NetEase, Inc.

good day and welcome to the NetEase first quarter 2026 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brandy Piacenti. Please go ahead.

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 and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect NetEase's business and financial results is included in certain filings of the company with the Securities and Exchange Commission, including its annual report on Form 20F and and announcements and filings on the Hong Kong Stock Exchange's website. 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 which should not be considered in isolation or as a substitute for the financial information prepared and presented in accordance with US GAAP. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the first quarter 2026 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 the Netties corporate website at ir.netties.com. Joining us today on the call from Netties' senior management are Mr. William Ding, Chief Executive Officer. Mr. Hu Jiepeng, Executive Vice President, Ms. Eileen Moore, Vice President of Finance, and Mr. Bill Tung, Vice President of Corporate Development. I will now turn the call over to Bill, who will read the prepared remarks on William's behalf. Bill, please go ahead.

Thank you, Brandi, and welcome everyone to today's call. Before we begin, I would like to remind everyone that all percentages are based on RMB. 2026 is off to a solid start, with total revenue reaching RMB $30.6 billion in the first quarter, driven by continued momentum in our games business. Our games and related value-add services generated net revenues of RMB $25.7 billion, reflecting our strengths in long-term game operations and growing global appeal. Our performance of this quarter was underpinned by continued strength of our game portfolio, both internationally and domestically. Overseas, our titles demonstrated growing cross-market appeal across genres and platforms. At home, our established franchises sustained strong player activity through consistent content delivery and live service innovation. Together, These results reflect the breadth and resilience of what we have built across genres, platforms, and the player communities worldwide. Now, let me walk through some of the highlights. Since its overseas launch in last November, where we meet has become a global phenomenon, resonating across cultures and maintaining momentum well beyond the initial launch window. In March, it launched its first major expansion, He Xi, bringing players to a desert environment with distinctive settings and uniquely designed in-game enemies. More recently, the game introduced version 1.6, featuring a new region, Qin Chuan, alongside a novel wind-based exploration system that further enhanced immersion and player freedom in the open world experience. The update was well received by players, propelling the game to number two on Steam's global top-seller chart. Strong momentum across both overseas and domestic markets backed by sustained player engagement translated into another record in quarterly revenue, a result that reflects the compounding value of high-quality content and reinforces our confidence in this title's long-term potential. Our rivals continue to expand its reach among global hero shooter audiences, supported by a steady cadence of seasonal updates and high-quality content. On April 10th, the game introduced the new themed cosmetic content, including a made-off fit for Deadpool and Jeff the Landshark, which generated strong community engagement, driving it to number two on Steam's top seller chart in the U.S. In addition to the content update, Marvel Rivals expanded its PvE experience with Bloodhound mode in Season 7.5, featuring new boss battles and refreshed mechanics as players engage in intense fights against the Lord of Vampires. It also introduced its Path to Doomsday event, a year-long roadmap featuring new modes and in-game events inspired by the Infinity Saga. This initiative is deepening player engagement while creating natural links to broader Marvel storytelling, leading to the release of Marvel Studios' Avengers Doomsday in December. Together, these efforts reinforce Marvel Rivals' position as a dynamic, evolving place with strong cross-media resonance. In March, Knives Out launched a crossover with the iconic Tokyo Ghoul franchise. integrating its themes into the in-game world and allowing players to engage with its universe. The collaboration sparked strong responses on social media and generated high player engagement. Supported by the IP's reach and well-designed event execution, 9,000 reached number three on Japan's LS Top Crossing chart. In the same genre, Blackstripe celebrated the second anniversary of its global mobile launch in March, achieving a record high daily active users, demonstrating the enduring strength of its player community. Alongside the international expansion, our domestic performance remains solid. We sustained strong engagement and revenue in the first quarter across established titles, supported by ongoing content updates and gameplay innovation. Multiple titles reached highs in player base and activity, demonstrating the enduring appeal of our esteemed franchises. Fantasy Westworld Journey Online, our flagship MMORPG, continues to evolve through new mechanics and content that keeps our players engaged. In the first quarter, the unlimited server rolled out a series of updates that enriched gameplay and PvP events. including the family system, which allows players to build in-game social balance, cultivate combat