NetEase Inc

NASDAQ:NTES

Earnings Call Analysis

NetEase's Q3 2024 Growth with Strong Gaming Performance

In Q3 2024, NetEase achieved total net revenues of RMB 26.2 billion, reflecting a 3% quarter-over-quarter increase. The gaming segment drove growth, with online game revenue rising to RMB 20.9 billion, boosted by a 29% year-over-year increase in PC game revenue. The company enhanced its gaming portfolio, celebrating significant anniversaries for titles like Identity V, leading to record user engagement. Despite some declines in other segments, Youdao recorded a 2% increase in net revenue. The gross profit margin improved to 62.9%. For future guidance, strategic expansions are set for December with new game launches such as Where Winds Meet and Marvel Rivals, aiming to capitalize on growing market interest.

Strong Revenue Growth in Gaming Division

NetEase reported impressive financial performance for the third quarter 2024, achieving total net revenues of RMB 26.2 billion (approximately USD 3.7 billion), marking a 3% increase quarter-over-quarter. Of this, net revenues from online games surged to RMB 20.2 billion, reflecting a 5% quarter-over-quarter rise. Particularly noteworthy was the performance of PC games, which saw net revenue up by 29% year-over-year and 30% quarter-over-quarter. This demonstrates NetEase's strong position and resilience in the gaming market, bolstered by successful anniversaries and expansions of established titles providing new content and engagement.

Improved Profitability Despite Margin Variations

The overall gross profit margin improved slightly from 62.2% to 62.9% year-over-year, driven by a shift in product mix. The gaming division maintained a high margin at 68.8%, though it saw a slight decrease year-over-year. Youdao and NetEase Cloud Music reported varying margin performances, with Youdao's margin at 50.2% affected by lower learning service revenues, while NetEase Cloud Music improved to 32.8% due to optimized costs and higher subscription revenues. These figures reflect NetEase’s efforts to balance margin management with growth investments.

Significant User Engagement and Launches

Several significant game launches have driven user engagement, with notable titles achieving record revenue. For instance, 'Identity V' recorded the highest revenues for three consecutive quarters, and 'Naraka: Bladepoint' witnessed an immense uptake following its mobile launch, reaching third place in the iOS top charts. Plans for future releases include 'Where Winds Meet' in December, which is generating considerable anticipation. The introduction of innovative monetization strategies, including tier-based offerings, is aimed at fostering a healthier player ecosystem.

Capital Returns and Solid Cash Position

NetEase's financial health is underscored by a robust cash position, with net cash approximately at RMB 120 billion. This positions the company strongly for ongoing investments and return strategies. The board has approved a dividend per share reflecting its commitment to shareholder returns. Furthermore, share repurchases in the last quarter increased significantly, marking a 98% quarter-over-quarter rise, indicating confidence in the company's future growth potential.

Expanding Global Reach and Diverse Portfolio

NetEase is strategically diversifying its offerings, aiming to capture a broader market through an extensive pipeline of upcoming titles. The upcoming global release of 'Marvel Rivals' and the mobile adaptation of 'Naraka: Bladepoint' showcases their ambition to tap into lucrative gaming markets outside China. With titles engaging different gaming preferences, from casual to competitive, NetEase is positioning itself to maximize its market share worldwide.

Focus on Innovation and Enhanced Player Experience

NetEase's commitment to innovation is evident in its approach to game development and user interaction. The latest products emphasize dynamic gameplay experiences and interactive storytelling, which cater to evolving consumer preferences. The introduction of AI-driven features in 'Justice Mobile' and enhanced user-generated content across platforms indicate an intent to deepen player engagement and loyalty. Continuous investment in R&D, which accounted for 16.9% of net revenues, remains a cornerstone of their strategy for sustainable growth.

Outlook and Future Guidance

Looking forward, NetEase anticipates continued growth in its gaming segment driven by both existing franchises and new product introductions. Management expressed optimism about revenue trajectories, especially in light of recent performance metrics indicating player engagement levels are rebounding. This strategic visibility positions NetEase as a key player to watch in the evolving gaming landscape, particularly in the wake of their successful collaboration with Blizzard to relaunch popular franchises which have exceeded initial engagement expectations.

