Good day and welcome to the NetEase 2022 second quarter earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Margaret Shi, IR Director of NetEase. Please go ahead ma'am.
Thank you operator. Please note the discussion today will contain forward-looking statements relating to future performance of the company and are intended to qualify for a 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 company's control and could cause actual results to differ materially from those mentioned in today's press release and in 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 website of Hong Kong Stock Exchange.
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 for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the 2022 second quarter earnings news release issued earlier today. As a reminder, this conference is being recorded. In addition, the investor presentation and the webcast replay of this conference call will be available on NetEase corporate website at ir.netease.com. Joining us today on the call from NetEase senior management is Mr. William Ding, Chief Executive Officer, and Charles Yang, Chief Financial Officer. I will now turn the call over to Charles, who will read a prepared remarks on behalf of William.
Thank you, Margaret, and thank you everyone for participating in today's call. Before we begin, I would like to remind everyone that all percentages are based on RMB. We are very pleased to report another solid quarter with net revenues growing to CNY 23.2 billion, up 13% versus the same period last year. Our online games continues to be our primary growth driver with net revenues from our games and related value-added services coming in at CNY 18.1 billion for the second quarter, up 15% year-over-year. Please note, we changed our segment categorization this quarter. The expanded games and related VAS segment now includes game-related value-added services such as CC Live streaming, game-related accessories and merchandise, et cetera. We believe this revised segment categorization better reflects the performance of our well-rounded capabilities around the broadly defined game ecosystem and value chain.
Players continue to gravitate to our long-lasting franchises. In the second quarter, revenue from our Fantasy Westward Journey saga kept on growing, further impressing the industry with their strength and longevity. Through the solid foundations we've built and continuous iterations we release every few months, these flagship sagas are still among the most well-crafted games in today's market, remaining highly attractive to users even after nearly two decades of operation. Over the years, we have built complex and intricate ecosystems within the games, constituting well-balanced, comprehensive economic systems and intimate user networks. We see these games as a work of art and science, and it is ever evolving as we dynamically adjust the finest details. In terms of newly launched titles, we were extremely excited to see Diablo Immortal enchant tens of millions of players, dominating the iOS top download chart in multiple regions.
Diablo Immortal boasts fantastic gameplay that relishes the authentic Diablo experience, which also features an MMORPG social experience where players can share a massive world with others as they explore. We are working hard to keep it fresh and plan to continuously introduce exciting new content for Diablo Immortal in a fast-paced manner to keep players engaged. Diablo Immortal's debut was also a huge opportunity for us to showcase our world-class development capabilities. Leveraging Messiah, our robust self-developed game engine, Diablo Immortal underscores our proficiency in producing top quality games on mobile devices. Over the years, our team has worked hard to recreate the Diablo sensation on mobile, putting great effort into every detail of the game and overcoming countless barriers along the way. In the second quarter, Naraka: Bladepoint maintained strong engagement levels as we introduced a series of content updates.
By the end of May, the game has sold 10 million copies worldwide since its release about a year ago, turning it into one of the best-selling PC games in the world. Along with its one-year anniversary, we recently announced an array of exciting updates for Naraka: Bladepoint, including a brand new map for the game called Holoroth. Holoroth brings fresh combat experiences to players and a wealth of new features such as weather systems, interactive objects, and new areas to explore, winning wide praise from players. On June 23rd, we debuted Naraka: Bladepoint on Xbox Series X|S and joined Xbox Game Pass. In its first two weeks on the market, an impressive 1 million new players jumped into the game, enjoying the exciting gameplay which had been optimized for the console. The game will next be available on Xbox One.
Simultaneously, we are working to bring Naraka: Bladepoint authentic melee combat to mobile platforms. Development is progressing smoothly, and pre-registration has been very encouraging, with more than 3 million users already registered without much marketing. Another exciting title that tops the chart in the second quarter was Infinite Lagrange. With new creative social media marketing initiatives, we greatly expanded the game's user base, which triggered wide player interest in our sci-fi SLG title. We are also seeing strong retention of new players, further boosting our confidence in this promising category. We continue to introduce new gameplay and all-rounded graphics, graphic updates on ships, stars, and space stations to further strengthen our leadership in the SLG category. Moving on to our pipeline. In addition to the aforementioned Naraka: Bladepoint mobile version, our strong pipeline is bursting with other exciting titles in the making.
