game publishers and operators (i) may not publish and operate online games that make participation in battles compulsory; (ii) may not provide inducement rewards such as daily logins, first recharges, and continuous recharges, and must set user recharge limits; (iii) may not allow the payment of large monetary rewards in the live streaming of online games; and (iv) may not allow minors to pay monetary rewards in online games live streaming or provide loot boxes to minors.
On December 22, 2023, the NPPA publicly solicited opinions on the Draft Administrative Measures for Online Games which, if adopted, would stipulate, among other requirements, that online game publishers and operators may not (i) publish and operate online games that make participation in battles compulsory; (ii) provide inducement rewards such as daily logins, first recharges, and continuous recharges, and must set user recharge limits; (iii) allow the payment of large monetary rewards in the live streaming of online games; and (iv) allow minors to pay monetary rewards in online games live streaming or provide loot boxes to minors.
In a number of our games, certain mechanics may be deemed to be loot boxes. New regulations which we may be required to comply with may vary significantly across jurisdictions. It is difficult to predict how existing or new laws may be applied to these or similar game mechanics.
In a number of our games, certain mechanics may be deemed to be loot boxes. New regulations with which we may be required to comply may vary significantly across jurisdictions. It is difficult to predict how existing or new laws may be applied to these or similar game mechanics.
While we already have in place numerous internal control measures to protect the source codes of our games from being stolen and to address illegal server usage and, to date, our games have not to our knowledge experienced such usage, our preventive measures may not be effective.
While we already have in place numerous internal control measures to protect the source codes of our games from being stolen and to address illegal server usage and, to date, our games have not experienced such usage to our knowledge, our preventive measures may not be effective.
In addition, the Cybersecurity Law provides that personal information and important data collected and generated by an operator of critical information infrastructure in the course of its operations in the PRC must be stored in the PRC. As of the date of the filing of this annual report, we have not been recognized as the operator of critical information infrastructure.
In addition, the Cybersecurity Law provides that personal information and important data collected and generated by an operator of critical information infrastructure in the course of its operations in the PRC must be stored in the PRC. As of the date of the filing of this annual report, we have not been recognized as an operator of critical information infrastructure.
If a cybersecurity incident allows unauthorized access to or release of Confidential Information and other data of our users, our reputation and brand could be materially damaged, and use of the NetEase websites and other online and mobile platforms could decrease.
If a cybersecurity incident allows unauthorized access to or release of our confidential information and other data of our users, our reputation and brand could be materially damaged, and use of the NetEase websites and other online and mobile platforms could decrease.
The expansion of our online game business and potentially other businesses outside of China will also expose us to risks and challenges inherent in operating businesses globally, including: 38 Table of Contents ● challenges in replicating or adapting our corporate policies and procedures to operating environments different from that of China, including technology and logistics infrastructure; ● challenges in maintaining efficient and consolidated internal systems, including IT infrastructure, and customizing and integrating these systems with the other parts of our business; ● lack of acceptance of our product and service offerings, and challenges of adapting our offerings to appeal to local tastes; ● failure to understand cultural differences, local consumer behavior and preferences and local business practices; ● protectionist or national security policies that restrict our ability to: ● invest in or acquire companies; ● develop, import or export certain technologies; ● utilize technologies that are deemed by local governmental to pose a threat to their national security; or ● obtain or maintain the necessary licenses and authorizations to operate our businesses; ● the need for increased resources to manage regulatory compliance across our international businesses; ● failure to attract and retain capable talent with international perspectives who can effectively manage and operate local businesses; ● compliance with local and international laws and regulations, including those relating to online games, e-commerce, digital services and platforms, such as the DSA and Digital Markets Act, privacy and data security, such as the GDPR and CCPA, and consumer and labor protection laws, which will increase our compliance costs across different legal systems; ● heightened restrictions and barriers on the transfer of data between different jurisdictions; ● availability, reliability and security of international and cross-border payment systems and logistics infrastructure; ● exchange rate fluctuations; and ● political instability and general economic or political conditions in particular countries or regions, including territorial or trade disputes, war and terrorism.
The expansion of our online game business and potentially other businesses outside of China will also expose us to risks and challenges inherent in operating businesses globally, including: ● challenges in replicating or adapting our corporate policies and procedures to operating environments different from that of China, including technology and logistics infrastructure; ● challenges in maintaining efficient and consolidated internal systems, including IT infrastructure, and customizing and integrating these systems with the other parts of our business; ● lack of acceptance of our product and service offerings, and challenges of adapting our offerings to appeal to local tastes; ● failure to understand cultural differences, local consumer behavior and preferences and local business practices; ● protectionist or national security policies that restrict our ability to: ● invest in or acquire companies; ● develop, import or export certain technologies; ● utilize technologies that are deemed by local governmental to pose a threat to their national security; or ● obtain or maintain the necessary licenses and authorizations to operate our businesses; ● the need for increased resources to manage regulatory compliance across our international businesses; 38 Table of Contents ● failure to attract and retain capable talent with international perspectives who can effectively manage and operate local businesses; ● compliance with local and international laws and regulations, including those relating to online games, e-commerce, digital services and platforms, such as the DSA and Digital Markets Act, privacy and data security, such as the GDPR and CCPA, and consumer and labor protection laws, which will increase our compliance costs across different legal systems; ● heightened restrictions and barriers on the transfer of data between different jurisdictions; ● availability, reliability and security of international and cross-border payment systems and logistics infrastructure; ● exchange rate fluctuations; and ● political instability and general economic or political conditions in particular countries or regions, including territorial or trade disputes, war and terrorism.
Expiration of, or changes to, these incentives and PRC tax laws could have a material adverse effect on our operating results. Under China’s Enterprise Income Tax Law, the enterprise income tax, or EIT, rate payable by domestic and foreign invested enterprises is 25.0%.
Expiration of, or changes to, these tax incentives and PRC tax laws could have a material adverse effect on our operating results. Under China’s Enterprise Income Tax Law, the enterprise income tax, or EIT, rate payable by domestic and foreign invested enterprises is 25.0%.
If we or such PRC participants fail to comply with these regulations, we or such PRC participants may be subject to fines and other legal or administrative sanctions. The Chinese government has strengthened the regulation of investments made by Chinese residents in offshore companies and reinvestments in China made by these offshore companies.
If we or such PRC participants fail to comply with these regulations, we or such PRC participants may be subject to fines and other legal or administrative sanctions. The PRC government has strengthened the regulation of investments made by Chinese residents in offshore companies and reinvestments in China made by these offshore companies.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed China mainland and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed China mainland and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021.
In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021.
As a result, it may be difficult or impossible for holders of our shares and ADSs to effect service of process within the United States or Hong Kong upon these persons, or to bring an action against us or against these individuals in the United States or Hong Kong in the event that they believe that their rights have been infringed under the U.S. federal securities laws, Hong Kong laws or otherwise.
As a result, it may be difficult or impossible for holders of our shares and ADSs to effect service of process within the United States or Hong Kong upon us or these persons, or to bring an action against us or against these individuals in the United States or Hong Kong in the event that they believe that their rights have been infringed under the U.S. federal securities laws, Hong Kong laws or otherwise.
Also see “—Risks Related to Doing Business in China—We may be treated as a resident enterprise for PRC tax purposes under the Enterprise Income Tax Law, which may subject us to PRC income tax for our global income and result in dividends payable by us to our foreign investors, and gains on the sales of our ordinary shares or ADSs, becoming subject to taxes under PRC tax laws, which may materially reduce the value of your investment.” Any limitation on the ability of our China mainland subsidiaries and the VIEs to transfer funds to us in the form of dividends or other distributions could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay debt or dividends, and otherwise fund and conduct our business.
Also see “—Risks Related to China—We may be treated as a resident enterprise for PRC tax purposes under the Enterprise Income Tax Law, which may subject us to PRC income tax for our global income and result in dividends payable by us to our foreign investors, and gains on the sales of our ordinary shares or ADSs, becoming subject to taxes under PRC tax laws, which may materially reduce the value of your investment.” Any limitation on the ability of our China mainland subsidiaries and the VIEs to transfer funds to us in the form of dividends or other distributions could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay debt or dividends, and otherwise fund and conduct our business.
These transactions involve significant challenges and risks, including: ● difficulties in, and significant and unanticipated additional costs and expenses resulting from, integrating into our business the personnel, operations, products, services, technology, internal controls and financial reporting of the businesses we acquire; ● disruptions to our ongoing business and distractions to our management and employees when engaging in or negotiating these transactions, or when integrating the new business we acquire with our existing business, both of which will increase our expenses; ● departure of skilled professionals and experienced management teams of the acquired businesses, in particular senior game designers and programmers; ● lack of influence over the controlling partners or shareholders or the misalignment of interests between us and our partners or other shareholders, for those investments in which we may not obtain management and operational control; 37 Table of Contents ● complex regulatory requirements, restrictions and/or scrutiny on our investments and acquisitions in foreign jurisdictions, including those related to national security, anti-monopoly and competition laws, export controls, etc.; ● actual or alleged misconduct, unscrupulous business practices or non-compliance by us and/or any company we acquire or invest in or by its affiliates or current or former employees, whether before, during or after our acquisition or investments; ● difficulties in and costs associated with identifying and selecting appropriate targets and strategic partners; ● loss of potential opportunities to enter into strategic transactions with competitors of our investee companies and strategic partners; ● difficulties in conducting sufficient and effective due diligence on potential targets to identify hidden liabilities, incidences of non-compliance, operating losses, or costs and expenses, which may adversely affect us following our acquisitions or investments or other strategic transactions; ● losses arising from disposal of investments or split-up of businesses; and ● actual or potential impairment charges or write-offs of investments in equity method investees or intangible assets (including intellectual property we acquire), and goodwill recorded in connection with invested businesses, in the event that a decline in fair value below the carrying value of our equity method investments is other-than-temporary, or the carrying amount of a reporting unit to which goodwill is allocated exceeds its fair value.
These transactions involve significant challenges and risks, including: ● difficulties in, and significant and unanticipated additional costs and expenses resulting from, integrating into our business the personnel, operations, products, services, technology, internal controls and financial reporting of the businesses we acquire; ● disruptions to our ongoing business and distractions to our management and employees when engaging in or negotiating these transactions, or when integrating the new business we acquire with our existing business, both of which will increase our expenses; ● departure of skilled professionals and experienced management teams of the acquired businesses, in particular senior game designers and programmers; ● lack of influence over the controlling partners or shareholders or the misalignment of interests between us and our partners or other shareholders, for those investments in which we may not obtain management and operational control; ● complex regulatory requirements, restrictions and/or scrutiny on our investments and acquisitions in foreign jurisdictions, including those related to national security, anti-monopoly and competition laws, export controls, etc.; ● actual or alleged misconduct, unscrupulous business practices or non-compliance by us and/or any company we acquire or invest in or by its affiliates or current or former employees, whether before, during or after our acquisition or investments; ● difficulties in and costs associated with identifying and selecting appropriate targets and strategic partners; ● loss of potential opportunities to enter into strategic transactions with competitors of our investee companies and strategic partners; ● difficulties in conducting sufficient and effective due diligence on potential targets to identify hidden liabilities, incidences of non-compliance, operating losses, or costs and expenses, which may adversely affect us following our acquisitions or investments or other strategic transactions; ● losses arising from disposal of investments or split-up of businesses; and ● actual or potential impairment charges or write-offs of investments in equity method investees or intangible assets (including intellectual property we acquire), and goodwill recorded in connection with invested businesses, in the event that a decline in fair value below the carrying value of our equity method investments is other-than-temporary, or the carrying amount of a reporting unit to which goodwill is allocated exceeds its fair value.
Other than the PRC Civil Code, which was passed by the National People’s Representative Meeting on May 28, 2020 and took effect on January 1, 2021, which prescribes that network virtual property will be protected according to the laws and regulations stipulating the protection of such property, the Chinese government has not yet enacted any specific laws regarding virtual property rights.
Other than the PRC Civil Code, which was passed by the National People’s Representative Meeting on May 28, 2020 and took effect on January 1, 2021, which prescribes that network virtual property will be protected according to the laws and regulations stipulating the protection of such property, the PRC government has not yet enacted any specific laws regarding virtual property rights.
Trump issued the “America First Investment Policy,” which mandates that the U.S. administration will, among other things, assess if adequate financial auditing standards are upheld for companies covered by the HFCAA and review the use of VIE structures by companies from designated “foreign adversaries,” including the PRC, to evaluate potential risks to U.S. investors.
President Trump issued the “America First Investment Policy,” which mandates that the U.S. administration will, among other things, assess if adequate financial auditing standards are upheld for companies covered by the HFCAA and review the use of VIE structures by companies from designated “foreign adversaries,” including the PRC, to evaluate potential risks to U.S. investors.
China has adopted a revised securities law which provides, among other things, that without governmental approval in China, no entity or individual in China may provide documents and information relating to securities business activities to overseas regulators which could present significant legal and other obstacles to obtaining information needed for investigations and litigation conducted outside of China.
China mainland has adopted a revised securities law which provides, among other things, that without governmental approval in China mainland, no entity or individual in China mainland may provide documents and information relating to securities business activities to overseas regulators which could present significant legal and other obstacles to obtaining information needed for investigations and litigation conducted outside of China mainland.
See below “—Risks Related to Doing Business in China—We are subject to consumer protection laws that could require us to modify our current business practices and incur increased costs.” We may also be required to obtain licenses and permits from different regulatory authorities in order to sell certain categories of products.
See below “—Risks Related to China—We are subject to consumer protection laws that could require us to modify our current business practices and incur increased costs.” We may also be required to obtain licenses and permits from different regulatory authorities in order to sell certain categories of products.
The significant changes in Youdao’s business strategies and offerings have not only rendered its historical results prior to such disposal no longer indicative of its future performance, but they may also have some or all of the following unintended effects: ● some users, customers and business partners may not receive the changes in Youdao’s business strategies and offerings in a positive manner, and relationships with these parties may be jeopardized; ● Youdao’s new products and services may not be accepted by its users as we expect; ● Youdao’s new products and services may not attract users and customers or generate the revenue required to succeed; ● the underlying assumptions and estimates about Youdao’s new businesses and the new markets that it attempts to enter into may prove incorrect, which may cause Youdao’s actual results of operations to fall short of our expectations; ● to the extent Youdao enters into new businesses, its previous operating history may be of limited use for investors to evaluate Youdao’s future performance and prospects; ● the development of new products and services could be costly and time-consuming and requires us to make significant investments in research and product development, develop new technologies, and increase sales and marketing efforts, all of which may not be successful; ● expenses will be incurred in the implementation of the new business strategies, which could be substantial; and 22 Table of Contents ● the changes in organizational structure that will be required to support the changes in Youdao’s business strategies and offerings may lead to dissatisfaction among employees which could make it more difficult for Youdao to retain key employees.
The significant changes in Youdao’s business strategies and offerings have not only rendered its historical results prior to such disposal no longer indicative of its future performance, but they may also have some or all of the following unintended effects: ● some users, customers and business partners may not receive the changes in Youdao’s business strategies and offerings in a positive manner, and relationships with these parties may be jeopardized; ● Youdao’s new products and services may not be accepted by its users as we expect; ● Youdao’s new products and services may not attract users and customers or generate the revenue required to succeed; ● the underlying assumptions and estimates about Youdao’s new businesses and the new markets that it attempts to enter into may prove incorrect, which may cause Youdao’s actual results of operations to fall short of our expectations; ● to the extent Youdao enters into new businesses, its previous operating history may be of limited use for investors to evaluate Youdao’s future performance and prospects; ● the development of new products and services could be costly and time-consuming and requires us to make significant investments in research and product development, develop new technologies, and increase sales and marketing efforts, all of which may not be successful; ● expenses will be incurred in the implementation of the new business strategies, which could be substantial; and ● the changes in organizational structure that will be required to support the changes in Youdao’s business strategies and offerings may lead to dissatisfaction among employees which could make it more difficult for Youdao to retain key employees.
Other examples include a number of Youdao’s products, such as Confucius , its large language model designed for the education sector and related AI tools underpinned by Confucius such as Hi Echo , an AI-driven virtual English-speaking tutor, and Mr. P AI Tutor , a conversation-based tutorial function.
Other examples include a number of Youdao’s products, such as Confucius , its large language model (LLM) designed for the education sector and related AI tools underpinned by Confucius such as Hi Echo , an AI-driven virtual English-speaking tutor, and Mr. P AI Tutor , a conversation-based tutorial function.
Our games are subject to regulations regarding the appropriateness of their content. For example, the Chinese government and regulatory authorities prohibit any internet content that, among other things, violates PRC laws and regulations, endangers the national security of China, or is obscene, superstitious, violent or defamatory.
Our games are subject to regulations regarding the appropriateness of their content. For example, the PRC government and regulatory authorities prohibit any internet content that, among other things, violates PRC laws and regulations, endangers the national security of China, or is obscene, superstitious, violent or defamatory.
Our business may be adversely affected by these restrictions. The SAFE has adopted certain regulations that require registration with, and approval from, Chinese government authorities in connection with direct or indirect control of an offshore entity by Chinese residents.
Our business may be adversely affected by these restrictions. The SAFE has adopted certain regulations that require registration with, and approval from, PRC government authorities in connection with direct or indirect control of an offshore entity by Chinese residents.
See “—The Chinese government has taken steps to limit online game playing time for all minors and to otherwise control the content and operation of online games” above. 13 Table of Contents In addition, there are ongoing academic, political and regulatory discussions in many jurisdictions around the globe regarding whether certain game genres, or certain game mechanics such as “loot boxes”, should be subject to a higher level or different type of regulation than other game genres or mechanics to protect consumers, and, if so, what such regulation should include.
See “—The PRC government has taken steps to limit online game playing time for all minors and to otherwise control the content and operation of online games” above. 13 Table of Contents In addition, there are ongoing academic, political and regulatory discussions in many jurisdictions around the globe regarding whether certain game genres, or certain game mechanics such as “loot boxes”, should be subject to a higher level or different type of regulation than other game genres or mechanics to protect consumers, and, if so, what such regulation should include.
In September 2021, the Chinese government and regulatory authorities further limited the play of online gamers under 18 by prohibiting play on weekdays and limiting playing for one hour a day on Fridays, Saturdays, Sundays and PRC statutory holidays.
In September 2021, the PRC government and regulatory authorities further limited the play of online gamers under 18 by prohibiting play on weekdays and limiting playing for one hour a day on Fridays, Saturdays, Sundays and PRC statutory holidays.
Because many of our existing competitors as well as a number of potential competitors have longer operating histories in the internet market, greater name and brand recognition, better connections with the Chinese government, larger customer bases and databases and significantly greater financial, technical and marketing resources than we have, we cannot assure you that we will be able to compete successfully against our current or future competitors or that competition will not have a material and adverse effect on our business, financial condition and results of operations.
Because many of our existing competitors as well as a number of potential competitors have longer operating histories in the internet market, greater name and brand recognition, better connections with the PRC government, larger customer bases and databases and significantly greater financial, technical and marketing resources than we have, we cannot assure you that we will be able to compete successfully against our current or future competitors or that competition will not have a material and adverse effect on our business, financial condition and results of operations.
Below is a summary of material risks we face, organized under relevant headings. All the operational risks associated with being based in and having operations in China mainland also apply to operations in Hong Kong.
Below is a summary of material risks we face, organized under relevant headings. All the operational risks associated with being based in and having operations in China mainland also apply to operations in Hong Kong and Macau.
As of the date of this annual report, the PCAOB has not issued any new determination that it is unable to inspect or investigate completely registered public accounting firms headquartered in any jurisdiction.
As of the date of the filing of this annual report, the PCAOB has not issued any new determination that it is unable to inspect or investigate completely registered public accounting firms headquartered in any jurisdiction.
Any failure on our part to maintain good relationships with a sufficient number of popular platforms for the distribution of our games could cause the number of our game downloads and activations to decrease, which will have a material adverse effect on our business, financial condition and results of operations. 15 Table of Contents Our business, financial condition and results of operations depend in part on the overall growth of the online game industry in China and the other markets where our games are operated, the growth of which is subject to a number of factors that are beyond our control.
Any failure on our part to maintain good relationships with a sufficient number of popular platforms for the distribution of our games could cause the number of our game downloads, purchases or activations to decrease, which will have a material adverse effect on our business, financial condition and results of operations. 15 Table of Contents Our business, financial condition and results of operations depend in part on the overall growth of the online game industry in China and the other markets where our games are operated, the growth of which is subject to a number of factors that are beyond our control.
Risks Related to Doing Business in China ● Risks relating to China’s political and economic policies; ● Risks relating to compliance with and changes in PRC laws and regulations relating to telecommunications, internet, foreign investment, tax, online games, virtual asset property rights, consumer protection and financial transactions; ● Risks relating to claims and liabilities based on the information and content on our platforms; ● Risks relating to uncertainties with respect to the interpretation and implementation of the anti-monopoly related laws in the field of internet platforms; ● Risks relating to our ability to protect our intellectual property from being infringed; ● Risks relating to currency exchange rates.
Risks Related to China ● Risks relating to China’s political and economic policies; ● Risks relating to compliance with and changes in PRC laws and regulations relating to telecommunications, internet, foreign investment, tax, online games, virtual asset property rights, consumer protection and financial transactions; ● Risks relating to claims and liabilities based on the information and content on our platforms; ● Risks relating to uncertainties with respect to the interpretation and implementation of the anti-monopoly related laws in the field of internet platforms; ● Risks relating to our ability to protect our intellectual property from being infringed; ● Risks relating to currency exchange rates.
The online game industry is affected by a number of factors that are beyond our control, including: ● general economic conditions and the level of discretionary spending devoted by players to non-essentials such as acquiring in-game virtual items; ● the availability and popularity of other forms of interactive entertainment, particularly games on console systems which are more popular in North America, Europe and Japan but which we have only recently begun offering, and other leisure activities; ● evolving PC, smartphone and tablet technologies; ● changes in game player demographics and public tastes and preferences; ● any government restrictions on the playing of online games; and ● the availability and popularity of alternative gameplay models such as cloud-gaming services.
The online game industry is affected by a number of factors that are beyond our control, including: ● general economic conditions and the level of discretionary spending devoted by players to non-essentials such as acquiring in-game virtual items; ● the availability and popularity of other forms of interactive entertainment, particularly games on console systems which are more popular in North America, Europe and Japan but which we have only begun offering in recent years, and other leisure activities; ● evolving PC, smartphone and tablet technologies; ● changes in game player demographics and public tastes and preferences; ● any government restrictions on the playing of online games; and ● the availability and popularity of alternative gameplay models such as cloud-gaming services.
For example, the PRC government has recently indicated an intent to exert more oversight over overseas securities offerings and published a series of laws and regulations to regulate such transactions.
For example, the PRC government has indicated an intent to exert more oversight over overseas securities offerings and published a series of laws and regulations to regulate such transactions.
We mainly compete to: ● attract, engage and retain users based on the design, quality, popularity and efficacy of our content offerings, the overall user experience of our products and services, as well as the effectiveness of our marketing activities; 26 Table of Contents ● attract and retain motivated and capable talent, including engineers, game designers, product developers and creative professionals to build compelling content, tools and functions; and ● win collaboration relationships with game studios and content owners based on our level of expertise in systematically developing original games, delivering a compelling user experience through operational know-how and customizing our established game titles for rapid expansion into overseas markets.
We mainly compete to: ● attract, engage and retain users based on the design, quality, popularity and efficacy of our content offerings, the overall user experience of our products and services, as well as the effectiveness of our marketing activities; ● attract and retain motivated and capable talent, including engineers, game designers, product developers and creative professionals to build compelling content, tools and functions; and ● win collaboration relationships with game studios and content owners based on our level of expertise in systematically developing original games, delivering a compelling user experience through operational know-how and customizing our established game titles for rapid expansion into overseas markets.
The PRC government has recently indicated an intent to exert more oversight over overseas offerings and/or foreign investment in China-based issuers like us.
The PRC government has indicated an intent to exert more oversight over overseas offerings and/or foreign investment in China-based issuers like us.
Specifically, although we sought and obtained shareholder’s approval for the amended and restated 2019 Share Plan at the annual general meeting of shareholders held on June 15, 2023, our board of directors had initially adopted our 2009 RSU Plan and 2019 Share Plan without seeking shareholder approval which is generally required under Rule 5635(c) of the Nasdaq Marketplace Rules.
Specifically, although we sought and obtained shareholders’ approval for the amended and restated 2019 Share Plan at the annual general meeting of shareholders held on June 15, 2023, our board of directors had initially adopted our 2009 RSU Plan and 2019 Share Plan without seeking shareholder approval which is generally required under Rule 5635(c) of the Nasdaq Marketplace Rules.
If we were considered a “resident enterprise”, we would be subject to the EIT rate of 25.0% of our global income, and as a result, the amount of dividends we can pay to our shareholders could be reduced. We believe that none of NetEase, Inc. and its subsidiaries outside of China is a PRC resident enterprise for PRC tax purposes.
If we were considered a “resident enterprise,” we would be subject to the EIT rate of 25.0% of our global income, and as a result, the amount of dividends we can pay to our shareholders could be reduced. We believe that none of NetEase, Inc. and its subsidiaries outside of China is a PRC resident enterprise for PRC tax purposes.
“Operating and Financial Review and Prospects—Critical Accounting Estimates—Impairment of long-term investments.” These and other risks could lead to negative publicity, increased regulatory scrutiny, litigation, government inquiries, investigations, actions or penalties against us and the companies we invest in or acquire on the ground of non-compliance with regulatory requirements and may force us to incur significant additional expenses and allocate significant management and human resources to rectify or improve these companies’ corporate governance standards, disclosure controls and procedures or internal controls and systems.
“Operating and Financial Review and Prospects—Critical Accounting Estimates—Impairment of long-term investments.” 37 Table of Contents These and other risks could lead to negative publicity, increased regulatory scrutiny, litigation, government inquiries, investigations, actions or penalties against us and the companies we invest in or acquire on the ground of non-compliance with regulatory requirements and may force us to incur significant additional expenses and allocate significant management and human resources to rectify or improve these companies’ corporate governance standards, disclosure controls and procedures or internal controls and systems.
As part of its anti-addiction online game policy, the Chinese government has taken several steps to discourage minors under the age of 18 from continuously playing online games once they exceed a set number of hours of continuous play. For a detailed description of these regulations, see Item 4.B.
As part of its anti-addiction online game policy, the PRC government has taken several steps to discourage minors under the age of 18 from continuously playing online games once they exceed a set number of hours of continuous play. For a detailed description of these regulations, see Item 4.B.
We may have to take corporate or legal action, which could involve significant time and resources to resolve and divert management from our operations. 47 Table of Contents RISKS RELATED TO DOING BUSINESS IN CHINA The political relationships between China and other countries may affect our business, financial condition, results of operations, cash flows and prospects.
We may have to take corporate or legal action, which could involve significant time and resources to resolve and divert management from our operations. 47 Table of Contents RISKS RELATED TO CHINA The political relationships between China and other countries may affect our business, financial condition, results of operations, cash flows and prospects.
Based on the value of our assets, including goodwill, and the composition of our income and assets, we do not believe that we were a PFIC for the taxable year ended December 31, 2024. We have not obtained any opinion of counsel or any rulings from the U.S. Internal Revenue Service, or the IRS, regarding our status as a PFIC.
Based on the value of our assets, including goodwill, and the composition of our income and assets, we do not believe that we were a PFIC for the taxable year ended December 31, 2025. We have not obtained any opinion of counsel or any rulings from the U.S. Internal Revenue Service, or the IRS, regarding our status as a PFIC.
Our ability to generate and maintain significant advertising revenue will depend on a number of factors, many of which are beyond our control, including: ● macroeconomic conditions; ● operations and financial conditions of our advertisers and the general level of advertiser spending; ● the development of a large base of users possessing demographic characteristics attractive to advertisers; 25 Table of Contents ● competition with other major and emerging online advertising platforms; ● the development of software that blocks internet advertisements before they appear on a user’s screen; ● downward pressure on online advertising prices; and ● the effectiveness of our advertising delivery and tracking system.
Our ability to generate and maintain significant advertising revenue will depend on a number of factors, many of which are beyond our control, including: ● macroeconomic conditions; ● operations and financial conditions of our advertisers and the general level of advertiser spending; ● the development of a large base of users possessing demographic characteristics attractive to advertisers; ● competition with other major and emerging online advertising platforms; ● the development of software that blocks internet advertisements before they appear on a user’s screen; ● downward pressure on online advertising prices; and ● the effectiveness of our advertising delivery and tracking system.
We consider our time deposits with maturities of less than 12 months as “cash items” for purposes of Rule 3a-1 under the Investment Company Act, which we believe is the correct treatment of such assets, and, as such, we satisfy Rule 3a-1’s 45% asset test described above as of December 31, 2024.
We consider our time deposits with maturities of less than 12 months as “cash items” for purposes of Rule 3a-1 under the Investment Company Act, which we believe is the correct treatment of such assets, and, as such, we satisfy Rule 3a-1’s 45% asset test described above as of December 31, 2025.
Additionally, prolonged trade disputes may disrupt global economic conditions, potentially impacting our business and growth prospects. As the duration, impact and interrelationship of the above-mentioned factors are difficult to predict, any of them could have a material adverse effect on our business, financial condition and results of operations.
Any prolonged trade disputes may disrupt global economic conditions, potentially impacting our business and growth prospects. As the duration, impact and interrelationship of all the above-mentioned factors are difficult to predict, any of them could have a material adverse effect on our business, financial condition and results of operations.