Earnings Call Transcript 2024-Q3

[Operator]

Good day, and welcome to the NetEase 2024 Third Quarter Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Brandi Piacente. Please go ahead.

[Unknown Attendee]

Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the future performance of the company and are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect NetEase's business and financial results is included in certain filings of the company with the Securities and Exchange Commission including its annual report on Form 20-F and in announcements and filings on the website of the Hong Kong Stock Exchange. The company does not undertake any obligation to update this forward-looking information, except as required by law.

During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the 2024 3rd quarter earnings news release issued earlier today.

As a reminder, this conference is being recorded.

In addition, an investor presentation and a webcast replay of this conference call will be available on NetEase's corporate website at ir.netease.com. Joining us today on the call from NetEase is senior management are Mr. William Ding, Chief Executive Officer; Mr. Bill Pang, the Vice President of Corporate Development.

I will now turn the call over to Bill, who will read the prepared remarks on behalf of William.

[Bill Pang, executive]

Thank you, Brandi, and thank you, everyone, for participating in today's call. Before we begin, I would like to remind everyone that all percentages are based on RMB.

At NetEase, we are constantly evolving to ensure the delivery of superior content through innovation across our NetEase family of businesses. During the quarter, we further strengthened our foundation for sustainable long-term growth and achieved total net revenue of RMB 26.2 billion. In our Gaming division, our popular titles gained even more traction while newer releases successfully expanded our player community. Total online games net revenue reached around RMB 20 billion. PC games, in particular, registered robust growth with net revenue up around 29% year-over-year and 30% quarter-over-quarter. Several of our games celebrated anniversaries in the third quarter, prompting some of our beloved established titles to set brand new records and reach new milestones. These achievements highlight our strength in long-term game operations and how we continue to drive game longevity.

With operations across Deck, our legacy franchises, fantasy Westward journey and the Westward Journey Online continue to [indiscernible] players with the enduring popularity. In the third quarter, we brought players a new chapter in [indiscernible] Journey Mobile, setting the [indiscernible] Kingdom. Here, new catchers and [indiscernible] offer diverse technical choices. While new boss brings more compact challenges, infusing the game with fresh vitality. Additionally, Westward Journey Online II achieved record high quarterly revenue with excitement generated from its anniversary expansion path. Players eagerly export new content and joined carnival events in Xian immersing themselves in the grander of [indiscernible] Asian capital. This blend of fresh in-game experiences and real-world festivities captured our communities imagination, deepening their connection to the game and drive remarkable engagement. Identity V reached record high revenues for the third consecutive quarter. The game also saw unprecedented DAUs and record high global concurrent online players in Q3. This milestone achievement reflects the success of our comprehensive operational strategy to maximize engagement and player stickiness. Our multifaceted entertainment approach, blended, translating our design, captivating story line, [indiscernible] IP core branding events and the dynamic eSports competitions for wholly immersed brand experience. This holistic strategy not only enhanced player engagement, but also establish identify as a premier competitive platform, offering players around the world and arena to increase challenges and enjoy fresh content.

Naraka: Bladepoint also celebrated its third anniversary in the third quarter, making another milestone for this unique action-driven PVP game designed to meet the robust and underaddressed demand for action-based competitive plan. Naraka: Bladepoint continue to lead innovation in this genre. With recent introduced introduction of new heroes, maps and mechanics, the anniversary updates reach content spark fresh excitement within the player community, driving concurrent players to a new peak. Following the success, co-branding events featuring popular like The Lost Tomb and The Tomb Raider further amplified enthusiasm. All these activities collectively contributed to record high revenue in Q3. Following its success on PC console, we extended Naraka: Bladepoint's reach, launching Naraka: Bladepoint mobile domestically in July to widespread market client. The mobile game ranked #3 on the iOS top working chart shortly after its release. With its seasonal update in September, Naraka: Bladepoint Mobile returned to the first position on the iOS top-base chart and was featured as an app store editor's choice during the summer.

