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DATE

Thursday, Aug. 20, 2026 at 8:00 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer - William Ding
  • Executive Vice President - Hu Zhipeng
  • Vice President of Finance - Aileen Mo
  • Vice President of Corporate Development - Bill Pang

TAKEAWAYS

  • Total Net Revenue -- RMB 30.1 billion, representing a 7.9% increase compared with the same quarter of 2025.
  • Games and Related VAS Revenue -- RMB 25.0 billion, increasing 9.7% year over year reflecting the broader appeal of the gaming portfolio.
  • Online Games Revenue -- RMB 24.5 billion, representing a 10% increase year over year driven by self-developed titles such as the Fantasy Westward Journey franchise and Where Winds Meet.
  • Youdao Revenue -- RMB 1.5 billion, increasing 3.5% year over year primarily due to higher revenue from learning services.
  • NetEase Cloud Music Revenue -- RMB 2.0 billion, remaining stable compared with the second quarter of 2025.
  • Innovative Businesses and Others Revenue -- RMB 1.6 billion, representing a 3.5% decrease year over year reflecting a decline in e-commerce business revenue.
  • Gross Profit -- RMB 21.2 billion, representing a 17.5% increase compared with the same quarter of 2025.
  • Games and Related VAS Gross Margin -- 76.1%, up from 70.2% in the prior year period due to lower revenue-sharing costs.
  • Youdao Gross Margin -- 48.9%, compared with 43.0% in the prior year period reflecting improved performance in the learning services segment.
  • Cloud Music Gross Margin -- 37.4%, up from 36.1% last year due to lower channel fee rates and optimized cost structures.
  • Non-GAAP Net Income -- RMB 7.7 billion, with a year-over-year decline primarily attributable to investment losses.
  • Operating Expenses -- RMB 9.1 billion, representing a 1.5% increase year over year driven by higher research and development expenditures.
  • Research and Development Expenses -- RMB 4.6 billion, representing 15.4% of total net revenue as the company maintains consistent investment in innovation.
  • Net Cash Position -- RMB 167.5 billion as of June 30, 2026, compared with RMB 163.5 billion at the end of 2025.
  • Share Repurchase Program -- $2.3 billion, representing the total cost for 24.8 million ADS repurchased as of June 30, 2026, under the current $5 billion authorization.
  • Quarterly Dividend -- $0.48 per ADS, approved by the Board of Directors for the second quarter.
  • Sword of Justice Engagement -- Over 10 million active players on the launch day of its New World anniversary update.
  • Eggy Party User Base -- 700 million registered users, with monthly active users remaining steadily above 100 million.
  • Eggy Party Creator Rewards -- RMB 200 million, representing cumulative rewards paid to the creator community to date.
  • NetEase Cloud Music User Retention -- Above 30% DAU to MAU ratio during the first half of 2026.
  • Youdao Dictionary Pen X8 -- 80 million words included in the library of the new smart device launched in June.

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RISKS

  • Pang noted that for the launch of Sea of Remnants, management realized the company "did not sufficiently lower the learning curve for players in the early stages," which negatively affected the initial player experience.

SUMMARY

Management at NetEase, Inc. (NTES -5.85%) reported a focused expansion of its gaming portfolio and AI-driven educational services, with total revenue reaching RMB 30.1 billion during the second quarter. The company stated that growth was primarily driven by the games and related value-added services segment, which benefited from both the sustained performance of established franchises and new title releases. The company indicated that its AI native strategy in the Youdao segment has led to the development of new large language models and enhanced smart device capabilities. Management also reported that NetEase Cloud Music stabilized its cost structure while maintaining high user engagement ratios. Strategic efforts remained concentrated on expanding the company's global reach and integrating AI tools across product development and advertising operations.

