Technology

NetEase Announces Second Quarter and Interim 2026 Unaudited Financial Results

Published

3 months ago

August 20, 2026

HONG KONG, Aug. 20, 2026 /PRNewswire/ — NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, “NetEase” or the “Company”), a leading internet and game services provider, today announced its unaudited financial results for the second quarter ended June 30, 2026.

In this results announcement, “we”, “us”, and “our” refer to the Company and where the context otherwise requires, the Group.

“Our robust performance in the first half of 2026 reflects players’ growing enthusiasm for both our newly launched and established games, underscoring our ability to create distinctive and refreshing experiences with lasting appeal,” said Mr. William Ding, Chief Executive Officer and Director of NetEase. “As we continue to strengthen both our live game operations and new title pipeline, we are sharpening our focus on original gameplay, cutting-edge technology and deeper global reach to support our enduring growth.

“Looking ahead, we will remain committed to creating original content that shapes industry trends, building evergreen franchises, and cultivating vibrant communities that sustain player engagement. Backed by disciplined execution and an expanding global presence, we aim to keep pushing creative boundaries, delivering exceptional gaming experiences and creating long-term value for our players, partners and shareholders,” Mr. Ding concluded.

FINANCIAL HIGHLIGHTS

Second Quarter 2026 Financial Highlights

Net revenues were RMB30.1 billion (US$4.4 billion), an increase of 7.9% compared with the same quarter of 2025.Games and related value-added services net revenues were RMB25.0 billion (US$3.7 billion), an increase of 9.7% compared with the same quarter of 2025.Youdao net revenues were RMB1.5 billion (US$216.2 million), an increase of 3.5% compared with the same quarter of 2025.NetEase Cloud Music net revenues were RMB2.0 billion (US$291.4 million), which was relatively stable compared with the same quarter of 2025.Innovative businesses and others net revenues were RMB1.6 billion (US$241.6 million), a decrease of 3.5% compared with the same quarter of 2025.Gross profit was RMB21.2 billion (US$3.1 billion), an increase of 17.5% compared with the same quarter of 2025.Total operating expenses were RMB9.1 billion (US$1.3 billion), an increase of 1.5% compared with the same quarter of 2025.Net income attributable to the Company’s shareholders was RMB7.0 billion (US$1.0 billion). Non-GAAP net income attributable to the Company’s shareholders was RMB7.7 billion (US$1.1 billion).[1]Basic net income per share was US$0.32 (US$1.61 per ADS). Non-GAAP basic net income per share was US$0.36 (US$1.78 per ADS).[1]

[1] As used in this announcement, non-GAAP net income attributable to the Company’s shareholders and non-GAAP basic and diluted net income per share and per ADS are defined to exclude share-based compensation expenses. See the unaudited reconciliation of GAAP and non-GAAP results within this announcement.

Six Months Ended June 30, 2026 Financial Highlights

Net revenues were RMB60.7 billion (US$8.9 billion), an increase of 7.0% compared with the same period of 2025.Games and related value-added services net revenues were RMB50.7 billion (US$7.5 billion), an increase of 8.3% compared with the same period of 2025.Youdao net revenues were RMB2.8 billion (US$414.9 million), an increase of 3.6% compared with the same period of 2025.NetEase Cloud Music net revenues were RMB4.0 billion (US$583.4 million), an increase of 3.4% compared with the same period of 2025.Innovative businesses and others net revenues were RMB3.2 billion (US$469.9 million), a decrease of 4.0% compared with the same period of 2025.Gross profit was RMB42.4 billion (US$6.3 billion), an increase of 16.2% compared with the same period of 2025.Total operating expenses were RMB17.7 billion (US$2.6 billion), an increase of 3.9% compared with the same period of 2025.Net income attributable to the Company’s shareholders was RMB17.7 billion (US$2.6 billion). Non-GAAP net income attributable to the Company’s shareholders was RMB19.0 billion (US$2.8 billion). [1]Basic net income per share was US$0.81 (US$4.06 per ADS). Non-GAAP basic net income per share was US$0.88 (US$4.38 per ADS).[1]

BUSINESS OVERVIEW

We continue to drive innovation across both newly launched and established titles, while further advancing our pipeline of titles in development.

Below are some recent highlights from our key products and services:

Games and related value-added services

The Fantasy Westward Journey franchise, Identity V, Eggy Party, Sword of Justice and Where Winds Meet sustained solid momentum through ongoing content updates, gameplay innovation and vibrant community activities.

