NetEase : Q4 2020 Investor Presentation

4Q 2020

Investor Presentation

SAFE HARBOR STATEMENT

This presentation contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. In addition, statements that are not historical facts, including statements about NetEase's strategies and business plans, its expectations regarding the growth of its business and its revenue and the quotations from management in this announcement are or contain forward-looking statements. NetEase may also make forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in announcements made on the website of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to: the risk that the online game market will not continue to grow or that NetEase will not be able to maintain its position in that market in

China or globally; the risk that COVID-19 or other health risks in China or globally could adversely affect the Company's operations or financial results; risks associated with NetEase's business and operating strategies and its ability to implement such strategies; NetEase's ability to develop and manage its operations and business; competition for, among other things, capital, technology and skilled personnel; potential changes in government regulation that could adversely affect the industry and geographical markets in which NetEase operates; the risk that NetEase may not be able to continuously develop new and creative online services or that NetEase will not be able to set, or follow in a timely manner, trends in the market; competition in NetEase's existing and potential markets; and the risk that fluctuations in the value of the Renminbi with respect to other currencies could adversely affect NetEase's business and financial results.

Further information regarding these and other risks is included in NetEase's filings with the SEC and announcements on the website of the Hong Kong Stock Exchange. NetEase does not undertake any obligation to update this forward-looking information, except as required under the applicable law.

COMPANY OVERVIEW

Founded in 1997, NetEase, Inc. is a leading China-based internet technology company that develops and operates some of China's most popular online PC and mobile games, and offers other innovative services, including online education, music streaming and a private label e-commerce platform.

NetEase, Inc. has been listed on NASDAQ since 2000 under the symbol (NASDAQ: NTES), and completed its dual listing on the Hong Kong Stock Exchange in June 2020 under the ticker (HK: 9999).

Its majority-owned education business, Youdao, has been listed on NYSE since October 2019 (NYSE: DAO).

As of December 31, 2020, NetEase had over 28,000 employees.

MARKET SNAPSHOT

In USD

Market Cap (2/24/21)

1

ADS Outstanding,

Diluted (4Q20)

2

Basic net income per ADS (GAAP) (4Q20)

3

Net Revenue	Net income attributable to
(4Q20)	the Company's shareholders	and short-term investment
(GAAP) (4Q20)	(12/31/20)

Cash, time deposits

Note:

• 1 Market Cap is calculated using the closing price on NASDAQ; Our market cap is HK$ 620.2 billion ($ 80.0 billion) based on the closing price on the Hong Kong Stock Exchange.

• 2 Total weighted average number of ordinary shares outstanding (diluted) is 3.4 billion as of December 31, 2020. Our ADSs each represents 5 ordinary shares.

• 3 Basic net income per ordinary share equals to US$0.04, or HK$0.31 (FX: 1 US$= 7.75 HKD).

BUSINESS OVERVIEW

Online Games

Online Education

• • Leading developer and operator of self-developed PC and mobile games for internet users in China and internationally

• • Operator of licensed games from Blizzard Entertainment, Mojang AB (a Microsoft subsidiary) and other leading game developers internationally

Self-Developed Games

Fantasy Westward Journey (Mobile)

Identity V

Westward Journey (Mobile)

Fantasy Westward

Onmyoji series

Westward Journey

Knives Out

Justice

Journey

Licensed Games

World of Warcraft

(Blizzard)

Diablo III (Blizzard)

• • Leading intelligent learning services operated by Youdao, our majority-controlled subsidiary dedicated to developing and using technologies to provide learning content, applications and solutions to users of all ages

Learning Services

Youdao Premium Courses

China University

NetEase Cloud

MOOC

Classroom

Innovative Businesses and Others

Hearthstone (Blizzard)

Minecraft (Microsoft)

• • Leading interactive music streaming service provider in China with more than 800 million registered users and over 200,000 independent musicians

• • Leading service provider of private label e-commerce through Yanxuan, targeting middle-class consumers in China with a strong emphasis on quality of life

4Q20 and FY20 HIGHLIGHTS

Online Games

Online Education

• • A number of new games were introduced in China in 4Q, such as For All Time, Unknown Future, Akasha Book

• • As the first game of 2021, Revelation mobile game launched in January quickly became a top-ranking title on the China's iOS grossing chart

• • Strong performance from existing titles: FWJ and WWJ PC titles reached record revenues in 2020

• • Overseas games also had a record year: Knives Out, Life-After and Identity V all had a record year in 2020

• • Further enriched Onmyoji IP-based pan-entertainment productions with three spin-off games in MOBA, card and simulation genres to date