  • Pang stated that the Sword of Justice anniversary update drove concurrent users to a 2-year high, supported by the introduction of a new regional expansion called Dali.
  • Management indicated that Eggy Party has evolved into a content platform where "UGC remains one of Eggy Party's defining strengths," supported by the distribution of creator rewards.
  • Pang noted that the company is utilizing AI capabilities as an "amplifier" to expedite development speed and enhance user experience across its product pipeline.
  • The company reported that Blizzard titles, including World of Warcraft and Hearthstone, continued to engage Chinese communities through localized operations and consistent updates.
  • Pang indicated that Marvel Rivals reached the top-seller spot in multiple regions, including the United States, following the introduction of its summer festival content.
  • Youdao launched its latest large language model, Confucius 4, which management stated provides improved mathematical reasoning capabilities at lower inference costs.

INDUSTRY GLOSSARY

  • ADS: American Depositary Share, representing equity shares of a non-U.S. company available for purchase by U.S. investors.
  • Confucius 4: The proprietary large language model developed by Youdao for educational and reasoning applications.
  • Eggy Party: NetEase's party game featuring a large user-generated content ecosystem.
  • MMORPG: Massively Multiplayer Online Role-Playing Game, a genre where a large number of players interact in a persistent world.
  • SLG: Strategy-style game, typically involving simulation or resource management.
  • UGC: User-Generated Content, referring to game maps, modes, or assets created by players rather than developers.
  • VAS: Value-Added Services, additional non-core services that generate revenue, such as in-game items or subscriptions.
  • Yanxuan: NetEase's private-label e-commerce platform specializing in home and lifestyle products.
  • Youdao: NetEase's majority-controlled subsidiary focused on intelligent learning and advertising technologies.

Full Conference Call Transcript

Operator: Good day, and welcome to the NetEase Second Quarter 2026 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.

Brandi Piacente: 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 20-F and in 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 U.S. GAAP.

For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the second 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 NetEase corporate website at ir.netease.com. Joining us today on the call from NetEase's senior management are Mr. William Ding, Chief Executive Officer; Mr. Hu Zhipeng, Executive Vice President; Ms. Aileen Mo, Vice President of Finance; and Mr. Bill Pang, 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?

Bill Pang: 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. In the first half of 2026, we delivered healthy growth across business segments. Total revenue reached RMB 30.1 billion in the second quarter, driven by the solid performance of our games business. Our games and related value-add services generated net revenues of RMB 25 billion, reflecting the broader appeal of our portfolio in both domestic and overseas markets. The strength of our portfolio stems from our sustained focus on innovation across the full life cycle of our games from original concept and development through long-term live operations.

By combining our engineering capabilities, creative design expertise and disciplined execution, we bring new ideas to life and deliver fresh experiences across genres, platforms and markets. One recent example is Sea of Remnants, released in China in July. It showcases our ongoing emphasis on original IP and genre innovation. Built on our in-house game engine, Sea of Remnants combines a distinctive visual style with an open world ocean fantasy setting. Players -- by combining naval combat, extraction gameplay and roguelike progression, the game creates varied adventures that unfold differently each time. Across themed Island, players encounter a wide cast of characters that bring each island to life through meaningful interactions and evolve storylines.

A variety of brand and content collaborations have also expanded the game's reach, extending its content ecosystem beyond the core gameplay experience. We are also preparing for the game's global rollout and look forward to introducing Sea of Remnants to players worldwide. Our innovation efforts are not only limited to new launches. They extend across our established titles where we keep evolving gameplay systems, introducing new content and strengthening live operations to sustain player enthusiasm over time. Sword of Justice launched its major anniversary update, New World in June. The comprehensive upgrade to the open world experience improved visual quality, streamlined cultivation system and refined the in-game economy, creating a more enjoyable experience for both returning and new players.

It also introduced the Dali, highly immersive new region to expand exploration and add greater storytelling depth. The community response was strong with active players exceeding 10 million on launch day and concurrent users reaching a 2-year high, demonstrating the title's ongoing appeal. Players continue to gravitate to Identity V with a steady cadence of live service updates, including anniversary content, crossover events and new gameplay experiences. In June, the game introduced Cryptic Notes, a new PVE mode that offers a lighter experience beyond its core PVP gameplay, opening up new ways for the community to play. This excitement carried into July with the launch of Season 44, introducing new themed costumes and events alongside the latest Paperbride crossover.