We also advanced our global strategy and enhanced player engagement through strong live operations. For example, Where Winds Meet and Marvel Rivals further broadened their international reach with a steady stream of fresh content and community-focused initiatives in various markets including North America and Europe.

With respect to our pipeline of new titles, Sea of Remnants launched in China in July 2026, while development of Ananta and Blood Message remained on track, strengthening our innovative pipeline across diverse genres, gameplay and markets.

Youdao

Youdao advanced its AI-native strategy and deepened AI-driven innovation across its ecosystem. In the second quarter, it launched the large language model, Confucius 4, which delivers leading mathematical reasoning capabilities at lower inference costs compared to its previous version. Youdao also advanced its AI agent capabilities toward the autonomous execution of complex work and learning tasks.

NetEase Cloud Music

NetEase Cloud Music further developed its music-centric ecosystem by nurturing its distinctive community and enriching its differentiated content offering with original music, thereby driving stronger community engagement. It also further improved music-oriented monetization through continued growth in subscription-based memberships.

Innovative businesses and others

Innovative businesses and others remained focused on sustainable development and efficient operations, with Yanxuan maintaining leading positions on major e-commerce platforms in China across its key categories, including pet food, home scents and home goods.

FINANCIAL REVIEW

Second Quarter 2026 Financial Results

Net Revenues

Net revenues for the second quarter of 2026 were RMB30.1 billion (US$4.4 billion), compared with RMB30.6 billion and RMB27.9 billion for the preceding quarter and the same quarter of 2025, respectively.

Net revenues from games and related value-added services were RMB25.0 billion (US$3.7 billion) for the second quarter of 2026, compared with RMB25.7 billion and RMB22.8 billion for the preceding quarter and the same quarter of 2025, respectively. Net revenues from the operation of online games accounted for approximately 97.7% of the segment’s net revenues for the second quarter of 2026, compared with 97.5% and 97.1% for the preceding quarter and the same quarter of 2025, respectively. The quarter-over-quarter decrease was mainly due to a slight decline in net revenues from certain self-developed and licensed games. The year-over-year increase was attributable to higher net revenues from self-developed games, such as the Fantasy Westward Journey franchise and Where Winds Meet.

Net revenues from Youdao were RMB1.5 billion (US$216.2 million) for the second quarter of 2026, compared with RMB1.3 billion and RMB1.4 billion for the preceding quarter and the same quarter of 2025, respectively. The quarter-over-quarter and year-over-year increases were mainly attributable to higher net revenues from its learning services.

Net revenues from NetEase Cloud Music were RMB2.0 billion (US$291.4 million) for the second quarter of 2026, remaining stable compared with the preceding quarter and the same quarter of 2025.

Net revenues from innovative businesses and others were RMB1.6 billion (US$241.6 million) for the second quarter of 2026, compared with RMB1.5 billion and RMB1.7 billion for the preceding quarter and the same quarter of 2025, respectively. The quarter-over-quarter increase was mainly attributable to higher net revenues from e-commerce business and several other businesses included within the segment. The year-over-year decrease was mainly due to decreased net revenues from the e-commerce business.

Cost of Revenues

Cost of revenues for the second quarter of 2026 was RMB8.9 billion (US$1.3 billion), compared with RMB9.4 billion and RMB9.8 billion for the preceding quarter and the same quarter of 2025, respectively. The quarter-over-quarter decrease was mainly due to lower revenue-sharing costs. The year-over-year decrease was mainly due to lower revenue-sharing and product costs.

Gross Profit

Gross profit for the second quarter of 2026 was RMB21.2 billion (US$3.1 billion), compared with RMB21.2 billion and RMB18.1 billion for the preceding quarter and the same quarter of 2025, respectively.

Operating Expenses

Total operating expenses for the second quarter of 2026 were RMB9.1 billion (US$1.3 billion), compared with RMB8.6 billion and RMB9.0 billion for the preceding quarter and the same quarter of 2025, respectively. The quarter-over-quarter increase was primarily due to increased marketing expenditures, staff-related costs and research and development expenditures. The year-over-year increase was primarily due to increased research and development expenditures.

Other Income/(Expenses)

Other income/(expenses) consisted of net investment income/(loss), interest income, net exchange gains/(losses) and others. The quarter-over-quarter and year-over-year fluctuations in other income/(expenses) were mainly due to a decline in the fair value of equity security investments and impairment provisions made during the second quarter of 2026.

