NetEase Cloud Music's profitability significantly improved in the first half of the year, with a net profit year-on-year increase of 165.4% | Financial Report Watch

NetEase Cloud announced its financial performance for the first half of 2024 on Thursday, with a significant increase in profitability. Core revenue streams such as member subscription income and advertising revenue also saw further growth.

Specific financial highlights:

• Revenue of RMB 4.07 billion, a year-on-year increase of 4.1%;
• Online music service revenue of RMB 2.56 billion, a year-on-year increase of 26.6%; member subscription sales revenue of RMB 2.1443 billion, compared to RMB 1.709 billion in the same period last year; social entertainment services and other revenue of RMB 1.511 billion, a year-on-year decrease of 19.9%.
• Gross profit of RMB 1.426 billion, a year-on-year increase of 47.7%;
• Gross profit margin increased to 35.0%, up 10.3 percentage points from 24.7% in the same period last year;
• Adjusted net profit of RMB 881 million, a year-on-year increase of 165.4%;

Operational indicators:

• User base size remains relatively stable, with a daily/ monthly active ratio consistently above 30%;
• Significant increase of 49.4% in the average listening time of long audio content per user on the platform;
• As of June 2024, the platform has over 732,000 registered independent musicians, uploading approximately 3.6 million music tracks.

During the reporting period, NetEase Cloud saw significant growth in online music service revenue, a 25.5% year-on-year increase in member subscription revenue, steady growth in monthly paying users, but a decline in revenue from social entertainment aspects such as karaoke and live streaming.

In its financial report, NetEase Cloud stated that the company significantly improved user retention and engagement by enhancing user experience and content quality. Additionally, the company strengthened its commercialization capabilities in the advertising business, optimized advertising algorithms, and introduced diversified ad formats.

Furthermore, NetEase Cloud's research and development expenses decreased by 10.2% from RMB 441 million to RMB 396 million, mainly due to improved utilization of technical resources and optimization of employee structure leading to reduced employee welfare costs.

Looking ahead, NetEase Cloud plans to continue driving the development of its core music business by enhancing content quality, optimizing user experience, and enhancing community interaction. Management stated that the company will further deepen cooperation with copyright holders, increase support for independent musicians and self-produced music content, actively explore innovations in the social field, and continuously improve profitability