companions, and experience a refreshed progression arc. The features were well received by the community, and the unlimited server continued to serve as an effective entry point for both returning and new players, broadening the active user base while retaining the loyalty of longstanding fans. Peak concurrent users reached a new high of 3.9 million, and the title recorded its highest-ever quarterly revenue, underscoring its continued vitality. Also, Journey Mobile also maintained strong momentum, with its specialized server continuing to refine progression systems and steadily expanding active player base. The game's 11th anniversary event in March was a particular highlight. driving daily active users to its highest level since 2017. In April, more updates to the in-game economic system continued to strengthen the long-term health and balance of the game's overall ecosystem. Tianxia, a long-running MMO franchise with over 18 years of operations, delivered a record commercial performance in the first quarter, supported by its loyal community and stable life operations cadence. The game continues to evolve through player co-creation, with ongoing content updates, sustaining engagement, while more new features are being explored to enhance personalization and deepen player connections. Ghost Story Mobile, one of NetEase's most enduring MMORPG franchises, recently celebrated its 10th anniversary. a milestone reflecting the stress of our long-term live service capabilities. Since its 2016 launch, the title has attracted over 200 million registered users, with its longevity built on the consistent content updates, evolving gameplay experiences, and a deeply loyal community. As a pioneer of film and television crossovers in gaming, Ghost Story Mobile once again partnered with Heat TV Drama Love O2O and the Actors for its 10th anniversary, reuniting players with beloved characters and classic experiences from the series, reaffirming the title's momentum as it enters into its second decade. Anki Party continues to hold its position as China's leading party game destination. Spring Festival events have become a meaningful annual tradition, bringing players together with friends and family through themed content on Aggie Island, reinforcing the game's identity as a shared social space. Building on the festive atmosphere, in February, the introduction of several beloved IPs, including My Little Pony, drove strong community participation and pushed the game to the top of China's LS closing chart. Identity V maintained steady engagement and momentum throughout the first quarter, with enriched gameplay systems that reinforced its unique position in the asymmetric battle arena genre. During the Spring Festival event, it added more depth by introducing new characters and themed content, alongside limited-time gameplay experiences within the classic 1v4 mode. In March, its eighth anniversary brought new variations to the classic 1v4 mode, where the sizes of survivors and hunters shift during matches based on player actions. It also added more dynamics to the fast-paced 2v8 mode with new card-based mechanics that influence real-time battle progression. As an integral part of this broader continent operation strategy, esports remains a core pillar of the game's long-term engagement. Quarter of this night, the game's premier global tournament reached its climax with the global finals held in Shanghai earlier this month. Elite teams from regions across the globe delivered highly competitive matches that ignited community excitement. Infinite Borders, our signature SLG title, continues to push the genre's boundary with updates like the fifth edition that streamline time-consuming actions and rebalance battle pacing, enhancing the overall strategic experience. Beyond this addition, the game continued to enrich its seasonal updates with fresh landscape designs, themed character portraits, and crossovers with popular IPs, all of which were well-received by the players over the past months. These updates resonated strongly with the community, drove a meaningful improvement in daily active users, and continued to strengthen the game's foundation for long-term operations. The Naraka Bay Point franchise continues to refine its melee-focused combat experience through new heroes, new maps, and updated battle mechanics that keep the fast-paced gameplay fresh. A two-way crossover event with Overwatch in China helped expand the game's reach, connecting two distinct player communities. Sword of Justice maintained a vibrant player community to reach content and a lively open world that continues to evolve. The title continues to enrich player interaction and creative gameplay experiences, introducing features such as text-to-item generation and in-game narrative creation. These innovations not only deepen the player engagement, but also fostered a thriving ecosystem of user-generated content, strengthening player connections. Innovation is a driving force for the constant creation in our existing portfolio, as well as our games under development. New titles in our pipeline remain on track, with Sea of Venements and Ananta making steady progress towards launch. Both titles are designed with a clear intent to deliver all new player experiences and explore gameplay directions that have the potential to shape future trends. Feedback from Sea of Remnants' latest round of testing was positive, and we're in the final stages of preparation ahead of launch. As for Blizzard titles, their popularity was reinforced through diversified live service operations