This update sparked active discussions across live streaming and social media platforms, helping keep the community engaged and reinforcing the game's long-term appeal. During the second quarter, the NARAKA: BLADEPOINT franchise unified its PC and mobile ecosystems. Players can now enjoy the game's signature melee combat seamlessly across devices while strengthening connections across its broader player community. Building on the increased connectivity, NARAKA: BLADEPOINT kicked off its fifth anniversary celebration in July with a major content update that introduced all new land and underwater battlefields as well as a new underwater combat system. These additions refreshed the game's core experience and drove strong player engagement across platforms. Eggy Party further solidified its position as China's leading party game destination.

It reached a new milestone with 700 million registered users and monthly active users remained steadily above 100 million. In June, the game celebrated its fourth anniversary, bringing another wave of player activity, supported by diverse gameplay, a vibrant UGC ecosystem and a rich slate of live operations. This strong momentum continued into the summer with Eggy Party remaining among the top ranked titles on both China's iOS top download and grossing chart and peaking at #3 on the top grossing chart. Peak daily active users also reached a multiyear high for the summer period.

UGC remains one of Eggy Party's defining strengths -- over the past year, the ecosystem has continued to thrive, supported by more powerful creation tools and a growing base of engaged creators. Total creator rewards reached a new milestone of RMB 200 million to date, reflecting both the vitality of this creator community and strong player demand for diverse user-generated content. Recent upgrades to the editor, including integration with multiple AI models have also made it easier for creators to learn, create and program. Together, these efforts expand what players can create and support Eggy Party's evolution from a stand-alone party game into a broader content platform.

Our flagship MMORPG, Fantasy Westward Journey Online continues to evolve across both its classic and unlimited servers. During the summer, its new expansion pack and Dunhuang in the content further engaged players, underscoring its timely popularity and its healthy community. Meanwhile, Fantasy Westward Journey Mobile carried its record-setting momentum into the second quarter, supported by refinements to the in-game economy and ongoing gameplay iterations. During the quarter, the game introduced a new equipment progression system and an extraction gameplay mode. These additions created fresh progression paths and greater strategic depth, gaining real traction with players. In July, the summer Treasure Pavilion offered a wider selection of costumes and items tailored to players' preferences, driving robust commercial performance.

The launch of the Origin server helped the Westward Journey Return build strong momentum in the second quarter. By preserving the iconic appeal of the Westward Journey franchise while introducing a portrait mode interface and more relaxed gameplay, the Origin server delivers a more accessible experience that players can enjoy anytime and anywhere, contributing to the title's strong performance in Q2. Infinite Borders further reinforced its leading position in the SLG genre through new innovative gameplay and initiatives designed to address community needs. New features such as EC Border Q, a social deduction game mode, were well received by players, while its collaboration with Minecraft China helped the game reach a broader and younger audience.

The launch of the highly anticipated special servers together with a series of pre-anniversary events ahead of its 11th anniversary, generated renewed excitement across the community, demonstrating the title's enduring appeal and continued relevance in the strategy game market. Alongside our success in the domestic market, we made additional steady progress in broadening our global reach. Where Winds Meet has demonstrated a healthy growth trajectory since its successful launch -- global launch last year. The player base continued to grow in the second quarter with positive reviews on Steam staying above 87%. In June, we brought this immersive open world action RPG to even more players worldwide with the successful launch on Xbox.

The game also repeatedly ranked among the top 3 titles on Steam's global top-seller chart following major content updates. This underscores the long-term potential of content-driven games and highlights our proven capabilities in delivering high-quality content and live operations. In the domestic market, Where Winds Meet also expanded its player community in the quarter with major new region additions, including Qingchuan and Hangzhou. The Hangzhou expansion proved particularly popular and pushed the game to #3 spot on China's iOS top grossing chart. This update brought distinctive local culture, fresh narrative and immersive exploration, driving year-over-year growth in quarterly revenue and achieving record high monthly active users.