Changes in government regulation of the telecommunications and internet industries in China may result in our having to obtain additional licenses or other governmental approvals to conduct our business, both of which may restrict our operations. The telecommunications and internet industry, including ICP services and online games, is highly regulated by the Chinese government.
Changes in government regulation of the telecommunications and internet industries in China may result in our having to obtain additional licenses or other governmental approvals to conduct our business, both of which may restrict our operations. The telecommunications and internet industry, including ICP services and online games, is highly regulated by the PRC government.
Maintaining and enhancing this brand will depend largely on our ability to continue to develop and provide an innovative and high-quality experience for our listeners and attract advertisers, content owners and other parties to work with us, which we may not do successfully.
Maintaining and enhancing this brand will depend largely on our ability to continue to develop and provide an innovative and high-quality experience for our listeners and attract advertisers, content owners and other parties to work with us, which we may not achieve successfully.
We have launched numerous mobile games in global markets since 2015 and also offer certain other services outside of China. Any deterioration of political relationships between China and other foreign jurisdictions may result in bans or restrictions that could impact our products.
We have launched numerous online games in global markets since 2015 and also offer certain other services outside of China. Any deterioration of political relationships between China and other foreign jurisdictions may result in bans or restrictions that could impact our products.
A relatively large number of mobile and PC games are typically available at any given time in the markets in which we launch and operate our online games, and such games compete for attention from the same game player population that we target.
A relatively large number of games are typically available at any given time in the markets in which we launch and operate our online games, and such games compete for attention from the same game player population that we target.
A number of our China mainland subsidiaries, such as Boguan, NetEase Hangzhou and certain other subsidiaries, enjoyed preferential tax rates of 15.0% for 2022, 2023 and 2024 by being recognized as an HNTE. See Item 5.A.
A number of our China mainland subsidiaries, such as Boguan, NetEase Hangzhou and certain other subsidiaries, enjoyed preferential tax rates of 15.0% for 2023, 2024 and 2025 by being recognized as an HNTE. See Item 5.A.
Several mobile and PC games we offer are licensed from third-party developers, which accounted for 9.5%, 4.6% and 7.4% of our total net revenues in 2022, 2023 and 2024, respectively.
Several mobile and PC games we offer are licensed from third-party developers, which accounted for 4.6%, 7.4% and 9.5% of our total net revenues in 2023, 2024 and 2025, respectively.
If the CSRC, CAC or other relevant PRC regulatory agencies subsequently determine that approval is required for any of our future offerings of securities overseas or to maintain the listing status of our ADSs or ordinary shares, we cannot guarantee that we will be able to obtain such approval in a timely manner, or at all.
If the CSRC, CAC or other relevant PRC regulatory agencies subsequently determine that approval is required for any future offerings of securities overseas by us or our subsidiaries or to maintain the listing status of our ADSs or ordinary shares, we cannot guarantee that we will be able to obtain such approval in a timely manner, or at all.
The spending of minors in games may be further restricted alongside the establishment of the minors mode. We are currently developing the minors mode together with mobile smart terminals and related distribution platforms. However, given that these guidelines and the Regulation on the Protection of Minors in Cyberspace are relatively new, there remain uncertainties as to their interpretation and application.
The spending of minors in games may be further restricted alongside the establishment of the minors mode. We have been developing the minors mode together with mobile smart terminals and related distribution platforms. However, given that these guidelines and the Regulation on the Protection of Minors in Cyberspace are relatively new, there remain uncertainties as to their interpretation and application.
Theses fluctuations had a significant effect on our profit and our cash dividend. Regulation on currency exchange may limit our ability to utilize our revenues effectively. Most of our revenues and operating expenses are denominated in Renminbi.
These fluctuations had a significant effect on our profit and our cash dividend. Regulation on currency exchange may limit our ability to utilize our revenues effectively. Most of our revenues and operating expenses are denominated in Renminbi.
If the CSRC, CAC or other PRC regulatory agencies determine that prior approval is required for any of our offerings of securities overseas or maintenance of the trading status of our ADSs or ordinary shares, we cannot guarantee that we will be able to obtain such approval in a timely manner, or at all.
If the CSRC, CAC or other PRC regulatory agencies determine that prior approval is required for any offerings of securities overseas by us or our subsidiaries or maintenance of the trading status of our ADSs or ordinary shares, we cannot guarantee that we will be able to obtain such approval in a timely manner, or at all.
Youdao, our majority-controlled subsidiary, relies on our financial support. Since its formation, Youdao has received various financial support from the NetEase group, among other things, currently including RMB878.0 million outstanding interest-bearing short-term loans as of December 31, 2024 and a US$300.0 million revolving loan facility.
Youdao, our majority-controlled subsidiary, relies on our financial support. Since its formation, Youdao has received various financial support from the NetEase group, among other things, currently including a RMB878.0 million outstanding interest-bearing short-term loan as of December 31, 2025 and a US$300.0 million revolving loan facility.
If any conflicts of interest that may arise between the divesting business and us cannot be resolved in our favor, our business, financial condition, results of operations could be materially and adversely affected. Furthermore, reducing or eliminating our ownership interests in these businesses might negatively affect our operations, prospects, or long-term value.
If any conflicts of interest that may arise between the divesting business and us cannot be resolved in our favor, our business, financial condition, results of operations could be materially and adversely affected. 40 Table of Contents Furthermore, reducing or eliminating our ownership interests in these businesses might negatively affect our operations, prospects, or long-term value.
Additionally, the Chinese government has enacted regulations that prohibit online game service providers from providing content for minors that might induce addiction, and allowing minors to access improper games or game functions.
Additionally, the PRC government has enacted regulations that prohibit online game service providers from providing content for minors that might induce addiction and allowing minors to access improper games or game functions.
As the implementing rules of these regulations have not been issued, we do not know how or when we will be expected to comply, or how our business will be affected by the application of these regulations. 52 Table of Contents We face uncertainties with respect to the interpretation and implementation of the anti-monopoly related laws in the field of internet platforms.
As the implementing rules of these regulations have not been issued, we do not know how or when we will be expected to comply, or how our business will be affected by the application of these regulations. We face uncertainties with respect to the interpretation and implementation of the anti-monopoly related laws in the field of internet platforms.
Our independent registered public accounting firm has also, in its audit report, concluded that our internal control over financial reporting was effective in all material aspects as of December 31, 2024.
Our independent registered public accounting firm has also, in its audit report, concluded that our internal control over financial reporting was effective in all material aspects as of December 31, 2025.
Even if shareholders are successful in bringing an action of this kind, the laws of the Cayman Islands and China may render them unable to enforce a judgment against our assets or the assets of our directors and officers. There is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments.
Even if shareholders are successful in bringing an action of this kind, the laws of the Cayman Islands and China mainland may render them unable to enforce a judgment against our assets or the assets of our directors and executive officers, as there is uncertainty as to whether the courts of the Cayman Islands or China mainland would recognize or enforce judgments of this kind.
We are subject to these third parties’ standard terms and conditions for application developers, which govern the promotion, distribution and operation of games and other applications on their platforms.
We are subject to these third parties’ standard terms and conditions for application developers and game publishers, which govern the promotion, distribution and operation of games and other applications on their platforms.
To the extent that we need to alter our business model or practices to adapt to these announcement and provisions and future regulations, laws and policies, we could incur additional expenses. Our privacy policies and practices concerning the use and disclosure of data are posted on the NetEase websites and other online and mobile platforms.
To the extent that we need to alter our business model or practices to adapt to these announcement and provisions and future regulations, laws and policies, we could incur additional expenses. 31 Table of Contents Our privacy policies and practices concerning the use and disclosure of data are posted on the NetEase websites and other online and mobile platforms.
Please also see the below risk factors “—Our current corporate structure and business operations may be affected by the Foreign Investment Law.” and “— Risks Related to Doing Business in China—The Chinese government restricts the ability for foreign investors to invest in and operate in certain types of telecommunications and internet businesses.” Our current corporate structure and business operations may be affected by the Foreign Investment Law.
Please also see the below risk factors “—Our current corporate structure and business operations may be affected by the Foreign Investment Law.” and “—Risks Related to China—The PRC government restricts the ability for foreign investors to invest in and operate in certain types of telecommunications and internet businesses.” Our current corporate structure and business operations may be affected by the Foreign Investment Law.
“Operating and Financial Review and Prospects—Operating Results—Income Taxes.” 55 Table of Contents Although we will attempt to obtain or maintain similar preferential tax statuses for our subsidiaries in the future, we cannot assure you that we will obtain or maintain any particular preferential tax status, and typically the relevant government agencies do not confirm that we have obtained or maintained a particular tax status until late in a given tax year or the following tax year.
“Operating and Financial Review and Prospects—Operating Results—Income Taxes.” Although we will attempt to obtain or maintain similar preferential tax statuses for our subsidiaries in the future, we cannot assure you that we will obtain or maintain any particular preferential tax status, and typically the relevant government agencies do not confirm that we have obtained or maintained a particular tax status until late in a given tax year or the following tax year.
There can be no assurance that the usage of, or our investments in, such technologies will always enhance our products or services or be beneficial to our business or profitability. With respect to our products or services that incorporate AI technologies, the market for such products and services is rapidly evolving and consumer acceptance remains uncertain.
There can be no assurance that the usage of, or our investments in, such technologies will always enhance our products or services or be beneficial to our business or profitability. 34 Table of Contents With respect to our products or services that incorporate AI technologies, the market for such products and services is rapidly evolving and consumer acceptance remains uncertain.
This may materially and adversely affect our business, brand, financial condition and results of operations. 36 Table of Contents Our operations are vulnerable to natural disasters and other events. We have limited backup systems and have experienced system failures and electrical outages from time to time in the past, which have disrupted our operations.
This may materially and adversely affect our business, brand, financial condition and results of operations. Our operations are vulnerable to natural disasters and other events. We have limited backup systems and have experienced system failures and electrical outages from time to time in the past, which have disrupted our operations.
We may be required to make significant expenditures or modify our business practices to comply with existing or future laws and regulations, which may increase our costs and materially limit our ability to operate our business. Regulatory restrictions on financial transactions may adversely affect the operation and profitability of our business.
We may be required to make significant expenditures or modify our business practices to comply with existing or future laws and regulations, which may increase our costs and materially limit our ability to operate our business. 53 Table of Contents Regulatory restrictions on financial transactions may adversely affect the operation and profitability of our business.
Exchange Act); ● have a compensation committee or a nominating or corporate governance committee consisting entirely of independent directors; ● have regularly scheduled executive sessions for non-management directors; or ● have executive sessions of solely independent directors each year. 62 Table of Contents We have relied on and intend to continue to rely on some of these exemptions.
Exchange Act); ● have a compensation committee or a nominating or corporate governance committee consisting entirely of independent directors; ● have regularly scheduled executive sessions for non-management directors; or ● have executive sessions of solely independent directors each year. We have relied on and intend to continue to rely on some of these exemptions.
The PFIC determination is highly fact-intensive and made at the end of each taxable year. We hold and may continue to hold a substantial amount of cash and cash equivalents.
The PFIC determination is highly fact-intensive and made after the end of each taxable year. We hold and may continue to hold a substantial amount of cash and cash equivalents.
For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F. 59 Table of Contents Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in China mainland and Hong Kong, among other jurisdictions.
For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in China mainland and Hong Kong, among other jurisdictions.
If we are a PFIC in any year with respect to a U.S. investor, the U.S. investor will generally be required to file an annual information return on IRS Form 8621 (or other then applicable IRS Form or statement) regarding distributions received on our ADSs or ordinary shares and any gain realized on the disposition of our ADSs or ordinary shares, and certain U.S. investors will be required to file an annual information return (also on IRS Form 8621 or other then applicable IRS Form or statement) relating to their ownership of our ADSs or ordinary shares.
If we are a PFIC in any year with respect to a U.S. investor, the U.S. investor will generally be required to file an annual information return on IRS Form 8621 regarding distributions received on our ADSs or ordinary shares and any gain realized on the disposition of our ADSs or ordinary shares, and certain U.S. investors will be required to file an annual information return (also on IRS Form 8621) relating to their ownership of our ADSs or ordinary shares.
In addition to market and industry factors, the price and trading volume for our shares and/or ADSs may be highly volatile for factors specific to our operation, including the following: ● variations in our results of operations that are not in line with market or research analyst expectations or changes in financial estimates by securities research analysts; ● announcements of studies and reports relating to the quality of our product and service offerings or those of our competitors; ● changes in the economic performance or market valuations of other market players in our industries; ● announcements made by us or our competitors of new features or functionalities or other product and service offerings, investments, acquisitions, strategic relationships, joint ventures or capital commitments; ● press and other reports, whether or not true, about our business, including negative reports published by short sellers, regardless of their veracity or materiality to us; 60 Table of Contents ● litigation and regulatory allegations or proceedings that involve us and our directors; ● additions to or departures of our management; ● political or market instability or disruptions, and actual or perceived social unrest in the markets where we operate; ● fluctuations of exchange rates among the Renminbi, the Hong Kong dollar and the U.S. dollar; ● sales or perceived potential sales or other dispositions of existing or additional ADSs or other equity or equity-linked securities; ● any actual or alleged illegal acts of our senior management or other key employees; ● any share repurchase program; and ● regulatory developments affecting us or our industry, customers, licensors and other suppliers.
In addition to market and industry factors, the price and trading volume for our shares and/or ADSs may be highly volatile for factors specific to our operation, including the following: ● variations in our results of operations that are not in line with market or research analyst expectations or changes in financial estimates by securities research analysts; ● announcements of studies and reports relating to the quality of our product and service offerings or those of our competitors; ● changes in the economic performance or market valuations of other market players in our industries; ● announcements made by us or our competitors of new features or functionalities or other product and service offerings, investments, acquisitions, strategic relationships, joint ventures or capital commitments; ● press and other reports, whether or not true, about our business, including negative reports published by short sellers, regardless of their veracity or materiality to us; ● litigation and regulatory allegations or proceedings that involve us and our directors; ● additions to or departures of our management; ● political or market instability or disruptions, and actual or perceived social unrest in the markets where we operate; ● fluctuations of exchange rates among the Renminbi, the Hong Kong dollar and the U.S. dollar; ● sales or perceived potential sales or other dispositions of existing or additional ADSs or other equity or equity-linked securities; ● any actual or alleged illegal acts of our senior management or other key employees; ● any share repurchase program; and ● regulatory developments affecting us or our industry, customers, licensors and other suppliers. 60 Table of Contents In particular, our revenues and results of operations have varied significantly in the past and may continue to fluctuate in the future, which may adversely impact the trading price of our ADSs and shares.
Any of the foregoing could result in a material adverse effect on our business and financial condition. Our business could be adversely affected by widespread public health or other outbreaks and epidemics. There have been outbreaks of epidemics globally in recent years.
Any of the foregoing could result in a material adverse effect on our business and financial condition. 36 Table of Contents Our business could be adversely affected by widespread public health or other outbreaks and epidemics. There have been outbreaks of epidemics globally in recent years.
Laws and regulations regarding consumer protection, particularly those involving transactions conducted over the internet, frequently change and are subject to interpretation. We are therefore unable to predict the ultimate cost of compliance of the relevant laws or regulations or their effect on our operations.
Laws and regulations regarding consumer protection, particularly those involving transactions conducted over the internet, change from time to time and are subject to interpretation. We are therefore unable to predict the ultimate cost of compliance of the relevant laws or regulations or their effect on our operations.
If Hong Kong stamp duty is determined by the competent authority to apply to the trading of those ADSs or deposits of shares in or withdrawal of shares from those ADS facilities, the trading price and the value of your investment in our ADSs and/or shares may be affected. ​
If Hong Kong stamp duty is determined by the competent authority to apply to the trading of those ADSs or deposits of shares in or withdrawal of shares from those ADS facilities, the trading price and the value of your investment in our ADSs and/or shares may be affected. ​ 67 Table of Contents
Our ability to successfully promote and monetize our online games will depend on our ability to adopt and effectively implement innovative marketing strategies, and particularly marketing through our 163.com website, game live streaming sites and other online game forums, and our ability to cross-market new games to players of our current online games.
Our ability to successfully promote and monetize our online games will depend on our ability to adopt and effectively implement innovative marketing strategies, and particularly marketing through our 163.com website and other online game forums, and our ability to cross-market new games to players of our current online games.
The Chinese government has taken steps to limit online game playing time for all minors and to otherwise control the content and operation of online games.
The PRC government has taken steps to limit online game playing time for all minors and to otherwise control the content and operation of online games.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31, 2024.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31, 2025.
Our new online games, including mobile games and PC games, may attract game players away from our existing games and shrink the player base of our existing online games, which could in turn make those existing games less attractive to other game players, resulting in decreased revenues from our existing games.
Our new online games may attract game players away from our existing games and shrink the player base of our existing online games, which could in turn make those existing games less attractive to other game players, resulting in decreased revenues from our existing games.
While we do not believe that we are in violation of any applicable trade sanctions laws or that any of our activities are currently sanctionable under applicable laws, some of our activities or the activities of our affiliates could expose us to penalties under these laws.
While we do not believe that we are in violation of any applicable trade sanctions laws or that any of our activities are currently sanctionable under applicable laws, it is possible that some of our activities or the activities of our affiliates could expose us to penalties under these laws.
It is not, however, possible to predict how the international regulatory environment concerning trade sanctions may develop. 28 Table of Contents As a company incorporated in the Cayman Islands, a British Overseas Territory, we are required to comply with sanctions implemented in the Cayman Islands, which generally reflect the United Kingdom sanctions.
It is not, however, possible to predict how the international regulatory environment concerning trade sanctions may develop. As a company incorporated in the Cayman Islands, a British Overseas Territory, we are required to comply with sanctions implemented in the Cayman Islands, which generally reflect the United Kingdom sanctions.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeWe offer a variety of in-game virtual items that players can purchase, including avatars, skills, privileges and other in-game consumables, features and functionalities. ​ 71 Table of Contents The table below sets forth certain of our major in-house developed mobile games: Game Genre Date of Initial Launch Mobile Version of Fantasy Westward Journey II ​ Turn-based MMORPG ​ July 2013 Fantasy Westward Journey mobile game ​ Turn-based MMORPG ​ March 2015 Westward Journey Online mobile game ​ Turn-based MMORPG ​ September 2015 Infinite Borders ​ SLG ​ October 2015 The mobile version of Ghost ​ Real-time MMORPG ​ May 2016 Onmyoji ​ CCG & RPG ​ September 2016 Knives Out ​ Battle Arena ​ November 2017 Identity V ​ Battle Arena ​ April 2018 LifeAfter ​ Cooperative Survival RPG ​ November 2018 Fantasy Westward Journey H5 ​ MMORPG ​ June 2020 Eggy Party ​ Casual Party Mobile Game ​ May 2022 Diablo® Immortal™* ​ MMO Action-RPG ​ June 2022 Racing Master* ​ Racing Simulation ​ June 2023 Justice mobile game ​ MMORPG ​ June 2023 Dunk City Dynasty ​ Basketball ​ August 2023 Naraka: Bladepoint mobile game ​ Action Battle Royale ​ July 2024 * Diablo ® Immortal™ and Racing Master were co-developed with Blizzard and Codemasters, respectively.
Biggest changeIn addition, Fantasy Westward Journey Online achieved four successive record peak concurrent player counts since the third quarter of 2025. ​ 71 Table of Contents The table below sets forth certain of our major in-house developed online games: ​ Game ​ ​ ​ Genre ​ ​ ​ Date of Initial Launch and Major Upgrade Westward Journey Online 2 (a comprehensive upgrade of Westward Journey Online II) ​ 2D MMORPG, classical Chinese setting ​ August 2002 September 2013 Fantasy Westward Journey Online (previously known as Fantasy Westward Journey II) ​ 2D MMORPG, classical Chinese setting ​ January 2004 July 2013 Mobile Version of Fantasy Westward Journey II ​ Turn-based MMORPG ​ July 2013 Fantasy Westward Journey mobile game ​ Turn-based MMORPG ​ March 2015 Westward Journey Online mobile game ​ Turn-based MMORPG ​ September 2015 Infinite Borders ​ SLG ​ October 2015 Ghost Story: Love Destiny (previously known as the mobile version of Ghost) ​ Real-time MMORPG ​ May 2016 Onmyoji ​ CCG & RPG ​ September 2016 Knives Out ​ Battle Arena ​ November 2017 Identity V ​ Battle Arena ​ April 2018 LifeAfter ​ Cooperative Survival RPG ​ November 2018 Naraka: Bladepoint ​ Action Battle Royale ​ July 2021 Eggy Party ​ Casual Party Mobile Game ​ May 2022 Diablo® Immortal™* ​ MMO Action-RPG ​ June 2022 Racing Master* ​ Racing Simulation ​ June 2023 Sword of Justice (previously known as Justice mobile game) ​ MMORPG ​ June 2023 Dunk City Dynasty ​ Basketball ​ August 2023 Once Human** ​ Survival\Open-world\Crafting ​ July 2024 Naraka: Bladepoint mobile game ​ Action Battle Royale ​ July 2024 Marvel Rivals** ​ Shooting ​ December 2024 Where Winds Meet** ​ Open-world action-adventure RPG ​ December 2024 * Diablo® Immortal™ and Racing Master were co-developed with Blizzard and Codemasters, respectively. ** Once Human, Marvel Rivals and Where Winds Meet are cross-platform games; Once Human is available both on PC and mobile devices, Where Winds Meet is available on PC, console and mobile devices, and Marvel Rivals is available both on PC and console devices.
On 14 June 2022, the CAC issued a revised version of the Administrative Provisions on Mobile Internet Application Information Services, or the APP Provisions, which emphasizes that mobile internet app providers shall comply with the relevant provisions on the scope of necessary personal information when engaging in personal information processing activities.
On June 14, 2022, the CAC issued a revised version of the Administrative Provisions on Mobile Internet Application Information Services, or the APP Provisions, which emphasizes that mobile internet app providers shall comply with the relevant provisions on the scope of necessary personal information when engaging in personal information processing activities.
GDPR also has extraterritorial effect, applying to both processing carried out by companies with an establishment in the European Economic Area, or EEA, and to the processing carried out by entities which offer goods or services to individuals located in the EEA or monitor the behavior of individuals located in the EEA.
The GDPR also has extraterritorial effect, applying to both processing carried out by companies with an establishment in the European Economic Area, or EEA, and to the processing carried out by entities which offer goods or services to individuals located in the EEA or monitor the behavior of individuals located in the EEA.
GDPR imposes robust requirements for controllers and processors of personal data. These include requiring a legal basis for processing, limits on the collection and use of personal data (purpose limitation principle), as well as transparency, data minimization and storage limitation obligations.
The GDPR imposes robust requirements for controllers and processors of personal data. These include requiring a legal basis for processing, limits on the collection and use of personal data (purpose limitation principle), as well as transparency, data minimization and storage limitation obligations.
In addition, controllers and processors are required to implement (and be able to evidence) robust technical and organizational measures, such as encryption, to ensure the confidentiality and integrity of personal data. Failure to comply with the principles set out in GDPR can result in substantial fines.
In addition, controllers and processors are required to implement (and be able to evidence) robust technical and organizational measures, such as encryption, to ensure the confidentiality and integrity of personal data. Failure to comply with the principles set out in the GDPR can result in substantial fines.
In addition to conducting data transfer impact assessments, companies may also need to introduce additional safeguards and put in place contract provisions to ensure that such transfers do not diminish the level of protection data subjects would otherwise have under GDPR.
In addition to conducting data transfer impact assessments, companies may also need to introduce additional safeguards and put in place contract provisions to ensure that such transfers do not diminish the level of protection data subjects would otherwise have under the GDPR.
According to Circular 13, no entity should engage in the operation of online games without receiving an Internet Publishing License and the approval from GAPP.
According to Circular 13, no entity should engage in the operation of online games without receiving an Internet Publishing License and approval from GAPP.
As of the date of the filing of this annual report, the Draft Administrative Measures for Online Games have not been formally adopted.
As of the date of the filing of this annual report, the Draft Administrative Measures for Online Games have not been formally adopted.
Regulations Relating to Overseas Listing On 6 July 2021, the General Office of the Chinese Communist Party Central Committee and the General Office of the State Council jointly promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities, which call for the enhanced administration and supervision of overseas-listed China-based companies, propose to revise the relevant regulation governing the overseas issuance and listing of shares by such companies and clarified the responsibilities of competent domestic industry regulators and government authorities.
Regulations Relating to Overseas Listing On July 6, 2021, the General Office of the Chinese Communist Party Central Committee and the General Office of the State Council jointly promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities, which call for the enhanced administration and supervision of overseas-listed China-based companies, propose to revise the relevant regulation governing the overseas issuance and listing of shares by such companies and clarified the responsibilities of competent domestic industry regulators and government authorities.
“Key Information—Risk Factors—Risks Related to Doing Business in China—The approval, filing or other requirements of the CSRC, CAC or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas or maintenance of the listing status of our ADSs or ordinary shares, and the PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs or ordinary shares.” 86 Table of Contents GOVERNMENT REGULATIONS Regulations on Foreign Investment On March 15, 2019, the National People’s Congress promulgated the 2019 PRC Foreign Investment Law, which became effective on January 1, 2020, and replaced the Wholly Foreign-owned Enterprises Law, the Sino-foreign Equity Joint Ventures Law, and the Sino-foreign Cooperative Joint Ventures Law.
“Key Information—Risk Factors—Risks Related to China—The approval, filing or other requirements of the CSRC, CAC or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas or maintenance of the listing status of our ADSs or ordinary shares, and the PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs or ordinary shares.” 86 Table of Contents GOVERNMENT REGULATIONS Regulations on Foreign Investment On March 15, 2019, the National People’s Congress promulgated the 2019 PRC Foreign Investment Law, which became effective on January 1, 2020, and replaced the Wholly Foreign-owned Enterprises Law, the Sino-foreign Equity Joint Ventures Law, and the Sino-foreign Cooperative Joint Ventures Law.
Other Innovative Services We also offer a wide range of other innovative services, including our (i) www.163.com portal and related mobile app, Wangyi Xinwen , which deliver quality information such as news, sports events, technology, fashion trends and online entertainment to our users and generate revenues mainly from online advertising services, (ii) NetEase Pay, an online payment platform, (iii) NetEase Mail, China’s leading email service provider since 1997, through which we provide free and fee-based email services, and (iv) certain other services, such as customized B-to-B technology services and e-reading services.
Other Innovative Services We also offer a wide range of other innovative services, including our (i) www.163.com portal and related mobile app, Wangyi Xinwen , which deliver quality information such as news, sports events, technology, fashion trends and online entertainment to our users and generate revenues mainly from online advertising services, (ii) NetEase Pay, an online payment platform, (iii) NetEase Mail, China’s leading e-mail service provider since 1997, through which we provide free and fee-based e-mail services, and (iv) certain other services, such as customized B-to-B technology services and e-reading services.
It shall also establish and implement internet security management systems and take technical security measures. Upon discovery of any information whose release or transmission is prohibited by applicable laws or regulations, the private school shall immediately cease the transmission of that information and take further remedial actions, such as deleting that information, to prevent it from spreading.
It must also establish and implement internet security management systems and take technical security measures. Upon discovery of any information whose release or transmission is prohibited by applicable laws or regulations, the private school shall immediately cease the transmission of that information and take further remedial actions, such as deleting that information, to prevent it from spreading.
The Amended Implementation Rules stipulate that online education activities using internet technology are encouraged by the regulatory authorities and shall comply with laws and regulations related to internet management. A private school using internet technology shall obtain the private school operating permit, as well as the internet operating permit.
The Amended Implementation Rules stipulate that online education activities using internet technology are encouraged by the regulatory authorities and shall comply with laws and regulations related to internet management. A private school using internet technology must obtain the private school operating permit, as well as the internet operating permit.
The provisions detail the relevant rules set forth in the PRC Anti-Monopoly Law (Revised 2022) and further elaborate on the factors to be taken into consideration when assessing monopoly agreements, acts of abusing market dominance and concentration of undertakings.
These provisions detail the relevant rules set forth in the PRC Anti-Monopoly Law (Revised 2022) and further elaborate on the factors to be taken into consideration when assessing monopoly agreements, acts of abusing market dominance and concentration of undertakings.
Our advanced data analytics and other capabilities lay the foundation for the platform’s personalized content recommendations, assisted content creation, interactive social functions and other powerful features that optimize the user experience and realize the unique value of our diverse content.
Its advanced data analytics and other capabilities lay the foundation for the platform’s personalized content recommendations, assisted content creation, interactive social functions and other powerful features that optimize the user experience and realize the unique value of our diverse content.
“Key Information—Risk Factors—Risks Related to Doing Business in China—We may not be able to adequately protect our intellectual property and may be exposed to infringement claims by third parties.” 81 Table of Contents COMPETITION Our competition primarily comes from global online game developers and operators, such as Tencent, established online and offline education service and/or product providers in China, as well as leading digital content and entertainment providers.
“Key Information—Risk Factors—Risks Related to China—We may not be able to adequately protect our intellectual property and may be exposed to infringement claims by third parties.” 81 Table of Contents COMPETITION Our competition primarily comes from global online game developers and operators, such as Tencent, established online and offline education service and/or product providers in China, as well as leading digital content and entertainment providers.
In 2024, we did not make any material insurance claims in relation to our business. 85 Table of Contents PERMISSIONS REQUIRED FROM THE PRC AUTHORITIES FOR OUR OPERATIONS AND OFFERINGS We believe our China mainland subsidiaries and the VIEs have obtained the requisite licenses and permits from the PRC government authorities that are necessary for their material business operations in China, except for our Online Publishing Service License which we are in the process of renewing as disclosed in Item 3.D.