• • A robust pipeline including Infinite Lagrange, Harry Potter: Magic Awakened, The Lord of the Rings: Rise to War, Elysium of Legends, Nightmare Breaker, Ghost World Chronicle, Diablo® Immortal™ and Pokémon Quest

• • 4Q total revenues reached RMB1.1 billion ü Net revenues from learning services grew by 199% YoY to

  RMB732 million ü Net revenues from learning devices also grew significantly by 254% YoY to RMB237 million

• • Achieved another quarter of positive operating cash flow of RMB129 million

Innovative Businesses and Others

• • NetEase Cloud Music achieved strong growth, and continued to see margin improvement as it scales further

• • Home to over 200,000 independent musicians and over 800 million registered users through product innovation and musicians empowerment

• • Continued to establish Yanxuan's name as the leading new consumer brand in China by improving product offerings and user experience

ONLINE GAME SERVICES

Online Game Services Net Revenue and Gross Margin

Gross Margin

RMB million

PC Game Net RevenueMobile Game Net Revenue

63.7%

63.8%

64.1%

63.8%

63.6%

Mobile Games as a Percentage of Online Games Net Revenue

63.1%

63.1%

63.1%

1Q19

2Q19

3Q19

4Q19

1Q20

ONLINE GAMES SERVICES

PC GAMES

MOBILE GAMES

* For All Time, Unknown Future and Akasha Book were launched in 4Q20

**Revelation Mobile and Yu-Gi-Oh! Duel Links were launched in 1Q21

ONLINE EDUCATION

Youdao Net Revenue and Gross Margin

1Q19

2Q19

3Q19

4Q19

1Q20

ONLINE EDUCATION HIGHLIGHTS

• • Gross billings from online courses in 4Q increased by 223% YoY to RMB1.1 billion, driven by the rapid growth across all segments

• • Growth from our K-12 segment reached a record high RMB767 million in gross billings in 4Q, up

  355% YoY, with K-12 paid enrollments expanding to over 659,000

• • Continued to expand our high quality servicing team, which now comprises 214 instructors and 3,786 tutors

• • Released Youdao Dictionary Pen 3.0 in

  December 2020, featuring the "Tap and Check" （超快点查）and the "Interactive Reading"（互动点 读）functions

INNOVATIVE BUSINESSES AND OTHERS

Innovative Businesses and Others Net Revenue and Gross Margin

RMB million

Gross Margin

Net Revenue

20.6%

5,255

4Q19

NetEase Cloud Music

NetEase E-mail

NetEase YanxuanNetEase Media

NetEase CC

1Q20

2Q20

3Q20

4Q20

INNOVATIVE BUSINESSES AND OTHERS

NetEase Cloud Music

• • Achieved strong growth in all three forms: membership, live broadcast and advertising, and continue to see margin improvement as we scale up

  NetEase Yanxuan

  • • Our innovative private label consumer brand, targeting young professionals in China with a strong emphasis on quality of life

• • Home to over 200,000 independent musicians and over 800 million registered users, of which 90% or more are post-90's or younger

• • Launched Cloud Music version 8.0 in November 2020, bringing our young users elevated personalized experiences

• • Enriched our content library in 2020 through copyright agreements with leading labels, such as Studio Ghibli, Rock Records, UMG and BMG

• • Launched a number of super-popular products with annual sales exceeding 100 million RMB that revolve around users' needs, such as household products, personal care, food and pet supplies

• • Continued to attract more membership subscriptions in 2020 with the right content and product offerings, and provide them with better benefits and shopping experience

INNOVATIVE BUSINESSES AND OTHERS

Internet Media

Live Streaming

E-mail Services

• •www.163.comis one of China's most visited internet portals, with strong user diversity, reach and stickiness

• • Mobile News App is one of the most popular news apps in China

• • CC live streaming platform offers various live streaming content with a primary focus on games

• • China's leading e-mail service provider since 1997

• • Around 595 million annual active users as of December 31, 2020

FINANCIAL HIGHLIGHTS

Net Revenue

Net Income attributable to shareholders

4Q19

3Q20

4Q20

BALANCE SHEET SUMMARY

INCOME STATEMENT SUMMARY

Note:16

All percentages are calculated based on numbers in millions except per ADS data

CONTACT US

Margaret Shi

NetEase, Inc.

E-mail:[e-mail]: [phone]

Twitter:https://twitter.com/NetEase_Global

Brandi Piacente

The Piacente Group, Inc.

E-mail:[e-mail]: [phone]

THANK YOU