On August 20, NetEase released its second-quarter financial results, showing that operating profit—a key metric reflecting the company’s actual operational performance—reached 12.1 billion yuan for the quarter, a 33% increase year-over-year.
However, due to certain non-operating factors, the company’s non-GAAP net income attributable to shareholders stood at 7.7 billion yuan for the quarter, compared to 9.5 billion yuan in the same period last year.
According to the earnings report, this temporary fluctuation in net income was primarily driven by a 3 billion yuan mark-to-market loss on stock investments and a 400 million yuan net foreign exchange loss during the quarter. The investment loss mainly stems from the book-value decline of equity assets NetEase holds, such as its stake in Pinduoduo, which are marked to market at fair value.