In 2025, we did not make any material insurance claims in relation to our business. 85 Table of Contents PERMISSIONS REQUIRED FROM THE PRC AUTHORITIES FOR OUR OPERATIONS AND OFFERINGS We believe our China mainland subsidiaries and the VIEs have obtained the requisite licenses and permits from the PRC government authorities that are necessary for their material business operations in China, except for our Online Publishing Service License which we are in the process of renewing as disclosed in Item 3.D.
On April 7, 2021, the State Council published the amendment to the Regulations on the Implementation of the Law for Promoting Private Education of the PRC, or the Amended Implementation Rules, which became effective on September 1, 2021.
On April 7, 2021, the State Council published an amendment to the Regulations on the Implementation of the Law for Promoting Private Education of the PRC, or the Amended Implementation Rules, which became effective on September 1, 2021.
Additionally, online games, live streaming and other network service providers should reasonably restrict minors’ network service expenditure according to their age groups, as well as set and optimize rules for preventing minors from cyber addiction. On March 14, 2025, the CAC released the Measures for Labeling Artificial Intelligence Generated Synthetic Contents, which will take effect on September 1, 2025.
Additionally, online games, live streaming and other network service providers should reasonably restrict minors’ network service expenditure according to their age groups, as well as set and optimize rules for preventing minors from cyber addiction. On March 7, 2025, the CAC released the Measures for Labeling Artificial Intelligence Generated Synthetic Contents, which will take effect on September 1, 2025.
Furthermore, users of face recognition technology who use face recognition technology in public places, or store face information of more than 10,000 people, should file with the competent Internet information department within 30 working days. 90 Table of Contents On October 16, 2023, the State Council promulgated the Regulation on the Protection of Minors in Cyberspace, which became effective on January 1, 2024.
Furthermore, users of face recognition technology who use face recognition technology in public places, or store face information of more than 100,000 people, should file with the competent Internet information department within 30 working days. 90 Table of Contents On October 16, 2023, the State Council promulgated the Regulation on the Protection of Minors in Cyberspace, which became effective on January 1, 2024.
“Key Information—Risk Factors—Risks Related to Doing Business in China.” In connection with our prior overseas offerings and listing status, as of the date of the filing of this annual report, we (i) have not been required to obtain any permission from or complete any filing with the CSRC, and (ii) have not been required to go through a cybersecurity review by the CAC.
“Key Information—Risk Factors—Risks Related to China.” In connection with our prior overseas offerings and listing status, as of the date of the filing of this annual report, we (i) have not been required to obtain any permission from or complete any filing with the CSRC, and (ii) have not been required to go through a cybersecurity review by the CAC.
The Encouraging Catalogue and the Negative List lay out the basic framework for foreign investment in China, classifying businesses into three categories with regard to foreign investment: “encourage,” “restricted” and “prohibited.” Industries not listed in the Encouraging Catalogue and the Negative List are generally deemed as falling into a fourth category “permitted” unless specifically restricted by other PRC laws.
The Encouraging Catalogue and the Negative List lay out the basic framework for foreign investment in China, classifying businesses into three categories with regard to foreign investment: “encouraged,” “restricted” and “prohibited.” Industries not listed in the Encouraging Catalogue and the Negative List are generally deemed as falling into a fourth category “permitted” unless specifically restricted by other PRC laws.
Pursuant to the Copyright Law and its implementation rules, creators of protected works enjoy personal and property rights, including, among other things, the right of disseminating the works through information networks. 106 Table of Contents Domain name Domain names are protected under the Administrative Measures on the Internet Domain Names promulgated by the MIIT on August 24, 2017.
Pursuant to the Copyright Law and its implementation rules, creators of protected works enjoy personal and property rights, including, among other things, the right of disseminating the works through information networks. 104 Table of Contents Domain name Domain names are protected under the Administrative Measures on the Internet Domain Names promulgated by the MIIT on August 24, 2017.
Live streaming platforms shall file with local cyberspace administration office in a timely manner, and shall cancel its filing immediately after it ceases to provide live streaming services. On August 30, 2021, the MOCT issued the Online Performance Brokerage Agencies Measures, which took effect on the same date.
Live streaming platforms must file with local cyberspace administration office in a timely manner and cancel its filing immediately after it ceases to provide live streaming services. On August 30, 2021, the MOCT issued the Online Performance Brokerage Agencies Measures, which took effect on the same date.
The MOE, jointly with certain other PRC government authorities, issued the Opinions on Guiding and Regulating the Orderly and Healthy Development of Educational Mobile Apps on August 10, 2019, or the Opinions on Educational Apps, which requires, among other things, mobile apps that provide services for school teaching and management, student learning and student life, or home-school interactions, with school faculty, students or parents as the main users, and with education or learning as the main application scenarios, or the Educational Apps, be filed with competent provincial regulatory authorities for education.
Regulations on After-school Tutoring and Educational Apps On August 10, 2019, the MOE, jointly with certain other PRC government authorities, issued the Opinions on Guiding and Regulating the Orderly and Healthy Development of Educational Mobile Apps, or the Opinions on Educational Apps, which requires, among other things, mobile apps that provide services for school teaching and management, student learning and student life, or home-school interactions, with school faculty, students or parents as the main users, and with education or learning as the main application scenarios, or the Educational Apps, be filed with competent provincial regulatory authorities for education.
According to the APP Provisions, mobile internet app providers shall not compel users to agree to non-essential personal information collection out of any reason and are prohibited from banning users from their basic functional services due to the users’ refusal of providing non-essential personal information.
According to the APP Provisions, mobile internet app providers shall not compel users to agree to non-essential personal information collection for any reason and are prohibited from banning users from their basic functional services due to the users’ refusal of providing non-essential personal information.
In addition, online game operators must ensure that, via the NCIIC real-name verification, users with fraudulent identification data be enrolled in the operators’ anti-addiction systems. On October 25, 2019, the NPPA promulgated the Notice on Preventing Minors from Indulging in Online Games, according to which the length of minors’ use of online games should be strictly controlled.
In addition, online game operators must ensure that, via the NCIIC real-name verification, users with fraudulent identification data be enrolled in the operators’ anti-addiction systems. 95 Table of Contents On October 25, 2019, the NPPA promulgated the Notice on Preventing Minors from Indulging in Online Games, according to which the length of minors’ use of online games should be strictly controlled.
The New Advertising Law forbids the usage of certain words or phrases in advertisements, such as “national,” “supreme,” or “best” and provides a more detailed definition of “false advertisement.” The New Advertising Law also forbids sending advertisements to residences, vehicles, fixed or mobile telephones or personal email addresses if the advertisement is not invited or the receiver of the advertisement has rejected the advertising.
The New Advertising Law forbids the usage of certain words or phrases in advertisements, such as “national,” “supreme,” or “best” and provides a more detailed definition of “false advertisement.” The New Advertising Law also forbids sending advertisements to residences, vehicles, fixed or mobile telephones or personal e-mail addresses if the advertisement is not invited or the receiver of the advertisement has rejected the advertising.
“Operating and Financial Review and Prospects—Operating Results.” Games and Related Value-added Services Our Games Our game products and services are comprised of in-house developed mobile and PC games as well as games licensed from renowned global developers.
“Operating and Financial Review and Prospects—Operating Results.” Games and Related Value-added Services Our Games Our game products and services are comprised of in-house developed games as well as games licensed from renowned global developers.
We compete to win collaboration relationships with well-known global IP and content owners based on our level of expertise in systematically developing in-house developed games, delivering a compelling user experience through operational knowhow and customizing established game titles for rapid expansion into overseas markets.
We compete to win collaboration relationships with well-known global IP and content owners based on our level of expertise in systematically developing in-house developed games, delivering a compelling user experience through operational know-how and customizing established game titles for rapid expansion into overseas markets.
The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us, at http://www.sec.gov. Our corporate website can be accessed at http://ir.netease.com. The information on our website is not part of this annual report. B.
The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us, at http://www.sec.gov. Our corporate website can be accessed at http://ir.netease.com. The information on our website is not part of this annual report. 68 Table of Contents B.
In order to further implement the Copyright Law of the PRC, the Regulations of the PRC for the Implementation of Copyright Law was promulgated by the State Council on September 15, 2002 and last amended on January 30, 2013.
In order to further implement the Copyright Law of the PRC, the Regulations of the PRC for the Implementation of Copyright Law were promulgated by the State Council on September 15, 2002 and last amended on January 30, 2013.
For example, in 2018, we launched the “One Screen” program, aiming to promote the equitable distribution of educational resources and stimulating balanced development among students from different regions.
For example, in 2018, we launched the “One Screen” program, aiming to promote the equitable distribution of educational resources and stimulating balanced development among students from diverse regions.
Such technologies are iteratively refined based on the vast data generated by our users. 77 Table of Contents For example, we offer a set of advanced AI-based technologies to make learning more personalized and efficient while maintaining a high level of human touch.
Such technologies are iteratively refined based on the vast data generated by our users. For example, we offer a set of advanced AI-based technologies to make learning more personalized and efficient while maintaining a high level of human touch.
As we expand our operations internationally, we have become subject to privacy and data protection laws of other jurisdictions. 93 Table of Contents In Europe, the GDPR has applied directly in all European Union member states since May 25, 2018.
As we expand our operations internationally, we have become subject to privacy and data protection laws of other jurisdictions. 93 Table of Contents In Europe, the GDPR has applied directly in all EU member states since May 25, 2018.
The Generative Artificial Intelligence Services Measures provide, among other things, that the provider of generative AI services of text, image, audio or video to the general public shall, (i) assume the responsibilities as the producers of the network information contents in accordance with the law and fulfill its obligation of network information security, (ii) if personal information is involved, assume its responsibility as a personal information handler in accordance with the law and fulfill its obligation of protecting personal information, and (iii) in case of providing generative AI services with attribute of public opinions or capable of social mobilization, conduct security assessments in accordance with the relevant regulations and complete certain filings in accordance with the Administrative Provisions on Internet Information Service Algorithm Recommendation.
The Generative Artificial Intelligence Services Measures provide, among other things, that the provider of generative AI services of text, image, audio or video to the general public shall (i) assume the responsibilities as the producers of the network information contents in accordance with the law and fulfill its obligation of network information security, (ii) if personal information is involved, assume its responsibility as a personal information handler in accordance with the law and fulfill its obligation of protecting personal information, and (iii) in case of providing generative AI services which affect public opinion or are capable of social mobilization, conduct security assessments in accordance with the relevant regulations and complete certain filings in accordance with the Administrative Provisions on Internet Information Service Algorithm Recommendation.
In addition, we generate revenues from sales of smart devices and from Youdao’s online marketing services through the provision of different formats of advertisements. Online Learning. We have developed a comprehensive offering of learning services catering to the diverse learning needs of different age groups.
In addition, we generate revenues from sales of smart devices and from Youdao’s online marketing services through the provision of different formats of advertisements. 75 Table of Contents Online Learning. We have developed a comprehensive offering of learning services catering to the diverse learning needs of different age groups.
Protection of minors in the field of Internet live streaming will be further strengthened under the newly promulgated laws and regulations. 103 Table of Contents On October 16, 2023, the State Council promulgated the Regulation on the Protection of Minors in Cyberspace, which became effective on January 1, 2024.
Protection of minors in the field of Internet live streaming will be further strengthened under the newly promulgated laws and regulations. On October 16, 2023, the State Council promulgated the Regulation on the Protection of Minors in Cyberspace, which became effective on January 1, 2024.
We offer online marketing services through different formats of advertisement, including banners, text links, videos, logos, buttons and rich media. Our online marketing services primarily consist of performance-based advertising services and global marketing and promotion services. ● Performance-based Advertising Services. Our domestic online marketing services focus on performance-based advertising.
We offer online marketing services through different formats of advertisement, including banners, text links, videos, logos, buttons and rich media. Our online marketing services primarily consist of performance-based advertising services and global marketing and promotion services. 76 Table of Contents ● Performance-based Advertising Services. Our domestic online marketing services focus on performance-based advertising.
Game R&D and Technologies Our consistent and significant investment in innovative game R&D is a key contributor to the success of our online game business and has been widely recognized in the games industry. 74 Table of Contents Our Proprietary Game R&D Capabilities Proprietary R&D is the key focus of our game business.
Game R&D and Technologies Our consistent and significant investment in innovative game R&D is a key contributor to the success of our online game business and has been widely recognized in the games industry. Our Proprietary Game R&D Capabilities Proprietary R&D is the key focus of our game business.
In addition, according to the regulations, internet information service providers must prohibit their users from using any illegal or harmful information in their account name, avatar, profile or other registration information. On June 27, 2022, the CAC issued the Internet User Account Information Management Regulations, which took effect on August 1, 2022.
In addition, according to the regulations, internet information service providers must prohibit their users from using any illegal or harmful information in their account name, avatar, profile or other registration information. 91 Table of Contents On June 27, 2022, the CAC issued the Internet User Account Information Management Regulations, which took effect on August 1, 2022.
Furthermore, our AI-driven model improves conversion efficiency by continuously refining advertisement strategies through data-driven insights and performance analytics. We further strengthen the role of AI in advertising efficiency through deepening the integration of advanced data analysis and algorithm optimization. ● Global Marketing and Promotion Services.
Furthermore, our AI-driven model improves conversion efficiency by continuously refining advertisement strategies through data-driven insights and performance analytics. We further strengthen the role of AI in advertising efficiency through deepening the integration of advanced data analysis and algorithm optimization.
Competent authorities as well as the supervision and administrative authorities of the above-mentioned important industries and sectors are responsible for the security protection of critical information infrastructures (the “Protection Authorities”). The Personal Information Protection Law, or the PIPL, was released by the National People’s Congress Standing Committee on August 20, 2021 and became effective on November 1, 2021.
Competent authorities as well as the supervision and administrative authorities of the above-mentioned important industries and sectors are responsible for the security protection of critical information infrastructures (the “Protection Authorities”). The Personal Information Protection Law, or the PIPL, was released by the NPCSC on August 20, 2021 and became effective on November 1, 2021.
Pursuant to the Measures, an online performance business entity shall assume the primary responsibilities for its online performance business activities and verify the qualifications of online performance brokerage agencies on the platform. The Minors Protection Law issued by the National People’s Congress Standing Committee on September 4, 1991 was last amended on April 26, 2024.
Pursuant to the Measures, an online performance business entity shall assume the primary responsibilities for its online performance business activities and verify the qualifications of online performance brokerage agencies on the platform. The Minors Protection Law issued by the NPCSC on September 4, 1991 was last amended on April 26, 2024.
In order to regulate online transaction activities, on March 15, 2021, SAMR issued the Online Trading Supervision and Management Measures, or the Online Trading Supervision Measures, which became effective on May 1, 2021.
In order to regulate online transaction activities, on March 15, 2021, SAMR issued the Online Trading Supervision and Management Measures, or the Online Trading Supervision Measures, which was amended on March 18, 2025 and became effective on May 1, 2025.
Regulations on Anti-Unfair Competition and Anti-Monopoly Matters According to the PRC Anti-Unfair Competition Law, which took effect on December 1, 1993 and last amended on April 23, 2019, unfair competition refers to that the operator disrupts the market competition order and damages the legitimate rights and interests of other operators or consumers in violation of the provisions of the Anti-Unfair Competition Law in the production and operating activities.
Regulations on Anti-Unfair Competition and Anti-Monopoly Matters According to the PRC Anti-Unfair Competition Law, which took effect on December 1, 1993 and was last amended on June 27, 2025, unfair competition refers to that the operator disrupts the market competition order and damages the legitimate rights and interests of other operators or consumers in violation of the provisions of the Anti-Unfair Competition Law in the production and operating activities.
Trademark According to the Trademark Law of the PRC promulgated by the Standing Committee of the National People’s Congress in August 1982 and recently amended in April 2019, and its Implementation Regulation promulgated in August 2002 and amended in April 2014 by the State Council, the period of validity for a registered trademark is ten years, commencing from the date of registration.
Trademark According to the Trademark Law of the PRC promulgated by the NPCSC in August 1982 and recently amended in April 2019, and its Implementation Regulation promulgated in August 2002 and amended in April 2014 by the State Council, the period of validity for a registered trademark is ten years, commencing from the date of registration.
Our finance and legal departments cooperate with our deal execution teams on deal analysis, communication, execution, risk control and reporting. Any material factors will be timely reported to the senior management or board of directors for further evaluation.
Our finance department monitors the deal performance on a regular basis. Our finance and legal departments cooperate with our deal execution teams on deal analysis, communication, execution, risk control and reporting. Any material factors will be timely reported to the senior management or board of directors for further evaluation.
We currently offer over 100 mobile and PC games across a wide range of genres, satisfying the ever growing and diversifying needs of the gamer community.
We currently offer over 100 online games across a wide range of genres, satisfying the ever growing and diversifying needs of the gamer community worldwide.
The revised version, among other things, (i) makes changes to the merger review process by enabling SAMR to review non-threshold transactions and introducing the stop-clock system, (ii) changes the rules on monopoly agreements for resale price maintenance, introducing a “safe harbor” for vertical monopoly agreement, and (iii) increases fines imposed on different parties, e.g., amending the fine for illegal concentration of business operators from “a fine of up to RMB500,000” to “a fine of no more than ten percent of its prior year’s sales revenue if the concentration of the business operators has or may have an effect of eliminating or restricting competitions; or a fine of up to RMB5 million if the concentration of business operators does not have an effect of eliminating or restricting competitions.” On March 10, 2023, the SAMR issued the Provisions on the Prohibitions of Monopoly Agreements, the Provisions on the Prohibitions of Acts of Abuse of Dominant Market Positions and the Provisions on Review of Concentration of Undertakings, all of which took effect on April 15, 2023.
The revised version, among other things, (i) makes changes to the merger review process by enabling SAMR to review non-threshold transactions, (ii) introduces a “safe harbor” for vertical monopoly agreements, and (iii) increases fines imposed on different parties, e.g., amending the fine for illegal concentration of business operators from “a fine of up to RMB500,000” to “a fine of no more than ten percent of its prior year’s sales revenue if the concentration of the business operators has or may have an effect of eliminating or restricting competition; or a fine of up to RMB5 million if the concentration of business operators does not have an effect of eliminating or restricting competition.” 102 Table of Contents On March 10, 2023, the SAMR issued the Provisions on the Prohibitions of Acts of Abuse of Dominant Market Positions and the Provisions on Review of Concentration of Undertakings, both of which took effect on April 15, 2023.
The Anti-Monopoly Guidelines mainly covers five aspects, including general provisions, monopoly agreements, abusing market dominance, concentration of undertakings, and abusing of administrative powers eliminating or restricting competition. On June 24, 2022, the Standing Committee of the National People’s Congress issued the PRC Anti-Monopoly Law (Revised 2022), which took effective on August 1, 2022.
The Anti-Monopoly Guidelines mainly covers five aspects, including general provisions, monopoly agreements, abusing market dominance, concentration of undertakings, and abusing of administrative powers eliminating or restricting competition. On June 24, 2022, the NPCSC issued the PRC Anti-Monopoly Law (Revised 2022), which took effect on August 1, 2022.
Since the measures were recently promulgated, there exists uncertainties with respect to their interpretation and implementation. On August 17, 2021, the State Council promulgated the Regulations on Critical Information Infrastructure Protection, or the CII Regulations, which came into effect on 1 September 2021.
As the measures are relatively new, there exists uncertainties with respect to their interpretation and implementation. On August 17, 2021, the State Council promulgated the Regulations on Critical Information Infrastructure Protection, or the CII Regulations, which came into effect on September 1, 2021.
For more description on our R&D capabilities, see Item 4.B. “Information on the Company—Business Overview—Our Services—Games and Related Value-added Services—Game R&D and Technologies.” Content Quality and User Experience We focus on providing an innovative and superior user experience in game design and development and strive to make games of the highest quality.
“Information on the Company—Business Overview—Our Services—Games and Related Value-added Services—Game R&D and Technologies.” Content Quality and User Experience We focus on providing an innovative and superior user experience in game design and development and strive to make games of the highest quality.
We continue to establish and deepen collaboration with other leading international game studios, including entering into a joint development agreement with Codemasters, a leading United Kingdom game studio focusing on racing games. In conjunction with Codemasters, we launched Racing Master , a real-time simulation racing game that has gained widespread acclaim in Hong Kong, Macau, Taiwan, China mainland and Japan.
We continue to establish and deepen collaboration with other leading international game studios, including entering into a joint development agreement with Codemasters, a leading United Kingdom game studio focusing on racing games. In conjunction with Codemasters, we launched Racing Master , a real-time simulation racing game that has gained widespread acclaim in multiple regions.
In addition, in May 2016, we entered into an exclusive agreement with Microsoft, pursuant to which Microsoft agreed to license both the mobile and PC versions of Minecraft to us for operation in China until 2022. The term of such license was extended in 2019 and further renewed in 2023.
In addition, in May 2016, we entered into an exclusive agreement with Microsoft, pursuant to which Microsoft agreed to license both the mobile and PC versions of Minecraft to us for operation in China. The term of such license was most recently renewed in 2023 and extends until 2028.
In 2024, we upgraded Youdao Lingshi with a tiered teaching approach tailored to individual learning needs and capabilities. In addition, our video tutorials break down complex topics into manageable segments to help students achieve better learning results. ● STEAM Courses. Our current STEAM courses primarily include computer coding courses and other STEAM courses.
In 2024, we upgraded Youdao Lingshi with a tiered teaching approach tailored to individual learning needs and capabilities. In addition, our video tutorials break down complex topics into manageable segments to help students achieve better learning results.
“Key Information—Risk Factors—Risks Related to Our Corporate Structure.” According to the 2019 PRC Foreign Investment Law, foreign investment shall enjoy “pre-entry national treatment,” which generally means that at an investment-entrance stage, foreign investment should be treated no less favorably than domestic investment, except for foreign investments in industries deemed to be “restricted” or “prohibited” in the “negative list.” The 2019 PRC Foreign Investment Law provides that foreign invested entities operating in “restricted” or “prohibited” industries will require entry clearance and other approvals.
“Key Information—Risk Factors—Risks Related to Our Corporate Structure.” According to the 2019 PRC Foreign Investment Law, foreign investment shall enjoy “pre-entry national treatment,” which generally means that at an investment-entrance stage, foreign investment should be treated no less favorably than domestic investment, except for foreign investments in industries deemed to be “restricted” or “prohibited” in the Negative List.
The Food Safety Law of the PRC, promulgated on February 28, 2009 and effective on June 1, 2009, was amended on April 29, 2021 with effect from the same date. This amendment provides that the sale of pre-packaged food only is not subject to a permit but needs to file a record with the competent authority.
The Food Safety Law of the PRC, promulgated on February 28, 2009 and effective on June 1, 2009, was last amended on September 12, 2025 with effect from December 1, 2025. This amendment provides that the sale of pre-packaged food only is not subject to a permit but needs to file a record with the competent authority.
We are in the process of constructing new office buildings, primarily located in Shanghai and Hangzhou. As of December 31, 2024, we had incurred construction in progress costs of RMB1.7 billion (US$232.4 million) for these new office buildings, which primarily comprise costs for building construction.
We are in the process of constructing new office buildings, primarily located in Shanghai and Hangzhou. As of December 31, 2025, we had incurred construction in progress costs of RMB1.0 billion (US$140.9 million) for these new office buildings, which primarily comprise costs for building construction.
Our key business milestones are summarized below: ​ ​ ● Founding of our business 1997 ​ ​ ● Launch of free web-based e-mail services, and business model shifted from software development to internet technology with the launch of our NetEase website (“ www.163.com ”) 1998 ​ ​ ● Launches of advertisement services, online platforms, online shopping malls, and other internet services in China 1999 ​ ​ ● Listing on Nasdaq on June 30 2000 ​ ​ ● Introduction of fee-based premium services and online entertainment services, including online games, wireless value-added services and other subscription-type services 2001 ​ ​ ● Launch of our first PC-client MMORPG game, Westward Journey Online , our widely popular in-house developed game series 2001 ​ ​ ● Launch of our Fantasy Westward Journey series, our second widely popular original game series 2004 ​ ​ ● Founding of Youdao, our intelligent learning and advertising solutions provider 2006 ​ ​ ● Launch of NetEase Cloud Music , our music streaming platform 2013 ​ ​ ● Launch of our first mobile game, the mobile version of Fantasy Westward Journey II 2013 ​ ​ ● Launch of Yanxuan, our e-commerce business 2016 ​ ​ ● Listing of Youdao on the New York Stock Exchange on October 26 2019 ​ ​ ● Listing on the Hong Kong Stock Exchange on June 11 2020 ​ ​ ● Listing of NetEase Cloud Music on the Hong Kong Stock Exchange on December 2 2021 ​ Our principal capital expenditures for 2024, 2023 and 2022 consisted mainly of expenditures related to our new office buildings in Shanghai and Hangzhou in China and the acquisition of new servers in connection with the operation of our business for a total of approximately RMB1.3 billion, RMB2.3 billion and RMB2.1 billion, respectively. 68 Table of Contents As of December 31, 2024, we had capital expenditure commitments of RMB632.3 million (US$86.6 million) for 2025 and thereafter, which primarily consist of commitments made in connection with the construction of new office buildings in Shanghai, Hangzhou and other cities.
Our key business milestones are summarized below: ​ ​ ● Founding of our business 1997 ​ ​ ● Launch of free web-based e-mail services, and business model shifted from software development to internet technology with the launch of our NetEase website (“www.163.com”) 1998 ​ ​ ● Launches of advertisement services, online platforms, online shopping malls, and other internet services in China 1999 ​ ​ ● Listing on Nasdaq on June 30 2000 ​ ​ ● Introduction of fee-based premium services and online entertainment services, including online games, wireless value-added services and other subscription-type services 2001 ​ ​ ● Launch of our first PC-client MMORPG game, Westward Journey Online , our widely popular in-house developed game series 2001 ​ ​ ● Launch of our Fantasy Westward Journey series, our second widely popular original game series 2004 ​ ​ ● Founding of Youdao, our intelligent learning and advertising solutions provider 2006 ​ ​ ● Launch of NetEase Cloud Music , our music streaming platform 2013 ​ ​ ● Launch of our first mobile game, the mobile version of Fantasy Westward Journey II 2013 ​ ​ ● Launch of Yanxuan, our e-commerce business 2016 ​ ​ ● Listing of Youdao on the New York Stock Exchange on October 26 2019 ​ ​ ● Listing on the Hong Kong Stock Exchange on June 11 2020 ​ ​ ● Listing of NetEase Cloud Music on the Hong Kong Stock Exchange on December 2 2021 ​ ​ ● Launched cross-platform titles that achieved global popularity across PC, mobile, and console 2024-2025 ​ Our principal capital expenditures for 2023, 2024 and 2025 consisted mainly of expenditures related to our new office buildings in Shanghai and Hangzhou in China and the acquisition of new servers in connection with the operation of our business for a total of approximately RMB2.3 billion, RMB1.3 billion and RMB1.1 billion, respectively.
In the U.S., new privacy related regimes are under discussion at both the federal and state level and a number of states have already enacted comprehensive privacy laws and more topic-specific privacy laws.
In the U.S., new privacy related regimes have been adopted or are under discussion at both the federal and state level and numerous states have already enacted comprehensive privacy laws and more topic-specific privacy laws.
As a global early mover that anticipated and captured the trend toward mobile games, we have significantly expanded our portfolio of mobile game offerings in recent years. At the same time, our flagship titles continue to provide solid support for our online games business with persistent longevity and user loyalty.
As a global early mover that anticipated and captured the trend toward mobile games, we have been developing a deep portfolio of mobile game offerings for more than a decade. At the same time, our flagship titles continue to provide solid support for our online games business with persistent longevity and user loyalty.
On March 22, 2024, the CAC issued the Guidelines for Declaring Data Cross-border Security Assessment (Second Edition), which became effective on the same date and further clarifies the scope of application, declaration methods and processes of data cross-border security assessment.
On June 27, 2025, the CAC issued the Guidelines for Declaring Data Cross-border Security Assessment (Third Edition), which became effective on the same date and further clarifies the scope of application, declaration methods and processes of data cross-border security assessment.
Regulations on Online Advertising On April 24, 2015, the Standing Committee of the National People’s Congress enacted the Advertising Law of the PRC, or the New Advertising Law, and last amended on April 29, 2021.
Regulations on Online Advertising On April 24, 2015, the NPCSC enacted the Advertising Law of the PRC, or the New Advertising Law, and last amended on April 29, 2021.
We are one of the largest mobile game providers globally in terms of game revenue, offering around 100 mobile games of various genres as of December 31, 2024, including in-house developed and licensed MMORPGs, casual games, shooting games, racing simulations, CCGs, battle arena games and SLGs, as well as other types of games.
Our Game Library In-house developed games We are one of the largest online game providers globally in terms of game revenue, offering over 100 in-house developed and licensed games of various genres, including MMORPG, casual games, shooting games, racing simulations, CCGs, battle arena games and SLGs, as well as other types of games.
We aim to improve people’s lives with digital technologies and make positive contributions to material social issues, such as education inequity, disaster recovery, workplace equality and diversity and green and low-carbon development. We have been focused on reducing education inequity and have launched several initiatives for that purpose.
We aim to improve people’s lives with digital technologies and make positive contributions to material social issues, such as education inequity, disaster recovery, workplace equality and diversity and green and low-carbon development. We are dedicated to reducing education inequity and have launched several initiatives to address this challenge.
The European Data Protection Board, or EDPB, has made clear that fines will be used as a means of deterring non-compliance and both the EDPB and local data protection authorities, such as the Irish Data Protection Commission have been active in bringing enforcement actions. GDPR also sets out strict requirements pertaining to transfers of personal data outside of the EU.