Harry Potter: Magic Awakened is under preparation for global launch following its debut in China last September. With our latest round of beta testing in July, we received very positive feedback from the player community. Together with Warner Bros. Games, we look forward to co-publishing this amazing title for global audience soon. Domestically, our development of Justice Mobile game is well on track. Building on the success that our PC phenomena Justice created back in 2018, Justice Mobile game will recreate a vivid world of the Song dynasty on mobile devices with our cutting-edge game technologies such as motion capture and global illumination. As a leader in the MMO category, we will keep pushing boundaries and continue to raise the bars for the industry.
Justice Mobile game will no doubt introduce a brand new game experience to the MMO universe and offer players a world of greater freedom and more imagination. We are determined to become a well-respected premium global game content provider on the international stage. Our globalization strategy will be an essential part of the next chapter of our growth story. Our world-class R&D infrastructure, coupled with our top talents from all over the world, will serve as a strong foundation to build the next sensational blockbusters for players worldwide. We always follow an innovative first approach and look for creative minds with the same passion for games. Through strategic investment and partnership, as well as setting up first-party overseas studios, we've successfully built a strong connection with top talent across the global stage.
In the second quarter, we made further progress in our globalization efforts, successfully bringing internationally renowned game veterans to NetEase. During the quarter, we are pleased to have announced that renowned industry veteran, Jerry Hook, a founding member of Xbox Live and one of the key masterminds behind the Halo and Destiny franchises. Jerry will be heading our newest first-party studio, Jar of Sparks, based in Seattle. We also announced the onboarding of Emile Liang, who had previously spent over 23 years with Ubisoft and was a producer of the Far Cry and Assassin's Creed franchises. We are excited for him to join as a lead producer in our Montréal studio, bringing us more expertise in AAA game production.
In Japan, we are also excited to welcome another master producer, Hiroyuki Kobayashi, who was a 27-year Capcom veteran and the producer of Resident Evil, Devil May Cry, Sengoku , Asura, and many other well-known game series. Same as our previously announced overseas studios, our new studios and producers have great autonomy over the games they want to build, allowing these top-notch talents to rise organically and maximize the creative genius in each of them. Now turning to our education business. Total net revenues for Youdao were RMB 956 million in the second quarter. We achieved positive operating cash flow of RMB 104 million in this quarter, despite the challenges faced during the COVID resurgence and business transition.
For the second quarter, net revenues from smart learning devices were RMB 240 million, up 16% year-over-year, demonstrating our resilience despite the pandemic's impact on the supply chain and logistics. Our flagship products maintained their remarkable popularity while we released a variety of diversified new products to cover a broader range of learning scenarios. Youdao Dictionary Pen series and Youdao listening pod both led their respective categories during JD.com's June eighteenth shopping festival. In July, we introduced a new product called Youdao Smart Learning Pad, our very first learning pad equipped with AI diagnosis and adaptive learning functions. The product satisfies users' needs for reading, listening, writing, and practicing all on one consolidated device.
We continue to diversify our product offering in the STEAM education sector, in which we achieved sustainable growth, with gross billings expanding by more than ninefold in the second quarter year-over-year and over 180% quarter-over-quarter. For example, in the second quarter, gross billings from Youdao International Chess increased by over 60% quarter-over-quarter. With an aim to create a comprehensive and user-friendly online learning community, we also launched the Youdao Board Game Academy application at the end of last year to better serve our students of Go, chess, and Chinese chess courses. As a result, the monthly average DAUs on this platform has increased over seven times compared with that of the first quarter. Looking ahead, Youdao will continue to upgrade its diversified products and services to empower more efficient learning experiences for Chinese students.
Driven by our proprietary technologies, we remain confident in Youdao's development trajectory in the second half of this year. On Cloud Music, again, a more challenging industry environment and macro headwind. We maintained strong growth in the second quarter, and total revenues improved by 29% year-over-year to CNY 2.2 billion. Our membership paying ratio also reached 21%, demonstrating the resilience of our business and high demand for the Cloud Music immersive music experience, along with users' increasing willingness to pay for premium content. Our online music services MAU stood at 182 million, with our DAU over MAU ratio staying well above 30% during the period. Gross margins have continued to improve and reached 13% in the second quarter, compared with just 4% in the same period last year.