Marvel Rivals continued to build on its global success through a steady stream of seasonal content, live service updates and community initiatives. In June, the game introduced a refreshed 18 versus 18 mode setting K'un-Lun Arena, alongside new heroes, maps and events that broaden gameplay variety. The Rivals summer festival added further momentum with a wide selection of themed costumes for fan favorite characters, help pushing the game to #2 on global top seller chart and #1 in multiple regions, including the United States. Most recently, the franchise extended its reach beyond the screen through real-world touch points across major fan events.

At San Diego Comic-Con in late July, Marvel Rivals generated even more excitement among players with new announcements and interactive fan activities. The new season finals was later held in Los Angeles, attracting top players and fans while reinforcing the title's competitive ecosystem and long-term live service foundation. As we continue to grow our existing portfolio, we're also advancing the development of new titles and exploring fresh ideas across diverse genres, gameplay experiences and markets. Ananta is progressing steadily towards launch as a free-to-play urban open world RPG -- the game invites players to experience a vibrant modern city through a variety of characters, lifestyles and activities, providing a high degree of freedom in exploration and interaction.

With strong anticipation from player community, we will continue to share more updates as development progresses. Blood Message made a strong impression at the Summer Game Fest, where overseas audience responded positively to the latest gameplay footage. The trailer has since generated around 40 million views globally with players praising its visual fidelity, distinctive storytelling and thematic combat. Our commitment to innovation and long-term operating capabilities also created value for our partner titles. Blizzard titles performed well in China during the quarter, supported by localized operations and a steady stream of updates. World of Warcraft and Hearthstone continue to engage their long-standing communities in China, backed by consistent updates and initiatives tailored to the local market.

Overwatch celebrated its 10th anniversary during the quarter with special content, rewards and activities that revitalize players and drove a significant increase in active users. Diablo IV further expanded its presence in China through exclusive localized content, localized events and newly introduced Chinese mythology skins, driving solid growth in both active users and player retention during the second quarter. Together, these achievements reflect the breadth and strength of our portfolio from new releases to essential titles across China and global markets through both our own IP and partner collaborations. We aim to keep our games relevant and engaging through new ideas, ongoing content updates and disciplined live operations while responding to evolving player expectations.

This innovative mindset will continue to guide us as we build stronger communities and create even more compelling experiences for players worldwide. Turning to our other businesses. Youdao further advanced its AI native strategy and deepen AI-driven innovation across its ecosystem. In the second quarter, Youdao launched its latest large language model Confucius 4 with substantially enhanced capabilities. The new model delivered stronger performance in visual math and physics reasoning, particularly on complex diagrams at lower inference cost. Youdao also upgraded its translation model with an efficient acceleration mechanism, increasing inference speed by approximately 80%. Beyond large language models, it further advanced its AI agent capabilities towards autonomous execution of complex real-world tasks, demonstrating stronger capabilities beyond simple Q&A interactions.

The Learning Services segment continued its healthy development, driven by the strong performance of Youdao. Popular features, including AI-powered English essay grading, AI recommendations and AI-based college admission advisers continue to enhance user satisfaction and drive higher user retention. Within the segment, AI-driven subscriptions also maintained strong momentum. The advertising efficiency in Youdao's online marketing services also continued to improve. We recently launched a second-generation AI ad placement optimizer, further enhancing the user experience and advertising efficiency with more streamlined and automated features. While capturing emerging opportunities in areas such as AI application and short-form dramas, Youdao also made steady progress in client acquisition and retention.

The smart devices segment sustained its focus on product innovation with the Youdao Victory Pen maintaining a strong market position. In June, we launched the Youdao Dictionary Pen X8, featuring an expanded library of 80 million words and photo-based tutoring across a broad range of subjects. During the 618 Shopping Festival, Youdao Dictionary Pen ranked #1 in sales on JD.com and Tmall within this category for the seventh consecutive year. Looking ahead, Youdao will continue to execute its AI native strategy across learning and advertising scenarios. For NetEase Cloud Music, we further developed its music-centric ecosystem in the first half of 2026, prioritizing exceptional user experiences, distinctive content and a vibrant music community to support healthy and steady growth.