Income Tax

The Group recorded a net income tax charge of RMB2.5 billion (US$362.4 million) for the second quarter of 2026, compared with RMB2.5 billion and RMB1.6 billion for the preceding quarter and the same quarter of 2025, respectively. The effective tax rate for the second quarter of 2026 was 25.5%, compared with 18.9% and 14.7% for the preceding quarter and the same quarter of 2025, respectively. The effective tax rate represents certain estimates by the Group as to the tax obligations and benefits applicable to it in each quarter.

Net Income and Non-GAAP Net Income

Net income attributable to the Company’s shareholders totaled RMB7.0 billion (US$1.0 billion) for the second quarter of 2026, compared with RMB10.7 billion and RMB8.6 billion for the preceding quarter and the same quarter of 2025, respectively.

Basic net income was US$0.32 per share (US$1.61 per ADS) for the second quarter of 2026, compared with US$0.49 per share (US$2.46 per ADS) and US$0.40 per share (US$1.99 per ADS) for the preceding quarter and the same quarter of 2025, respectively.

Non-GAAP net income attributable to the Company’s shareholders totaled RMB7.7 billion (US$1.1 billion) for the second quarter of 2026, compared with RMB11.3 billion and RMB9.5 billion for the preceding quarter and the same quarter of 2025, respectively.

Non-GAAP basic net income was US$0.36 per share (US$1.78 per ADS) for the second quarter of 2026, compared with US$0.52 per share (US$2.60 per ADS) and US$0.44 per share (US$2.20 per ADS) for the preceding quarter and the same quarter of 2025, respectively.

Six Months Ended June 30, 2026 Financial Results

Net Revenues

Net revenues for the six months ended June 30, 2026 were RMB60.7 billion (US$8.9 billion), compared with RMB56.7 billion for the same period of 2025.

Net revenues from games and related value-added services were RMB50.7 billion (US$7.5 billion) for the six months ended June 30, 2026, compared with RMB46.9 billion for the same period of 2025. Net revenues from the operation of online games accounted for approximately 97.6% of the segment’s net revenues for the six months ended June 30, 2026, compared with approximately 97.3% for the same period of 2025. The increase was attributable to higher net revenues from self-developed games, such as the Fantasy Westward Journey franchise, Where Winds Meet and Eggy Party.

Net revenues from Youdao were RMB2.8 billion (US$414.9 million) for the six months ended June 30, 2026, compared with RMB2.7 billion for the same period of 2025. The increase was mainly attributable to higher net revenues from its learning services and online marketing services, partially offset by a decrease in net revenues from smart devices.

Net revenues from NetEase Cloud Music were RMB4.0 billion (US$583.4 million) for the six months ended June 30, 2026, compared with RMB3.8 billion for the same period of 2025. The increase was mainly attributable to higher net revenues from online music services, driven by growth in sales of membership subscriptions.

Net revenues from innovative businesses and others were RMB3.2 billion (US$469.9 million) for the six months ended June 30, 2026, compared with RMB3.3 billion for the same period of 2025. The decrease was mainly due to a decline in net revenues from the e-commerce business.

Cost of Revenues

Cost of revenues for the six months ended June 30, 2026 was RMB18.3 billion (US$2.7 billion), compared with RMB20.2 billion for the same period of 2025. The decrease was mainly due to lower revenue-sharing and product costs.

Gross Profit

Gross profit for the six months ended June 30, 2026 was RMB42.4 billion (US$6.3 billion), compared with RMB36.5 billion for the same period of 2025.

Operating Expenses

Total operating expenses for the six months ended June 30, 2026 were RMB17.7 billion (US$2.6 billion), compared with RMB17.0 billion for the same period of 2025. The increase was primarily attributable to higher marketing and research and development expenditures for games and related value-added services.

Other Income/(Expenses)

Other income/(expenses) consisted of net investment income/(loss), interest income, net exchange gains/(losses) and others. The fluctuation in other income/(expenses) was mainly due to a decline in the fair value of equity security investments, increased net exchange losses, and impairment provisions made during the six months ended June 30, 2026.

Income Tax

The Group recorded a net income tax charge of RMB5.0 billion (US$734.3 million) for the six months ended June 30, 2026, compared with RMB3.5 billion for the same period of 2025. The effective tax rate for the six months ended June 30, 2026 was 21.7%, compared with 15.0% for the same period of 2025. The effective tax rate represents certain estimates by the Group as to the tax obligations and benefits applicable to it in each period.