The European Data Protection Board, or EDPB, has made clear that fines will be used as a means of deterring non-compliance and both the EDPB and local data protection authorities, such as the Irish Data Protection Commission have been active in bringing enforcement actions.
Failure to comply with the various laws of European Union may result in criminal liability and/or significant fines, such as those applicable under the GDPR which can amount up to EUR20,000,000 or up to 4% of the total worldwide annual turnover.
Failure to comply with the GDPR may result in criminal liability and/or significant fines, which can amount up to EUR20,000,000 or up to 4% of the total worldwide annual turnover.
In addition, the Ministry of Culture issued the Circular on Clearing Illegal Online Music Products in 2011, which clarified that entities engaging in any of the following conducts will be subject to relevant penalties or sanctions imposed by the Ministry of Culture: (i) providing online music products or relevant services without obtaining corresponding qualifications; (ii) importing online music products that have not been reviewed by the Ministry of Culture; or (iii) providing domestically developed online music products that have not been filed with the Ministry of Culture. 102 Table of Contents Regulations on Internet Live Streaming Services On November 4, 2016, the CAC issued Administrative Provisions on Internet Live Streaming Services, which became effective on December 1, 2016.
In addition, the Ministry of Culture issued the Circular on Clearing Illegal Online Music Products in 2011, which clarified that entities engaging in any of the following conducts will be subject to relevant penalties or sanctions imposed by the Ministry of Culture: (i) providing online music products or relevant services without obtaining corresponding qualifications; (ii) importing online music products that have not been reviewed by the Ministry of Culture; or (iii) providing domestically developed online music products that have not been filed with the Ministry of Culture.
On August 8, 2023, the CAC issued the Regulations on Safety Management of Face Recognition Technology Application (Trial) (Draft for Comments) for public comments, which require the use of face recognition technology to process face information shall obtain the individual’s separate consent or written consent according to law, except where personal consent is not required by laws and administrative regulations.
On March 13, 2025, the CAC and the Ministry of Public Security issued the Regulations on Safety Management of Face Recognition Technology Application, which require that the use of face recognition technology to process face information shall obtain the individual’s separate consent or written consent according to law, except where personal consent is not required by laws and administrative regulations.
We also launched Identity V and Racing Master in Japan in 2018 and 2024, respectively, further evidencing our potential to operate a diverse range of games in overseas markets over the long term. In addition to our success in Japan, we have expanded our footprint across more regions.
We also launched Identity V and Racing Master in Japan in 2018 and 2023, respectively, further evidencing our potential to operate a diverse range of games in overseas markets over the long term.
In addition, while solidifying our leadership position in the Chinese domestic market, we have also expanded globally with launches in Japan, Southeast Asia, the United States and other international markets.
In addition, while solidifying our leadership position in the Chinese domestic market, we have also expanded globally with game launches in North America, Europe, Asia and other international markets.
According to the amended PRC Anti-money Laundering Law, entities such as non-bank payment institutions shall fulfill the anti-money laundering obligations of financial institutions under this Law, including, among other things, establishing sound internal control for anti-money laundering, and fulfill other obligations such as customer due diligence, preserving the identity records of customers and transaction records, reporting of large-value transactions and doubtful transactions, and taking special preventive measures against money laundering. 105 Table of Contents Regulations on Intellectual Property Rights The PRC has adopted comprehensive legislation governing intellectual property rights, including patents, trademarks, copyrights and domain names.
According to the amended PRC Anti-money Laundering Law, entities such as non-bank payment institutions shall fulfill the anti-money laundering obligations of financial institutions under this Law, including, among other things, establishing sound internal control for anti-money laundering, and fulfill other obligations such as customer due diligence, preserving the identity records of customers and transaction records, reporting of large-value transactions and doubtful transactions, and taking special preventive measures against money laundering.
In addition, we have implemented an emergency response mechanism to evaluate critical risks, formulate disaster response plans and perform emergency drills on a regular basis to help ensure the resiliency and availability of our systems and services. From a governance perspective, our information security policy is reviewed periodically.
In addition, we have implemented an emergency response mechanism to evaluate critical risks, formulate disaster response plans and perform emergency drills on a regular basis to help ensure the resilience and availability of our systems and services.
Other revenue sources primarily include movie soundtrack production and ticketing services for offline music events. 78 Table of Contents Technological-driven Music Experience NetEase Cloud Music needs to ensure that it can deliver a satisfying music experience consistently at scale by continuously innovating and improving its platform and investing in R&D.
Other revenue sources primarily include movie soundtrack production and ticketing services for offline music events. Technological-driven Music Experience NetEase Cloud Music is committed to delivering a satisfying music experience consistently at scale by continuously innovating and improving its platform and investing in R&D.
On November 11, 2024, the Standing Committee of the National People’s Congress issued the amended PRC Anti-money Laundering Law, which came into effect on January 1, 2025.
On November 11, 2024, the NPCSC issued the amended PRC Anti-money Laundering Law, which came into effect on January 1, 2025.
The diagram below summarizes our corporate structure as of March 31, 2025 and identifies the subsidiaries and the VIEs that together are representative of our major business units, including our significant subsidiaries, as that term is defined under Section 1-02 of Regulation S-X under the Securities Act, and other representative subsidiaries: 69 Table of Contents (1) Hangzhou NetEase Leihuo Technology Co., Ltd. is owned by two of our employees.
“Key Information—Risk Factors” for a detailed discussion of the risks to NetEase, Inc. regarding its dependency on these companies. ​ 69 Table of Contents The diagram below summarizes our corporate structure as of March 31, 2026 and identifies the subsidiaries and the VIEs that together are representative of our major business units, including our significant subsidiaries, as that term is defined under Section 1-02 of Regulation S-X under the Securities Act, and other representative subsidiaries: (1) Hangzhou NetEase Leihuo Technology Co., Ltd. is owned by two of our employees.
These requirements necessitate careful consideration, and detailed risk assessments, of potential cross border transfers of personal data to ensure compliance with GDPR.
The GDPR also sets out strict requirements pertaining to transfers of personal data outside of the EU. These requirements necessitate careful consideration, and detailed risk assessments, of potential cross-border transfers of personal data to ensure compliance with the GDPR.
Youdao Dictionary Pen X6 Pro , Youdao’s flagship product, is equipped with an AI grammar instruction application and digital human language coach, Hi Echo , powered by our Confucius LLM. We launched Youdao Dictionary Pen X7 in July 2024, featuring our proprietary AI-powered applications, Hi Echo and Mr. P AI Tutor .
We launched Youdao Dictionary Pen X6 Pro and Youdao Dictionary Pen S6 in August 2023. Youdao Dictionary Pen X6 Pro , Youdao’s flagship product, is equipped with an AI grammar instruction application and digital human language coach, Hi Echo , powered by our Confucius LLM.
The controlling shareholders and actual controllers of such domestic companies that organize or instruct the aforementioned violations would be fined up to RMB10 million and directly liable persons-in-charge and other directly liable persons would be each fined up to RMB5 million. 107 Table of Contents In order to support domestic companies’ overseas securities offering and listing pursuant to PRC laws and regulations, as a supplement to the Filing Rules, on February 24, 2023, CSRC and other three PRC regulatory authorities jointly issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Confidentiality and Archives Administration Provisions, which took effect on March 31, 2023 with the Filing Rules, according to which, a domestic company that seeks overseas offering and listing, and the securities companies and securities service providers that undertake relevant businesses shall strictly abide by applicable PRC laws and regulations and perform relevant confidentiality and archives administration obligations.
In order to support domestic companies’ overseas securities offering and listing pursuant to PRC laws and regulations, as a supplement to the Filing Rules, on February 24, 2023, CSRC and other three PRC regulatory authorities jointly issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Confidentiality and Archives Administration Provisions, which took effect on March 31, 2023 with the Filing Rules, according to which, a domestic company that seeks overseas offering and listing, and the securities companies and securities service providers that undertake relevant businesses shall strictly abide by applicable PRC laws and regulations and perform relevant confidentiality and archives administration obligations.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

117 edited+17 added−22 removed116 unchanged
Biggest changeGAAP (the “Primary Beneficiaries of VIEs”), our other subsidiaries that are not the Primary Beneficiaries of VIEs (the “Other Subsidiaries”), and the VIEs and their subsidiaries that we consolidate for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ ​ ​ ​ ​ ​ Primary ​ VIEs and ​ ​ ​ ​ ​ NetEase, Other Beneficiaries their Eliminating Consolidated ​ ​ Inc. ​ Subsidiaries ​ of VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Assets Cash and cash equivalents 224,824 13,269,440 6,132,382 1,802,256 — 21,428,902 Time deposits — 63,445,277 38,040,757 420,000 — 101,906,034 Restricted cash — 20,075 56,098 2,701,583 — 2,777,756 Accounts receivable, net — 1,421,964 337,122 4,663,331 — 6,422,417 Inventories — 586,212 72,254 36,908 — 695,374 Prepayments and other current assets, net 262,937 2,933,583 1,114,866 1,765,209 — 6,076,595 Short-term investments — 39,620 4,322,533 73,904 — 4,436,057 Amounts due from group companies (1) 48,884,976 32,562,994 18,972,738 9,192,463 (109,613,171) — Property, equipment and software, net 829 709,387 7,312,616 52,212 — 8,075,044 Land use right, net — 64,264 4,010,879 — — 4,075,143 Operating lease right-of-use assets, net 3,996 280,906 410,687 53,686 — 749,275 Deferred tax assets — 15,158 1,396,083 148,847 — 1,560,088 Investments in subsidiaries (2) 103,785,841 28,944,158 (410,515) — (132,319,484) — Contractual interests in the VIEs and VIEs’ subsidiaries (2) ​ — ​ — ​ 1,619,075 ​ — ​ (1,619,075) ​ — Long-term investments 393,580 19,211,745 965,058 1,212,804 — 21,783,187 Other long-term assets 42,303 4,471,840 1,221,219 203,744 — 5,939,106 Total assets 153,599,286 167,976,623 85,573,852 22,326,947 (243,551,730) 185,924,978 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities, redeemable noncontrolling interests and shareholders’ equity ​ ​ ​ ​ ​ ​ Accounts payable 32 536,021 79,826 265,137 — 881,016 Salary and welfare payables 1,678 669,323 4,071,411 114,794 — 4,857,206 Taxes payable 10,278 35,066 2,383,421 142,769 — 2,571,534 Short-term loans 920,751 8,669,455 9,633,862 16,095 — 19,240,163 Contract liabilities-current — 732,809 227,931 12,401,426 — 13,362,166 Accrued liabilities and other payables 9,008 2,071,530 6,900,483 3,689,885 — 12,670,906 Operating lease liabilities 3,536 316,747 442,348 52,691 — 815,322 Amounts due to group companies (1) 28,368,227 45,955,508 32,466,685 2,822,751 (109,613,171) — Deferred tax liabilities — 1,951,981 347,322 — — 2,299,303 Long-term loans — — 427,997 — — 427,997 Other long-term liabilities — 101,713 58,923 554,648 — 715,284 Total liabilities 29,313,510 61,040,153 57,040,209 20,060,196 (109,613,171) 57,840,897 Redeemable noncontrolling interests — 77,798 — 37,961 — 115,759 Total equity 124,285,776 106,858,672 28,533,643 2,228,790 (133,938,559) 127,968,322 Total liabilities, redeemable noncontrolling interests and shareholders’ equity 153,599,286 167,976,623 85,573,852 22,326,947 (243,551,730) 185,924,978 ​ 131 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2024 ​ ​ ​ Primary VIEs and ​ ​ ​ ​ NetEase, ​ Other ​ Beneficiaries of ​ their ​ Eliminating ​ Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Assets Cash and cash equivalents 68,315 22,226,946 28,074,849 1,013,200 — 51,383,310 Time deposits — 67,221,715 11,174,640 70,000 — 78,466,355 Restricted cash — 22,636 40,326 3,028,651 — 3,091,613 Accounts receivable, net — 1,765,642 285,361 3,618,024 — 5,669,027 Inventories — 494,666 49,547 27,335 — 571,548 Prepayments and other current assets, net 65,235 3,341,726 663,724 2,346,183 — 6,416,868 Short-term investments — 123,191 10,219,436 413,516 — 10,756,143 Amounts due from group companies (1) 47,134,874 24,332,449 17,541,728 11,716,452 (100,725,503) — Property, equipment and software, net 765 806,010 7,703,421 9,905 — 8,520,101 Land use right, net — 61,354 4,111,111 — — 4,172,465 Operating lease right-of-use assets, net 2,541 232,315 271,200 35,015 — 541,071 Deferred tax assets — 12,763 1,085,481 15,191 — 1,113,435 Investments in subsidiaries (2) 110,875,457 27,503,090 (691,849) — (137,686,698) — Contractual interests in the VIEs and VIEs’ subsidiaries (2) ​ — ​ — ​ 1,810,627 ​ — ​ (1,810,627) ​ — Long-term investments 393,580 ​ 17,737,532 955,281 1,119,963 — 20,206,356 Other long-term assets 30,137 3,938,040 773,016 342,065 — 5,083,258 Total assets 158,570,904 169,820,075 84,067,899 23,755,500 (240,222,828) 195,991,550 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities, redeemable noncontrolling interests and shareholders’ equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable 1,540 457,395 209,709 51,905 — 720,549 Salary and welfare payables 1,897 638,774 3,948,479 93,859 — 4,683,009 Taxes payable 10,389 422,409 2,186,974 139,413 — 2,759,185 Short-term loans — 7,899,918 3,905,133 — — 11,805,051 Contract liabilities-current — 1,319,742 276,933 13,702,547 — 15,299,222 Accrued liabilities and other payables 32,143 2,716,831 6,924,271 4,555,787 — 14,229,032 Operating lease liabilities 2,317 256,038 292,603 33,251 — 584,209 Amounts due to group companies (1) 19,837,012 39,620,317 38,609,798 2,658,376 (100,725,503) — Deferred tax liabilities — 1,756,535 416,582 — — 2,173,117 Long-term loans — — 427,997 — — 427,997 Other long-term liabilities — 109,239 58,179 648,623 — 816,041 Total liabilities 19,885,298 55,197,198 57,256,658 21,883,761 (100,725,503) 53,497,412 Redeemable noncontrolling interests — 84,272 — — — 84,272 Total equity 138,685,606 114,538,605 26,811,241 1,871,739 (139,497,325) 142,409,866 Total liabilities, redeemable noncontrolling interests and shareholders’ equity 158,570,904 169,820,075 84,067,899 23,755,500 (240,222,828) 195,991,550 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2022 ​ ​ ​ ​ ​ ​ Primary ​ VIEs and ​ ​ ​ ​ ​ NetEase, Other Beneficiaries of their Eliminating Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Net revenues Third-party revenues — ​ 12,788,652 ​ 1,157,713 ​ 82,549,444 ​ — ​ 96,495,809 Intra-Group revenues related to technical consulting and related service (3) — ​ 692,337 ​ 64,085,249 ​ — ​ (64,777,586) ​ — Other intra-Group revenues (4) — ​ 913,644 ​ 1,876,699 ​ 817,962 ​ (3,608,305) ​ — Total net revenues — ​ 14,394,633 ​ 67,119,661 ​ 83,367,406 ​ (68,385,891) ​ 96,495,809 Cost of revenues and operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Third-party cost of revenues and operating expenses (62,115) ​ (13,477,853) ​ (44,968,961) ​ (18,358,287) ​ — ​ (76,867,216) Intra-Group cost of revenues and operating expenses related to technical consulting and related services (3) — ​ — ​ — ​ (64,777,586) ​ 64,777,586 ​ — Other intra-Group cost of revenues and operating expenses (4) — ​ (1,822,670) ​ (1,667,214) ​ (185,608) ​ 3,675,492 ​ — Total cost of revenues and operating expenses (62,115) ​ (15,300,523) ​ (46,636,175) ​ (83,321,481) ​ 68,453,078 ​ (76,867,216) Operating (losses)/profit (62,115) ​ (905,890) ​ 20,483,486 ​ 45,925 ​ 67,187 ​ 19,628,593 Share of income/(losses) from subsidiaries and VIEs (2) 24,489,042 ​ 20,442,796 ​ (151,361) ​ — ​ (44,780,477) ​ — Other (expenses)/income, net (4,156,514) ​ 6,458,954 ​ 2,334,424 ​ (15,193) ​ — ​ 4,621,671 Income before tax 20,270,413 ​ 25,995,860 ​ 22,666,549 ​ 30,732 ​ (44,713,290) ​ 24,250,264 Income tax — ​ (2,437,898) ​ (2,481,879) ​ (112,061) ​ — ​ (5,031,838) Net income from continuing operations 20,270,413 ​ 23,557,962 ​ 20,184,670 ​ (81,329) ​ (44,713,290) ​ 19,218,426 ​ ​ 132 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023 ​ ​ ​ ​ ​ ​ Primary ​ VIEs and ​ ​ ​ ​ NetEase, Other Beneficiaries of their Eliminating Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Net revenues ​ ​ ​ ​ ​ ​ Third-party revenues ​ — ​ 12,193,244 ​ 1,220,371 ​ 90,054,544 ​ — ​ 103,468,159 Intra-Group revenues related to technical consulting and related service (3) ​ — ​ 386,828 ​ 72,605,740 ​ — ​ (72,992,568) ​ — Other intra-Group revenues (4) ​ — ​ 873,787 ​ 1,440,970 ​ 734,857 ​ (3,049,614) ​ — Total net revenues ​ — ​ 13,453,859 ​ 75,267,081 ​ 90,789,401 ​ (76,042,182) ​ 103,468,159 Cost of revenues and operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Third-party cost of revenues and operating expenses ​ (26,012) ​ (14,240,361) ​ (44,024,077) ​ (17,468,565) ​ — ​ (75,759,015) Intra-Group cost of revenues and operating expenses related to technical consulting and related services (3) ​ — ​ — ​ — ​ (72,992,568) ​ 72,992,568 ​ — Other intra-Group cost of revenues and operating expenses (4) ​ — ​ (1,454,070) ​ (1,571,998) ​ (23,546) ​ 3,049,614 ​ — Total cost of revenues and operating expenses ​ (26,012) ​ (15,694,431) ​ (45,596,075) ​ (90,484,679) ​ 76,042,182 ​ (75,759,015) Operating (losses)/profit ​ (26,012) ​ (2,240,572) ​ 29,671,006 ​ 304,722 ​ — ​ 27,709,144 Share of income/ (losses) from subsidiaries and VIEs (2) ​ 29,849,939 ​ 30,023,775 ​ (88,094) ​ — ​ (59,785,620) ​ — Other (expenses)/ income, net ​ (345,851) ​ 3,929,431 ​ 2,537,239 ​ 226,964 ​ — ​ 6,347,783 Income before tax ​ 29,478,076 ​ 31,712,634 ​ 32,120,151 ​ 531,686 ​ (59,785,620) ​ 34,056,927 Income tax ​ — ​ (1,928,340) ​ (2,568,035) ​ (203,329) ​ — ​ (4,699,704) Net income from continuing operations ​ 29,478,076 ​ 29,784,294 ​ 29,552,116 ​ 328,357 ​ (59,785,620) ​ 29,357,223 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2024 ​ ​ ​ Primary VIEs and ​ ​ ​ ​ NetEase, ​ Other ​ Beneficiaries of ​ their ​ Eliminating ​ Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Net revenues ​ ​ ​ ​ ​ ​ Third-party revenues ​ — ​ 13,062,383 ​ 1,360,569 ​ 90,872,284 ​ — ​ 105,295,236 Intra-Group revenues related to technical consulting and related service (3) ​ — ​ 359,211 ​ 72,339,430 ​ — ​ (72,698,641) ​ — Other intra-Group revenues (4) ​ — ​ 1,416,369 ​ 1,525,153 ​ 938,100 ​ (3,879,622) ​ — Total net revenues ​ — ​ 14,837,963 ​ 75,225,152 ​ 91,810,384 ​ (76,578,263) ​ 105,295,236 Cost of revenues and operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Third-party cost of revenues and operating expenses ​ (38,022) ​ (14,872,314) ​ (42,256,868) ​ (18,544,042) ​ — ​ (75,711,246) Intra-Group cost of revenues and operating expenses related to technical consulting and related services (3) ​ — ​ — ​ — ​ (72,698,641) ​ 72,698,641 ​ — Other intra-Group cost of revenues and operating expenses (4) ​ — ​ (1,453,656) ​ (2,270,346) ​ (155,620) ​ 3,879,622 ​ — Total cost of revenues and operating expenses ​ (38,022) ​ (16,325,970) ​ (44,527,214) ​ (91,398,303) ​ 76,578,263 ​ (75,711,246) Operating (losses)/profit ​ (38,022) ​ (1,488,007) ​ 30,697,938 ​ 412,081 ​ — ​ 29,583,990 Share of income/ (losses) from subsidiaries and VIEs (2) ​ 30,071,305 ​ 29,362,928 ​ 55,384 ​ — ​ (59,489,618) ​ — Other (expenses)/ income, net ​ (335,674) ​ 4,658,054 ​ 1,852,504 ​ (41,119) ​ — ​ 6,133,765 Income before tax ​ 29,697,609 ​ 32,532,975 ​ 32,605,826 ​ 370,962 ​ (59,489,618) ​ 35,717,755 Income tax ​ — ​ (1,895,096) ​ (3,372,468) ​ (193,844) ​ — ​ (5,461,408) Net income from continuing operations ​ 29,697,609 ​ 30,637,879 ​ 29,233,358 ​ 177,118 ​ (59,489,618) ​ 30,256,347 ​ ​ 133 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2022 ​ ​ ​ ​ ​ ​ Primary ​ VIEs and ​ ​ ​ ​ ​ NetEase, Other Beneficiaries of their Eliminating Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Cash flows from operating activities: ​ ​ Net cash (used in)/provided by transactions with third-parties (255,519) ​ 707,587 ​ (40,202,699) ​ 67,459,864 ​ — ​ 27,709,233 Net cash provided by/(used in) transactions with intra-Group companies related to technical consulting and related service — ​ 820,545 ​ 66,150,273 ​ (66,970,818) ​ — ​ — Dividends received from subsidiaries and VIEs (5) — ​ 29,094,971 ​ — ​ — ​ (29,094,971) ​ — Net cash provided by/(used in) other transactions with intra-Group companies 2,893 ​ (3,478,205) ​ 3,175,860 ​ 299,452 ​ — ​ — Net cash (used in)/provided by operating activities (252,626) ​ 27,144,898 ​ 29,123,434 ​ 788,498 ​ (29,094,971) ​ 27,709,233 Cash flows from investing activities: ​ ​ ​ ​ ​ Net cash (used in)/provided by transactions with third-parties (223) ​ (10,434,166) ​ 3,136,494 ​ (71,832) ​ — ​ (7,369,727) Loans made to intra-Group companies (6) (6,013,061) ​ (33,737,997) ​ (1,356,487) ​ — ​ 41,107,545 ​ — Loans repaid by intra-Group companies (6) 2,501,060 ​ 8,292,517 ​ 668,856 ​ — ​ (11,462,433) ​ — Other investing activities with intra-Group companies (7) — ​ (1,912) ​ (31,000) ​ — ​ 32,912 ​ — Net cash (used in)/provided by investing activities (3,512,224) ​ (35,881,558) ​ 2,417,863 ​ (71,832) ​ 29,678,024 ​ (7,369,727) Cash flows from financing activities: ​ ​ ​ ​ ​ Net cash (used in)/provided by transactions with third-parties (21,326,822) ​ 6,636,050 ​ 4,505,614 ​ (52,541) ​ — ​ (10,237,699) Cash dividend paid to intra-Group companies (5) — ​ — ​ (29,094,971) ​ — ​ 29,094,971 ​ — Loans received from intra-Group companies (6) 33,461,057 ​ 7,168,199 ​ 276,940 ​ 201,349 ​ (41,107,545) ​ — Loans repaid to intra-Group companies (6) (8,292,517) ​ (2,862,847) ​ (272) ​ (306,797) ​ 11,462,433 ​ — Other financing activities with intra-Group companies (7) — ​ 31,000 ​ 1,912 ​ — ​ (32,912) ​ — Net cash provided by/(used in) financing activities 3,841,718 ​ 10,972,402 ​ (24,310,777) ​ (157,989) ​ (583,053) ​ (10,237,699) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023 ​ ​ ​ ​ ​ ​ Primary ​ VIEs and ​ ​ ​ ​ ​ NetEase, Other Beneficiaries of their Eliminating Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Cash flows from operating activities: ​ ​ Net cash (used in)/provided by transactions with third-parties (354,694) ​ 475,946 ​ (37,115,437) ​ 72,325,460 ​ — ​ 35,331,275 Net cash provided by/(used in) transactions with intra-Group companies related to technical consulting and related service — ​ 411,369 ​ 72,887,298 ​ (73,298,667) ​ — ​ — Dividends received from subsidiaries and VIEs (5) — ​ 26,455,948 ​ — ​ — ​ (26,455,948) ​ — Net cash provided by/(used in) other transactions with intra-Group companies 476 ​ (502,444) ​ (137,577) ​ 639,545 ​ — ​ — Net cash (used in)/provided by operating activities (354,218) ​ 26,840,819 ​ 35,634,284 ​ (333,662) ​ (26,455,948) ​ 35,331,275 Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash used in transactions with third-parties (589) ​ (3,584,348) ​ (13,375,849) ​ (82,645) ​ — ​ (17,043,431) Loans made to intra-Group companies (6) (5,100,814) ​ (32,331,958) ​ (13,748,357) ​ — ​ 51,181,129 ​ — Loans repaid by intra-Group companies (6) 246,020 ​ 7,004,819 ​ 1,200,611 ​ — ​ (8,451,450) ​ — Other investing activities with intra-Group companies (7) — ​ (347,375) ​ (17,100) ​ — ​ 364,475 ​ — Net cash used in investing activities (4,855,383) ​ (29,258,862) ​ (25,940,695) ​ (82,645) ​ 43,094,154 ​ (17,043,431) Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash (used in)/provided by transactions with third-parties (19,980,650) ​ (6,357,771) ​ 4,855,694 ​ 15,673 ​ — ​ (21,467,054) Cash dividend paid to intra-Group companies (5) — ​ — ​ (26,455,948) ​ — ​ 26,455,948 ​ — Loans received from intra-Group companies (6) 32,327,958 ​ 18,639,436 ​ 4,000 ​ 209,735 ​ (51,181,129) ​ — Loans repaid to intra-Group companies (6) (7,004,819) ​ (1,184,057) ​ — ​ (262,574) ​ 8,451,450 ​ — Other financing activities with intra-Group companies (7) — ​ 17,100 ​ 347,375 ​ — ​ (364,475) ​ — Net cash provided by/(used in) financing activities 5,342,489 ​ 11,114,708 ​ (21,248,879) ​ (37,166) ​ (16,638,206) ​ (21,467,054) ​ 134 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2024 ​ ​ ​ ​ ​ ​ Primary ​ VIEs and ​ ​ ​ ​ ​ NetEase, Other Beneficiaries of their Eliminating Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Cash flows from operating activities: ​ ​ ​ Net cash (used in)/provided by transactions with third-parties (20,988) ​ 2,140,247 ​ (37,271,070) ​ 74,828,624 ​ — ​ 39,676,813 Net cash provided by/(used in) transactions with intra-Group companies related to technical consulting and related service — ​ 259,015 ​ 73,526,878 ​ (73,785,893) ​ — ​ — Dividends received from subsidiaries and VIEs (5) — ​ 30,766,934 ​ — ​ — ​ (30,766,934) ​ — Net cash provided by/(used in) other transactions with intra-Group companies 228,056 ​ (117,507) ​ (65,495) ​ (45,054) ​ — ​ — Net cash provided by operating activities 207,068 ​ 33,048,689 ​ 36,190,313 ​ 997,677 ​ (30,766,934) ​ 39,676,813 Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash (used in)/provided by transactions with third-parties (292) ​ (1,633,126) ​ 19,784,580 ​ (234,760) ​ — ​ 17,916,402 Loans made to intra-Group companies (6) (6,437,272) ​ (34,610,921) ​ (14,876,404) ​ (1,438,000) ​ 57,362,597 ​ — Loans repaid by intra-Group companies (6) 3,634,436 ​ 11,781,140 ​ 16,200,334 ​ — ​ (31,615,910) ​ — Other investing activities with intra-Group companies (7) (356) ​ — ​ (22,250) ​ — ​ 22,606 ​ — Net cash (used in)/provided by investing activities (2,803,484) ​ (24,462,907) ​ 21,086,260 ​ (1,672,760) ​ 25,769,293 ​ 17,916,402 Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash used in transactions with third-parties (20,630,929) ​ (919,224) ​ (5,769,454) ​ (16,095) ​ — ​ (27,335,702) Cash dividend paid to intra-Group companies (5) — ​ — ​ (30,766,934) ​ — ​ 30,766,934 ​ — Loans received from intra-Group companies (6) 34,610,921 ​ 20,436,682 ​ 1,438,000 ​ 876,994 ​ (57,362,597) ​ — Loans repaid to intra-Group companies (6) (11,529,250) ​ (19,187,330) ​ (251,889) ​ (647,441) ​ 31,615,910 ​ — Other financing activities with intra-Group companies (7) — ​ 22,606 ​ — ​ — ​ (22,606) ​ — Net cash provided by/(used in) financing activities 2,450,742 ​ 352,734 ​ (35,350,277) ​ 213,458 ​ 4,997,641 ​ (27,335,702) Note: (1) It represents the elimination of intercompany balances among NetEase, Inc., other subsidiaries, primary beneficiary of VIEs, and VIEs and their subsidiaries.
