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NetEase Cloud Music Reports Modest Revenue Growth and Sharp Profit Decline in First Half 2026
On August 20, 2026, NetEase Cloud Music Inc. (HKEX: 9899) released its first‑half 2026 financial results, revealing a modest uptick in revenue alongside a sharp drop in profitability. Revenue climbed 3.4 % to RMB4.0 billion from RMB3.8 billion a year earlier, but operating profit fell 11 % to RMB746.2 million, and net profit plunged 57 % to RMB809.2 million.
The top‑line growth was driven mainly by the company’s core online music services, which grew 3.4 % to RMB3.1 billion, and by membership subscription revenue, up 4 % to RMB2.6 billion. Social entertainment services and other revenue categories also expanded, adding 3.7 % to reach RMB891.3 million. Gross profit rose 5.9 % to RMB1.5 billion, lifting the gross margin to 37.2 % from 36.4 % in the prior year.
Profitability, however, was hit hard. Adjusted operating profit – which removes equity‑settled share‑based payments – slipped 12 % to RMB796.7 million, while adjusted net profit fell 55 % to RMB859.7 million. The sharp decline in net profit is largely attributable to the elimination of a RMB849.4 million deferred tax credit that had been recognised in 2025.
The credit stemmed from deferred tax assets linked to cumulative tax losses of a wholly‑owned subsidiary. With the credit no longer available, the 2026 results more accurately reflect NetEase Cloud Music’s underlying operating performance.
Despite the earnings dip, the company highlighted several strategic initiatives aimed at strengthening its core business. NetEase Cloud Music continued to broaden its licensed catalogue through renewed agreements with Universal Music Group, Warner Music, CJ Entertainment, and Chinese labels such as Forward Music. The platform also expanded its Korean music offering via DSP Media and added TVB drama soundtracks and variety‑show music.
Original content remains a key focus. The artist Gareth.T’s single “Glass” (《玻璃》) surpassed 100 million streams on the platform, while the in‑house production hit “12.31” received widespread acclaim. More than 1.25 million independent artists have registered on NetEase Cloud Music, contributing over 7.3 million tracks.
Technological enhancements were also a priority. The AI‑driven recommendation engine, Climber, was upgraded, and new features such as AI‑inspired playlists and an AI mood tuner were launched to improve music discovery. Community functions saw refreshes as well: the “Listen Together” feature now supports voice comments, and a new “Lyric Stamp” offers themed lyric overlays.
The platform’s multi‑device footprint has grown. NetEase Cloud Music added support for Chery, XPeng Robotaxi, and FAW Jiefang vehicles, and introduced new smart‑watch and PC interfaces.
An earnings conference call will be held on August 20, 2026, at 7:00 p.m. Beijing/Hong Kong time, with a replay available until August 27. The call will be webcast live via the company’s investor relations website.
In summary, NetEase Cloud Music’s first‑half 2026 results show that while revenue growth remains modest, profitability is under pressure from higher promotion costs and the loss of a significant tax credit. The company’s strategy—centered on content expansion, AI‑enhanced discovery, and community engagement—continues to shape its position in China’s competitive streaming market.
The top‑line growth was driven mainly by the company’s core online music services, which grew 3.4 % to RMB3.1 billion, and by membership subscription revenue, up 4 % to RMB2.6 billion. Social entertainment services and other revenue categories also expanded, adding 3.7 % to reach RMB891.3 million. Gross profit rose 5.9 % to RMB1.5 billion, lifting the gross margin to 37.2 % from 36.4 % in the prior year.
Profitability, however, was hit hard. Adjusted operating profit – which removes equity‑settled share‑based payments – slipped 12 % to RMB796.7 million, while adjusted net profit fell 55 % to RMB859.7 million. The sharp decline in net profit is largely attributable to the elimination of a RMB849.4 million deferred tax credit that had been recognised in 2025.
The credit stemmed from deferred tax assets linked to cumulative tax losses of a wholly‑owned subsidiary. With the credit no longer available, the 2026 results more accurately reflect NetEase Cloud Music’s underlying operating performance.
Despite the earnings dip, the company highlighted several strategic initiatives aimed at strengthening its core business. NetEase Cloud Music continued to broaden its licensed catalogue through renewed agreements with Universal Music Group, Warner Music, CJ Entertainment, and Chinese labels such as Forward Music. The platform also expanded its Korean music offering via DSP Media and added TVB drama soundtracks and variety‑show music.
Original content remains a key focus. The artist Gareth.T’s single “Glass” (《玻璃》) surpassed 100 million streams on the platform, while the in‑house production hit “12.31” received widespread acclaim. More than 1.25 million independent artists have registered on NetEase Cloud Music, contributing over 7.3 million tracks.
Technological enhancements were also a priority. The AI‑driven recommendation engine, Climber, was upgraded, and new features such as AI‑inspired playlists and an AI mood tuner were launched to improve music discovery. Community functions saw refreshes as well: the “Listen Together” feature now supports voice comments, and a new “Lyric Stamp” offers themed lyric overlays.
The platform’s multi‑device footprint has grown. NetEase Cloud Music added support for Chery, XPeng Robotaxi, and FAW Jiefang vehicles, and introduced new smart‑watch and PC interfaces.
An earnings conference call will be held on August 20, 2026, at 7:00 p.m. Beijing/Hong Kong time, with a replay available until August 27. The call will be webcast live via the company’s investor relations website.
In summary, NetEase Cloud Music’s first‑half 2026 results show that while revenue growth remains modest, profitability is under pressure from higher promotion costs and the loss of a significant tax credit. The company’s strategy—centered on content expansion, AI‑enhanced discovery, and community engagement—continues to shape its position in China’s competitive streaming market.