Net Income and Non-GAAP Net Income

Net income attributable to the Company’s shareholders totaled RMB17.7 billion (US$2.6 billion) for the six months ended June 30, 2026, compared with RMB18.9 billion for the same period of 2025.

Basic net income was US$0.81 per share (US$4.06 per ADS) for the six months ended June 30, 2026, compared with US$0.88 per share (US$4.38 per ADS) for the same period of 2025.

Non-GAAP net income attributable to the Company’s shareholders totaled RMB19.0 billion (US$2.8 billion) for the six months ended June 30, 2026, compared with RMB20.8 billion for the same period of 2025.

Non-GAAP basic net income was US$0.88 per share (US$4.38 per ADS) for the six months ended June 30, 2026, compared with US$0.96 per share (US$4.81 per ADS) for the same period of 2025.

OTHER FINANCIAL INFORMATION

As of June 30, 2026, the Company’s net cash (total cash and cash equivalents, current and non-current time deposits and restricted cash, as well as short-term investments balance, minus loans) totaled RMB167.5 billion (US$24.7 billion), compared with RMB163.5 billion as of December 31, 2025. Net cash provided by operating activities was RMB10.0 billion (US$1.5 billion) for the second quarter of 2026, compared with RMB13.7 billion and RMB10.9 billion for the preceding quarter and the second quarter of 2025, respectively.

EXCHANGE RATE INFORMATION

The United States dollar (US$) amounts disclosed in this announcement are presented solely for the convenience of the reader. The percentages stated are calculated based on RMB.

The conversion of Renminbi (RMB) into US$ is based on the noon buying rate of US$1.00 = RMB6.7851 on the last trading day of June 2026 (June 30, 2026) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on June 30, 2026, or at any other certain date.

CONFERENCE CALL

NetEase’s management team will host a teleconference call with a simultaneous webcast at 8:00 a.m. Eastern Time on Thursday, August 20, 2026 (Beijing/Hong Kong Time: 8:00 p.m., Thursday, August 20, 2026). NetEase’s management will be on the call to discuss the results and answer questions.

Interested parties may participate in the conference call by dialing 1-914-202-3258 and providing conference ID: 10056362, 15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 1-855-883-1031 and entering PIN: 10056362. The replay will be available through August 27, 2026.

This call will be webcast live, and the replay will be available for 12 months. Both will be available on NetEase’s Investor Relations website at http://ir.netease.com/.

ABOUT NETEASE, INC.

NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, “NetEase”) is a leading internet and game services provider centered around premium content. With extensive offerings across its expanding gaming ecosystem, the Company develops and operates some of the most popular and longest-running mobile and PC games available in China and globally.

Powered by one of the largest in-house game R&D teams focused on mobile, PC and console, NetEase creates superior gaming experiences, inspires players, and passionately delivers value for its thriving community worldwide. By infusing play with culture, and education with technology, NetEase transforms gaming into a meaningful vehicle to build a more entertaining and enlightened world.

Beyond games, NetEase service offerings include its majority-controlled subsidiaries Youdao (NYSE: DAO), an intelligent learning and advertising solutions provider, and NetEase Cloud Music (HKEX: 9899), a well-known online music platform featuring a vibrant content community, as well as Yanxuan, NetEase’s private-label consumer lifestyle brand.

For more information, please visit: http://ir.netease.com/.

Contact for Media and Investors:

Email: ir@service.netease.com

FORWARD-LOOKING STATEMENTS

This announcement 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 expressions. 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 games market will not continue to grow or that NetEase will not be able to maintain its position in that market in China or globally; 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 regulatory environment in the markets where NetEase operates, including policy or rule changes on taxation; 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; risks related to evolving economic cycles and geopolitical tensions, including the direct or indirect impacts of national trade, investment, protectionist, tax or other laws or policies as well as export controls and economic or trade sanctions; risks related to the expansion of NetEase’s businesses and operations internationally; risks associated with cybersecurity threats or incidents; and fluctuations in foreign currency exchange rates that 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 applicable law.

NON-GAAP FINANCIAL MEASURES

NetEase considers and uses non-GAAP financial measures, such as non-GAAP net income attributable to the Company’s shareholders and non-GAAP basic and diluted net income per ADS and per share, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP.

NetEase defines non-GAAP net income attributable to the Company’s shareholders as net income attributable to the Company’s shareholders excluding share-based compensation expenses. Non-GAAP net income attributable to the Company’s shareholders enables NetEase’s management to assess its operating results without considering the impact of share-based compensation expenses. NetEase believes that this non-GAAP financial measure provides useful information to investors in understanding and evaluating the Company’s current operating performance and prospects in the same manner as management does, if they so choose. NetEase also believes that the use of this non-GAAP financial measure facilitates investors’ assessment of its operating performance.