In our newer releases, Justice Mobile celebrated its first anniversary at the end of June. As a title that push the boundaries of traditional MMOs and establish a large user base. Justice Mobile continues to drive innovation in more areas. Building on the success of AI-driven MPCs, which created immense player interest with lifelike interactions players can now access tools to create their own AI companies to explore the vast Wuxia world with overwhelming player in team. Justice Mobile now accommodates over 8 million intelligence entities, giving each player a unique and personalized journey and redefining was possible in mobile MMO.

Similarly, we are forcing players creativity in a party through enhanced features that empower creators to explore innovative ideas and receive rewards for their creations. We were thrilled to see a search in community engagement with many new creators dedicating them as full-time map creators. Beyond UGC content, we elevated at party with inspiring culture material from external collaborators. In the third quarter, we strategically partnered with the people's literature publishing house bringing the rich catalog of our original works to [indiscernible] party and encouraging players to explore a world enriched by science and literature.

For Racing Master's first anniversary, we launched an exciting annual updates, introducing legendary car models, including the Lamborgini Reventon and the Master X7, bringing players even more dedicated and responsive driving experiences. The update also features several highly acclaimed new maps, each offering a unique recent experience from renowned pivoting track like [indiscernible] to an exotic Goldrush journey set in the desert of Colorado plateau. Through our dedicated operational efforts, Racing Master sustained strong popularity with our player community, solidifying its market position in the racing genre.

As we continue to diversify our portfolio across various genres, we pave the way to extend the success of our established titles into new regions. In August, we brought Racing Master to Japan, were a quickly top the App Store and Google Play free charge and stay in the top 7 of the iOS downloading chart highlighting its appeal to local players.

In addition to Racing Master, we are gearing up to expand several of our games international footprint. Justice Mobile will be hitting the Hong Kong, Macau and Taiwan market in November, while Dance City Dynasty is preparing for global release.

On top of our expansion plans for these titles, we are advancing our robust game pipeline with plans to release several highly anticipated titles in coming months. Our eagerly awaited open-world action adventure RPG Where Winds Meet is on track for the domestic release in December. This gameplay is designed to meet diversifying player demand offering both single player and multiplayer mode across PC and mobile platforms. With top-notch graphic utilizing retreating technology, Where Wind Meets is gaining increasing attention from the gaming community as we get closer to the launch phase.

The Super Hero team-based PVP shooter game, Marvel Rivals, is slated to global release on December 6 as part of the Ravel Rivals global launch campaign, Marvel just announced a special season on November 11 in collaboration with multiple popular titles, including Fortnite, Mobile Parcel Quest, Future Fight and Marvel Snap creating a Marvel Rival in the season for fans worldwide and promising a fantastic celebration across games. We are also excited about [indiscernible], a fast-paced 5 versus 5 shooter game. Closed beta testing in October attracted over 1 met applicants and with its distinctive car mechanics and vibrant carnival inspired our design, banking as the top trending upcoming game in steams free-to-play section. Building on this momentum, [indiscernible] first testing phase in China will begin this December, aiming to capture the interest of an even broader audience and further showcase its unique appeal. We are also planning to start around a regional off-line technical test soon for our eagerly anticipated open-world adventure title product movement. After another year of intense development and refinement, Project Morgan is ready to captivate ACG fans with a fresh urban exploration experience.

Next up, we are thrilled to announce our latest product, MARVEL Mystic Mayhem. Set in the heart of Marvel universe. In this team-based technical RPG, players who are drawing force will build up superheros as they clash with a signature force of Super villain nightmare and bear witness to the inner fears of iconic heroes and villains throughout their journey.

In November, we started closed beta testing for Destiny: Rising, the first mobile game in the Destiny franchise, rooted in the intriguing Destiny universe. Destiny: Rising will offer a new adventure set in the alternative pipeline, featuring a wide area of characters and various game mode, Destiny: Rising introduced new ways to play vestment.