Biggest changeGAAP (the “Primary Beneficiaries of VIEs”), our other subsidiaries that are not the Primary Beneficiaries of VIEs (the “Other Subsidiaries”), and the VIEs and their subsidiaries that we consolidate for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2024 ​ ​ ​ ​ ​ ​ Primary ​ VIEs and ​ ​ ​ ​ ​ ​ ​ ​ NetEase, ​ ​ ​ Other ​ ​ ​ Beneficiaries ​ ​ ​ their ​ ​ ​ Eliminating ​ ​ ​ Consolidated ​ ​ Inc. ​ Subsidiaries ​ of VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Assets ​ ​ ​ ​ ​ ​ Cash and cash equivalents 68,315 22,226,946 28,074,849 1,013,200 — 51,383,310 Time deposits — 67,221,715 11,174,640 70,000 — 78,466,355 Restricted cash — 22,636 40,326 3,028,651 — 3,091,613 Accounts receivable, net — 1,765,642 285,361 3,618,024 — 5,669,027 Inventories — 494,666 49,547 27,335 — 571,548 Prepayments and other current assets, net 65,235 3,341,726 663,724 2,346,183 — 6,416,868 Short-term investments — 123,191 10,219,436 413,516 — 10,756,143 Amounts due from group companies (1) 47,134,874 24,332,449 17,541,728 11,716,452 (100,725,503) — Property, equipment and software, net 765 806,010 7,703,421 9,905 — 8,520,101 Land use right, net — 61,354 4,111,111 — — 4,172,465 Operating lease right-of-use assets, net 2,541 232,315 271,200 35,015 — 541,071 Deferred tax assets — 12,763 1,085,481 15,191 — 1,113,435 Investments in subsidiaries (2) 110,875,457 27,503,090 (691,849) — (137,686,698) — Contractual interests in the VIEs and VIEs’ subsidiaries (2) ​ — ​ — ​ 1,810,627 ​ — ​ (1,810,627) ​ — Long-term investments 393,580 ​ 17,737,532 955,281 1,119,963 — 20,206,356 Other long-term assets 30,137 3,938,040 773,016 342,065 — 5,083,258 Total assets 158,570,904 169,820,075 84,067,899 23,755,500 (240,222,828) 195,991,550 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities, redeemable noncontrolling interests and shareholders’ equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable 1,540 457,395 209,709 51,905 — 720,549 Salary and welfare payables 1,897 638,774 3,948,479 93,859 — 4,683,009 Taxes payable 10,389 422,409 2,186,974 139,413 — 2,759,185 Short-term loans — 7,899,918 3,905,133 — — 11,805,051 Contract liabilities-current — 1,319,742 276,933 13,702,547 — 15,299,222 Accrued liabilities and other payables 32,143 2,716,831 6,924,271 4,555,787 — 14,229,032 Operating lease liabilities 2,317 256,038 292,603 33,251 — 584,209 Amounts due to group companies (1) 19,837,012 39,620,317 38,609,798 2,658,376 (100,725,503) — Deferred tax liabilities — 1,756,535 416,582 — — 2,173,117 Long-term loans — — 427,997 — — 427,997 Other long-term liabilities — 109,239 58,179 648,623 — 816,041 Total liabilities 19,885,298 55,197,198 57,256,658 21,883,761 (100,725,503) 53,497,412 Redeemable noncontrolling interests — 84,272 — — — 84,272 Total equity 138,685,606 114,538,605 26,811,241 1,871,739 (139,497,325) 142,409,866 Total liabilities, redeemable noncontrolling interests and shareholders’ equity 158,570,904 169,820,075 84,067,899 23,755,500 (240,222,828) 195,991,550 ​ 129 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Primary ​ ​ ​ VIEs and ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NetEase, ​ Other ​ Beneficiaries of ​ their ​ Eliminating ​ Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Assets ​ ​ ​ ​ ​ ​ Cash and cash equivalents 183,850 13,864,689 32,342,191 777,174 — 47,167,904 Time deposits — 89,269,378 6,365,000 — — 95,634,378 Restricted cash — 15,241 46,433 4,261,563 — 4,323,237 Accounts receivable, net — 1,887,701 212,380 3,247,738 (10,000) 5,337,819 Inventories — 627,590 41,805 19,788 — 689,183 Prepayments and other current assets, net 39,471 4,441,485 915,561 2,261,829 — 7,658,346 Short-term investments — 693,412 21,023,727 1,086,364 — 22,803,503 Amounts due from group companies (1) 42,094,348 10,553,620 17,631,438 17,002,696 (87,282,102) — Property, equipment and software, net 280 681,602 7,733,778 9,667 — 8,425,327 Land use right, net — 61,381 3,985,974 — — 4,047,355 Operating lease right-of-use assets, net 1,018 168,599 120,044 30,637 — 320,298 Deferred tax assets — 55,854 2,711,948 63,621 — 2,831,423 Investments in subsidiaries (2) 123,848,462 30,999,695 (705,317) — (154,142,840) — Contractual interests in the VIEs and VIEs’ subsidiaries (2) ​ — ​ — ​ 2,290,822 ​ — ​ (2,290,822) ​ — Long-term investments 143,723 ​ 16,490,400 882,743 946,017 — 18,462,883 Other long-term assets 29,999 2,859,866 710,078 113,461 — 3,713,404 Total assets 166,341,151 172,670,513 96,308,605 29,820,555 (243,725,764) 221,415,060 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities, redeemable noncontrolling interests and shareholders’ equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable 28 369,939 247,059 36,138 (10,000) 643,164 Salary and welfare payables 2,256 461,683 4,332,807 92,962 — 4,889,708 Taxes payable 10,158 857,264 2,914,009 92,712 — 3,874,143 Short-term loans — 2,460,080 3,909,001 15,336 — 6,384,417 Contract liabilities-current — 1,746,751 190,260 18,577,529 — 20,514,540 Accrued liabilities and other payables 41,204 3,388,354 6,619,800 5,900,414 — 15,949,772 Operating lease liabilities 774 191,025 125,211 28,315 — 345,325 Amounts due to group companies (1) 5,990,612 32,446,835 46,976,050 1,868,605 (87,282,102) — Deferred tax liabilities — 2,049,374 586,764 1,120 — 2,637,258 Other long-term liabilities — 92,574 113,266 866,884 — 1,072,724 Total liabilities 6,045,032 44,063,879 66,014,227 27,480,015 (87,292,102) 56,311,051 Redeemable noncontrolling interests — 91,319 — — — 91,319 Total equity 160,296,119 128,515,315 30,294,378 2,340,540 (156,433,662) 165,012,690 Total liabilities, redeemable noncontrolling interests and shareholders’ equity 166,341,151 172,670,513 96,308,605 29,820,555 (243,725,764) 221,415,060 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023 ​ ​ ​ ​ ​ ​ Primary ​ VIEs and ​ ​ ​ ​ ​ ​ ​ ​ NetEase, ​ ​ ​ Other ​ ​ ​ Beneficiaries of ​ ​ ​ their ​ ​ ​ Eliminating ​ ​ ​ Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Net revenues ​ ​ ​ ​ ​ ​ Third-party revenues — ​ 12,193,244 ​ 1,220,371 ​ 90,054,544 ​ — ​ 103,468,159 Intra-Group revenues related to technical consulting and related service (3) — ​ 386,828 ​ 72,605,740 ​ — ​ (72,992,568) ​ — Other intra-Group revenues (4) — ​ 873,787 ​ 1,440,970 ​ 734,857 ​ (3,049,614) ​ — Total net revenues — ​ 13,453,859 ​ 75,267,081 ​ 90,789,401 ​ (76,042,182) ​ 103,468,159 Cost of revenues and operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Third-party cost of revenues and operating expenses (26,012) ​ (14,240,361) ​ (44,024,077) ​ (17,468,565) ​ — ​ (75,759,015) Intra-Group cost of revenues and operating expenses related to technical consulting and related services (3) — ​ — ​ — ​ (72,992,568) ​ 72,992,568 ​ — Other intra-Group cost of revenues and operating expenses (4) — ​ (1,454,070) ​ (1,571,998) ​ (23,546) ​ 3,049,614 ​ — Total cost of revenues and operating expenses (26,012) ​ (15,694,431) ​ (45,596,075) ​ (90,484,679) ​ 76,042,182 ​ (75,759,015) Operating (losses)/profit (26,012) ​ (2,240,572) ​ 29,671,006 ​ 304,722 ​ — ​ 27,709,144 Share of income/(losses) from subsidiaries and VIEs (2) 29,849,939 ​ 30,023,775 ​ (88,094) ​ — ​ (59,785,620) ​ — Other (expenses)/income, net (345,851) ​ 3,929,431 ​ 2,537,239 ​ 226,964 ​ — ​ 6,347,783 Income before tax 29,478,076 ​ 31,712,634 ​ 32,120,151 ​ 531,686 ​ (59,785,620) ​ 34,056,927 Income tax — ​ (1,928,340) ​ (2,568,035) ​ (203,329) ​ — ​ (4,699,704) Net income 29,478,076 ​ 29,784,294 ​ 29,552,116 ​ 328,357 ​ (59,785,620) ​ 29,357,223 ​ ​ 130 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2024 ​ ​ ​ ​ ​ ​ Primary ​ VIEs and ​ ​ ​ ​ ​ ​ ​ NetEase, ​ ​ ​ Other ​ ​ ​ Beneficiaries of ​ ​ ​ their ​ ​ ​ Eliminating ​ ​ ​ Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Net revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Third-party revenues ​ — ​ 13,062,383 ​ 1,360,569 ​ 90,872,284 ​ — ​ 105,295,236 Intra-Group revenues related to technical consulting and related service (3) ​ — ​ 359,211 ​ 72,339,430 ​ — ​ (72,698,641) ​ — Other intra-Group revenues (4) ​ — ​ 1,416,369 ​ 1,525,153 ​ 938,100 ​ (3,879,622) ​ — Total net revenues ​ — ​ 14,837,963 ​ 75,225,152 ​ 91,810,384 ​ (76,578,263) ​ 105,295,236 Cost of revenues and operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Third-party cost of revenues and operating expenses ​ (38,022) ​ (14,872,314) ​ (42,256,868) ​ (18,544,042) ​ — ​ (75,711,246) Intra-Group cost of revenues and operating expenses related to technical consulting and related services (3) ​ — ​ — ​ — ​ (72,698,641) ​ 72,698,641 ​ — Other intra-Group cost of revenues and operating expenses (4) ​ — ​ (1,453,656) ​ (2,270,346) ​ (155,620) ​ 3,879,622 ​ — Total cost of revenues and operating expenses ​ (38,022) ​ (16,325,970) ​ (44,527,214) ​ (91,398,303) ​ 76,578,263 ​ (75,711,246) Operating (losses)/profit ​ (38,022) ​ (1,488,007) ​ 30,697,938 ​ 412,081 ​ — ​ 29,583,990 Share of income from subsidiaries and VIEs (2) ​ 30,071,305 ​ 29,362,928 ​ 55,384 ​ — ​ (59,489,617) ​ — Other (expenses)/ income, net ​ (335,674) ​ 4,658,054 ​ 1,852,504 ​ (41,119) ​ — ​ 6,133,765 Income before tax ​ 29,697,609 ​ 32,532,975 ​ 32,605,826 ​ 370,962 ​ (59,489,617) ​ 35,717,755 Income tax ​ — ​ (1,895,096) ​ (3,372,468) ​ (193,844) ​ — ​ (5,461,408) Net income ​ 29,697,609 ​ 30,637,879 ​ 29,233,358 ​ 177,118 ​ (59,489,617) ​ 30,256,347 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Primary ​ ​ ​ VIEs and ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NetEase, ​ Other ​ Beneficiaries of ​ their ​ Eliminating ​ Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Net revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Third-party revenues ​ — ​ 16,658,915 ​ 1,086,423 ​ 94,880,469 ​ — ​ 112,625,807 Intra-Group revenues related to technical consulting and related service (3) ​ — ​ 396,178 ​ 75,057,044 ​ — ​ (75,453,222) ​ — Other intra-Group revenues (4) ​ — ​ 1,131,149 ​ 3,196,284 ​ 1,126,267 ​ (5,453,700) ​ — Total net revenues ​ — ​ 18,186,242 ​ 79,339,751 ​ 96,006,736 ​ (80,906,922) ​ 112,625,807 Cost of revenues and operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Third-party cost of revenues and operating expenses ​ (37,446) ​ (14,709,963) ​ (42,202,588) ​ (19,840,943) ​ — ​ (76,790,940) Intra-Group cost of revenues and operating expenses related to technical consulting and related services (3) ​ — ​ — ​ — ​ (75,453,222) ​ 75,453,222 ​ — Other intra-Group cost of revenues and operating expenses (4) ​ — ​ (3,135,497) ​ (2,115,434) ​ (202,769) ​ 5,453,700 ​ — Total cost of revenues and operating expenses ​ (37,446) ​ (17,845,460) ​ (44,318,022) ​ (95,496,934) ​ 80,906,922 ​ (76,790,940) Operating (losses)/profit ​ (37,446) ​ 340,782 ​ 35,021,729 ​ 509,802 ​ — ​ 35,834,867 Share of income from subsidiaries and VIEs (2) ​ 34,597,746 ​ 34,241,064 ​ 506,000 ​ — ​ (69,344,810) ​ — Other income, net ​ 261,735 ​ 2,565,229 ​ 2,086,843 ​ 81,796 ​ — ​ 4,995,603 Income before tax ​ 34,822,035 ​ 37,147,075 ​ 37,614,572 ​ 591,598 ​ (69,344,810) ​ 40,830,470 Income tax ​ — ​ (2,566,656) ​ (3,393,338) ​ (72,692) ​ — ​ (6,032,686) Net income ​ 34,822,035 ​ 34,580,419 ​ 34,221,234 ​ 518,906 ​ (69,344,810) ​ 34,797,784 ​ ​ 131 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023 ​ ​ ​ ​ ​ ​ Primary ​ VIEs and ​ ​ ​ ​ ​ ​ ​ ​ NetEase, ​ ​ ​ Other ​ ​ ​ Beneficiaries of ​ ​ ​ their ​ ​ ​ Eliminating ​ ​ ​ Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ Net cash (used in)/provided by transactions with third-parties (354,694) ​ 475,946 ​ (37,115,437) ​ 72,325,460 ​ — ​ 35,331,275 Net cash provided by/(used in) transactions with intra-Group companies related to technical consulting and related service — ​ 411,369 ​ 72,887,298 ​ (73,298,667) ​ — ​ — Dividends received from subsidiaries and VIEs (5) — ​ 26,455,948 ​ — ​ — ​ (26,455,948) ​ — Net cash provided by/(used in) other transactions with intra-Group companies 476 ​ (502,444) ​ (137,577) ​ 639,545 ​ — ​ — Net cash (used in)/provided by operating activities (354,218) ​ 26,840,819 ​ 35,634,284 ​ (333,662) ​ (26,455,948) ​ 35,331,275 Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash used in transactions with third-parties (589) ​ (3,584,348) ​ (13,375,849) ​ (82,645) ​ — ​ (17,043,431) Loans made to intra-Group companies (6) (5,100,814) ​ (32,331,958) ​ (13,748,357) ​ — ​ 51,181,129 ​ — Loans repaid by intra-Group companies (6) 246,020 ​ 7,004,819 ​ 1,200,611 ​ — ​ (8,451,450) ​ — Other investing activities with intra-Group companies (7) — ​ (347,375) ​ (17,100) ​ — ​ 364,475 ​ — Net cash used in investing activities (4,855,383) ​ (29,258,862) ​ (25,940,695) ​ (82,645) ​ 43,094,154 ​ (17,043,431) Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash (used in)/provided by transactions with third-parties (19,980,650) ​ (6,357,771) ​ 4,855,694 ​ 15,673 ​ — ​ (21,467,054) Cash dividend paid to intra-Group companies (5) — ​ — ​ (26,455,948) ​ — ​ 26,455,948 ​ — Loans received from intra-Group companies (6) 32,327,958 ​ 18,639,436 ​ 4,000 ​ 209,735 ​ (51,181,129) ​ — Loans repaid to intra-Group companies (6) (7,004,819) ​ (1,184,057) ​ — ​ (262,574) ​ 8,451,450 ​ — Other financing activities with intra-Group companies (7) — ​ 17,100 ​ 347,375 ​ — ​ (364,475) ​ — Net cash provided by/(used in) financing activities 5,342,489 ​ 11,114,708 ​ (21,248,879) ​ (37,166) ​ (16,638,206) ​ (21,467,054) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2024 ​ ​ ​ ​ ​ ​ Primary ​ VIEs and ​ ​ ​ ​ ​ ​ ​ ​ NetEase, ​ ​ ​ Other ​ ​ ​ Beneficiaries of ​ ​ ​ their ​ ​ ​ Eliminating ​ ​ ​ Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ Net cash (used in)/provided by transactions with third-parties (20,988) ​ 2,140,247 ​ (37,271,070) ​ 74,828,624 ​ — ​ 39,676,813 Net cash provided by/(used in) transactions with intra-Group companies related to technical consulting and related service — ​ 259,015 ​ 73,526,878 ​ (73,785,893) ​ — ​ — Dividends received from subsidiaries and VIEs (5) — ​ 30,766,934 ​ — ​ — ​ (30,766,934) ​ — Net cash provided by/(used in) other transactions with intra-Group companies 228,056 ​ (117,507) ​ (65,495) ​ (45,054) ​ — ​ — Net cash provided by operating activities 207,068 ​ 33,048,689 ​ 36,190,313 ​ 997,677 ​ (30,766,934) ​ 39,676,813 Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash (used in)/provided by transactions with third-parties (292) ​ (1,633,126) ​ 19,784,580 ​ (234,760) ​ — ​ 17,916,402 Loans made to intra-Group companies (6) (6,437,272) ​ (34,610,921) ​ (14,876,404) ​ (1,438,000) ​ 57,362,597 ​ — Loans repaid by intra-Group companies (6) 3,634,436 ​ 11,781,140 ​ 16,200,334 ​ — ​ (31,615,910) ​ — Other investing activities with intra-Group companies (7) (356) ​ — ​ (22,250) ​ — ​ 22,606 ​ — Net cash (used in)/provided by investing activities (2,803,484) ​ (24,462,907) ​ 21,086,260 ​ (1,672,760) ​ 25,769,293 ​ 17,916,402 Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash used in transactions with third-parties (20,630,929) ​ (919,224) ​ (5,769,454) ​ (16,095) ​ — ​ (27,335,702) Cash dividend paid to intra-Group companies (5) — ​ — ​ (30,766,934) ​ — ​ 30,766,934 ​ — Loans received from intra-Group companies (6) 34,610,921 ​ 20,436,682 ​ 1,438,000 ​ 876,994 ​ (57,362,597) ​ — Loans repaid to intra-Group companies (6) (11,529,250) ​ (19,187,330) ​ (251,889) ​ (647,441) ​ 31,615,910 ​ — Other financing activities with intra-Group companies (7) — ​ 22,606 ​ — ​ — ​ (22,606) ​ — Net cash provided by/(used in) financing activities 2,450,742 ​ 352,734 ​ (35,350,277) ​ 213,458 ​ 4,997,641 ​ (27,335,702) ​ 132 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2025 ​ ​ ​ ​ ​ ​ Primary ​ VIEs and ​ ​ ​ ​ ​ ​ ​ ​ NetEase, ​ ​ ​ Other ​ ​ ​ Beneficiaries of ​ ​ ​ their ​ ​ ​ Eliminating ​ ​ ​ Consolidated ​ ​ Inc. ​ Subsidiaries ​ VIEs ​ subsidiaries ​ adjustments ​ totals ​ ​ (RMB in thousands) Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash (used in)/provided by transactions with third-parties (17,330) ​ 7,431,822 ​ (38,759,800) ​ 82,085,108 ​ — ​ 50,739,800 Net cash provided by/(used in) transactions with intra-Group companies related to technical consulting and related service — ​ 394,151 ​ 83,342,885 ​ (83,737,036) ​ — ​ — Dividends received from subsidiaries and VIEs (5) 7,199,042 ​ 28,486,684 ​ — ​ — ​ (35,685,726) ​ — Net cash provided by/(used in) other transactions with intra-Group companies 188,752 ​ (1,575,097) ​ 434,184 ​ 952,161 ​ — ​ — Net cash provided by/(used in) operating activities 7,370,464 ​ 34,737,560 ​ 45,017,269 ​ (699,767) ​ (35,685,726) ​ 50,739,800 Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash used in transactions with third-parties (7) ​ (25,676,520) ​ (7,024,806) ​ (480,011) ​ — ​ (33,181,344) Loans made to intra-Group companies (6) (12,392,492) ​ (39,376,500) ​ (12,684,010) ​ (30,000) ​ 64,483,002 ​ — Loans repaid by intra-Group companies (6) 13,530,708 ​ 11,878,091 ​ 12,537,453 ​ 2,303,000 ​ (40,249,252) ​ — Other investing activities with intra-Group companies (7) (21,503,020) ​ 2,267,998 ​ (7,019) ​ — ​ 19,242,041 ​ — Net cash (used in)/provided by investing activities (20,364,811) ​ (50,906,931) ​ (7,178,382) ​ 1,792,989 ​ 43,475,791 ​ (33,181,344) Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash (used in)/provided by transactions with third-parties (14,463,114) ​ (5,284,420) ​ (427,586) ​ 15,336 ​ — ​ (20,159,784) Cash dividend paid to intra-Group companies (5) — ​ (7,199,042) ​ (28,486,684) ​ — ​ 35,685,726 ​ — Loans received from intra-Group companies (6) 39,371,300 ​ 24,355,402 ​ 5,200 ​ 751,100 ​ (64,483,002) ​ — Loans repaid to intra-Group companies (6) (11,793,733) ​ (25,206,122) ​ (2,387,358) ​ (862,039) ​ 40,249,252 ​ — Other financing activities with intra-Group companies (7) — ​ 21,510,039 ​ (2,267,998) ​ — ​ (19,242,041) ​ — Net cash provided by/(used in) financing activities 13,114,453 ​ 8,175,857 ​ (33,564,426) ​ (95,603) ​ (7,790,065) ​ (20,159,784) Notes: (1) It represents the elimination of intercompany balances among NetEase, Inc., other subsidiaries, primary beneficiary of VIEs, and VIEs and their subsidiaries.
These segments reflect the way we evaluate, view and run our business operations.
These segments reflect the way we evaluate, view and run our business operations.
Each of our China mainland subsidiaries that is a domestic company is also required to set aside at least 10.0% of its after-tax profit based on PRC accounting standards each year to its general reserves or statutory capital reserve fund until the accumulative amount of such reserves reach 50.0% of its respective registered capital.
Each of our China mainland subsidiaries that is a domestic company is also required to set aside at least 10.0% of its after-tax profit based on PRC accounting standards each year to its general reserves or statutory reserve fund until the accumulative amount of such reserves reach 50.0% of its respective registered capital.
Our operating lease commitments are the lease commitments under the lease agreements mainly for our corporate offices and warehouses. Our server and bandwidth service fee commitments are related to our network servers located mainly in the facilities of the respective affiliates of China Telecom, China Unicom and China Mobile.
Our operating lease commitments are the commitments under the lease agreements mainly for our corporate offices and warehouses. Our server and bandwidth service fee commitments are related to our network servers located mainly in the facilities of the respective affiliates of China Telecom, China Unicom and China Mobile.
Net cash used in investing activities was RMB17.0 billion for the year ended December 31, 2023, which was mainly attributable to (i) placement/rollover of matured time deposits of RMB124.7 billion, (ii) investment in other equity investments and acquisition of subsidiaries of RMB2.4 billion, (iii) purchase of property, equipment and software of RMB2.3 billion, (iv) purchase of intangible assets, content and licensed copyrights of RMB2.0 billion, and (v) net change of short-term investments with terms of three months or less of RMB1.8 billion, which were partially offset by (i) proceeds from maturities of time deposits of RMB111.4 billion, and (ii) proceeds from maturities of short-term investments with terms over three months of RMB5.4 billion.
Net cash used in investing activities was RMB17.0 billion for the year ended December 31, 2023, which was attributable to (i) placement/rollover of matured time deposits of RMB124.7 billion, (ii) investment in other equity investments and acquisition of subsidiaries of RMB2.4 billion, (iii) purchase of property, equipment and software of RMB2.3 billion, (iv) purchase of intangible assets, content and licensed copyrights of RMB2.0 billion, and (v) net change of short-term investments with terms of three months or less of RMB1.8 billion, which were partially offset by (i) proceeds from maturities of time deposits of RMB111.4 billion, and (ii) proceeds from maturities of short-term investments with terms over three months of RMB5.4 billion.
The events or circumstances and factors we consider for the impairment assessment including a) significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investees; b) significant adverse change in the regulatory, economic, or technological environment of the investees; c) significant adverse change in the general market condition of either the geographical area or the industry in which the investees operate; d) bona fide offer to purchase, an offer by the investee to sell, or a completed auction process for the same or similar investment for an amount less than the carrying amount of that investment; e) factors that raise significant concerns about the investees’ ability to continue as a going concern; f) factors that raise significant concerns about the performance of new products and g) valuation methods and key estimates in the determination of the impairment amounts.
The events or circumstances and factors we consider for the impairment assessment include (a) significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investees; (b) significant adverse change in the regulatory, economic, or technological environment of the investees; (c) significant adverse change in the general market condition of either the geographical area or the industry in which the investees operate; (d) bona fide offer to purchase, an offer by the investee to sell, or a completed auction process for the same or similar investment for an amount less than the carrying amount of that investment; (e) factors that raise significant concerns about the investees’ ability to continue as a going concern; (f) factors that raise significant concerns about the performance of new products and (g) valuation methods and key estimates in the determination of the impairment amounts.
A lower withholding income tax rate of 5% is applied if the foreign invested enterprises’ immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with China, subject to a qualification review at the time of the distribution.
A lower withholding income tax rate of 5% is applied if the foreign invested enterprises’ immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with China mainland, subject to a qualification review at the time of the distribution.
The decrease in gross profit margin in 2024 for Youdao was mainly due to increased net revenues from online marketing services which have comparatively lower gross profit margins. The improvement in gross profit margin in 2024 for NetEase Cloud Music was mainly due to increased net revenues from sales of membership subscriptions and continued improvement in cost control measures.
The decrease in gross profit margin in 2024 for Youdao was due to increased net revenues from online marketing services which have comparatively lower gross profit margins. The improvement in gross profit margin in 2024 for NetEase Cloud Music was due to increased net revenues from sales of membership subscriptions and continued improvement in cost control measures.
Trend Information Other than as described elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenue, income from continuing operations, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to be indicative of future operation results or financial condition. 136 Table of Contents E.
Trend Information Other than as described elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenue, income from continuing operations, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to be indicative of future operation results or financial condition. 134 Table of Contents E.
For equity investments without readily determinable fair value for which we have elected to use the measurement alternative, we make a qualitative assessment of whether the investment is impaired periodically, or when events or circumstances indicate that the carrying amount may not be recoverable, applying significant judgement in considering various events and factors. Assumptions and Approach Used – Impairment assessment.
For equity investments without readily determinable fair value for which we have elected to use the Measurement Alternative, we make a qualitative assessment of whether the investment is impaired periodically, or when events or circumstances indicate that the carrying amount may not be recoverable, applying significant judgment in considering various events and factors. Assumptions and Approach Used – Impairment assessment.
“Key Information—Risk Factors—Risks Related to Our Corporate Structure—Our corporate structure may restrict our ability to receive dividends from, and transfer funds to, our China mainland subsidiaries and VIEs, which could restrict our ability to act in response to changing market conditions and reallocate funds internally in a timely manner.” and “Key Information—Risk Factors—Risks Related to Doing Business in China—Regulation on currency exchange may limit our ability to utilize our revenues effectively.” and Item 10.D.
“Key Information—Risk Factors—Risks Related to Our Corporate Structure—Our corporate structure may restrict our ability to receive dividends from, and transfer funds to, our China mainland subsidiaries and VIEs, which could restrict our ability to act in response to changing market conditions and reallocate funds internally in a timely manner.” and “Key Information—Risk Factors—Risks Related to China—Regulation on currency exchange may limit our ability to utilize our revenues effectively.” and Item 10.D.
The increase in gross profit margin in 2024 for innovative businesses and others was mainly due to increased gross profit from Yanxuan and several other businesses included within the segment.
The increase in gross profit margin in 2024 for innovative businesses and others was due to increased gross profit from Yanxuan and several other businesses included within the segment.
See “—Management of Capital Resources” above. 135 Table of Contents Furthermore, if certain procedural requirements are satisfied, the payment of current account items, including profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE or its local branches.
See “—Management of Capital Resources” above. 133 Table of Contents Furthermore, if certain procedural requirements are satisfied, the payment of current account items, including profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE or its local branches.
China The PRC Enterprise Income Tax Law subjects foreign invested enterprises and domestic companies to EIT at a uniform rate of 25%, and preferential tax treatments may be granted to foreign invested enterprises or domestic companies which conduct businesses in certain encouraged sectors and to entities otherwise classified as “Software Enterprises”, “Key Software Enterprises” and/or HNTEs.
China mainland The PRC Enterprise Income Tax Law subjects foreign invested enterprises and domestic companies to EIT at a uniform rate of 25%, and preferential tax treatments may be granted to foreign invested enterprises or domestic companies which conduct businesses in certain encouraged sectors and to entities otherwise classified as “Software Enterprises,” “Key Software Enterprises” and/or HNTEs.
For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective. 129 Table of Contents (4) China’s Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise to its immediate holding company outside of China.