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP net income attributable to the Company’s shareholders is that it does not reflect all items of expense/income that affect the Company’s operations. Share-based compensation expenses have been and may continue to be incurred in NetEase’s business and are not reflected in the presentation of non-GAAP net income attributable to the Company’s shareholders. In addition, the non-GAAP financial measures NetEase uses may differ from the non-GAAP measures used by other companies, including peer companies, and therefore their comparability may be limited.

NetEase compensates for these limitations by reconciling non-GAAP net income attributable to the Company’s shareholders to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company’s performance. NetEase encourages you to review its financial information in its entirety and not rely on a single financial measure.

The unaudited reconciliation of GAAP and non-GAAP results is set out as follows in RMB and US$ (in thousands, except per share data or per ADS data):

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2025

2026

2025

2026

RMB

US$

RMB

US$

Net income attributable to the
Company’s shareholders

8,601,010

10,674,106

6,980,656

1,028,821

18,902,167

17,654,762

2,601,989

Add: Share-based compensation

930,921

600,718

766,058

112,903

1,866,491

1,366,776

201,438

Non-GAAP net income attributable
to the Company’s shareholders

9,531,931

11,274,824

7,746,714

1,141,724

20,768,658

19,021,538

2,803,427

Non-GAAP net income per share

Basic

2.99

3.53

2.42

0.36

6.53

5.94

0.88

Diluted

2.96

3.49

2.40

0.35

6.46

5.90

0.87

Non-GAAP net income per ADS

Basic

14.95

17.63

12.09

1.78

32.64

29.72

4.38

Diluted

14.81

17.46

12.02

1.77

32.32

29.49

4.35

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

December 31,

June 30,

2025

2026

RMB

US$

Assets

Current assets:

Cash and cash equivalents

47,167,904

22,814,542

3,362,447

Time deposits

92,639,378

101,978,645

15,029,792

Restricted cash

4,319,344

4,447,483

655,478

Accounts receivable, net

5,337,819

5,746,080

846,867

Inventories

689,183

511,896

75,444

Prepayments and other current assets, net

7,658,346

5,965,371

879,188

Short-term investments

22,803,503

50,599,638

7,457,464

Total current assets

180,615,477

192,063,655

28,306,680

Non-current assets:

Property, equipment and software, net

8,425,327

8,180,276

1,205,623

Land use rights, net

4,047,355

3,982,017

586,877

Deferred tax assets

2,831,423

2,695,809

397,313

Time deposits

2,995,000

260,000

38,319

Restricted cash

3,893

3,775

556

Long-term investments

18,462,883

21,336,343

3,144,588

Other long-term assets

4,033,702

3,686,261

543,287

Total non-current assets

40,799,583

40,144,481

5,916,563

Total assets

221,415,060

232,208,136

34,223,243

Liabilities, Redeemable noncontrolling interests and
Shareholders’ equity

Current liabilities:

Accounts payable

643,164

702,263

103,501

Salary and welfare payables

4,889,708

3,764,789

554,861

Taxes payable

3,874,143

3,720,498

548,334

Short-term loans

6,384,417

12,604,170

1,857,625

Contract liabilities

20,514,540

19,297,191

2,844,054

Accrued liabilities and other payables

16,062,984

15,529,221

2,288,724

Total current liabilities

52,368,956

55,618,132

8,197,099

Non-current liabilities:

Deferred tax liabilities

2,637,258

3,727,316

549,338

Other long-term liabilities

1,304,837

1,300,994

191,742

Total non-current liabilities

3,942,095

5,028,310

741,080

Total liabilities

56,311,051

60,646,442

8,938,179

Redeemable noncontrolling interests

91,319

94,938

13,992

Shareholders’ equity:

Ordinary shares

2,631

2,632

388

Additional paid-in capital

9,837,460

8,781,946

1,294,299

Treasury stock

(1,518,573)

(1,617,961)

(238,458)

Statutory reserves

2,457,371

362,172

Accumulated other comprehensive loss

(237,770)

(1,644,123)

(242,314)

Retained earnings

149,755,000

159,110,675

23,450,011

NetEase, Inc.’s shareholders’ equity

160,296,119

167,090,540

24,626,098

Noncontrolling interests

4,716,571

4,376,216

644,974

Total equity

165,012,690

171,466,756

25,271,072

Total liabilities, redeemable noncontrolling interests and
shareholders’ equity

221,415,060

232,208,136

34,223,243

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME

(in thousands except per share data or per ADS data)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2025