Beyond our in-house development games, the return of Blizzard games in China as we met with an presenting enthusiasm from the gaming community to ensure we meet expectations we stay closely attuned to the voice of Chinese players. This commitment has rekindled the loyalty of long-time fans eager to return to Azeroth and also captivated new players eager to embark on epic adventures. We are seeing strong player engagement following the relaunch. World of Warcraft saw a 50% increase in data active players as compared to the level before the shutdown, while Hearthstone achieved over 150% growth. Our partnership with Blizzard build on mutual trust and respect and supported by a dedicated fund community has delivered results far exceeding expectations from both sides, whether self-developed or in partnership, we always strive to bring players new exciting gaming experiences. We're executing the strategy at a very high level. bringing more games and content to the domestic market while expanding our global reach.

Now let's move to Youdao. During the third quarter, we significantly improved our profitability with income from operations exceeding RMB 100 million. This marks our first profitable third quarter and set a new record for quarterly operating profit, a testament to our commitment to high-quality growth. For digital content services, we have remained committed to enhancing the product experience. The Youdao intelligent learning system expanded its knowledge category to nearly 40,000 videos across 4 difficulty levels, providing comprehensive coverage of essential topics throughout students learning. Additionally, Youdao literature introduced AI power writing enhancement to help students level up their written word, resulting in an increased user engagement. We also maintained strong growth momentum in AI-driven subscription services fueled by our AI power tool, which enhanced functionality and user appeal. For Youdao Pictionary, we launched simultaneous interpretation powered by our large language model. It achieved over 4 million users in the debut quarter, boasting exceptional accuracy and fluency. Hi Echo has also gained increasing popularity. A leading AI application ranking chart in China shows Hi Echo as 1 of the most popular domestic apps highlighting its high user number and retention rate.

Online marketing services saw rapid growth as well. Our expansion into new sectors and advance the applications to optimize ad performance net revenue from real-time API doubling year-over-year. Additionally, key opinion leader advertising was a key growth engine for revenue in Q3, with outbound advertising demand surging in several sectors. The Smart Devices segment saw solid year-over-year growth, showcasing our commitment to product innovation. With the launch of X7 Pro, the latest iteration of our flagship digital Pictionary path, we introduced the industry's first learning device capable of off-line large language model translation. The X7 Pro also boost robust accuracy better than online AMT.

Overall, customer feedback on our new products and their innovative upgrades has been excellent. This year's product launches, mainly the G7 and X7 Pro were key in driving Q3 as over 50% year-over-year net revenue growth for our digital Pictionary fan series.

Turning to NetEase Cloud Music. During the third quarter, we continued to propel our quality development across our music-centric ecosystem, broadening our subscriber base and leading to healthy revenue growth momentum for online music. To further enrich our content ecosystem, we continuously expand our music offerings to meet diverse audience demand. especially trending interest from younger generation. We reintroduced our partnership. We reinforced our partnership with various music labels in the third quarter. Building on earlier collaboration with Kakao Entertainment and JYP Entertainment, we reintroduced music from CGEM during the third quarter, enhancing our K-Pop library with popular original soundtracks from Korean dramas and performance. We are also amplifying the impact of our in-house music forcing a unique and differentiated content ecosystem. Multiple in-house traps have viral our community and beyond. For example, our direct version of [indiscernible] which brands companies and French with [indiscernible] inspired a large number of UGC content featuring on the track.

On other popular sound, each with a unique style are also gaining significant popularity. We continue strengthening our music-focused monetization capabilities providing distinctive features that unleash creativity and express individuality. The AM powered 2 that we recently launched allow users to recreate sales with their own voices. We also offer a 2 for members to customize their music train interface with their chosen background and manual players catering to users' personalized interest. The increasing accessibility to individual expression through customization and content creation continues to drive engagement on our platform, in broadening membership privileges for our subscriber our collaboration with popular IP provides exclusive skins and decorations to our members that our members love prompting robust user engagement and boosting our commercialization potential.

Taking a look at Yanxuan. We continue to strengthen its brand equity with a private label consumer market. We achieved notable growth in GMV across key categories by consistently and successfully introducing products and expanding sales through our omnichannel strategy. In the third quarter, sales of pet products and household cleaning items grew by double digits year-over-year. Notably, to further strengthen our competitiveness in the fastfood sector, we established a dedicated factory in partnership with a leading platform manufacturer. This collaboration significantly improved our ability to deliver high-quality platform on a larger scale reinforcing Yanxuan's position in this fast-growing category.