Enhancements to user experience and strong brand perception continue to drive higher user engagement and expanding the daily active user base. Our DAU versus MAU ratio remained above 30% in the first half of 2026, increasing both year-over-year and sequentially. The average daily mobile music listing time also rose steadily with penetration rates of community content consumption and interactions improving notably. In particular, retention and renewal rates across our expanded membership base increased both year-over-year and sequentially, reflecting stronger user loyalty and deeper connection to the platform. We also enriched our comprehensive and distinctive content library by expanding copyrighted music and promoting original music.

Earlier this year, we renewed partnerships with major labels such as Universal Music Group as well as added new content and Chinese labels, OSPs and variety show music, while enhancing our signature genres. At the same time, we continue to promote original Chinese music with our recent in-house releases such as December 31, gaining widespread acclaim. From a product perspective, we remain focused on user needs, advancing innovation across music discovery and consumption experiences while galvanizing our community by making music exploration more intuitive and engaging on the platform. We also launched innovative functions such as AI-inspired playlist to address users' diverse music discovery preferences. Subscription-based membership grew as well, improving our music-oriented monetization.

We further refined membership benefits built around content, features, personalization privileges and office-related offerings, all of which enhance the platform's overall value proposition and support ongoing membership growth. Turning to Yanxuan. Yanxuan once again secured leading positions on e-commerce platforms across its key categories in the second quarter. New products in pet food, home scent and home goods categories performed well, generating healthy growth. Notably, the freshly steamed pet food series, which we launched last year with our differentiated steaming technology and fresh meat recipes continue to deliver solid sales while earning recognition from leading industry organizations. In closing, across the NetEase family of businesses, we remain committed to innovation and staying at the forefront of technology.

By integrating leading technologies into every stage of product development and operation, we create compelling user experiences that help shape industry trends. This approach continues to support sustainable growth across our business. In our games portfolio, in particular, it enhances the appeal of both established titles and new releases, extending our success in China to broader global -- throughout the year, we will continue to foster an environment that empowers our developers to push creative boundaries. As we advance our products with cutting-edge technology, we believe we are well positioned to create even more engaging experiences and enduring value for players, communities and shareholders alike.

That concludes William's comments, and I will turn the call over to Aileen for more detailed discussion of our financial results. Thank you.

Aileen Bin Mo: Thank you, Bill. I will now provide a brief review of our 2026 interim financial results with a focus on the second quarter. 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 in RMB unless otherwise stated. Our total net revenue for the first half of 2026 were RMB 60.7 billion or USD 8.9 billion, representing a 7% increase year-over-year. For the second quarter, total revenue were RMB 30.1 billion or USD 4.4 billion. During the first half, total net revenue from our games and related VAS were RMB 15.7 billion, up 8% year-over-year.

In the second quarter, net revenue grew 10% to reach RMB 25 billion. Specifically, net revenue from online games were RMB 49.5 billion for the first half, up 9% year-over-year. In the second quarter, online games net revenue were RMB 24.5 billion, decreasing 2% quarter-over-quarter and increasing 10% year-over-year. The quarter-over-quarter decrease were mainly due to a slight decline in net revenue from certain self-developed games and licensed games. The year-over-year increase was attributable to higher net revenue from self-development games such as Fantasy Westward Journey franchise and Where Winds Meet. Youdao's net revenue increased 4% to RMB 2.8 billion for the first half of 2026.

In the second quarter, net revenue were RMB 1.5 billion, up 9% quarter-over-quarter and 3% year-over-year. The quarter-over-quarter and year-over-year increases were mainly attributable to higher net revenue from its learning services segment. NetEase Cloud Music net revenue increased 3% year-over-year to RMB 4.0 billion for the first half of 2026. In the second quarter, net revenues were RMB 2 billion, remaining broadly stable quarter-over-quarter and year-over-year. Net revenues from the innovative business and others totaled RMB 3.2 billion for the first half of 2026. In the second quarter, net revenue were RMB 1.6 billion, up 6% quarter-over-quarter and down 4% year-over-year.