2026

2025

2026

RMB

US$

RMB

US$

Net revenues

27,891,664

30,591,281

30,106,546

4,437,156

56,720,209

60,697,827

8,945,753

Cost of revenues

(9,839,182)

(9,374,209)

(8,889,221)

(1,310,109)

(20,188,321)

(18,263,430)

(2,691,697)

Gross profit

18,052,482

21,217,072

21,217,325

3,127,047

36,531,888

42,434,397

6,254,056

Operating expenses:

Selling and marketing expenses

(3,578,174)

(3,441,485)

(3,678,809)

(542,189)

(6,273,771)

(7,120,294)

(1,049,401)

General and administrative
expenses

(1,056,578)

(636,597)

(805,268)

(118,682)

(2,012,915)

(1,441,865)

(212,505)

Research and development
expenses

(4,356,646)

(4,482,157)

(4,643,910)

(684,428)

(8,742,959)

(9,126,067)

(1,345,016)

Total operating expenses

(8,991,398)

(8,560,239)

(9,127,987)

(1,345,299)

(17,029,645)

(17,688,226)

(2,606,922)

Operating profit

9,061,084

12,656,833

12,089,338

1,781,748

19,502,243

24,746,171

3,647,134

Other income/(expenses):

Investment income/(loss), net

328,444

5,472

(2,953,671)

(435,317)

1,021,195

(2,948,199)

(434,511)

Interest income, net

953,490

890,267

863,201

127,220

2,014,376

1,753,468

258,429

Exchange gains/(losses), net

114,037

(622,108)

(436,492)

(64,331)

115,840

(1,058,600)

(156,018)

Other, net

192,167

438,978

62,858

9,264

447,482

501,836

73,961

Income before tax

10,649,222

13,369,442

9,625,234

1,418,584

23,101,136

22,994,676

3,388,995

Income tax

(1,560,757)

(2,523,838)

(2,458,674)

(362,364)

(3,465,900)

(4,982,512)

(734,331)

Net income

9,088,465

10,845,604

7,166,560

1,056,220

19,635,236

18,012,164

2,654,664

Accretion of redeemable
noncontrolling interests

(1,051)

(1,104)

(1,087)

(160)

(2,100)

(2,191)

(323)

Net income attributable to
noncontrolling interests

(486,404)

(170,394)

(184,817)

(27,239)

(730,969)

(355,211)

(52,352)

Net income attributable to the
Company’s shareholders

8,601,010

10,674,106

6,980,656

1,028,821

18,902,167

17,654,762

2,601,989

Net income

9,088,465

10,845,604

7,166,560

1,056,220

19,635,236

18,012,164

2,654,664

Other comprehensive income

Foreign currency translation
adjustment

(389,857)

(728,683)

(770,419)

(113,546)

(628,819)

(1,499,102)

(220,940)

Total comprehensive income

8,698,608

10,116,921

6,396,141

942,674

19,006,417

16,513,062

2,433,724

Comprehensive income
attributable to noncontrolling
interests

(470,857)

(121,843)

(140,619)

(20,725)

(690,158)

(262,462)

(38,682)

Comprehensive income
attributable to the
Company’s shareholders

8,227,751

9,995,078

6,255,522

921,949

18,316,259

16,250,600

2,395,042

Net income per share

Basic

2.70

3.34

2.18

0.32

5.94

5.52

0.81

Diluted

2.67

3.31

2.17

0.32

5.88

5.47

0.81

Net income per ADS

Basic

13.49

16.69

10.90

1.61

29.71

27.58

4.06

Diluted

13.36

16.53

10.83

1.60

29.41

27.37

4.03

Weighted average number of
ordinary shares used in
calculating net income per
share

Basic

3,188,634

3,198,123

3,203,046

3,181,307

3,200,598

Diluted

3,214,681

3,227,325

3,221,637

3,210,563

3,224,495

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2025

2026

2025

2026

RMB

US$

RMB

US$

Cash flows from operating activities:

Net income

9,088,465

10,845,604

7,166,560

1,056,220

19,635,236

18,012,164

2,654,664

Adjustments to reconcile net income to net cash
provided by operating activities:

Depreciation and amortization

428,427

430,583

439,439

64,765

909,188

870,022

128,225

Fair value changes of equity security, other
investments and financial instruments