Innovation is the heart of our NetEase family of businesses and the core components of our competitive edge, along with deep gaming operating capabilities and commitment to quality and user experience. We'll continue to bring our community impactful games product and services that create value for loyalty and meaningful returns to our shareholders.

That concludes William's comment. I will now provide a brief review of our 2024 3rd quarter financial results. Given the limited time on today's call, I will present some abbreviated financial highlights. We encourage you to read through our press release issued earlier today for further details.

As a reminder, all amounts are RMB unless otherwise stated. Total net revenue for the third quarter were RMB 26.2 billion or USD 3.7 billion representing a 3% increase quarter-over-quarter. Meanwhile, current contract liabilities were RMB 15.5 billion, up 14% quarter-over-quarter. Total net revenues from our games and related VS were RMB 20.9 billion, up 4% quarter-over-quarter. Specifically, net revenues from online games were RMB 20.2 billion, up 5% quarter-over-quarter. This growth was primarily driven by increased revenue contributions from key PC games, such as Word of Warcraft and the Naraka: Bladepoint as well as mobile games like Identity V and the recent launch of Naraka: Bladepoint Mobile. Notably, net revenue from our PC games accounted for approximately 29.2% of our total online game revenue, representing an increase of 3% quarter-over-quarter, an increase of 29% year-over-year.

On a year-over-year basis, total net revenues from games and VS declined by 4%, mainly due to adjustments in our PC live streaming service. These changes, in turn, enhance our margin profile and contributed to long-term business sustainability. Excluding the impact of this adjustment, our online games revenue remained relatively stable on a year-over-year basis, with 1% decrease.

Youdao's net revenue were RMB 1.6 billion, a year-over-year increase of 2%, primarily due to the increased revenue contribution from Youdao's online marketing services and a 19% quarter-over-quarter increase driven mainly by higher net revenues from the sales of smart devices and learning services.

NetEase Cloud Music's net revenue were RMB 2 billion, a 1% increase compared to the same period last year, primarily due to higher net revenue from membership subscriptions and a 2% quarter-over-quarter decline due to a decline in net revenues from NetEase Cloud Music, social entertainment services. Net revenue for innovative businesses and others were RMB 1.8 billion, a 10% decrease compared with the same quarter of 2023, mainly due to the decrease of advertising revenues of our news related products and several other businesses, including within the segment and the 14% quarter-over-quarter decrease due to the effect of seasonality on Yanxuan sales. The total gross profit margin was 62.9% in the third quarter compared with 62.2% for the same period in 2023.

Looking at our third quarter margin in more detail. Gross profit margin was 68.8% for our games and related VS compared with 69% in the same period last year. The year-over-year decrease was mainly attributable to changes in product mix. Gross profit margin for Youdao was 50.2% compared with 55.9% in the same period last year. The year-over-year decrease was primarily due to the decrease in revenues from learning services. Gross profit margin for NetEase Cloud Music reached 32.8% versus 27.2% in the same period last year. The margin improvement primarily resulted from increased net revenue from membership subscriptions and continued cost optimization measures. For innovative businesses and others, gross profit margin was 7.8% compared with 27.3% in the third quarter of 2023. The year-over-year increase was mainly due to increased gross margin -- gross profit margin from other businesses included within the segment.

Total operating expenses for the third quarter were RMB 9.3 billion or 35.6% of our net revenues.

Taking a closer look at our cost composition. Our selling and marketing expenses as a percentage of total net revenue was 14.5% compared with 13.1% in the same quarter last year. The increase was primarily due to higher marketing expenditures associated with online game services for new game launches. Our R&D expenses as a percentage of total net revenue was 16.9% in the third quarter compared with 15.9% for the same period last year. We remain committed to investing into content creation and product development to keep our product and content at the forefront of the industry. We believe that our investment in R&D will remain a key catalyst for future growth over the longer term. The effective tax rate was 16.1% for the third quarter.

As a reminder, the effective tax rate is presented on an accrual basis, depending on the applicable policies and our operations.