For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective. (4) China’s Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise to its immediate holding company outside of China.
We repatriated a portion of these earnings and paid related withholding income tax in 2022, 2023 and 2024. In addition, the payment of dividends by entities established in the PRC is subject to limitations. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in the PRC.
We repatriated a portion of these earnings and paid related withholding income tax in 2023, 2024 and 2025. In addition, the payment of dividends by entities established in the PRC is subject to limitations. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in the PRC.
Our management believes that there is only a remote possibility that this scenario would happen. 130 Table of Contents Condensed Consolidating Schedule The following tables present the condensed consolidating schedule of financial information for NetEase, Inc., its wholly owned subsidiaries that are the primary beneficiaries of the VIEs under U.S.
Our management believes that there is only a remote possibility that this scenario would happen. 128 Table of Contents Condensed Consolidating Schedule The following tables present the condensed consolidating schedule of financial information for NetEase, Inc., its wholly-owned subsidiaries that are the primary beneficiaries of the VIEs under U.S.
These assumptions include, but not limited to types of games and characteristics of targeted players. 137 Table of Contents In connection with our periodic reviews of the estimate, the assumptions are evaluated accordingly considering historical players’ churn rates, similarities between new games and existing games and management judgment.
These assumptions include, but are not limited to, types of games and characteristics of targeted players. 135 Table of Contents In connection with our periodic reviews of the estimate, the assumptions are evaluated accordingly considering historical players’ churn rates, similarities between new games and existing games and management judgment.
For the years 2022, 2023 and 2024, the first HK$2 million of profits earned by one of our subsidiaries incorporated in Hong Kong is taxed at a rate of 8.25%, while the remaining profits will continue to be taxed at the 16.5% tax rate.
For the years 2023, 2024 and 2025, the first HK$2 million of profits earned by one of our subsidiaries incorporated in Hong Kong is taxed at a rate of 8.25%, while the remaining profits will continue to be taxed at the 16.5% tax rate.
Boguan, NetEase Hangzhou and certain of our other China mainland subsidiaries were qualified as HNTEs and enjoyed a preferential tax rate of 15% for 2022, 2023 and 2024. The foregoing preferential income tax rate, however, is subject to periodic review and renewal by PRC authorities.
Boguan, NetEase Hangzhou and certain of our other China mainland subsidiaries were qualified as HNTEs and enjoyed a preferential tax rate of 15% for 2023, 2024 and 2025. The foregoing preferential income tax rate, however, is subject to periodic review and renewal by PRC authorities.
Cost of Revenues Our cost of revenues decreased by 2.3% to RMB39.5 billion (US$5.4 billion) in 2024 from RMB40.4 billion in 2023, which was mainly due to a decrease in revenue sharing costs with talent agencies of live streaming performers and other third parties.
Cost of Revenues Our cost of revenues decreased by 2.3% to RMB39.5 billion in 2024 from RMB40.4 billion in 2023, which was due to a decrease in revenue sharing costs with talent agencies of live streaming performers and other third parties.
Net revenues from our in-house developed games increased by 2.3% to RMB72.6 billion (US$10.0 billion) in 2024 from RMB71.0 billion in 2023 as a result of the expansion of our portfolio of both PC and mobile games and their increased popularity in 2024.
Net revenues from our in-house developed games increased by 2.3% to RMB72.6 billion in 2024 from RMB71.0 billion in 2023 as a result of the expansion of our portfolio of both PC and mobile games and their increased popularity in 2024.
Operating Expenses Total operating expenses increased by 2.5% to RMB36.2 billion (US$5.0 billion) in 2024 from RMB35.4 billion in 2023 as a result of higher R&D investments mainly for games and related value-added services.
Operating Expenses Total operating expenses increased by 2.5% to RMB36.2 billion in 2024 from RMB35.4 billion in 2023 as a result of higher R&D investments mainly for games and related value-added services.
These projections are derived using investees’ business plan forecasts. 138 Table of Contents ● Long-term growth rate. A growth rate is used to calculate the terminal value of the business and is added to the present value of the debt-free interim cash flows.
These projections are derived using investees’ business plan forecasts. 136 Table of Contents ● Long-term growth rate. A growth rate is used to calculate the terminal value of the business and is added to the present value of the debt-free interim cash flows.
Many of the factors used in assessing performance and financial position of the investee are outside the control of management, and these assumptions and judgement may change in future periods. Assumptions and Approach Used – Fair value of the investees.
Many of the factors used in assessing performance and financial position of the investee are outside the control of management, and these assumptions and judgment may change in future periods. Assumptions and Approach Used – Fair value of the investees.
Future changes in Chinese government policies affecting the provision of information services, including the provision of online games, online education, online music, live streaming, internet access, online advertising and online payment services, may impose additional regulatory requirements on us or our service providers or otherwise harm our business. Please see Item 3.D.
Future changes in PRC government policies affecting the provision of information services, including the provision of online games, online education, online music, internet access, online advertising and online payment services, may impose additional regulatory requirements on us or our service providers or otherwise harm our business. Please see Item 3.D.
There are no withholding taxes in the BVI. Hong Kong Our subsidiaries in Hong Kong were subject to income tax on their taxable income generated from operations in Hong Kong at a rate of 16.5%.
There are no withholding taxes in the BVI. ​ 112 Table of Contents Hong Kong Our subsidiaries in Hong Kong were subject to income tax on their taxable income generated from operations in Hong Kong at a rate of 16.5%.
As of December 31, 2024, NetEase, Inc. had made cumulative capital contributions of US$2.3 billion to our China mainland subsidiaries through intermediate holding companies, which were accounted for as “Investments in subsidiaries” of NetEase, Inc. These funds have been used by our China mainland subsidiaries for their operations.
As of December 31, 2025, NetEase, Inc. had made cumulative capital contributions of US$2.1 billion to our China mainland subsidiaries through intermediate holding companies, which were accounted for as “Investments in subsidiaries” of NetEase, Inc. These funds have been used by our China mainland subsidiaries for their operations.
The approach we used to assess investment impairment are based on assumptions and management judgement in considering various factors and events.
The approach we used to assess investment impairment are based on assumptions and management judgment in considering various factors and events.
“Additional Information—Exchange Controls.” CAPITAL EXPENDITURES Our capital requirements relate primarily to financing: ● our working capital requirements, such as servers and bandwidth service fees, inventory purchase costs, content and copyrights purchase costs, staff costs, selling and marketing expenses and R&D costs; and ● costs incurred for the construction of our new office buildings and acquisition of new servers and other facilities. 127 Table of Contents MATERIAL CASH REQUIREMENTS Our material cash requirements as of December 31, 2024 primarily include our operating lease commitments, server and bandwidth service fee commitments, capital commitments, royalties and expenditure for licensed content commitments and other commitments.
“Additional Information—Exchange Controls.” CAPITAL EXPENDITURES Our capital requirements relate primarily to financing: ● our working capital requirements, such as servers and bandwidth service fees, inventory purchase costs, content and copyrights purchase costs, selling and marketing expenses and R&D costs; and ● costs incurred for the construction of our new office buildings and acquisition of new servers and other facilities. 125 Table of Contents MATERIAL CASH REQUIREMENTS Our material cash requirements as of December 31, 2025 primarily include our operating lease commitments, server and bandwidth service fee commitments, capital commitments, royalties and expenditures for licensed content commitments and other commitments.
Financing Activities Net cash used in financing activities was RMB27.3 billion (US$3.7 billion) for the year ended December 31, 2024, which was mainly attributable to (i) dividends paid to shareholders of RMB11.2 billion (US$1.5 billion), (ii) repurchase of NetEase’s ADSs and purchase of subsidiaries’ ADSs and shares of RMB8.8 billion (US$1.2 billion), and (iii) net payment of short-term and long-term loans of RMB7.5 billion (US$1.0 billion).
Net cash used in financing activities was RMB27.3 billion for the year ended December 31, 2024, which was attributable to (i) dividends paid to shareholders of RMB11.2 billion, (ii) repurchase of NetEase’s ADSs and purchase of subsidiaries’ ADSs and shares of RMB8.8 billion, and (iii) net payment of short-term and long-term loans of RMB7.5 billion.
“Information on the Company—Business Overview—Our Organizational Structure.” As of December 31, 2024, the total assets of all the consolidated VIEs were RMB23.8 billion (US$3.3 billion), mainly comprising cash and cash equivalents, restricted cash, accounts receivable, net, prepayments and other current assets, net, amounts due from group companies and long-term investments.
“Information on the Company—Business Overview—Our Organizational Structure.” As of December 31, 2025, the total assets of all the consolidated VIEs were RMB29.8 billion (US$4.3 billion), mainly comprising cash and cash equivalents, restricted cash, accounts receivable, net, prepayments and other current assets, net, amounts due from group companies and long-term investments.
The gross profit margins in 2023 and 2024 were calculated by dividing our gross profits over our net revenues for the corresponding type of services. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2023 ​ 2024 ​ 2024 ​ ​ RMB RMB US$ ​ ​ (in thousands) Gross profit: ​ Games and related value-added services 55,626,584 ​ 57,480,020 ​ 7,874,729 ​ Youdao 2,767,462 ​ 2,748,491 ​ 376,542 ​ NetEase Cloud Music 2,102,670 ​ 2,681,512 ​ 367,366 ​ Innovative businesses and others 2,566,678 ​ 2,897,061 ​ 396,896 ​ Total gross profit 63,063,394 ​ 65,807,084 ​ 9,015,533 ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit margin: ​ ​ ​ ​ ​ ​ Games and related value-added services 68.2 % 68.7 % 68.7 % Youdao 51.4 % 48.9 % 48.9 % NetEase Cloud Music 26.7 % 33.7 % 33.7 % Innovative businesses and others 29.7 % 35.8 % 35.8 % Total gross profit margin 60.9 % 62.5 % 62.5 % ​ The slight increase in gross profit margin in 2024 for games and related value-added services was primarily attributable to decreased revenue contribution from live streaming services, which have relatively lower gross profit margins, as well as increased net revenues from the operation of online games compared to other products and services in the segment.
The gross profit margins in 2023 and 2024 were calculated by dividing our gross profits over our net revenues for the corresponding type of services. ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ ​ ​ 2023 ​ ​ ​ 2024 ​ ​ RMB ​ RMB ​ ​ (in thousands) Gross profit: ​ ​ ​ ​ ​ Games and related value-added services 55,626,584 ​ 57,480,020 ​ Youdao 2,767,462 ​ 2,748,491 ​ NetEase Cloud Music 2,102,670 ​ 2,681,512 ​ Innovative businesses and others 2,566,678 ​ 2,897,061 ​ Total gross profit 63,063,394 ​ 65,807,084 ​ ​ ​ ​ ​ ​ ​ Gross profit margin: ​ ​ ​ ​ Games and related value-added services 68.2 % 68.7 % Youdao 51.4 % 48.9 % NetEase Cloud Music 26.7 % 33.7 % Innovative businesses and others 29.7 % 35.8 % Total gross profit margin 60.9 % 62.5 % ​ The slight increase in gross profit margin in 2024 for games and related value-added services was attributable to decreased revenue contribution from live streaming services, which have relatively lower gross profit margins, as well as increased net revenues from the operation of online games compared to other products and services in the segment.
General and administrative expenses decreased by 7.1% to RMB4.6 billion (US$623.4 million) in 2024 from RMB4.9 billion in 2023, primarily due to one-off expenses recorded in 2023, such as the settlement of certain litigation as well as an impairment provision made for fixed assets and land use rights.
General and administrative expenses decreased by 7.1% to RMB4.6 billion in 2024 from RMB4.9 billion in 2023 due to one-off expenses recorded in 2023, such as the settlement of certain litigation as well as an impairment provision made for fixed assets and land use rights.
Gross Profit Our gross profit increased by 4.4% to RMB65.8 billion (US$9.0 billion) in 2024 from RMB63.1 billion in 2023. 118 Table of Contents The following table sets forth the consolidated gross profits and gross profit margins of our business activities for the periods indicated as derived from our audited financial statements.
Gross Profit Our gross profit increased by 4.4% to RMB65.8 billion in 2024 from RMB63.1 billion in 2023. 120 Table of Contents The following table sets forth the consolidated gross profits and gross profit margins of our business activities for the periods indicated as derived from our audited financial statements.
The difference between our net income of RMB29.4 billion and the net cash provided by operating activities was primarily due to (i) the adjustment of non-cash items, mainly including adding back share-based compensation cost of RMB3.2 billion, depreciation and amortization charges of RMB3.1 billion, and impairment losses on investments and other long-term assets of RMB469.2 million, partially offset by gains on fair value change of equity security investments of RMB535.3 million, share of results on equity method investees and revaluation results from previously held equity interest of RMB473.9 million, fair value changes of short-term investments of RMB414.2 million, and (ii) an increase in cash resulting from the changes in operating assets and liabilities, mainly including an increase in contract liabilities of RMB1.2 billion and an increase in payables of RMB544.3 million, including content costs, bonus and professional and technical charges, partially offset by an increase in accounts receivable of RMB1.5 billion. 125 Table of Contents Net cash provided by operating activities was RMB27.7 billion for the year ended December 31, 2022.
The difference between our net income of RMB29.4 billion and the net cash provided by operating activities was due to (i) the adjustment of non-cash items, including adding back share-based compensation cost of RMB3.2 billion, depreciation and amortization charges of RMB3.1 billion, and impairment losses on investments and other long-term assets of RMB469.2 million, partially offset by gains on fair value change of equity security investments of RMB535.3 million, share of results on equity method investees and revaluation results from previously held equity interest of RMB473.9 million, fair value changes of short-term investments of RMB414.2 million, and (ii) an increase in cash resulting from the changes in operating assets and liabilities, mainly including an increase in contract liabilities of RMB1.2 billion and an increase in payables of RMB544.3 million, including content costs, bonus and professional and technical charges, partially offset by an increase in accounts receivable of RMB1.5 billion.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Please see the Notes to the Consolidated Financial Statements—Note 2(bb) “Recently issued accounting pronouncements not yet adopted.” 115 Table of Contents RESULTS OF OPERATIONS The following table sets forth a summary of our audited consolidated statements of operations for the periods indicated both in Renminbi and as a percentage of total revenues.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Please see the Notes to the Consolidated Financial Statements—Note 2(cc) “Recently issued accounting pronouncements not yet adopted.” 113 Table of Contents RESULTS OF OPERATIONS The following table sets forth a summary of our consolidated statements of operations extracted from the audited financial statements for the periods indicated both in Renminbi and as a percentage of total revenues.
Interest income, net increased to RMB4.9 billion (US$674.2 million) in 2024 from RMB4.1 billion in 2023, which included interest expenses of RMB598.0 million (US$81.9 million) in 2024 related to our short-term and long-term loans.
Interest income, net increased to RMB4.9 billion in 2024 from RMB4.1 billion in 2023, which included interest expenses of RMB598.0 million in 2024 related to our short-term and long-term loans.
Our effective tax rate in 2024 was 15.3%, compared to 13.8% in 2023. 120 Table of Contents Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 We have organized our operations into following segments: games and related value-added services, Youdao, NetEase Cloud Music and innovative businesses and others.
Our effective tax rate in 2025 was 14.8%, compared to 15.3% in 2024. ​ 118 Table of Contents Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 We have organized our operations into following segments: games and related value-added services, Youdao, NetEase Cloud Music and innovative businesses and others.
Investment income was RMB355.3 million (US$48.7 million) in 2024, compared to investment income of RMB1.3 billion in 2023, consisting primarily of (i) a gain from fair value change related to equity investments with readily determinable fair value of RMB841.9 million (US$115.3 million) in 2024 compared to RMB535.3 million in 2023, (ii) investment income related to short-term investments of RMB530.6 million (US$72.7 million) in 2024 compared to RMB414.2 million in 2023, (iii) a gain on disposal of certain long-term investments of RMB272.4 million (US$37.3 million) in 2024 compared to RMB63.8 million in 2023, and (iv) dividend income from certain long-term investments of RMB125.2 million (US$17.2 million) in 2024 compared to RMB63.7 million in 2023, which was offset in part by impairment provisions related to certain investments of RMB1.3 billion (US$177.0 million) compared to RMB274.2 million in 2023, and a net investment loss in equity method investees of RMB155.6 million (US$21.3 million) in 2024 compared to a gain of RMB473.9 million in 2023.
Investment income was RMB355.3 million in 2024, compared to investment income of RMB1.3 billion in 2023, consisting of (i) a gain from fair value change related to equity investments with readily determinable fair value of RMB841.9 million in 2024 compared to RMB535.3 million in 2023, (ii) investment income related to short-term investments of RMB530.6 million in 2024 compared to RMB414.2 million in 2023, (iii) a gain on disposal of certain long-term investments of RMB272.4 million in 2024 compared to RMB63.8 million in 2023, and (iv) dividend income from certain long-term investments of RMB125.2 million in 2024 compared to RMB63.7 million in 2023, which was offset in part by impairment provisions related to certain investments of RMB1.3 billion compared to RMB274.2 million in 2023 and a net investment loss in equity method investees of RMB155.6 million in 2024 compared to a gain of RMB473.9 million in 2023.
Investing Activities Net cash provided by investing activities was RMB17.9 billion (US$2.5 billion) for the year ended December 31, 2024, which was mainly attributable to (i) proceeds from maturities of time deposits of RMB179.4 billion (US$24.6 billion), (ii) proceeds from maturities of short-term investments with terms over three months of RMB2.9 billion (US$391.0 million), and (iii) proceeds from disposal of long-term investments, businesses, subsidiaries and other financial instruments of RMB2.8 billion (US$386.7 million), which were partially offset by (i) placement/rollover of matured time deposits of RMB154.8 billion (US$21.2 billion), (ii) purchase of short-term investments with terms over three months of RMB8.2 billion (US$1.1 billion), (iii) purchase of property, equipment and software of RMB1.3 billion (US$174.7 million), (iv) purchase of intangible assets, content and licensed copyrights of RMB931.0 million (US$127.5 million), (v) investment in other equity investments and acquisition of subsidiaries of RMB589.6 million (US$80.8 million), (vi) investment in equity method investees of RMB513.4 million (US$70.3 million) and (vii) net change of short-term investments with terms of three months or less of RMB408.3 million (US$55.9 million).
Net cash provided by investing activities was RMB17.9 billion for the year ended December 31, 2024, which was attributable to (i) proceeds from maturities of time deposits of RMB179.4 billion, (ii) proceeds from maturities of short-term investments with terms over three months of RMB2.9 billion, and (iii) proceeds from disposal of long-term investments, businesses, subsidiaries and other financial instruments of RMB2.8 billion, which were partially offset by (i) placement/rollover of matured time deposits of RMB154.8 billion, (ii) purchase of short-term investments with terms over three months of RMB8.2 billion, (iii) purchase of property, equipment and software of RMB1.3 billion, (iv) purchase of intangible assets, content and licensed copyrights of RMB931.0 million, (v) investment in other equity investments and acquisition of subsidiaries of RMB589.6 million, (vi) investment in equity method investees of RMB513.4 million and (vii) net change of short-term investments with terms of three months or less of RMB408.3 million.
Youdao Cost of revenues from Youdao increased by 9.8% to RMB2.9 billion (US$394.2 million) in 2024 from RMB2.6 billion in 2023, which was mainly attributable to an increase in revenue sharing costs in line with increased net revenues from online marketing services.
Youdao Cost of revenues from Youdao increased by 9.8% to RMB2.9 billion in 2024 from RMB2.6 billion in 2023, which was attributable to an increase in revenue sharing costs in line with increased net revenues from online marketing services of RMB325.9 million.
As of December 31, 2024, US$4.6 billion of such credit facilities had not been utilized. 124 Table of Contents We believe that our current levels of cash and cash equivalents, cash flows from operations and short-term investments will be sufficient to meet our anticipated cash needs for at least the next 12 months.
As of December 31, 2025, US$5.3 billion of such credit facilities had not been utilized. 122 Table of Contents We believe that our current levels of cash and cash equivalents, cash flows from operations and short-term investments will be sufficient to meet our anticipated cash needs for at least the next 12 months.
As a result of these and other restrictions under PRC laws and regulations, our China mainland subsidiaries and the VIEs are restricted in their ability to transfer a portion of their net assets to us either in the form of dividends, loans or advances, which restricted portion amounted to approximately RMB14.2 billion, or 10% of our total consolidated net assets, as of December 31, 2024.
As a result of these and other restrictions under PRC laws and regulations, our China mainland subsidiaries and the VIEs are restricted in their ability to transfer a portion of their net assets to us either in the form of dividends, loans or advances, which restricted portion amounted to approximately RMB13.3 billion, or 8% of our total consolidated net assets, as of December 31, 2025.
Our capital commitments are primarily the commitments made in connection with the construction of new office buildings. Our royalties and expenditures for licensed content commitments primarily relate to the costs of acquiring the rights to certain content by our online game and online music businesses. Other commitments primarily consist of expenditures related to marketing and administration activities.
Our capital commitments are primarily the commitments made in connection with the construction of new office buildings. Our royalties and expenditures for licensed content commitments primarily relate to the costs of acquiring the rights to certain content by our online game and online music businesses.
NetEase Cloud Music Cost of revenues from NetEase Cloud Music decreased by 8.6% to RMB5.3 billion (US$721.8 million) in 2024 from RMB5.8 billion in 2023, which was primarily attributable to a decrease in revenue sharing costs in line with decreased net revenues from social entertainment services.
NetEase Cloud Music Cost of revenues from NetEase Cloud Music decreased by 8.6% to RMB5.3 billion in 2024 from RMB5.8 billion in 2023, which was driven by a decrease in revenue sharing costs in line with decreased net revenues from social entertainment services.
As of December 31, 2024, there were unrecognized share-based compensation expenses of RMB18.0 million related to such share options for which the service conditions were met and are expected to be recognized when the vesting conditions are achieved.
As of December 31, 2025, there were unrecognized share-based compensation expenses of RMB14.8 million related to such share options for which the service conditions were met and are expected to be recognized when the vesting conditions are achieved.
Research and development expenses increased by 6.3% to RMB17.5 billion (US$2.4 billion) in 2024 from RMB16.5 billion in 2023, primarily due to increased staff-related costs and expenses for outsourced game development activities. 119 Table of Contents Other Income/(Expenses) The following table sets forth our other income/(expenses) for the periods indicated as derived from our audited financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2023 ​ 2024 ​ 2024 ​ ​ RMB ​ RMB ​ US$ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ Investment income, net 1,306,722 355,286 48,674 Interest income, net 4,120,418 4,920,915 674,163 Exchange (losses)/ gains, net (132,999) 255,430 34,994 Other, net 1,053,642 602,134 82,492 ​ Other income/(expenses) mainly consisted of investment income related to short-term investments, interest income, government incentives, net foreign exchange gains/(losses), impairment provisions related to certain equity investments, net investment gain in equity method investees and fair value change related to our equity investments with readily determinable fair value.
Research and development expenses increased by 6.3% to RMB17.5 billion in 2024 from RMB16.5 billion in 2023, which was driven by increased investments in game development activities. 121 Table of Contents Other Income/(Expenses) The following table sets forth our other income/(expenses) for the periods indicated as derived from our audited financial statements. ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ ​ ​ 2023 ​ ​ ​ 2024 ​ ​ RMB ​ RMB ​ ​ (in thousands) ​ ​ ​ ​ ​ Investment income, net 1,306,722 ​ 355,286 Interest income, net 4,120,418 ​ 4,920,915 Exchange (losses)/ gains, net (132,999) ​ 255,430 Other, net 1,053,642 ​ 602,134 ​ Other income/(expenses) mainly consisted of investment income related to short-term investments, interest income, government incentives, net foreign exchange gains/(losses), impairment provisions related to certain equity investments, net investment gain in equity method investees and fair value change related to our equity investments with readily determinable fair value.
As of December 31, 2024, the total liabilities of the consolidated VIEs were RMB21.9 billion (US$3.0 billion), mainly comprising contract liabilities, amounts due to group companies and accrued liabilities and other payables. 109 Table of Contents We believe that our present operations are structured to comply with the relevant PRC laws and regulations.
As of December 31, 2025, the total liabilities of the consolidated VIEs were RMB27.5 billion (US$3.9 billion), mainly comprising contract liabilities, amounts due to group companies and accrued liabilities and other payables. We believe that our present operations are structured to comply with the relevant PRC laws and regulations.
The following table sets forth the net revenues and cost of revenues by segment for the period presented as derived from our audited financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2023 ​ 2024 ​ 2024 ​ RMB RMB US$ ​ ​ (in thousands) Net revenues: ​ ​ ​ ​ ​ ​ Games and related value-added services 81,565,449 ​ 83,622,643 ​ 11,456,254 Youdao 5,389,208 ​ 5,625,919 ​ 770,748 NetEase Cloud Music 7,866,992 ​ 7,950,146 ​ 1,089,166 Innovative businesses and others 8,646,510 ​ 8,096,528 ​ 1,109,220 Total net revenues 103,468,159 ​ 105,295,236 ​ 14,425,388 Cost of revenues: ​ ​ ​ ​ ​ Games and related value-added services (25,938,865) ​ (26,142,623) ​ (3,581,525) Youdao (2,621,746) ​ (2,877,428) ​ (394,206) NetEase Cloud Music (5,764,322) ​ (5,268,634) ​ (721,800) Innovative businesses and others (6,079,832) ​ (5,199,467) ​ (712,324) Total cost of revenues (40,404,765) ​ (39,488,152) ​ (5,409,855) ​ Net Revenues Total net revenues increased by 1.8% to RMB105.3 billion (US$14.4 billion) in 2024 from RMB103.5 billion in 2023.
The following table sets forth the net revenues and cost of revenues by segment for the period presented as derived from our audited financial statements. ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2023 ​ 2024 ​ ​ RMB ​ RMB ​ ​ (in thousands) Net revenues: ​ ​ ​ ​ ​ ​ ​ ​ Games and related value-added services 81,565,449 83,622,643 Youdao 5,389,208 5,625,919 NetEase Cloud Music 7,866,992 7,950,146 Innovative businesses and others 8,646,510 8,096,528 Total net revenues 103,468,159 105,295,236 Cost of revenues: ​ ​ Games and related value-added services (25,938,865) (26,142,623) Youdao (2,621,746) (2,877,428) NetEase Cloud Music (5,764,322) (5,268,634) Innovative businesses and others (6,079,832) (5,199,467) Total cost of revenues (40,404,765) (39,488,152) ​ Net Revenues Total net revenues increased by 1.8% to RMB105.3 billion in 2024 from RMB103.5 billion in 2023.
In 2022, 2023 and 2024, we accrued RMB2.1 billion, RMB1.5 billion and RMB1.6 billion (US$215.9 million) withholding tax liabilities, respectively, mainly associated with dividends expected to be distributed from our China mainland subsidiaries to companies in our corporate group outside of China for general corporate purposes.
In 2023, 2024 and 2025, we accrued RMB1.5 billion, RMB1.6 billion and RMB1.8 billion (US$225.4 million) withholding tax liabilities, respectively, mainly associated with dividends expected to be distributed from our China mainland subsidiaries to companies in our corporate group outside of China for general corporate purposes.
We also incurred net foreign exchange gains of RMB255.4 million (US$35.0 million) in 2024, compared to net foreign exchange losses of RMB133.0 million in 2023, primarily due to the fluctuation between the U.S. dollar against the RMB over the periods.
We also incurred net foreign exchange gains of RMB255.4 million in 2024, compared to net foreign exchange losses of RMB133.0 million in 2023, reflecting fluctuations between the U.S. dollar against the RMB over the periods.
As of December 31, 2024, total unrecognized compensation cost related to unvested awards granted under the 2019 Share Plan, adjusted for estimated forfeitures, was RMB2.9 billion (US$402.1 million), which is expected to be recognized through the remaining vesting period of each grant.
As of December 31, 2025, total unrecognized compensation cost related to unvested awards granted under the 2019 Share Plan, adjusted for estimated forfeitures, was RMB2.4 billion (US$348.1 million), which is expected to be recognized through the remaining vesting period of each grant. As of December 31, 2025, the weighted average remaining vesting period was 1.39 years.
As of December 31, 2024, the aggregate loan balance owed by our subsidiaries under our agreements with the VIEs was US$48.9 million. In 2022, 2023 and 2024, the VIEs transferred RMB67.0 billion, RMB73.3 billion and RMB73.8 billion (US$10.1 billion), respectively, to our China mainland subsidiaries as payment or prepayment of service fees.
As of December 31, 2025, the aggregate loan balance owed by our subsidiaries under our agreements with the VIEs was US$51.1 million. In 2023, 2024 and 2025, the VIEs transferred RMB73.3 billion, RMB73.8 billion and RMB83.7 billion (US$12.0 billion), respectively, to our China mainland subsidiaries as payment or prepayment of service fees.
The difference between our net income of RMB30.3 billion (US$4.1 billion) and the net cash provided by operating activities was primarily due to (i) the adjustment of non-cash items, mainly including adding back share-based compensation cost of RMB3.9 billion (US$532.0 million), depreciation and amortization charges of RMB2.4 billion (US$331.3 million) and impairment losses on investments of RMB1.3 billion (US$177.0 million), partially offset by gains on fair value change of equity security, other investments and financial instruments of RMB841.9 million (US$115.3 million), unrealized exchange gains of RMB719.2 million (US$98.5 million), and fair value changes of short-term investments of RMB530.6 million (US$72.7 million), and (ii) an increase in cash resulting from the changes in operating assets and liabilities, mainly including an increase in contract liabilities of RMB2.0 billion (US$277.0 million), an increase in payables of RMB1.4 billion (US$193.3 million), including content costs, bonus and professional and technical charges, and a decrease in accounts receivable of RMB716.4 million (US$98.1 million), partially offset by an increase in prepayments and other assets of RMB809.6 million (US$110.9 million).