55,715

1,117,717

2,023,477

298,224

(502,784)

3,141,194

462,955

Impairment losses on investments

161,463

344,871

1,281,917

188,931

250,534

1,626,788

239,759

Share-based compensation cost

946,395

616,180

781,656

115,202

1,898,267

1,397,836

206,015

Allowance for expected credit losses

153,179

6,719

1,309

193

169,950

8,028

1,183

Gains on disposal of property, equipment and
software

(30,920)

(565)

(13,983)

(2,061)

(10,627)

(14,548)

(2,144)

Unrealized exchange (gains)/losses

(165,662)

643,942

487,982

71,920

(194,115)

1,131,924

166,825

(Gains)/losses on disposal of long-term investments

(141,078)

(1,071,442)

5,550

818

(129,403)

(1,065,892)

(157,093)

Deferred income taxes

(853,764)

532,257

693,742

102,245

(525,492)

1,225,999

180,690

Share of results on equity method investees

13,479

442,575

96,645

14,244

(5,189)

539,220

79,471

Fair value changes of short-term investments

(344,604)

(385,395)

(372,234)

(54,861)

(546,213)

(757,629)

(111,661)

Changes in operating assets and liabilities:

Accounts receivable

953,295

(1,188,837)

726,762

107,111

(135,665)

(462,075)

(68,101)

Inventories

(73,944)

143,099

34,048

5,018

(20,171)

177,147

26,108

Prepayments and other assets

583,484

116,152

(16,816)

(2,478)

288,306

99,336

14,640

Accounts payable

119,644

134,445

(105,340)

(15,525)

(28,432)

29,105

4,290

Salary and welfare payables

920,662

(2,253,559)

1,107,729

163,259

(1,164,449)

(1,145,830)

(168,874)

Taxes payable

(764,372)

1,895,324

(2,038,642)

(300,459)

1,031,751

(143,318)

(21,122)

Contract liabilities

(718,719)

1,384,445

(2,511,144)

(370,097)

1,807,479

(1,126,699)

(166,055)

Accrued liabilities and other payables

530,718

(21,044)

184,272

27,158

240,344

163,228

24,057

Net cash provided by operating activities

10,861,863

13,733,071

9,972,929

1,469,827

22,968,515

23,706,000

3,493,832

Cash flows from investing activities:

Purchase of property, equipment and software

(189,842)

(312,148)

(18,785)

(2,769)

(643,913)

(330,933)

(48,774)

Proceeds from sale of property, equipment and
software

21,499

1,673

14,539

2,143

22,835

16,212

2,389

Purchase of intangible assets, content and licensed
copyrights

(313,349)

(290,019)

(61,554)

(9,072)

(612,120)

(351,573)

(51,815)

Net changes of short-term investments with terms of
three months or less

776,428

(15,766,308)

(1,594,496)

(235,000)

(5,362,128)

(17,360,804)

(2,558,666)

Purchase of short-term investments with terms over
three months and debt securities

(5,800,000)

(5,885,000)

(12,851,707)

(1,894,107)

(8,770,000)

(18,736,707)

(2,761,449)

Proceeds from maturities of short-term investments
with terms over three months

5,745,454

4,861,483

3,515,814

518,167

8,454,055

8,377,297

1,234,661

Investment in equity method investees

(100,986)

(94,021)

(3,040,753)

(448,152)

(155,089)

(3,134,774)

(462,009)

Investment in other equity investments

(2,640,655)

(3,110,374)

(453,871)

(66,892)

(2,677,518)

(3,564,245)

(525,304)

Proceeds from disposal of long-term investments

784,855

1,353,947

50,733

7,477

862,283

1,404,680

207,024

Placement/rollover of matured time deposits

(27,980,605)

(30,608,133)

(50,216,128)

(7,400,941)

(77,582,412)

(80,824,261)

(11,912,022)

Proceeds from maturities of time deposits

33,617,510

42,018,869

30,056,765

4,429,819

77,543,992

72,075,634

10,622,634

Change in other long-term assets

(27,367)

65,909

(58,891)

(8,679)

(28,045)

7,018

1,034

Net cash provided by/(used in) investing activities

3,892,942

(7,764,122)

(34,658,334)

(5,108,006)

(8,948,060)

(42,422,456)

(6,252,297)

Cash flows from financing activities:

Net changes from loans with terms of three months or
less

2,017,570

1,182,383

420,940

62,039

(236,845)