Our non-GAAP net income attributable to shareholders for third quarter totaled RMB 7.5 billion or USD 1.1 billion. Non-GAAP basic earnings per ADS for the third quarter were USD 1.67 or USD 0.33 per share. Additionally, our cash position remains robust with net cash of approximately RMB 120 billion as of September 30, 2024, compared with RMB 110.9 billion at the end of 2023.

In accordance with our dividend policy, we are pleased to report that our Board of Directors has approved a dividend of [indiscernible] per share or USD [indiscernible] per ADS for the third quarter.

Lastly, we continue to conduct our share buyback during the third quarter. We repurchased shares in the amount of USD 43 million, marking a 98% increase from the previous quarter. Under our current USD 5 billion share repurchase program, which started in mid-January last year. We have repurchased approximately 18 million ADS as of September 30, 2024, for a total cost of approximately USD 1.6 billion.

Thank you for your attention. We would now like to open the call to your questions. Operator, please?

[Operator]

[Operator Instructions] Your first question comes from Lincoln Kong with Goldman Sachs.

[Lincoln Kong, analyst]

[Foreign Language] So my first question is about Where Winds Meet. So what's the latest launch schedule for this gaming PC and mobile version? Based on last time feedback, there are some user fee pay around the positioning of this game, how to better integrate the single player model versus the multiplayer one? And how to design the monetization here. So any of the update or programs of this game lately.

[Unknown Executive]

[Foreign Language]

[Bill Pang, executive]

Okay. Yes, I will do the translation. First of all, Where Winds Meet, PC is slated to launch by the end of December. And the mobile will be slightly later than that, but the gap won't be too long. And now we're doing a final stage, optimization to make sure that, again, could be played on as many devices as possible. That's our goal now.

And regarding your question about the positioning of the game, the core game play is positioned to provide high-quality open world exploration and also cash or social experiences in the open background kind of work. We're aiming at engaging players who are looking for high fidelity immersive experience, open world exploration as well as relaxing casual social game plan. About the single player versus multiplayer mode, we hope in every single each of our expansions, players could start with single-player content to enjoy that content first and over time, smoothly translate into multiplayer mode and enjoy social gaming with a period between expansion path. That's the plan.

In terms of monetization, we'll focus on a tier-based cosmetic offerings, alongside with other lighter monetization models like better cost. But we want to make sure that our game could alleviate the pressures from complicated -- traditional complicated cultivation and monetization, forcing a healthier social ecosystem and we lap social environment where players can immerse themselves with light effort to match up with other players and lower barriers for the all players to return to game. We aim to achieve a better operational performance in the long term. That's our goal. Thank you for your question.

[Lincoln Kong, analyst]

[Foreign Language] So for the second question is about Justice Mobile and [indiscernible]. So based on some third-party data, it seems the steel games have some pressure in terms of the grossing trend recently. Could management elaborate how they are seeing internally for these 2 games in terms of their operational strategy, especially in what direction. Could we expect to extend the life cycle of these 2 games?

[Unknown Executive]

[Foreign Language]

[Bill Pang, executive]

Yes. So allow us to [indiscernible] the Justice Mobile partners. As you know, during Q3, we finished the celebration of the first anniversary of the game. And players show very good stickiness to the game and players coming back, actually, the return player coming back exceeded our expectations. What we are trying to do here is to balance the commercialization and user experience as well in the long run. We're pretty sure that what we have achieved is that we making sure the players have enough fun ER game, and we can do the commercialization exploration in the meantime to satisfy big players.

Looking at the future, what we're going to keep doing and keep enriching the content of the game, provide multi-tier of content and pursuing for the players. And in the meantime, explore innovative commercializations to make sure the game has a long-term housing environment. That's a part of the Just Mobile.

[Unknown Executive]

[Foreign Language]

[Bill Pang, executive]

Okay. So for the question about [indiscernible] party. Now 1 thing you can be sure that we are still doing a big effort and keep investing into building more content for the game. So again, we have -- we are very confident for the [indiscernible] party in the long-term run. It's actually 1 of the highest DAU products of NetEase in the history. And as you noted from other sources of data, commercialization, we run into some short-term challenges However, we take that as a great opportunity to accumulate experiences in how to develop a relevant franchise. We strongly believe this franchise is a very unique offering in the market. And our focus the long-term content operation. We believe in the long term, while we're doing more content will provide more opportunities for commercialization in the future. Thank you.