By enhancing our product and community features and through technological innovation, we are bringing music lovers and artists alike the premium experience they crave. During the period, we launched our new high-resolution audio feature, offering users higher audio quality for an immersive audio experience. Coupled with our seamless listening function, we are committed to bringing users superior sound quality through the latest technology. User interaction is also a key component to the music experience we aim to provide. With our new music-inspired social networking app, Muse, we are utilizing music content to connect users. Within this app, users can connect with others who share similar music tastes based on their listening preferences and personality insights. On the content side, to satisfy the music needs of our younger users, we continue to build our content and give users increasing choices to express themselves.
As of June 30th, 2022, Cloud Music was also home to over 500,000 registered independent artists with 2.3 million music tracks created by this group of talented musicians. In addition, we are also working in collaboration with top labels to secure more top talent content and simultaneously achieving better commercial terms. As for our recently licensed content, we've added multiple licensing agreements with major overseas and domestic music labels such as SM Entertainment, TF Entertainment, YG Entertainment, all of which provide our users with access to more hits at an improved ROI. This will continue to be our goal as we negotiate with multiple copyright holders to bring in music content that resonates with our community and complement our offerings. Looking ahead, we plan to keep growing in the scope, content coverage, and community size.
Moving on to Yanxuan, our private label brand continues to launch popular products that consumers love across diversified channels in the second quarter. With a goal of bringing consumers products that facilitate a more leisurely and modern lifestyle, Yanxuan focuses on its development of high-quality original product designs. During the second quarter, we launched a number of popular products such as handmade vinegar, ergonomic chairs, skin-friendly quilts, and Chinese style fragrances, covering food, home furnishing, bedding, as well as personal hygiene and maternity products. Lastly, in June, we published our ESG report for 2021, highlighting that we have officially established a dedicated sustainable development department and formed an ESG committee at our board level consisting of three independent directors. In addition, we remained committed to continuing developing our carbon strategy and enhancing more transparent disclosure.
In 2021, as part of our environmental and social endeavors, we successfully reduced over 3,800 metric tons of carbon emissions in warehouses, logistics and packaging sites, and donated over RMB 80 million for flood relief and efforts towards pandemic control. In addition to our ongoing work to help students in remote mountainous areas, we also provided a great number of smart hardware, high-quality courses, and online learning platforms to rural schools. We were pleased to learn that with our help, many students achieved positive results in this year's college entrance exam and were successfully admitted to top universities, including Peking University. Across our business, we strive to serve the greater good of society as a whole and use our technology and other resources to support a better future. So far, we are making steady progress in growing our core game businesses and international presence.
With the global launch of thrilling new games across different platforms and the establishment of our overseas studios, which afford us access to the best creative minds anywhere in the world, we are getting ready for the next phase of our global ambition. This concludes William's comments. I will now provide a brief review of our 2022 second quarter financial results. Given the limited time on today's call, I will be presenting some abbreviated financial highlights. We encourage you to read through our press release issued earlier today for further details. Total net revenues for the second quarter were CNY 23.2 billion, or $3.5 billion, representing a 13% increase year-over-year.
As we disclosed in our earnings release issued earlier today, beginning in this quarter, we've consolidated revenues from certain value-added game services with our online games operations and renamed the category Games and Related Value-Added Services. We think this is a better depiction of our game business' ecosystem. In addition to online games, we provide a range of tools and services to our users to enhance their overall gaming experience when they play our games, such as the CC Live streaming service, a platform offering various live streaming content with a primary focus on game broadcasting and certain game-related merchandise sales. These revenues were previously included under our Innovative Businesses and Others line item, and historical periods have also been adjusted accordingly. Online game operations are still the primary component of this segment, accounting for nearly 93% of our total games and related value-added services revenue.
The ratio is steady with the prior period and same period a year ago. Total net revenues from our games and related VAS were RMB 18.1 billion, up 15% year-over-year. The growth was primarily due to increased revenue contribution from the launch of new games such as Naraka: Bladepoint and Harry Potter: Magic Awakened and other exciting games such as Fantasy Westward Journey Online. Net revenues from our mobile games accounted for approximately 66% of net revenues from the operation of online games. Youdao's net revenues were RMB 956 million, compared with RMB 1.3 billion in the same quarter last year.