The difference between our net income of RMB30.3 billion and the net cash provided by operating activities was due to (i) the adjustment of non-cash items, including adding back share-based compensation cost of RMB3.9 billion, depreciation and amortization charges of RMB2.4 billion and impairment losses on investments of RMB1.3 billion, partially offset by gains on fair value change of equity security, other investments and financial instruments of RMB841.9 million, unrealized exchange gains of RMB719.2 million, and fair value changes of short-term investments of RMB530.6 million, and (ii) an increase in cash resulting from the changes in operating assets and liabilities, including an increase in contract liabilities of RMB2.0 billion, an increase in payables of RMB1.4 billion, including content costs, bonus and professional and technical charges, and a decrease in accounts receivable of RMB716.4 million, partially offset by an increase in prepayments and other assets of RMB809.6 million. 123 Table of Contents Net cash provided by operating activities was RMB35.3 billion for the year ended December 31, 2023.
Such plan was amended and restated in February 2023 and renamed the Amended and Restated 2019 Share Incentive Plan, or the 2019 Share Plan. We have reserved 322,458,300 ordinary shares for issuance under this plan. The 2019 Share Plan became effective on October 15, 2019 and will expire in February 2033.
Such plan was amended and restated in February 2023 and renamed the Amended and Restated 2019 Share Incentive Plan, or the 2019 Share Plan. We have reserved 322,458,300 ordinary shares for issuance under this plan.
As of December 31, 2024, these subsidiaries and VIEs had RMB129.8 billion (US$17.8 billion) in cash and cash equivalents and short-term and long-term time deposits. Our cash and cash equivalents and time deposits held outside of China are mainly denominated in U.S. dollars.
As of December 31, 2025, these subsidiaries and VIEs had RMB142.6 billion (US$20.4 billion) in cash and cash equivalents and short-term and long-term time deposits. Our cash and cash equivalents and time deposits held outside of China are mainly denominated in U.S. dollars.
Net cash used in financing activities was RMB10.2 billion for the year ended December 31, 2022, which was mainly attributable to (i) repurchase of NetEase’s ADSs and purchase of subsidiaries’ ADSs and shares of RMB8.3 billion and (ii) dividends paid to shareholders of RMB6.7 billion, which were partially offset by net proceeds from short-term and long-term loans of RMB4.8 billion. 126 Table of Contents MANAGEMENT OF CAPITAL RESOURCES In managing our capital, we seek to maintain a reasonable amount of liquidity to support new business growth and maximize returns on our capital resources, while at the same time focusing on the preservation of capital and complying with applicable legal requirements.
Net cash used in financing activities was RMB21.5 billion for the year ended December 31, 2023, which was attributable to (i) net payment of short-term and long-term loans of RMB8.3 billion, (ii) dividends paid to shareholders of RMB8.0 billion, and (iii) repurchase of NetEase’s ADSs and purchase of subsidiaries’ ADSs and shares of RMB5.2 billion. 124 Table of Contents MANAGEMENT OF CAPITAL RESOURCES In managing our capital, we seek to maintain a reasonable amount of liquidity to support new business growth and maximize returns on our capital resources, while at the same time focusing on the preservation of capital and complying with applicable legal requirements.
Net revenues from games and related value-added services, Youdao, NetEase Cloud Music and innovative businesses and others constituted 78.8%, 5.2%, 7.6% and 8.4%, respectively, of our total net revenues in 2023, compared with 77.3%, 5.2%, 9.3% and 8.2%, respectively, in 2022.
Net revenues from games and related value-added services, Youdao, NetEase Cloud Music and innovative businesses and others constituted 81.9%, 5.2%, 6.9% and 6.0%, respectively, of our total net revenues in 2025, compared with 79.4%, 5.3%, 7.6% and 7.7%, respectively, in 2024.
We intend to fund our existing and future material cash requirements primarily with anticipated cash flows from operations, our existing cash balance and other financing alternatives. We will continue to make cash commitments to support the growth of our business.
Other commitments primarily consist of expenditures related to purchases of inventory and professional and technical services, among others. We intend to fund our existing and future material cash requirements primarily with anticipated cash flows from operations, our existing cash balance and other financing alternatives. We will continue to make cash commitments to support the growth of our business.
As all these games are hosted on our servers, we have the pricing discretion, and are responsible for the sale and marketing of the games as well as any related customer services.
We are the principal of substantially all games we operate, including both in-house developed games and licensed games, as these games are hosted on our servers, we have the pricing discretion and we are responsible for the sale and marketing of the games as well as any related customer services.
Net revenues from licensed games increased by 64.3% to RMB7.8 billion (US$1.1 billion) in 2024 from RMB4.7 billion in 2023, which was mainly attributable to the return of certain hit titles. Net revenues generated from licensed games represented 7.4% of our total net revenues in 2024, compared to 4.6% in 2023.
Net revenues from licensed games increased by 64.3% to RMB7.8 billion in 2024 from RMB4.7 billion in 2023 due to the launch of certain Blizzard titles in 2024. Net revenues generated from licensed games represented 7.4% of our total net revenues in 2024, compared to 4.6% in 2023.
We generated net revenues of RMB96.5 billion, RMB103.5 billion and RMB105.3 billion (US$14.4 billion) in 2022, 2023 and 2024, respectively. Our net income attributable to the company’s shareholders was RMB20.3 billion, RMB29.4 billion and RMB29.7 billion (US$4.1 billion) in 2022, 2023 and 2024, respectively. OUR CORPORATE STRUCTURE Our company was incorporated in the Cayman Islands.
We generated net revenues of RMB103.5 billion, RMB105.3 billion and RMB112.6 billion (US$16.1 billion) in 2023, 2024 and 2025, respectively. Our net income attributable to the company’s shareholders was RMB29.4 billion, RMB29.7 billion and RMB33.8 billion (US$4.8 billion) in 2023, 2024 and 2025, respectively. 106 Table of Contents OUR CORPORATE STRUCTURE Our company was incorporated in the Cayman Islands.
For the year ended December 31, 2024, an aggregate of RMB1.0 billion in investment impairments were recorded. See Note 11 of Notes to the Consolidated Financial Statements for more information. 139 Table of Contents
For the year ended December 31, 2025, an aggregate of RMB2.4 billion in investment impairments were recorded. See Note 9 of Notes to the Consolidated Financial Statements for more information. 137 Table of Contents
Games and Related Value-added Services Net revenues from games and related value-added services increased by 2.5% to RMB83.6 billion (US$11.5 billion) in 2024 from RMB81.6 billion in 2023, which was principally attributable to the strong performance of certain self-developed titles, such as Identity V , Naraka: Bladepoint PC and mobile games and certain licensed titles, which was partially offset by decreased net revenues from live streaming services.
Games and Related Value-added Services Net revenues from games and related value-added services increased by 2.5% to RMB83.6 billion in 2024 from RMB81.6 billion in 2023, with an increase in net revenues from online games of RMB4.7 billion driven by the strong performance of certain self-developed titles, such as Identity V , the PC and mobile versions of Naraka: Bladepoint and certain licensed titles, which was partially offset by a decrease in net revenues from live streaming services of RMB2.4 billion.
Innovative Businesses and Others Net revenues from the innovative businesses and others segment decreased by 6.4% to RMB8.1 billion (US$1.1 billion) in 2024 from RMB8.6 billion in 2023, which mainly resulted from decreased net revenues from advertising services and certain other innovative businesses in this segment.
Innovative Businesses and Others Net revenues from the innovative businesses and others segment decreased by 6.4% to RMB8.1 billion in 2024 from RMB8.6 billion in 2023, resulting from decreased net revenues from several businesses in this segment, including advertising services.
Net cash used in financing activities was RMB21.5 billion for the year ended December 31, 2023, which was mainly attributable to (i) net payment of short-term and long-term loans of RMB8.3 billion, (ii) dividends paid to shareholders of RMB8.0 billion, and (iii) repurchase of NetEase’s ADSs and purchase of subsidiaries’ ADSs and shares of RMB5.2 billion.
Financing Activities Net cash used in financing activities was RMB20.2 billion (US$2.9 billion) for the year ended December 31, 2025, which was attributable to (i) dividends paid to shareholders of RMB13.8 billion (US$2.0 billion), (ii) net payment of short-term and long-term loans of RMB5.8 billion (US$829.2 million), and (iii) repurchase of NetEase’s ADSs and purchase of subsidiaries’ ADSs and shares of RMB639.3 million (US$91.4 million).
Our China mainland subsidiaries maintain certain personnel for content production, sales and marketing, R&D and general and administrative functions to support the operations of the VIEs. 128 Table of Contents The following is a summary of cash transfers that have occurred between our subsidiaries and the VIEs: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ ​ RMB RMB RMB ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ Net cash paid by the VIEs to our subsidiaries under service agreements (66,970,818) ​ (73,298,667) ​ (73,785,893) Net cash provided by/(used in) other transactions with intra-Group companies 299,452 ​ 639,545 ​ (45,054) Net loans made to intra-Group companies — ​ — ​ (1,438,000) Loans received from intra-Group companies 201,349 ​ 209,735 ​ 876,994 Loans repaid to intra-Group companies (306,797) ​ (262,574) ​ (647,441) ​ For any amounts owed by the VIEs to our China mainland subsidiaries under the VIE agreements, unless otherwise required by the PRC tax authorities, we are able to settle such amounts without limitations under the currently effective PRC laws and regulations, provided that the VIEs have sufficient funds to do so.
Our China mainland subsidiaries maintain certain personnel for content production, sales and marketing, R&D and general and administrative functions to support the operations of the VIEs. 126 Table of Contents The following is a summary of cash transfers that have occurred between the VIEs and our subsidiaries: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ Net cash paid related to technical consulting and related services (73,298,667) ​ (73,785,893) ​ (83,737,036) Net cash received/(paid) related to other transactions 639,545 ​ (45,054) ​ 952,161 Net loans (made to)/repaid by intra-Group companies — ​ (1,438,000) ​ 2,273,000 Net loans received from/(repaid to) intra-Group companies (52,839) ​ 229,553 ​ (110,939) ​ For any amounts owed by the VIEs to our China mainland subsidiaries under the VIE agreements, unless otherwise required by the PRC tax authorities, we are able to settle such amounts without limitations under the currently effective PRC laws and regulations, provided that the VIEs have sufficient funds to do so.
Net cash provided by operating activities was RMB35.3 billion for the year ended December 31, 2023.
Net cash provided by operating activities was RMB39.7 billion for the year ended December 31, 2024.
The following table sets forth our operating expenses for the periods indicated as derived from our audited financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2023 ​ 2024 ​ 2024 ​ ​ RMB ​ RMB ​ US$ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ Selling and marketing expenses (13,969,460) (14,147,657) (1,938,221) General and administrative expenses (4,899,880) (4,550,625) (623,433) Research and development expenses (16,484,910) (17,524,812) (2,400,889) Total operating expenses (35,354,250) (36,223,094) (4,962,543) ​ Selling and marketing expenses increased by 1.3% to RMB14.1 billion (US$1.9 billion) in 2024 from RMB14.0 billion in 2023, primarily due to increased marketing spending for games and related value-added services.
The following table sets forth our operating expenses for the periods indicated, as derived from our audited financial statements. ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2023 ​ 2024 ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ (in thousands) ​ ​ ​ ​ ​ Selling and marketing expenses (13,969,460) ​ (14,147,657) General and administrative expenses (4,899,880) ​ (4,550,625) Research and development expenses (16,484,910) ​ (17,524,812) Total operating expenses (35,354,250) ​ (36,223,094) ​ Selling and marketing expenses remained relatively stable at RMB14.1 billion in 2024 compared to RMB14.0 billion in 2023.
Our mobile game portfolio now consists of approximately 100 diverse games, and we expect to continue introducing new mobile games each year for the foreseeable future, which we believe will contribute to future growth in net revenues from this segment. We generate revenues from our PC games mainly through sales of prepaid points and sales of in-game virtual items.
Our online game portfolio now consists of over 100 diverse games, including mobile, PC, console and cross-platform games, and we expect to continue introducing new titles each year for the foreseeable future, which we believe will contribute to future growth in net revenues from this segment.
Share-Based Compensation Cost The following table sets forth the allocation of our share-based compensation costs for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2022 2023 2024 2024 ​ ​ RMB ​ RMB ​ RMB ​ US$ ​ ​ (in thousands) Share-based compensation cost included in: Cost of revenues ​ 758,413 ​ 823,765 ​ 1,185,854 ​ 162,461 Selling and marketing expenses 120,171 ​ 132,801 ​ 104,534 ​ 14,321 General and administrative expenses 1,214,995 ​ 1,119,018 ​ 1,069,850 ​ 146,569 Research and development expenses 1,080,581 ​ 1,167,226 ​ 1,522,701 ​ 208,609 Total 3,174,160 ​ 3,242,810 ​ 3,882,939 ​ 531,960 ​ NetEase 2009 and 2019 Restricted Share Unit Plans In November 2009, we adopted the 2009 RSU Plan for our employees, directors and consultants.
Share-Based Compensation Cost The following table sets forth the allocation of our share-based compensation costs for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2023 2024 2025 2025 ​ ​ RMB ​ RMB ​ RMB ​ US$ ​ ​ (in thousands) Share-based compensation cost included in: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenues ​ 823,765 ​ 1,185,854 ​ 1,004,581 ​ 143,653 Selling and marketing expenses 132,801 ​ 104,534 ​ 132,666 ​ 18,971 General and administrative expenses 1,119,018 ​ 1,069,850 ​ 916,675 ​ 131,083 Research and development expenses 1,167,226 ​ 1,522,701 ​ 1,593,740 ​ 227,902 Total 3,242,810 ​ 3,882,939 ​ 3,647,662 ​ 521,609 ​ NetEase 2009 and 2019 Restricted Share Unit Plans In November 2009, we adopted the 2009 RSU Plan for our employees, directors and consultants.
We have successfully developed industry-leading proprietary game, big data and other technologies and integrate these technologies into our products and services, and we will continue to significantly invest in developing and upgrading our technology with a focus on optimizing our products and services and delivering a superior and differentiated user experience. 110 Table of Contents Our ability to manage our costs and expenses effectively across all business segments Our results of operations are affected by our ability to effectively control our costs and expenses across all of our business segments.
We have successfully developed industry-leading proprietary game, big data and other technologies and integrate these technologies into our products and services, and we will continue to significantly invest in developing and upgrading our technology with a focus on optimizing our products and services and delivering a superior and differentiated user experience.
For the years ended December 31, 2022, 2023 and 2024, we recorded share-based compensation cost of approximately RMB3.2 billion, RMB3.2 billion and RMB3.9 billion (US$532.0 million), respectively, for awards granted under the 2009 RSU Plan and 2019 Share Plan, as well as the other share incentive plans discussed as below.
The 2019 Share Plan became effective on October 15, 2019 and will expire in February 2033. 111 Table of Contents For the years ended December 31, 2023, 2024 and 2025, we recorded share-based compensation cost of approximately RMB3.2 billion, RMB3.9 billion and RMB3.6 billion (US$521.6 million), respectively, for awards granted under the 2009 RSU Plan and 2019 Share Plan, as well as the other share incentive plans discussed as below.
Liquidity and Capital Resources To date, we have financed our operations primarily through operating cash flows and existing capital resources. As of December 31, 2024, we had RMB51.4 billion (US$7.0 billion) in cash and cash equivalents, RMB78.5 billion (US$10.7 billion) in time deposits and RMB10.8 billion (US$1.5 billion) in short-term investments.
Liquidity and Capital Resources To date, we have financed our operations primarily through operating cash flows and existing capital resources. As of December 31, 2025, we had RMB47.2 billion (US$6.7 billion) in cash and cash equivalents, RMB95.6 billion (US$13.7 billion) in time deposits and RMB22.8 billion (US$3.3 billion) in short-term investments.
Other, net increased to RMB1.1 billion in 2023 from RMB846.8 million in 2022, which were mainly related to government incentives received and recognized in 2023 and 2022. Income Tax Income tax decreased to RMB4.7 billion in 2023 from RMB5.0 billion in 2022. Our effective tax rate in 2023 was 13.8% compared with 20.7% in 2022. B.
Other, net decreased to RMB602.1 million in 2024 from RMB1.1 billion in 2023, which reflected a decrease in government incentives received and recognized in 2024 compared to 2023. Income Tax Income tax increased to RMB5.5 billion in 2024 from RMB4.7 billion in 2023. Our effective tax rate in 2024 was 15.3%, compared to 13.8% in 2023. B.
NetEase Cloud Music NetEase Cloud Music’s revenue is primarily generated from (i) online music services through the sales of membership subscriptions in various content and service packages and (ii) social entertainment services and others mainly through the sale of virtual items.
We also generate revenues from sales of smart devices as well as Youdao’s online marketing services through the provision of different formats of advertisements. 109 Table of Contents NetEase Cloud Music NetEase Cloud Music’s revenue is primarily generated from (i) online music services through the sales of membership subscriptions in various content and service packages and (ii) social entertainment services and others mainly through the sale of virtual items.
Gross Profit Our gross profit increased by 19.5% to RMB63.1 billion in 2023 from RMB52.8 billion in 2022. 122 Table of Contents The following table sets forth the consolidated gross profits and gross profit margins of our business activities for the periods indicated as derived from our audited financial statements.
Gross Profit Our gross profit increased by 10.0% to RMB72.4 billion (US$10.4 billion) in 2025 from RMB65.8 billion in 2024. 116 Table of Contents The following table sets forth the consolidated gross profits and gross profit margins of our business activities for the periods indicated as derived from our audited financial statements.
Unless otherwise stated, cash flows discussed herein refer to our continuing activities only. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ 2024 ​ ​ RMB RMB RMB US$ ​ ​ (in thousands) Net cash provided by operating activities 27,709,233 ​ 35,331,275 ​ 39,676,813 ​ 5,435,701 Net cash (used in)/provided by investing activities (7,369,727) ​ (17,043,431) ​ 17,916,402 ​ 2,454,537 Net cash used in financing activities (10,237,699) ​ (21,467,054) ​ (27,335,702) ​ (3,744,976) ​ Operating Activities Net cash provided by operating activities was RMB39.7 billion (US$5.4 billion) for the year ended December 31, 2024.
Unless otherwise stated, cash flows discussed herein refer to our continuing activities only. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ 2025 ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ US$ ​ ​ (in thousands) Net cash provided by operating activities 35,331,275 ​ 39,676,813 ​ 50,739,800 ​ 7,255,695 Net cash (used in)/provided by investing activities (17,043,431) ​ 17,916,402 ​ (33,181,344) ​ (4,744,868) Net cash used in financing activities (21,467,054) ​ (27,335,702) ​ (20,159,784) ​ (2,882,811) ​ Operating Activities Net cash provided by operating activities was RMB50.7 billion (US$7.3 billion) for the year ended December 31, 2025.
Youdao Net revenues from our Youdao segment increased by 4.4% to RMB5.6 billion (US$770.7 million) in 2024 from RMB5.4 billion in 2023, which was mainly due to increased net revenues from its online marketing services, which was offset in part by decreased net revenues from its learning services. 117 Table of Contents NetEase Cloud Music Net revenues from our NetEase Cloud Music segment increased by 1.1% to RMB8.0 billion (US$1.1 billion) in 2024 from RMB7.9 billion in 2023, which was mainly attributable to increased net revenues from online music services as a result of the growth in sales of membership subscriptions, which was offset in part by decreased net revenues from social entertainment services.
Youdao Net revenues from our Youdao segment increased by 4.4% to RMB5.6 billion in 2024 from RMB5.4 billion in 2023, resulting from an increase in net revenues from its online marketing services of RMB643.1 million, which was partially offset by a decrease in net revenues from its learning services of RMB400.8 million. 119 Table of Contents NetEase Cloud Music Net revenues from our NetEase Cloud Music segment increased by 1.1% to RMB8.0 billion in 2024 from RMB7.9 billion in 2023, resulting from an increase in net revenues from online music services of RMB1.0 billion due to growth in sales of membership subscriptions, which was partially offset by a decrease in net revenues from social entertainment services and others of RMB920.5 million.

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Biggest changeWilliam Lei Ding, our founder, Chief Executive Officer and a director, is the sole director of Shining Globe International Limited and the settlor of the Trust, retaining the investment and dispositive powers with respect to the assets of the Trust. The beneficiaries of the Trust are William Lei Ding and his family.
Biggest changeWilliam Lei Ding through a trust. Mr. Ding is the settlor of the trust and Mr. Ding and his family are the trust’s beneficiaries. The registered address of Shining Globe International Limited is Kingston Chambers PO Box 173, Road Town, Tortola, British Virgin Islands.
Share Ownership The table in this section sets forth certain information known to us with respect to the beneficial ownership as of February 28, 2025 (unless otherwise indicated) by: ● all persons who are beneficial owners of 5% or more of our ordinary shares, ● each of our directors, ● each of our current executive officers, and ● all current directors and executive officers as a group.
Share Ownership The table in this section sets forth certain information known to us with respect to the beneficial ownership as of February 28, 2026 (unless otherwise indicated) by: ● all persons who are beneficial owners of 5% or more of our ordinary shares, ● each of our directors, ● each of our current executive officers, and ● all current directors and executive officers as a group.
Tang is a U.S. certified public accountant and a fellow of the Hong Kong Institute of Certified Public Accountants. 140 Table of Contents Joseph Tze Kay Tong , also known as Joseph Tong , has served as a director of our company since March 2003. From January 2003 to November 2021, Mr.
Tang is a U.S. certified public accountant and a fellow of the Hong Kong Institute of Certified Public Accountants. 138 Table of Contents Joseph Tze Kay Tong , also known as Joseph Tong , has served as a director of our company since March 2003. From January 2003 to November 2021, Mr.
Leung currently is an independent non-executive director and chairman of the audit committee for Orange Sky Golden Harvest Entertainment (Holdings) Limited (stock code: 1132) and Luye Pharma Group Ltd. (stock code: 2186), all of which are companies listed on the Hong Kong Stock Exchange. Mr.
Leung currently is an independent non-executive director and chairman of the audit committee for Orange Sky Golden Harvest Entertainment (Holdings) Limited (HKEX: 1132) and Luye Pharma Group Ltd. (HKEX: 2186), all of which are companies listed on the Hong Kong Stock Exchange. Mr.
Leung also serves as an independent non-executive director on the board of China Ting Group Holdings Limited (stock code: 3398), a company listed on the Hong Kong Stock Exchange. Mr. Leung received a Bachelor’s Degree in Social Sciences from the University of Hong Kong in October 1977 with a major in Accounting, Management and Statistics.
Leung also serves as an independent non-executive director on the board of China Ting Group Holdings Limited (HKEX: 3398), a company listed on the Hong Kong Stock Exchange. Mr. Leung received a Bachelor’s Degree in Social Sciences from the University of Hong Kong in October 1977 with a major in Accounting, Management and Statistics. Paul W.
Our major shareholders do not have different voting rights than any of our other shareholders. ​ F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation None. ​ 147 Table of Contents
Our major shareholders do not have different voting rights than any of our other shareholders. F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation None. ​
“Directors, Senior Management and Employees—Directors and Senior Management.” We have no specific policy with respect to director attendance at our annual general meetings of shareholders, and no director attended the annual general meeting of shareholders held on June 26, 2024.
“Directors, Senior Management and Employees—Directors and Senior Management.” We have no specific policy with respect to director attendance at our annual general meetings of shareholders, and no director attended the annual general meeting of shareholders held on June 25, 2025.
The awards can become 100% vested on the vesting commencement date, or vest in two, three, four or five substantially equal annual installments with the first installment vesting on the vesting commencement date. C.
The awards can become 100% vested on the vesting commencement date, or vest in two, three, four or five substantially equal annual installments with the first installment vesting on the vesting commencement date. 143 Table of Contents C.
Awards under the Share Plans Awards under the Share Plans are evidenced by an award agreement which contains, among other things, such provisions concerning the exercise price (in the case of share options), how the award may be settled upon vesting (in the case of restricted share unit awards) and forfeiture upon termination of an award grantee’s service with our company or entities within our group (by reason of death, disability, retirement or otherwise), as have been determined by our board, either acting directly or through our compensation committee or one or more of our officers.
Awards under the Share Plans Awards under the Share Plans are evidenced by an award agreement which contains, among other things, such provisions concerning the exercise price (in the case of share options), how the award may be settled upon vesting (in the case of restricted share unit awards) and forfeiture upon termination of an award grantee’s service with our company or entities within our group (by reason of death, disability, retirement or otherwise), as have been determined by our board, either acting directly or through our compensation committee or one or more of our officers. 141 Table of Contents Restricted share units do not represent any actual ownership interest in us.
Leung was a responsible officer of Grand Moore Capital Limited from September 2019 to November 2021. Mr. Leung was appointed executive director of Unitas Holdings Limited (stock code: 8020) from September 2011 to November 2018, and served as a responsible officer from May 2011 to November 2018 of Chanceton Capital Partners Limited, a subsidiary of Unitas Holdings Limited. Previously, Mr.
Leung was appointed executive director of Unitas Holdings Limited (HKEX: 8020) from September 2011 to November 2018, and served as a responsible officer from May 2011 to November 2018 of Chanceton Capital Partners Limited, a subsidiary of Unitas Holdings Limited. Previously, Mr.
Restricted share units do not represent any actual ownership interest in us. The units granted correspond in number and value to a specified number of our ordinary shares. No actual shares are issued. Instead, the units are tracked in a bookkeeping account. The units may be subject to forfeiture provisions to replicate the treatment of restricted shares.
The units granted correspond in number and value to a specified number of our ordinary shares. No actual shares are issued. Instead, the units are tracked in a bookkeeping account. The units may be subject to forfeiture provisions to replicate the treatment of restricted shares.
Directors and Senior Management The names of our directors and executive officers, their ages as of the date of the filing of this annual report and the principal positions with NetEase held by them are as follows: ​ Name Age Position William Lei Ding ​ 53 ​ Director and Chief Executive Officer Alice Yu-Fen Cheng (1) ​ 63 ​ Independent Director Grace Hui Tang (1) ​ 65 ​ Independent Director Joseph Tze Kay Tong (1) ​ 62 ​ Independent Director Michael Man Kit Leung ​ 71 ​ Independent Director Yingfeng Ding ​ 53 ​ Executive Vice President Paul W.
Directors and Senior Management The names of our directors and executive officers, their ages as of the date of the filing of this annual report and the principal positions with NetEase held by them are as follows: ​ Name ​ ​ ​ Age ​ ​ ​ Position William Lei Ding ​ 54 ​ Director and Chief Executive Officer Alice Yu-Fen Cheng (1) ​ 64 ​ Independent Director Grace Hui Tang (1) ​ 66 ​ Independent Director Joseph Tze Kay Tong (1) ​ 63 ​ Independent Director Kok Chung Johnny Chan ​ 66 ​ Independent Director Michael Man Kit Leung ​ 72 ​ Independent Director Paul W.
The shareholders listed below do not have different voting rights. ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Shares ​ ​ Beneficially Owned ​ Number Percentage 5% Shareholder ​ ​ ​ ​ ​ Shining Globe International Limited/William Lei Ding (1) 1,450,300,000 ​ 45.8 % ​ 146 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ Number of Shares ​ ​ ​ Beneficially Owned ​ ​ Number Percentage ​ Executive Officers and Directors (2) ​ ​ ​ ​ ​ William Lei Ding (1) 1,450,300,000 45.8 % Alice Cheng * * ​ Grace Tang ​ * ​ * ​ Joseph Tong * * ​ Michael Leung * * ​ Yingfeng Ding * * ​ Paul W.
The shareholders listed below do not have different voting rights. ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Shares ​ ​ Beneficially Owned ​ ​ ​ ​ Number ​ ​ ​ Percentage 5% Shareholder ​ ​ ​ ​ ​ Shining Globe International Limited/William Lei Ding (1) 1,450,300,000 ​ 45.5 % ​ 145 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ Number of Shares ​ ​ ​ Beneficially Owned ​ ​ ​ ​ ​ Number ​ ​ ​ Percentage ​ Executive Officers and Directors (2) ​ ​ ​ ​ ​ William Lei Ding (1) 1,450,300,000 45.5 % Alice Cheng 188,050 0.0 % Grace Tang ​ — ​ — ​ Joseph Tong 75,000 0.0 % Johnny Chan ​ 1,500 ​ 0.0 % Michael Leung 62,600 0.0 % Paul W.
In April 2023, Youdao adopted a 2023 Share Incentive Plan, or the 2023 Youdao Plan, under which 5,668,625 shares of Youdao are reserved for issuance. As of March 31, 2025, no options or restricted share units were outstanding under the 2023 Youdao Plan.
In April 2023, Youdao adopted a 2023 Share Incentive Plan, or the 2023 Youdao Plan, under which 5,668,625 shares of Youdao are reserved for issuance. As of March 31, 2026, restricted share units representing an aggregate of 133,890 shares were outstanding under the 2023 Youdao Plan.
As of February 28, 2025, 3,165,991,421 of our ordinary shares were outstanding (excluding 53,573,160 ordinary shares issued to and held by The Bank of New York Mellon, the depositary of our ADS program, which were the ordinary shares underlying our treasury ADSs and were reserved for future delivery upon vesting of share awards granted under our Share Plans).
As of February 28, 2026, 3,190,640,526 of our ordinary shares were outstanding (excluding 28,924,055 ordinary shares issued to and held by The Bank of New York Mellon, the depositary of our ADS program, which were the ordinary shares underlying our treasury ADSs and were reserved for future delivery upon vesting of share awards granted under our Share Plans).