[Operator]

Your next question comes from Xueqing Zhang with CICC.

[Xueqing Zhang, analyst]

[Foreign Language] I have 2 questions, and I will address 1 by 1. My first question about [indiscernible] strategy. How is your current situation with the overseas [indiscernible] studios, we have seen that once human has performed well [indiscernible] year. Could management share more specific details and what's our plan for globalizations of Holistic studio game?

[Unknown Executive]

[Foreign Language]

[Bill Pang, executive]

So thank you for your question. As you can tell that we are having 2 legs in our -- when we go after the global market. One leg is we have oversee first-party, making games in the region in Western market in Japan for the Western and Japan market. In the meantime, the second leg is that we have our studios -- domestic studios making for global to release not only in China but in Europe market, North American market and Japanese market as well. You're right that once human was again we released early summer this year and performance really well. And looking forward, immediately, we have 2 titles. One is Marvel Rivals in December and the other 1 is Frostpunk in early next year that we're going to release towards the global market. Both of these are sugar-based PVP game on PC console. We believe our domestic studios will be capable of producing more and more products suitable for global market. Actually, this is not our first wave of success in global market outside of China market. You probably recorded our lifestyle and actually work fairly well in Japan market and gain a lot of claim there. And looking forward, we have confidence that our domestic studies and our overseas students will be able to produce more and more worldwide suitable content. Thank you.

[Xueqing Zhang, analyst]

[Foreign Language] My second question is about the flagship evergreen games. How do the first games such as [indiscernible] joining mobile remains strong? How are the gross billings in recent months?

[Unknown Executive]

[Foreign Language]

[Bill Pang, executive]

Yes. So actually, and that is, we have quite a selection of franchises that has more than 10 years old. Like [indiscernible] Journey, Westward Journey Online, the world, even our license title World of Warcraft. We keep going -- what we'll keep doing is continuously add new game play, try new things, new fund staff and content into the game. We believe the core of game business is for innovation to keep providing fund innovative new content to the players. And in every single et game, we'll keep doing that, and that's something you can be sure of. Thank you.

[Operator]

Your next question comes from Ritchie Sun with HSBC.

[Ritchie Sun, analyst]

[Foreign Language] First of all, for Marvel rivals, can management contrast the potential of this title against other PVP shooting titles in the market? And how long would it take for the game to ramp up to its full potential? And what metrics should we monitor to track its progress?

[Unknown Executive]

[Foreign Language]

[Bill Pang, executive]

Yes, yes. So for your question about Marvel Rivals. Marvel Rivals is a new generation superhero based team-based competitive shooting game. It actually has very unique game experiences, and we hope it could open new track in this big genre. And the product actually facilitated large-scale PCN console post-beta tests in north the overseas market. The performance data was excellent. The steel positive review rate was close to 95%. The player's feedback are very positive. And in the meantime, it also ranked another 7 on a steam wishlist now. We do have confidence that we're doing the time we have before launch, we'll keep optimizing the product cheap option of product. One product -- when the product is released on December 6 globally on PC and console, it could be operate aspect of pro experience to the users. We hope this 1 could provide a unique experience to the players worldwide.

[Ritchie Sun, analyst]

[Foreign Language] I have second question about the reception of the relaunch of World of Warcraft and Hearthstone in China is much better than expected. So what have we done differently than the past to drive such results? And would this mean the annual revenue contribution from buses in the future will be higher than in 2022? And when will Overwatch return to China?