The decline was mainly due to the conclusion of Youdao's after-school tutoring services for academic subjects under China's compulsory K-9 education system, which were previously included in its learning services back in 2021. Net revenues from Cloud Music were RMB 2.2 billion, up nearly 30% year-over-year. The increase was mainly due to the increased revenues from membership subscription as well as social entertainment services. Net revenues for innovative businesses and others were nearly RMB 2 billion, up 14% quarter-over-quarter, mainly due to increased contribution from Yanxuan in the second quarter. Our total gross profit margin rose to 55.9% in the second quarter, up slightly compared with 54.5% in the second quarter of last year. GP margin for the games and related value-added services was sixty-four point nine percent.
The majority of our gross profit in this segment is contributed by online games revenue. The contribution from related VAS is relatively much smaller, which carries a lower margin than online games. Therefore, even with adjustments to our line items, our games and related VAS margin is generally stable, with some narrow fluctuations based on the revenue mix of mobile and PC titles, self-developed, co-developed, as well as licensed games. GP margin for Youdao was 42.8%, compared with 52.3% in the same period of last year. The decline was mainly due to the lower revenue proportion from Youdao's learning services, resulting from the conclusion of the after-school tutoring businesses for K-9 academic subjects. Gross profit margin for Cloud Music continues to improve in the second quarter, climbing to 13% versus 4.1% a year ago.
The significant margin improvement primarily resulted from strong top-line growth, as well as the improved efficiency of our content investment. GP margin for innovative businesses and others was 25.8%, compared with 27.3% last year. The decline was mainly due to the result of decreased revenue from higher margin advertising services. Total operating expense for the second quarter were CNY 8 billion or 35% of our total net revenues. If we look at our cost composition in more detail, our selling and marketing expenses as a percentage of net revenue were 14%, compared with 15% for the same period last year. The change was mainly due to less marketing spend related to Youdao.
If we exclude Youdao, our selling and marketing expenses as a percentage of net revenue were 12%, compared with 11% in the same period last year, mainly due to increased spending on certain games promotion during the second quarter. Our R&D expenses were CNY 3.6 billion or 15% as a percentage of total net revenue, compared with 17% for the same period last year. We remain committed to investing in content creation and product development. We are also seeing leverage in our R&D investment. Our other income was CNY 785 million for the second quarter, compared with CNY 28 million last quarter. The quarter-over-quarter increase was mainly due to the exchange rate of the U.S. dollar against the RMB fluctuating over the last couple of periods. Our effective tax rate for this quarter was 22%.
As a general reminder, the effective tax rate is presented on an accrual basis, and the tax credits differ from each of our legal entities at different time periods, depending on applicable policies and our operations. Our non-GAAP net income from continuing operations attributable to shareholders for the second quarter totaled RMB 5.4 billion, or $808 million. Non-GAAP basic earnings per ADS from continuing operations for the quarter was $1.23 or $0.25 per share. This quarter, we also had RMB 625 million of net income from discontinued operations, which was related to the disposal of the Kaola business. Additionally, our cash position remains strong. As of the quarter end, our net cash position was about 88 billion RMB, compared with 86 billion as of the year-end last year.
In accordance with our dividend policy, we are pleased to report that our board of directors has approved a dividend of $0.072 per share or $0.36 per ADS. We continue to buy back shares during the period. Under our share repurchase program for up to $3 billion, approximately 24 million ADS has been repurchased as of June 30, for a total cost of approximately $3 billion. Meanwhile, under NetEase Youdao purchase program for up to $50 million, approximately 1.7 million ADS has been purchased for a total cost of about $18 million as of June 30.
In addition, NetEase purchased about 0.8 million ordinary shares of Cloud Music for a total cost over $8 million during the second quarter. Thank you for your attention. We would like now to open the call to your questions. Operator, let's go to Q&A.
Thank you. If you would like to ask questions, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. For the benefit of all participants on today's call, if you wish to ask your questions to management in Mandarin, please immediately repeat your questions in English. We will pause for just a moment to allow everyone an opportunity to signal for questions. We will take our first question from the line of Yang Bai from CICC.
好，谢谢，谢谢。
Please go ahead.
