NTES

On business quality NetEase is close to best-in-class. FY2025 revenue grew 11.6% to $16.1B while net income jumped 20.0% to $4.98B and operating income rose 26.4% to $5.12B—earnings growing roughly twice as fast as the top line is the signature of operating leverage, not financial engineering. The margin stack is exceptional and stable: 64.3% gross, 31.8% operating, 30.9% net, with 21.7% ROE. The five-year history ($13.7B→$16.1B revenue, $2.66B→$4.98B net income) shows durable, accelerating profitability. The balance sheet is fortress-grade: $22.9B equity against just $8.05B total liabilities (0.35x), only $58.6M of long-term debt, $6.74B cash, and operating cash flow of $7.26B (+33.5%) on trivial capex ($152M), so nearly all reported profit converts to cash. Capital return is real and rising—dividends paid up 29.2% to $1.98B—and the company self-funds growth ($2.53B R&D) without diluting (shares +0.8%).