[Unknown Executive]

[Foreign Language]

[Bill Pang, executive]

Yes. So the -- we have done quite many things on both marketing as well as product is a modified effort approach to operate with the product. World of Warcraft is on power. However, a multiple, multiple cross-branding collaborations with other brands we brought that into an even bigger impact in the society, and that helped us to attract a lot of new players to the game as well. For Hearthstone, you probably heard that we announced the return Hearthstone at China Joy, and that became 1 of the most exciting things during China Joy time. And also the return of -- on the sports side, the [indiscernible] the impact on the big enrollment that's all helped. And also will be innovative in how to spread out the brand message and how to interact with the players. For example, social media is something we have done more innovatively compared to the past. The videos on social media has been the click of the video -- some video has more than 10 billion times now. And also, none of this could be realized without a deep corporation, deep trust and deep collaboration with Blizzard. Now both on the product and marketing side, we have very big working relationship now. And we believe with the innovations we're doing here in China, focusing on how to present more locally appreciated product and service to the Chinese players. We can maintain and the players also showed us the level of activeness and level of payment intention is really high. And we are very confident that it will have a very good result in the long run. That's for World of Warcraft and Hearthstone.

For Overwatch, we don't have anything specific to disclose now regarding the launch date. But Overwatch is going to be the next product -- next reserve product we launch in China. Thank you.

Your next question comes from Felix Liu with UBS.

[Felix Liu, analyst]

[Foreign Language] My question is on your pipeline. You mentioned some titles earlier in the call, but could you provide more details on the game genre and the expected launch time for the key titles in Additionally, I would like to ask a question on [indiscernible], what is the latest status of the game and expected launch time?

[Unknown Executive]

[Foreign Language]

[Bill Pang, executive]

Yes. So let's talk about the Project Moment. [indiscernible], as we mentioned that we're going to have a test within this year in December. And based on the test result, we'll decide want to launch this game officially. That's for Frostpunk. And for Project moving, as we mentioned that we're going to have the first offline chest within this year. and we do have high expectations for Project Morgan, not only because we invested a tremendous amount of R&D resources into this product, but also our expectation is this game is not going to be only another open world ACG game. It will carry NetEase's thinking about future game. And based on our 20 years experience, knowledge of the Chinese game -- of the gamers and observational gamers, we got lot of thinking into what the future of this type of game should be and that will be reflected in the game. We do have high expectations there.

[Felix Liu, analyst]

[Foreign Language] my follow-up question is on the latest trends on fantasy Westwood Journey PC. Its operating trends as well as cash growth in trend? And what are the user feedback to our changes made in the first half.

[Unknown Executive]

[Foreign Language]

[Bill Pang, executive]

Now all the performance metrics are very stable. As a matter of fact, August was the highest revenue months in this year for this game. And now after the adjustment the DAU is stable. Not only stabilized but keep improving now. And we released a series of adjusted content from August to October time. And the player feedback regarding this new content is a very welcoming attitude. And in the meantime, we're going to release new expansion pack by the end of this year and more optimization and refresh content to maintain the fine of play the game and maintain the stableness of the game operation. Thank you.

Operator, given the time limit, we probably have time for 1 more question.

[Operator]

Your next question comes from Alicia Yap with Citigroup.

[Alicis a Yap, analyst]

[Foreign Language] Could management share with us your thoughts and on the performance of Naraka: Bladepoint Mobile since the launch in July. Has that met your expectations? What are some of the upcoming content and promotional events update plans for this game? Any meaningful difference in terms of the gamer profile for the mobile version versus the PC version?

[Unknown Executive]

[Foreign Language]

[Bill Pang, executive]

Yes. To answer your question, we actually have accumulated 50 million new users across the 4 months of operation. And 1 thing we learned is that even both the PC and mobile are competitive action-based competitive games. The PC gamers and the mobile gamers their needs and demands are, to some extent, different the mobile gamers, the demand are more diversified. They are hardcore competitive players. There are social type players. There are also players enjoy collecting the cosmetic stores. So what we do is that we embrace -- we understand and we embrace the difference in the gamers' needs, and we provide different content, differentiated content to both PC and global version. And for example, the -- we might provide more new content that are not available on PC, but for mobile players only to provide new gameplay, new content, everything. And the game actually is very -- in a very healthy status and very stabilized, very stable, very healthy status, and we have long-term confidence in this product. Thank you.

[Operator]

That concludes the question-and-answer session. I would like to turn the conference back over to Brandi Piacente for any closing comments.

[Brandi Piacente]

Thank you again for joining us today. If you have any further questions, please feel free to contact the IR team at NetEase. Have a great day. Thank you.