and localized content in the first quarter. World of Warcraft launched its midnight expansion in China on March 3rd, alongside the global release, bringing players back to the Elven Kingdom With the continued deepening of our localized operations in China, we have implemented extensive optimizations and dedicated live ops events tailored to the China market. These efforts have successfully sustained a high level of player retention and engagement, leading to a solid year-on-year commercial performance in the first quarter. In April, Diablo 4 launched its Lord of Hatred expansion. simultaneously across China and global markets. Meanwhile, Diablo II Resurrected, a title with a 20-year legacy, reignited its player base with a new DLC. This update drove a strong increase in monthly active users in the first quarter, further reflecting its enduring appeal. In February, Overwatch and Naraka PlayPoint collaborated on a two-week crossover event featuring character integration and themed skins. Combined with the Spring Festival themed content, the event generated strong cross-community engagement and elevated player activity. With strong user engagement in Q1, daily active users grew with key bids while showing improved stability. Through strong partnerships and sustained engagement across our growing portfolio, We are well-positioned heading into the rest of the year. With continued investment in innovation, an unwavering commitment to quality, and deep-rooted operational expertise, we aim to create unique and unforgettable gaming experiences for players in China and around the world. Turning to our other businesses, Udall further advanced its AI-native strategy in the first quarter by driving continued iterations on its Confucius large language model and more deeply embedding AI throughout its ecosystem. The learning services segment made steady progress, supported by strong growth in Yeo Dao Ling Shi and AI-driven subscription offerings. Yeo Dao also enriched its AI agent matrix, adding two new AI native applications, Lobster AI an open-source personal AI desktop assistant, and Yodoboku, an AI-native knowledge base designed for complex information synthesis. Online marketing services benefited from increased demand for performance-based advertising, as AI-driven tools enhanced the targeting and streamlined content production, while the smart devices segment maintained its physical discipline, prioritizing SQ profitability over volume. Yanxuan celebrated its 10th anniversary this year, marking a decade of dedication to high-quality products. As part of this effort, we continue to build out our pet category, strengthening capabilities across R&D, supply chain, quality control, and membership operations. Yanxuan maintained consistent execution across key categories in the first quarter, with pet food, home stands, and home goods continuing to introduce new products and securing leading positions in their segment across e-commerce platforms. Additionally, sustainable development remains a core focus for NetEase. We believe long-term success of a company is intertwined with the value it creates for users, for communities, and employees. Earlier today, we published our seventh annual ESG report, outlining our latest progress across sustainability, governance, and social impact. As our business continues to grow and evolve, we stand steadfast along our employees, who share our values and dedication to continuous innovation and a passion in service of our users. We provide resources and opportunities for them to develop, strive, and keep innovating. By focusing on these kinds of initiatives, we have once again been included in the world's best employer list published by Forbes. marking nine consecutive years for our company. We're also mindful of social impact of our technology and strive to integrate corporate social responsibilities into product innovation and business practices, extending the accessibility and inclusiveness of technology. On the environmental side, while our online business by nature has relatively low carbon footprint, we nonetheless actively explore ways to make our operation even greener and cleaner. For example, we have improved energy efficiencies across our data centers and campuses, helping reduce greenhouse gas emissions by 12% year-over-year. On the governance side, we continue to improve our board and management oversight on material issues. External recognition continues to reflect this progress. MSCI upgraded us to a triple-A ranking positioning us as a leader among over 200 companies in the global media and entertainment industry. We also maintain our low-risk rating with improved profile, placing us among the top companies in our industry. In closing, across our businesses, our operations, and our development pipeline, we're seeing results from our long-held commitment to creativity, innovation, and the evolving technologies that power it. We see this momentum building as established titles continue to set new records, new titles advance towards launch with clear ambition, and our international footprint continues to grow. Woven through all of it is our ongoing effort to build an environment where our developers are free to push creative boundaries and deliver experiences that are relevant with players' communities around the world. We believe we are still in the early stages of what this can deliver for our players, our communities, and shareholders alike. That concludes William's comments, and I will turn the call over to Eileen for more detailed discussions of our financial results.