好的，谢谢管理层，首先恭喜强劲的业绩。那么我的问题是有关海外的游戏市场，其实我们看到在过去的一段时间里，公司还是持续地在发力这个海外市场，并且也成立了不少的工作室。我想问一下，该如何看待我们未来布局海外的一个步伐，包括这些海外工作室是否有一些正在开发中的产品可以和我们分享。
NetEase has continuously made efforts in the overseas markets in recent years and has established several game developers overseas. What is our take on the pace of overseas investment in the future? Also, could you perhaps share some colors on the products in development? Thank you.
海外游戏市场对网易来说是个非常重要的未来的业务发展的方向。众所周知，我们公司在过去一年没有获得国内游戏的版号，那我们的研发力量不得不面向欧美日韩的用户去进行产品的研发。我相信网易在过去二十年里面积累了大量的研发的经验，我们是一个非常有研发效率的企业，那我们也积极地跟海外的有创意的制作人通过各种方式去合作，开拓海外用户喜欢的游戏产品、作品。目前已经立项了不少产品在进行，我相信在不久的将来会有丰硕的成果。你这次看到网易六月二号在美国上线、海外上线的暗黑不朽，就是我们跟暴雪一起共同研发的，针对海外市场的，具体地说针对全球市场的作品，而且目前看来市场反应还是非常成功的。所以我们是有能力去做这方面的开发。谢谢。
Overseas market is of great importance for NetEase. As everybody knows that in the past year we've not received any license approval of 版号 in China. We have to make the strategic choice to shift some of our R&D resources to the global markets, to European markets, to the Japanese or the Asian markets. Everybody knows that we have very strong track record in game production. We have very high R&D efficiencies, and we are now working very closely with many overseas developers to find products that will be welcomed by the global game players. We actually do have a lot of products under development. Hopefully you will see some of them being introduced to the market very soon. On June 2nd, everybody saw the success of Diablo that we have with Blizzard, and I think it's been a very positive, very strong release of that game. Thank you.
We'll take our next question from the line of Thomas Chong from Jefferies.
晚上好，谢谢管理层接受我的提问。最近能看到呢，在全球宏观环境不太明朗的情况下，互联网公司呢，都在降本增效，优化员工成本，还有就是销售费用方面呢，有更积极的一个管控。想问一下管理层在销售、研发跟行政费用方面呢，未来的展望可以分享一下吗？谢谢。
Thanks management for taking my questions. We have seen Internet companies highlighting about cost efficiencies such as staff costs and marketing spending on the back of global macro headwinds these days. Can management share the thought about outlook about the operating expenses in sales and marketing, R&D and G&A? Thanks.
我想对这些费用不能说是裁剪，是优化啊，就是企业是要持续不断地对自己的每一个环节进行优化，这个优化的过程中，啊，也有这个缩减的过程，也有加大这个投资的过程。所以网易啊是持续不断地会去做这方面的这个优化、优化工作的。但这并不意味着说我们因为大的环境现在啊不理想，啊我们要做出某一方面的行动，啊我们是一个持续的啊、居安思危的、啊长远看问题的企业啊。
It's not about cutting costs, it's about optimization of cost. Sometimes it's throughout development operations for business. Sometimes we do cut costs. Costs in certain areas will also increase our investment spend in other areas. NetEase will continue to optimize the way we spend the cost structure of the company. Just because there's weakness in the macro doesn't necessarily mean that we have to take certain actions to address that. NetEase thinks very long term, and we care about the sustainable and long term growth of the company. Thank you.
Thomas Chong, Charles Yang, just to add a bit more. As you can see, we've always been very committed to R&D spending over the past couple of years. Our total headcount also remained relatively stable. Because for us, we think investing in talent, investing in technology is the key component in us creating world-class content.
Thank you Thomas. Next question, please.
Okay, thank you. We will take our next question from the line of Kenneth Fong from Credit Suisse.
丁总，Charles，Margaret，你们好，谢谢接受我的提问。想请教一下管理层对国内监管的环境的看法以及版号批准的预期。在将来我们减少版号的大环境以下，我们游戏的发展的策略，包括玩法、IP啊，投入的方向会有什么改变呢？谢谢。我继续翻译一下。
Thank you management for taking my question. What's management view on the domestic regulatory landscape and expectation on the 版号 approval? With a likely lower number of 版号 approved in the future, how will this change our game strategy including genre, IP, investment, et cetera ? Thank you.