The quarter-over-quarter increase was mainly attributable to higher net revenue from the e-commerce business and several other business within this segment. The year-over-year decrease was mainly due to a modest decline in net revenue from the e-commerce business. For the first half, our gross profit margin was 69.9%. In the second quarter, our gross profit margin increased year-over-year to 70.5% from 64.7% in the prior year period. Looking at our second quarter margin in more detail. Gross profit margin was 76.1% from our games and related VAS compared with 70.2% in the same period of last year. The improvement was primarily driven by lower revenue sharing costs related to platforms.

Our gross profit margin for Youdao was 48.9% compared with 43.0% in the same period of last year. The increase was mainly driven by improved gross profit margin from its learning services segment. Gross profit margin for Cloud Music was 37.4% compared with 36.1% in the same period last year. The increase was primarily driven by lower channel fee rates, along with the continued cost structure optimization. For our innovative business and others, gross profit margin was 43.4% compared with 42.3% in the second quarter of 2025. The improvement was primarily driven by the higher contribution from higher-margin business within this segment. Total operating expenses for the second quarter were RMB 9.1 billion, representing 30% of our total net revenue.

Taking a closer look at our expense composition. Our selling and marketing expenses accounted for 12.2% of total net revenue in the second quarter compared with 12.8% in the same period of last year, remaining generally stable year-over-year. For the first half, the ratio was 11.7%, remaining broadly in line with the same period last year. Our G&A expenses accounted for 2.7% of total net revenues in the second quarter compared with 3.8% in the same period of last year. For the first half, the ratio was 2.4% compared with 3.5% in the same period of last year.

Our R&D expenses remained stable at 15.4% of total net revenues in the second quarter compared with 15.6% in the same period of last year, reflecting our consistent investment in innovation and content development. For the first half, the ratio was 15.0%, remaining broadly in line with the same period of last year. The effective tax rate was 21.7% for the first half and 25.5% for the second quarter. As a reminder, the effective tax rate is presented on an accrual basis and the tax credit vary across each of our entities at different time periods depending on applicable policies and our operations.

Our non-GAAP net income attributable to shareholders for the second quarter totaled RMB 7.7 billion or USD 1.1 billion, with the year-over-year decline primarily attributable to investment losses. Non-GAAP basic earnings per ADS for the quarter was USD 1.78 or USD 0.36 per share. For the first half, non-GAAP net income attributable to shareholders was down 8% year-over-year to RMB 19 billion or USD 2.8 billion, which is USD 4.38 per ADS or USD 0.88 per share. Additionally, our cash position remains strong. As of June 30, 2026, our total net cash position was RMB 167.5 billion compared with RMB 163.5 billion at the end of 2025.

In accordance with our dividend policy, we are pleased to report that our Board of Directors has approved a dividend of USD 0.096 per share or USD 0.48 per ADS for the second quarter. Lastly, under our current USD 5 billion share repurchase program, we have repurchased approximately 24.8 million ADS as of June 30, 2026, for a total cost of approximately USD 2.3 billion. Thank you for your attention. We would now like to open the call to your questions.

Operator: [Operator Instructions] The first question comes from Alicia Yap with Citigroup.

Alicis a Yap: [Foreign Language] [Interpreted] So can management share the latest performance of and also the expected closing for the next quarter? What aspects are currently doing well? And then what adjustments are planned in the future to further improve the games performance?

William Ding: [Foreign Language]

Bill Pang: [Interpreted] Okay. I will do the translation. So in China market, we did receive a lot of user feedback and among which certain amount are critics. Review what we -- all the feedback we received, we realized that while we are trying to explore a very bold visual style and the rogue gameplay, which is the kind of novel open world experience, we did not sufficiently lower the learning curve for players in the early stages, which, to some extent, affected the initial player experience. So that's feedback we have heard and taken.