Our R&D staff consisted of 49.0% of our total employees as of December 31, 2024. ​ ​ ​ ​ Games and related value-added services ​ 16,041 Youdao ​ 3,750 NetEase Cloud Music ​ 1,331 Innovative businesses and others ​ 4,906 Total ​ 26,028 ​ All employees of our company, subsidiaries and the VIEs are employed under employment contracts which specify, among other things, the employee’s responsibilities, remuneration and grounds for termination of employment.
Our R&D staff consisted of 47.8% of our total employees as of December 31, 2025. ​ ​ ​ ​ Games and related value-added services ​ 16,074 Youdao ​ 3,595 NetEase Cloud Music ​ 1,288 Innovative businesses and others ​ 4,425 Total ​ 25,382 ​ All employees of our company, subsidiaries and the VIEs are employed under employment contracts which specify, among other things, the employee’s responsibilities, remuneration and grounds for termination of employment.
As of March 31, 2025, options to purchase a total of 1,258,490 ordinary shares were outstanding under the 2016 NetEase Cloud Music Plan, and 1,038,665 of such options had vested and become exercisable; and restricted share units representing an aggregate of 182,997 shares were outstanding and remain unsettled under the 2016 NetEase Cloud Music Plan, which may be satisfied by new or existing shares of NetEase Cloud Music.
As of March 31, 2026, options to purchase a total of 640,610 ordinary shares were outstanding under the 2016 NetEase Cloud Music Plan, and 640,610 of such options had vested and become exercisable; and restricted share units representing an aggregate of 14,720 shares were outstanding under the 2016 NetEase Cloud Music Plan, which may be satisfied by new or existing shares of NetEase Cloud Music, respectively.
The Bank of New York Mellon, depositary of our ADS program, held 518,172,325 outstanding ordinary shares as of that date, which accounted for 16.4% of our total issued and outstanding ordinary shares (excluding 53,573,160 ordinary shares issued to and held by The Bank of New York Mellon, which were the ordinary shares underlying our treasury ADSs and were reserved for future delivery upon vesting of share awards granted under our Share Plans).
The Bank of New York Mellon, depositary of our ADS program, held 372,491,270 outstanding ordinary shares as of that date, which accounted for 11.7% of our total issued and outstanding ordinary shares (excluding 28,924,055 ordinary shares issued to and held by The Bank of New York Mellon, which were the ordinary shares underlying our treasury ADSs and were reserved for future delivery upon vesting of share awards granted under our Share Plans).
The 2019 Share Plan provides that the maximum exercisable term of share option awards is ten years from the date of a grant. 143 Table of Contents Conditions of Awards Our board, either acting directly or through our compensation committee or one or more of our officers, is authorized to determine the provisions, terms and conditions of each award, including, without limitation, the award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, settlement of the award, payment contingencies and satisfaction of any performance criteria established by our board.
Conditions of Awards Our board, either acting directly or through our compensation committee or one or more of our officers, is authorized to determine the provisions, terms and conditions of each award, including, without limitation, the award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, settlement of the award, payment contingencies and satisfaction of any performance criteria established by our board.
The audit, compensation, nominating and ESG committees are composed solely of non-employee directors, as such term is defined in Rule 16b-3 under the Exchange Act and the board of directors has determined that all such members are “independent” as that term is defined in NASDAQ Marketplace Rule 5605(a)(2). 145 Table of Contents Compensation Committee Interlocks No interlocking relationships have existed between our board of directors or compensation committee and the board of directors or compensation committee of any other company.
The audit, compensation, nominating and ESG committees are composed solely of non-employee directors, as such term is defined in Rule 16b-3 under the Exchange Act and the board of directors has determined that all such members are “independent” as that term is defined in NASDAQ Marketplace Rule 5605(a)(2).
As of March 31, 2025, 4,260,547 restricted share units had been granted under the 2022 NetEase Cloud Music Plan. 144 Table of Contents In addition, certain of our other subsidiaries have adopted their own equity incentive plans, which allow the relevant subsidiaries to grant options or other awards to certain of our employees.
As of March 31, 2026, 2,080,254 restricted share units were outstanding under the 2022 NetEase Cloud Music Plan. In addition, certain of our other subsidiaries have adopted their own equity incentive plans, which allow the relevant subsidiaries to grant options or other awards to certain of our employees.
He is a member of the American Institute of Certified Public Accountants and an associate member of the Hong Kong Institute of Certified Public Accountants. Michael Man Kit Leung , also known as Michael Leung , has served as a director of our company since July 2002. Mr.
He is a member of the American Institute of Certified Public Accountants and an associate member of the Hong Kong Institute of Certified Public Accountants. Kok Chung Johnny Chan , also known as Johnny Chan , has served as a director of our company since August 2025. Mr.
Our board subsequently approved an amendment and restatement of the 2019 RSU Plan in February 2023 to enable share option awards to be granted pursuant to such plan and make certain other amendments and renamed it as the Amended and Restated 2019 Share Incentive Plan (referred to in this annual report as the 2019 Share Plan).
Our board subsequently approved an amendment and restatement of the 2019 RSU Plan in February 2023 to enable share option awards to be granted pursuant to such plan and make certain other amendments and renamed it as the Amended and Restated 2019 Share Incentive Plan (referred to in this annual report as the 2019 Share Plan). 140 Table of Contents The purpose of our Share Plans is to attract and retain the best available personnel, to provide additional incentive to employees, directors and consultants and to promote the success of our business.
Relationships Among Directors or Executive Officers; Right to Nominate Directors There are no family relationships among any of the directors or executive officers of our company. None of our directors were nominated pursuant to a contractual or other right. 141 Table of Contents B.
She is a member of the American Institute of Certified Public Accountants and the Chinese Institute of Certified Public Accountants. Relationships Among Directors or Executive Officers; Right to Nominate Directors There are no family relationships among any of the directors or executive officers of our company. None of our directors were nominated pursuant to a contractual or other right. B.
As of March 31, 2025, options to purchase a total of 2,694,185 ordinary shares were outstanding under the 2015 Youdao Plan, and 2,371,225 of such options had vested and become exercisable. Additionally, as of March 31, 2025, restricted share units representing an aggregate of 605,288 shares were outstanding under the 2015 Youdao Plan.
As of March 31, 2026, options to purchase a total of 1,889,607 ordinary shares were outstanding under the 2015 Youdao Plan, and 1,790,547 of such options had vested and become exercisable. Additionally, as of March 31, 2026, restricted share units representing an aggregate of 727,473 shares were outstanding under the 2015 Youdao Plan.
Boltz, Jr. * * ​ Sarah Li * * ​ All current directors and executive officers as a group (eight persons) (3) 1,472,083,436 46.4 % * Less than 1%. (1) Shining Globe International Limited is the record owner of 1,450,300,000 ordinary shares, consisting of 1,406,000,000 ordinary shares and 8,860,000 ADSs.
Boltz, Jr. 111,115 0.0 % Aileen Bin Mo ​ — ​ — ​ All current directors and executive officers as a group (eight persons) (3) 1,450,738,265 45.5 % Notes: (1) Shining Globe International Limited is the record owner of 1,450,300,000 ordinary shares, consisting of 1,406,000,000 ordinary shares and 8,860,000 ADSs. Shining Globe International Limited is beneficially owned by Mr.
The vested portion of an option will expire if not exercised prior to the expiration date of the award as set forth in the award agreement.
The vested portion of an option will expire if not exercised prior to the expiration date of the award as set forth in the award agreement. The 2019 Share Plan provides that the maximum exercisable term of share option awards is ten years from the date of a grant.
Ding has also led the design and development of several signature products of the NetEase group, including Fantasy Westward Journey . Paul W. Boltz, Jr. has served as General Counsel for the NetEase group since January 2024. Mr. Boltz previously served as our International General Counsel from February 2023 to January 2024.
Boltz, Jr. has served as General Counsel for the NetEase group since January 2024. Mr. Boltz previously served as our International General Counsel from February 2023 to January 2024.
Alternatively, we will withhold or collect from the participant an amount sufficient to satisfy such tax obligations. Other Equity Incentive Plans Youdao, our subsidiary, adopted its 2015 Share Incentive Plan, or the 2015 Youdao Plan, in February 2015 (and amended it in April 2018), under which 10,222,222 ordinary shares of Youdao are reserved for issuance.
(1) The restricted share units held by such individual(s) have no expiration dates. Other Equity Incentive Plans Youdao, our subsidiary, adopted its 2015 Share Incentive Plan, or the 2015 Youdao Plan, in February 2015 (and amended it in April 2018), under which 10,222,222 ordinary shares of Youdao are reserved for issuance.
D. Employees As of December 31, 2022, 2023 and 2024, we had 31,119, 29,128 and 26,028 full-time employees, respectively. A substantial majority of our employees are based in China. We believe that we have a generally good working relationship with our employees, and we have not experienced any significant labor disputes.
A substantial majority of our employees are based in China. We believe that we have a generally good working relationship with our employees, and we have not experienced any significant labor disputes. The following table sets forth information regarding our staff as of December 31, 2025.
Boltz, Jr. ​ 55 ​ General Counsel Sarah Ying Li ​ 42 ​ Head of Financial Reporting (1) Alice Cheng, Grace Tang and Joseph Tong are members of the audit, compensation, nominating and environmental, social and governance (ESG) committee.
Boltz, Jr. ​ 56 ​ General Counsel Aileen Bin Mo ​ 46 ​ Vice President, Finance (1) Alice Cheng, Grace Tang and Joseph Tong are members of the audit, compensation, nominating and environmental, social and governance (ESG) committees.
Plan Administration Our board has designated our compensation committee to administer the Share Plans, and it may designate one or more of our officers to exercise its authority thereunder from time to time. 142 Table of Contents Securities Subject to the Share Plans The maximum aggregate number of our ordinary shares which were issuable pursuant to all awards under the 2009 RSU Plan was 323,694,050 ordinary shares.
Plan Administration Our board has designated our compensation committee to administer the Share Plans, and it may designate one or more of our officers to exercise its authority thereunder from time to time.
Compensation Executive Officer and Director Compensation In 2024, we paid our executive officers and directors aggregate cash compensation of RMB466.1 million (US$63.8 million). In 2024, we also granted restricted share unit awards under our 2019 Share Plan to our executive officers, which, if vested, represented less than 1% of our total outstanding ordinary shares as of December 31, 2024.
During the same period, we also granted restricted share unit awards under our 2019 Share Plan to our executive officers currently in office, which, if vested, would represent less than 1% of our total outstanding ordinary shares as of December 31, 2025.
(3) Shares owned by all of our current directors and executive officers as a group includes shares beneficially owned by William Lei Ding. As of February 28, 2025, based on public filings with the SEC, there are no major shareholders holding 5% or more of our ordinary shares or ADSs representing ordinary shares, except as described above.
As of February 28, 2026, based on public filings with the SEC, there are no major shareholders holding 5% or more of our ordinary shares or ADSs representing ordinary shares, except as described above. As of February 28, 2026, there were four ordinary shareholders of record with an address in the United States.
He received his Bachelor of Arts degree in Economics from the University of Pennsylvania and a Juris Doctor degree from Villanova University School of Law. Sarah Ying Li, also known as Sarah Li , has served as Head of Financial Reporting for the NetEase group since February 2024. Ms. Li previously served as our Group Financial Controller from April 2016.
He received his Bachelor of Arts degree in Economics from the University of Pennsylvania and a Juris Doctor degree from Villanova University School of Law. 139 Table of Contents Aileen Bin Mo , also known as Aileen Mo , joined NetEase in June 2025 and has served as our Vice President, Finance since February 2026. Prior to joining NetEase, Ms.
The maximum aggregate number of our ordinary shares which may be issued pursuant to all awards under the 2019 Share Plan is 322,458,300 ordinary shares. Such ordinary shares may, in whole or in part, be authorized but unissued shares or shares that will have been or may be reacquired by us.
Such ordinary shares may, in whole or in part, be authorized but unissued shares or shares that will have been or may be reacquired by us.
Removed
Yingfeng Ding , also known as Ding Ding , has served as Executive Vice President for the NetEase group since 2016 and is currently in charge of our Interactive Entertainment Group, a part of our online games division. Mr.
Added
Chan has over 40 years of experience in the investment banking and investment management industry. Mr. Chan is currently the chief investment officer of the Hong Kong Cyberport Management Company, a position he has held since September 2018. He has also served as an independent non-executive director of CNQC International Holdings Ltd.
Removed
Ding previously served as Vice President for the NetEase group, responsible for the product development, operation and management of our online games division from 2011 to 2016. Mr. Ding has more than 25 years of experience in game development and design. Since joining NetEase in 2002, Mr.
Added
(HKEX: 1240) since January 2016, Hangzhou SF Intra-city Industrial Co., Ltd. (HKEX: 9699) since November 2021, and the HSBC Provident Fund Trustee (Hong Kong) Limited, a member of HSBC Holdings, since January 2021 (and as chairman of its Investment Committee since May 2024). In addition, Mr.
Removed
Prior to joining NetEase, Ms. Li worked in international audit firms. She worked at KPMG from January 2006 to April 2016, culminating in the position of senior audit manager and department head. She also worked at PricewaterhouseCoopers from September 2004 to January 2006 as an audit associate. Ms.
Added
Chan has been a member of the Market Misconduct Tribunal, established under the Securities and Futures Ordinance of Hong Kong, a director of the Accounting and Financial Reporting Council, a panel member of the Securities and Futures Appeals Tribunal, and a member of the Exchange Fund Advisory Committee of the Hong Kong Monetary Authority since January 2023, October 2024, April 2025 and September 2025, respectively.
Removed
Li received a Bachelor of Arts (English (International Business)) degree from Guangdong University of Foreign Studies in 2004. She is a member of the American Institute of Certified Public Accountants, the Association of Chartered Certified Accountants and the Chinese Institute of Certified Public Accountants.
Added
He is also president and executive director of the Hong Kong Venture Capital and Private Equity Association and chairman of the Global Venture Capital Congress. Previously, Mr. Chan was a member of the Listing Committee of the Stock Exchange of Hong Kong from July 2020 to July 2024, serving as its deputy chairman from July 2022 to July 2024.
Removed
The purpose of our Share Plans is to attract and retain the best available personnel, to provide additional incentive to employees, directors and consultants and to promote the success of our business.
Added
Prior to that, he was the chief investment officer of Softech Investment Management Ltd., the manager of the Hong Kong Government Applied Research Fund, from 2000 to 2019, a co-founder and director of Techpacific Capital Limited, which became Crosby Capital Limited, and chairman and chief investment officer of Crosby Asset Management (Hong Kong) Limited from 2002 to 2016. Mr.
Removed
The following table sets forth information regarding our staff as of December 31, 2024.
Added
Chan received a bachelor’s degree (majoring in economics) from City of London Polytechnic (now London Metropolitan University) in July 1982, a master’s degree in business administration from City University London in November 1983 and a postgraduate diploma from the Securities Institute of Australia (now The Financial Services Institute of Australasia (FINSIA)) in April 1989.
Removed
Shining Globe International Limited is wholly owned by Shining Globe Holding Limited, which is in turn wholly owned by Shining Globe Trust, or the Trust, for which TMF (Cayman) Ltd. acts as the trustee.
Added
Michael Man Kit Leung , also known as Michael Leung , has served as a director of our company since July 2002. Mr. Leung was a responsible officer of Grand Moore Capital Limited from September 2019 to November 2021. Mr.
Removed
The principal business address of Shining Globe International Limited is c/o NetEase, Inc., NetEase Building, No. 599 Wangshang Road, Binjiang District, Hangzhou, People’s Republic of China 310052. (2) The address of our current executive officers and directors are c/o NetEase Building, No. 599 Wangshang Road, Binjiang District, Hangzhou, People’s Republic of China 310052.
Added
Mo worked at PricewaterhouseCoopers for more than 20 years, with her last held position as audit partner. At PricewaterhouseCoopers, Ms. Mo was responsible for the audits of numerous public and private companies in the United States and Hong Kong. Ms. Mo received a bachelor’s degree from Renmin University with a major in international accounting.
Removed
As of February 28, 2025, there were four ordinary shareholders of record with an address in the United States.
Added
Compensation Executive Officer and Director Compensation In 2025, we paid aggregate cash compensation of RMB44.5 million (US$6.4 million) to our executive officers and directors currently in office.
Added
Securities Subject to the Share Plans The maximum aggregate number of our ordinary shares which were issuable pursuant to all awards under the 2009 RSU Plan was 323,694,050 ordinary shares. The maximum aggregate number of our ordinary shares which may be issued pursuant to all awards under the 2019 Share Plan is 322,458,300 ordinary shares.
Added
Alternatively, we will withhold or collect from the participant an amount sufficient to satisfy such tax obligations. 142 Table of Contents The following table summarizes, as of December 31, 2025, the number of ordinary shares underlying outstanding restricted share units that we granted to our directors and executive officers currently in office. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Underlying ​ ​ ​ ​ ​ ​ ​ ​ Outstanding ​ ​ ​ ​ ​ ​ ​ ​ Restricted Share ​ Exercise Price ​ ​ ​ ​ Name ​ ​ ​ Units ​ ​ ​ (US$/Share) ​ ​ ​ Grant Date ​ ​ ​ Expiration Date William Lei Ding — — ​ — — Alice Cheng — — ​ — — Grace Tang — — ​ — — Joseph Tong — — ​ — — Johnny Chan — — ​ — — Michael Leung — — ​ — — Paul W.
Added
Boltz, Jr. * — ​ March 1, 2023 N/A (1) ​ ​ ​ ​ ​ ​ March 5, 2024 ​ ​ ​ ​ ​ ​ ​ ​ February 28, 2025 ​ ​ Aileen Bin Mo * — ​ August 21, 2025 N/A (1) Notes: * Less than 1% of our total outstanding ordinary shares.
Added
Compensation Committee Interlocks No interlocking relationships have existed between our board of directors or compensation committee and the board of directors or compensation committee of any other company. 144 Table of Contents D. Employees As of December 31, 2023, 2024 and 2025, we had 29,128, 26,028 and 25,382 full-time employees, respectively.
Added
(2) The address of our current executive officers and directors is c/o Room 802, 8/F, China Life Centre, Tower A, One HarbourGate, No. 18 Hung Luen Road, Kowloon, Hong Kong. (3) Shares owned by all of our current directors and executive officers as a group includes shares beneficially owned by William Lei Ding.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

17 edited+1 added−2 removed103 unchanged
Biggest changeAs of December 31, 2024, the total principal amount of interest-bearing short-term loan outstanding to Youdao was RMB878.0 million (US$120.3 million). As of March 31, 2025, the total principal amount of interest-bearing long-term loans outstanding to Youdao was US$128.1 million (equivalent to RMB926.7 million), which was drawn down from the above-mentioned revolving loan facility.
Biggest changeAs of March 31, 2026, the total principal amount of interest-bearing long-term loans outstanding to Youdao was US$117.1 million (equivalent to RMB814.9 million), which was drawn down from the above-mentioned revolving loan facility. Agreements with NetEase Cloud Music NetEase Cloud Music, which became listed on the Hong Kong Stock Exchange in December 2021, is currently our majority-controlled subsidiary.
If the party receiving the notice elects not to or otherwise fails to take up the opportunity within 30 days, the notifying party may proceed to take up such business or investment opportunity. 155 Table of Contents The non-competition agreement also provides for a mutual non-solicitation obligation that neither Youdao nor we may, during the Non-competition Period, hire, or solicit for hire, any active employees of or individuals providing consulting services to the other party, or any former employees of or individuals providing consulting services to the other party within six months of the termination of their employment or consulting services, without the other party’s consent, except for solicitation activities through generalized non-targeted advertisement not directed to such employees or individuals that do not result in a hiring within the Non-competition Period.
If the party receiving the notice elects not to or otherwise fails to take up the opportunity within 30 days, the notifying party may proceed to take up such business or investment opportunity. 154 Table of Contents The non-competition agreement also provides for a mutual non-solicitation obligation that neither Youdao nor we may, during the Non-competition Period, hire, or solicit for hire, any active employees of or individuals providing consulting services to the other party, or any former employees of or individuals providing consulting services to the other party within six months of the termination of their employment or consulting services, without the other party’s consent, except for solicitation activities through generalized non-targeted advertisement not directed to such employees or individuals that do not result in a hiring within the Non-competition Period.
This agreement was effective from July 1, 2015 and will continue to be effective unless it is terminated by written notice of Youdao Information or, in case of a material breach of the agreement, it is terminated by written notice of the non-breaching party. 152 Table of Contents Agreements relating to Hangzhou Yuedu As of the date of the filing of this annual report, William Lei Ding, our Chief Executive Officer, and Wei Li, an employee of NetEase Cloud Music, own 99.0% and 1.0% of the equity interest in Hangzhou Yuedu, respectively. ● Cooperation Agreement .
This agreement was effective from July 1, 2015 and will continue to be effective unless it is terminated by written notice of Youdao Information or, in case of a material breach of the agreement, it is terminated by written notice of the non-breaching party. 151 Table of Contents Agreements relating to Hangzhou Yuedu As of the date of the filing of this annual report, William Lei Ding, our Chief Executive Officer, and Wei Li, an employee of NetEase Cloud Music, own 99.0% and 1.0% of the equity interest in Hangzhou Yuedu, respectively. ● Cooperation Agreement .
If the transfer price for the equity interest in Hangzhou Yuedu is higher than the principal of the loan under the relevant Loan Agreement, any surplus would be considered interest for the loan. Subsidiary Guarantees We have entered into several guarantee agreements in the aggregate amount of US$2.7 billion in respect of certain credit facilities taken by our subsidiaries.
If the transfer price for the equity interest in Hangzhou Yuedu is higher than the principal of the loan under the relevant Loan Agreement, any surplus would be considered interest for the loan. Subsidiary Guarantees We have entered into several guarantee agreements in the aggregate amount of US$2.4 billion in respect of certain credit facilities taken by our subsidiaries.
These include a master transaction agreement, a transitional services agreement, a non-competition agreement, a cooperation framework agreement, an intellectual property license agreement and multiple loan agreements, each of which are summarized below. 154 Table of Contents Master Transaction Agreement We have entered into a master transaction agreement with Youdao to govern certain key aspects of our relationship with Youdao, including the allocation of liabilities.
These include a master transaction agreement, a transitional services agreement, a non-competition agreement, a cooperation framework agreement, an intellectual property license agreement and multiple loan agreements, each of which are summarized below. 153 Table of Contents Master Transaction Agreement We have entered into a master transaction agreement with Youdao to govern certain key aspects of our relationship with Youdao, including the allocation of liabilities.
In addition, under the Exclusive Purchase Option Agreements, William Lei Ding and Wei Li may not transfer or permit the encumbrance of or allow any guarantee or security to be created on any of its equity interest in Hangzhou Yuedu without Hangzhou NetEase Cloud Music’s prior written consent. 153 Table of Contents ● Equity Pledge Agreements .
In addition, under the Exclusive Purchase Option Agreements, William Lei Ding and Wei Li may not transfer or permit the encumbrance of or allow any guarantee or security to be created on any of its equity interest in Hangzhou Yuedu without Hangzhou NetEase Cloud Music’s prior written consent. 152 Table of Contents ● Equity Pledge Agreements .
Hui discharges all his obligations under the above-mentioned agreements. 149 Table of Contents Agreements relating to Hangzhou Leihuo As of the date of the filing of this annual report, the ultimate shareholders of Hangzhou Leihuo are Zhipeng Hu and Long Cheng, two of our employees, who each hold a 50.0% equity interest. Mr.
Hui discharges all his obligations under the above-mentioned agreements. 148 Table of Contents Agreements relating to Hangzhou Leihuo As of the date of the filing of this annual report, the ultimate shareholders of Hangzhou Leihuo are Zhipeng Hu and Long Cheng, two of our employees, who each hold a 50.0% equity interest. Mr.
Guangzhou NetEase may waive this fee at any time. 148 Table of Contents The term of the foregoing agreement is automatically renewable for successive one year term. ● Trademark Transfer Agreement between Guangzhou NetEase and NetEase Beijing . Under this agreement, Guangzhou NetEase transferred its registered trademarks to NetEase Beijing. ● Supplemental Agreement between NetEase Beijing and Guangzhou NetEase.
Guangzhou NetEase may waive this fee at any time. The term of the foregoing agreement is automatically renewable for successive one year term. ● Trademark Transfer Agreement between Guangzhou NetEase and NetEase Beijing . Under this agreement, Guangzhou NetEase transferred its registered trademarks to NetEase Beijing. 147 Table of Contents ● Supplemental Agreement between NetEase Beijing and Guangzhou NetEase.
On November 28, 2023, we entered into a new framework agreement, which superseded the original NetEase Cloud Music Framework Agreement, pursuant to which the intragroup transactions between NetEase Cloud Music and us set forth in the NetEase Cloud Music Framework Agreement (save for the aforementioned advertising agency services provided by us) were renewed for a term of three years (other than the intellectual property license which, as noted above, was granted in perpetuity), commencing from January 1, 2024.
On November 28, 2023, we entered into a new framework agreement, which superseded the original NetEase Cloud Music Framework Agreement, pursuant to which the intragroup transactions between NetEase Cloud Music and us set forth in the NetEase Cloud Music Framework Agreement (save for the aforementioned advertising agency services provided by us) were renewed for a term of three years (other than the intellectual property license which, as noted above, was granted in perpetuity), commencing from January 1, 2024. 155 Table of Contents C.
Each Exclusive Purchase Option Agreement shall remain in effect until all of the equity interests in or assets of Youdao Computer have been acquired by Youdao Information or its designee or until Youdao Information unilaterally terminates the agreement by written notice. 151 Table of Contents ● Shareholder Voting Rights Trust Agreements between Youdao Information and each of William Lei Ding and Feng Zhou.
Each Exclusive Purchase Option Agreement shall remain in effect until all of the equity interests in or assets of Youdao Computer have been acquired by Youdao Information or its designee or until Youdao Information unilaterally terminates the agreement by written notice. ● Shareholder Voting Rights Trust Agreements between Youdao Information and each of William Lei Ding and Feng Zhou.
The term of this agreement is 20 years from December 1, 2015 and can be extended with the written consent of NetEase Hangzhou. 150 Table of Contents ● Cooperation Agreement between NetEase Hangzhou and Hangzhou Leihuo.
The term of this agreement is 20 years from December 1, 2015 and can be extended with the written consent of NetEase Hangzhou. 149 Table of Contents ● Cooperation Agreement between NetEase Hangzhou and Hangzhou Leihuo.
Each of the Equity Pledge Agreement will remain binding until the respective pledger, William Lei Ding or Feng Zhou, as the case may be, discharges all his obligations under the above-mentioned agreements. ● Exclusive Purchase Option Agreements .
Each of the Equity Pledge Agreement will remain binding until the respective pledger, William Lei Ding or Feng Zhou, as the case may be, discharges all his obligations under the above-mentioned agreements. 150 Table of Contents ● Exclusive Purchase Option Agreements .
As of December 31, 2024, US$1.5 billion of such credit facilities had not been utilized. Agreements with Youdao Youdao, which became listed on the New York Stock Exchange in October 2019, is currently our majority-controlled subsidiary.
As of December 31, 2025, US$1.9 billion of such credit facilities had not been utilized. Agreements with Youdao Youdao, which became listed on the New York Stock Exchange in October 2019, is currently our majority-controlled subsidiary.
Item 7. Major Shareholders and Related Party Transactions A. Major Shareholders Please see Item 6.E. “Directors, Senior Management and Employees—Share Ownership.” B.
Item 7. Major Shareholders and Related Party Transactions A. Major Shareholders Please see Item 6.E. “Directors, Senior Management and Employees—Share Ownership.” 146 Table of Contents B.
C. Interests of Experts and Counsel Not applicable. ​ 156 Table of Contents
Interests of Experts and Counsel Not applicable. ​
Hangzhou Leihuo has agreed to pay a monthly service fee to NetEase Hangzhou in accordance with a formula based on its expenses incurred.
Hangzhou Leihuo has agreed to pay a monthly service fee to NetEase Hangzhou in accordance with a formula based on its expenses incurred. This agreement was effective from February 25, 2025 and will continue to be effective unless it is terminated by written notice of NetEase Hangzhou.
Under this Cooperation Agreement, NetEase Hangzhou has agreed to provide the following services: ● the development of computer software (including, but not limited to, online games) and technical support and maintenance for computer software operation; ● the provision of broadband internet access and other operational support; and ● jointly with Hangzhou Leihuo, the provision of value-added telecommunication and other services to users of the Leihuo website and relevant products.
Under this Cooperation Agreement, NetEase Hangzhou has agreed to provide the following services: ● the development of game-related computer software and licensing of such self-developed computer software to Hangzhou Leihuo; ● the technical support and maintenance for computer software operation; ● the development of online publishing and network communication technologies, as well as the provision of related technical support; and ● the provision of software technical services and digital marketing services.
Removed
This agreement was effective from January 1, 2010 and will continue to be effective unless it is terminated by written notice of NetEase Hangzhou or, in case of a material breach of the agreement, it is terminated by written notice of the non-breaching party.
Added
As of the date of the filing of this annual report, we and Youdao have both approved an extension of the maturity date of the loan facility, including the loans already drawn under it, to March 31, 2030. As of December 31, 2025, the total principal amount of interest-bearing short-term loan outstanding to Youdao was RMB878.0 million (US$125.6 million).
Removed
Agreements with NetEase Cloud Music NetEase Cloud Music, which became listed on the Hong Kong Stock Exchange in December 2021, is currently our majority-controlled subsidiary.

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