对，这个问题我其实刚刚回答过了，这个促使我们一方面要把更多的市场放在海外的拓展方面，要对欧美日韩的用户进行拓展。第二个方面也是给我们一个警示说，我们要更加珍惜这个中国的国内的市场，要能更多积极地开发出优良品质的游戏，因为版号目前对我们来说是一个非常稀缺的资源。
I kind of mentioned that in the earlier question, one of the reasons we have to look abroad and be more active in expanding our user base overseas because of a lack of 版号 in China. Secondly, it kind of tells us that we have to value or cherish the domestic market even more, because 版号 is a very precious resource now. Every 版号 we get, we have to work, you know, putting more effort to make sure every game we develop to launch to the market will be popular, will be welcomed by the game players in China. Thank you.
谢谢。
Okay thank you. We will take our next question from the line of Lincoln Kong from Goldman Sachs. The line is open. Please go ahead.
谢谢管理层。那我想问一下关于两款这个title的一些问题啊，一个是这个无尽的拉格朗日，那刚才这个管理层也介绍这个，其实最近几个月这个游戏的这个热度啊，MAU都涨得很快啊。那可不可以再跟我们再说一说，这个背后主要是你们觉得是哪些原因扩大了整个这个user base，那对整这样的这种SLG类型的游戏，啊，未来的这个啊生命周期你还是怎么样去看？那，另外一个就是关于这个永劫无间的手游啊，那，是我们这个是顺利有版号的话，如果怎么样去想这种类型的手游啊，长远的这个潜力呢？啊，在现有的这些可能市场上已经有比较大的这种大DAU的这个啊竞争对手的游戏中的话，怎么样去想永劫无间的这个差异化和这个是未来的这个市场份额。
My question is about two single game titles. First is on Infinite Lagrange. What's the reason behind this title's popular trend in the recent months, and why we're seeing such a strong expanding MAU growth? Second is on the Naraka: Bladepoint mobile. From a longer term perspective, how do we see the potential for the mobile game version? What's our differentiated strategy to penetrate those large DAU base for battle royale game type, and especially acquiring the market share from those competitors?
我先回答一下关于那个拉格朗日的问题，那个
我们的团队非常擅长长线运营，在这个之前呢，拉格朗日这款产品它的DAU一直保持非常稳健的一个增长。在今年第二季度呢，我们推出了新的版本，这个新的版本呢，广受好评和欢迎。我们也注意到这个新版本呢，让很多玩家更深切地感受到了我们的SLG产品和市面其他竞争竞品的差异化。我们通过宏观用户的结构也发现，我们在新版本推出之后呢，我们的用户泛化很多，也说明我们的一些新开发内容呢，具备了一定的穿透力。所以呢，我相信这款产品在未来会取得更大的一个成绩。那我来回答一下第二个问题，就是虽然现在我们知道确实市面上已经有比较多的这样大DAU的这类产品，但是我们认为，这个《永劫无间》它给玩家提供的这样的游戏体验，特别是近战生存游戏体验和这个系列自由游、自由移动的这样的一种自由度是非常独特的，也是市面上目前比较缺乏的品类。那么我们之所以缺乏这个品类，我们也是做过研究的，它需要比较强的设计能力和技术实践。这两点我们是做了非常多的积累工作。在之前推出过流星蝴蝶剑，这样的手机上的非常好的近战品类的游戏，所以我们积累了丰富的经验，我们也相信我们能用这样的经验，把这样的经验用到《永劫无间》手里上，并且让全球玩家享受到它的乐趣。
好的，谢谢，谢谢。
管理层晚上好，谢谢接受我的提问。我的问题是关于这个美股 ADR 这个退市的风险，还有就是我们香港主板上市的一些计划，不知道管理层能够跟我们分享一下，就是说大概如果我们有想要在香港主板的话呢，大概时间是什么一个时候？然后不知道管理层有没有更多的一个信息，就是关于中美之间的一些讨论探讨的情况，我们的 ADR 是否真的会从美国这边退市呢？所以希望管理层这边有一些更新的一些想法跟我们分享一下。
Good evening . Thanks for taking my questions. My questions are related to the U.S. ADR delisting risk, and whether management has any comments on your plans for the primary Hong Kong listing, and if so, what is the rough time frame that we should expect that to happen? And if management has any latest update that you could share with us regarding the discussion status between China and the U.S., and whether the ADR will indeed be delisted from the U.S. exchange. Thank you.