So in the meantime, our team has prepared a substantial amount of large high-quality amount of content and which provide the foundation of the long-term operation and sustainable player community operation. After this initial feedback round, along with the high cadence of content update and experience optimization, we believe we have seen growing recognition from the players group of the games core gameplay and content quality, which with discussions back to the game's content and ongoing operations, the overall sentiment and satisfaction has continued to improve. Looking ahead, we'll continue to serve our core players of this game well and keep optimization -- keep optimizing the experience problems we heard from players.

In the meantime, we will streamline the early-stage game content, make sure the innovative game play could be better and wider accepted and experienced by the players. We are confident in the long-term potential of this game. Thank you for your question.

Operator: The next question comes from Xueqing Zhang with CICC.

Xueqing Zhang: [Foreign Language] I will translate my question. [Interpreted] Could management update us on the development progress of Ananta with several competing titles targeting the urban open world genre. How does the company plan to differentiate the game and stand out from the competition?

William Ding: [Foreign Language]

Bill Pang: [Interpreted] Okay. I will do the translation. Ananta is well on track with its development as the team is now keep polishing the game experience. We'll unveil the game's latest progress at the Gamescom next week. So please stay tuned. In terms of competition, we believe Ananta has its own distinctive strength as an urban open world experience. The strength come from the product's unique identity, its theme and its gameplay design as well, which can offer players a fresh experience that stands apart from other open world urban games in the market.

Ultimately, we believe that the high-quality content, the distinctive narrative identity, the innovative gameplay and thoughtful monetization design will be the key to build a successful -- to being a key part of the -- behind the success of products. Thank you for your question.

Operator: Your next question comes from Lincoln Kong with Goldman Sachs.

Lincoln Kong: [Foreign Language] [Interpreted] Congrats on a very solid second quarter. So over the past 1 or 2 years, actually, the company proactively reduced the number of new game launches to focus the resources on the key titles. And meanwhile, like a new release like Marvel Rivals delivered a very strong performance. So looking ahead with a relatively lean pipeline of new games and the higher baseline for our existing portfolio, how does the company plan to drive further business growth? So what will be the primary growth driver and operating strategy moving forward?

William Ding: [Foreign Language]

Bill Pang: [Interpreted] Okay. I will help do the transition. Well, first of all, regarding the really high-quality products, we're not hesitated to keep investment in. And we're actually going to keep investing to keep building really high quality level of premium products, good premium quality of products. Of course, when doing new products, we need to make sure that we have a clear vision as well as making sure the quality is definitely top notch. And secondly, now as of today, with the help of AI capabilities, which we believe is an amplifier that we believe we can expedite the development speed and as well as leveraging AI capabilities to improve the user experience when users playing our game.

We have confidence that with the help of AI tools, we can build more high-quality products than most of our peers in the industry, providing a high-quality experience to our players. That's something we have confidence in, and that's our view. And thank you for your question.

Operator: Your next question comes from Ritchie Sun with HSBC.

Ritchie Sun: [Foreign Language] [Interpreted] So recently, the 2 games undergoing testing, Beneath The Mist and also Tamas: Shadowveil. So how does management view the monetization potential of these 2 games? And when can these games be launched?

William Ding: [Foreign Language]

Bill Pang: [Interpreted] I will do the translation. So thank you for your question. Both of the products you mentioned are still ongoing intensive refinement. And one is refinements approach a stage that we believe will satisfy the users' demand and we will release them. As the game developer, we believe player experience is the key of everything. We believe delivering an excellent experience is the foundation of achieving commercial success. Thank you for your question.

Operator: And that concludes the question-and-answer session. I would like to turn the conference back over to Brandi Piacente for any additional or closing comments. Brandi, please go ahead with your closing comments.

Brandi Piacente: Thank you. Sorry for that. Thank you once again for joining us today. And if you have any further questions, please feel free to contact us. Thank you again.

Operator: This concludes the conference. You may disconnect your line. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]