Thank you Alicia, it's Charles . Let me answer your question directly in English. First, we are very closely monitoring the situation as everyone knows this is a topic or rather this is a question that is beyond the control of individual company. It is more of a geopolitical issue, but we remain cautiously optimistic that the U.S. and China, the two largest countries in the world and the senior leadership will find the common ground of interest. We think a kind of a hard landing or decoupling between entirely the Chinese companies. There are over 200 Chinese companies listed in the U.S. market. We really don't think a hard landing or decoupling would take place or rather being accelerated.
What we could control though is that we are making very proactive preparation in the event or in a hypothetical scenario if that extreme situation happened then NetEase will be prepared to continue being a listed liquid asset. As many of you know, we are in fact the second Chinese ADR that is being dual listed in Hong Kong back in 2020. Although we are currently a secondary listed status on the Hong Kong Stock Exchange, t he conversion between secondary listing to primary listing is more of a technical paperwork, or in a joking way, it's more of a lawyer's work. There's no barrier or roadblocks per se, and the preparation work, some of them has been undergoing for a while by us.
We think if the situation requires, the conversion will be a very swift and smooth process.
Thank you Charles.
Okay thank you. We will take our next question from the line of Natalie Wu from Haitong International.
晚上好，丁老板、Charles 和 Margaret，谢谢接受我的提问，并恭喜又取得一个好的业绩。那我的问题呢，有两个，一个的话是关于最近的魔兽的手游版和终止开发的这个传闻，就想确认一下这个是个独立事件是吗？我们需要担心和暴雪现在和未来的一些合作吗？尤其是考虑到明年被微软收购以后。那第二个是个很短的一个 follow-up，关于这个前面问到的无尽的拉格朗日，想问一下是不是有比较大的最近的增长是来自抖音发行计划？那，就如果是的话，那这部分利润怎么看？是不是相应的节支成本也要高一些？Uh, let me translate myself briefly.
Good evening. Thanks management for taking my question and congratulations on a very solid quarter. My question is related with the recent World of Warcraft mobile game rumor. Just heard that the collaboration has been halted. Just wanted to make sure if this is an independent event or should we be concerned regarding company's future relationship with Blizzard, especially after the Microsoft deal next year. Secondly, very quickly follow up with the Infinite Lagrange mobile game. I was just wondering if the majority of the recent incremental user or booking is generated through the ByteDance game publisher plan initiative, and if yes, how should we think of the related margin profile? Thank you.
我们跟那个暴雪的魔兽世界的手游这个问题，就像你说的，这是一个独立、独立的事情。那第二个，我们跟这个暴雪的合作到目前为止还是非常不错的。所以你看我们刚刚在一起共同发行的暗黑不朽，在全世界范围也是取得了不错的这个，这个成绩。拉格朗日的事情
我先翻译吧。
Let me just translate the answer to first question. Natalie , like you said, the case on World of Warcraft is an independent one. Our relationship with Blizzard has been very good. As you've seen recently, we co-developed and co-published Diablo on the world stage and achieved very positive results. Thank you.
Yeah Natalie for your second question on Infinite Lagrange, the short answer is that we from time to time continuously monitor and explore what we think are effective ways of user acquisition and marketing. Douyin amongst many others is a conducive marketing channel for certain type of games, maybe not all. For Infinite Lagrange, it works for certain types of marketing spending.
All in all, when we look at overall margin profile of a game, obviously we factor in a lot of considerations, marketing channels, marketing expense being one, but the success or rather the increasing popularity and success of Infinite Lagrange, I don't think it's only dependent on one single source of marketing channel. It played a role, but I think more importantly, the success is underscored by the continuous expansion packs. In particular, the expansion packs that we released in the second quarter was particularly effective.
Got it. Very clear. Thank you.
Okay thank you. We will take our next question from the line of Charlene Liu from HSBC.
谢谢管理层给我这个提问的机会。我想问一下，就是一个关于暗黑的问题，我们看到暗黑上线以来，其实无论在用户增长跟流水已经取得相当不错的成绩，我们想问一下管理层是怎么看待这个游戏的表现的，而且对于未来的生命周期有什么样的一个期待，公司对于关注游戏的哪些指标。我翻译一下。
Thank you management for giving me the opportunity to ask the question. We understand that Diablo is off to an excellent start, achieving amazing downloads and growth billing figures. How would the management evaluate the Diablo performance so far? What are your expectations on the longevity of the game? Also, what are the key KPIs you would be tracking mainly? Thank you very much.
暗黑上线之后，在全球市场都取得非常显著的成绩。它作为一款MMORPG产品，我们预期会进行长期的运营。就像我们过去运营梦幻西游、大话西游一样，我们会维护好现有的用户。同时，随着后续不断的更新和资料片内容的开发，会吸引更多的玩家体验暗黑的游戏世界。
You know, Diablo has achieved very prominent results on a worldwide stage and it's a very strong IP game and like we've done with many of our legacy games we will continue to issue strong content, good expansion packs to serve our global game players well. Thank you.
Next question please.
We will take our next question from the line of Alex Poon from Morgan Stanley.
谢谢管理层接受我的提问，恭喜很好的业绩。我有第一个问题想问一下，国内的游戏和海外的游戏在货币化科技的机制方面，这个设计方面有没有什么明显的区别？比如说暗黑在刚刚上线的时候，有一些美国的玩家会觉得科技比较重，所以想问一下，在未来全球手游这个发展，其实玩家会逐渐习惯这种科技的模式，或者我们在设计方面需要做得轻度一些，做一些调整。我第二个问题想问一下，永劫无间在 Xbox 的表现现在如何，以及以后在 PS5 和其他设备上线的时间表，在这个 console 这方面我们应该怎么预测这个收入未来？谢谢。
My first question is related to the monetization design between overseas titles and domestic titles. When Diablo was initially released we saw some comments from U.S. gamers saying the game design is a bit over monetized. In future when we design mobile games are gamers going to get used to this kind of monetization or we need to adjust our monetization system to be a little bit lighter? My second question is related to the performance of Naraka: Bladepoint on Xbox after its release in June and the timeline for PS5 and other platforms in future. Thank you.
我们的游戏产品呢，其实对所有的用户都提供了非常优质的游戏体验，我们并不是只制作一些只服务一些少数大R的这样一些游戏。相反呢，我们希望无论玩家他付费能力高低呢，都能够在我们的游戏里获得非常优质的游戏体验。据我所知呢，我身边很多的国内海外的一些玩家，他们在不花钱情况下都能非常好地体验暗黑这款产品。在全球不同国家和区域，有着不同的文化背景，还有用户的游戏习惯，消费习惯，我们会根据这些差异面向全球的游戏开发，展开我们全球的游戏开发和运营，我们也会尽量满足不同市场用户的特殊需求，差异化需求。
Our products is designed to provide strong user experience for all players. We are not targeting the only those who pay a lot of money in the game. We want to serve all of our players of all levels equally well. There are many of my friends globally who have all said they've had a great time playing Diablo without having to spend much money. It is true there are many different cultural differences, player differences in different regions around the globe and it will endeavor to provide great experience to players in every country every region of the world. Thank you.
关于这个物件在Xbox上的表现，我们财报里面已经有披露。因为我们加入的是Xbox的会员机制，上线之后带来了大量的新增，让更多的主机玩家体验到了我们的游戏内容。我们也计划在今年底或明年初会上PS平台，同时支持PS4和PS5，相信会有更多的玩家能够进入到我们游戏的轨道。
Thank you. As we mentioned in our prepared remarks, you know the Naraka: Bladepoint was launched on Xbox and we joined Xbox network, which brought us a lot of incremental users, particularly console game players. In terms of PlayStation 5, we're looking at a launch around end of this year or early next year. Thank you. Thank you very much. I think that ends our call.
Okay due to time constraint, that concludes today's questions and answer session. At this time I will turn the conference back to Margaret Shi for any additional closing remarks.
Thank you once again for joining us today. If you have any further questions, please feel free to contact us directly or TPG Investor Relations. Have a great day. Thank you.
That concludes today's conference. Thank you everyone for your participation.