1,603,323

236,300

Proceeds of loans with terms over three months

1,231,000

6,134,520

1,326,090

195,441

3,978,550

7,460,610

1,099,558

Payment of loans with terms over three months

(1,804,730)

(2,620,900)

—

(4,740,407)

(2,620,900)

(386,273)

Dividends paid to shareholders

(3,082,122)

(5,156,320)

(3,138,873)

(462,613)

(8,666,654)

(8,295,193)

(1,222,560)

Net amounts received/(paid) related to capital
contribution from or repurchase of noncontrolling
interests shareholders

42,400

(23,418)

4,874

718

84,917

(18,544)

(2,733)

Net amounts paid related to repurchase of NetEase’s
ADSs/purchase of subsidiaries’ shares

(355,563)

(1,314,003)

(1,795,596)

(264,638)

(659,164)

(3,109,599)

(458,298)

Net cash used in financing activities

(1,951,445)

(1,797,738)

(3,182,565)

(469,053)

(10,239,603)

(4,980,303)

(734,006)

Effect of exchange rate changes on cash, cash
equivalents and restricted cash held in foreign
currencies

(31,749)

(340,829)

(187,753)

(27,671)

(88,681)

(528,582)

(77,903)

Net increase/(decrease) in cash, cash equivalents
and restricted cash

12,771,611

3,830,382

(28,055,723)

(4,134,903)

3,692,171

(24,225,341)

(3,570,374)

Cash, cash equivalents and restricted cash, at the
beginning of the period

45,395,483

51,491,141

55,321,523

8,153,384

54,474,923

51,491,141

7,588,855

Cash, cash equivalents and restricted cash, at end of
the period

58,167,094

55,321,523

27,265,800

4,018,481

58,167,094

27,265,800

4,018,481

Supplemental disclosures of cash flow information:

Cash paid for income taxes, net

2,184,556

1,464,650

2,487,225

366,572

3,391,111

3,951,875

582,434

Cash paid for interest expenses

64,366

78,326

25,374

3,740

161,790

103,700

15,283

Supplemental schedule of non-cash investing and
financing activities:

Fixed asset purchases financed by accounts payable
and accrued liabilities

744,596

463,033

522,371

76,988

744,596

522,371

76,988

NETEASE, INC.

UNAUDITED SEGMENT INFORMATION

(in thousands)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2025

2026

2025

2026

RMB

US$

RMB

US$

Net revenues:

Games and related value-added services

22,806,459

25,712,975

25,022,788

3,687,903

46,854,466

50,735,763

7,477,527

Youdao

1,417,541

1,348,022

1,466,861

216,189

2,715,803

2,814,883

414,862

NetEase Cloud Music

1,968,729

1,981,234

1,977,472

291,443

3,827,117

3,958,706

583,441

Innovative businesses and others

1,698,935

1,549,050

1,639,425

241,621

3,322,823

3,188,475

469,923

Total net revenues

27,891,664

30,591,281

30,106,546

4,437,156

56,720,209

60,697,827

8,945,753

Cost of revenues:

Games and related value-added services

(6,792,240)

(6,482,431)

(5,973,965)

(880,453)

(14,287,502)

(12,456,396)

(1,835,846)

Youdao

(808,181)

(745,729)

(749,986)

(110,534)

(1,492,216)

(1,495,715)

(220,441)

NetEase Cloud Music

(1,258,855)

(1,247,066)

(1,237,231)

(182,345)

(2,434,632)

(2,484,297)

(366,140)

Innovative businesses and others

(979,906)

(898,983)

(928,039)

(136,777)

(1,973,971)

(1,827,022)

(269,270)

Total cost of revenues

(9,839,182)

(9,374,209)

(8,889,221)

(1,310,109)

(20,188,321)

(18,263,430)

(2,691,697)

Gross profit:

Games and related value-added services

16,014,219

19,230,544

19,048,823

2,807,450

32,566,964

38,279,367

5,641,681

Youdao

609,360

602,293

716,875

105,655

1,223,587

1,319,168

194,421

NetEase Cloud Music

709,874

734,168

740,241

109,098

1,392,485

1,474,409

217,301

Innovative businesses and others

719,029

650,067

711,386

104,844

1,348,852

1,361,453

200,653

Total gross profit

18,052,482

21,217,072

21,217,325

3,127,047

36,531,888

42,434,397

6,254,056

View original content:https://www.prnewswire.com/news-releases/netease-announces-second-quarter-and-interim-2026-unaudited-financial-results-302856259.html

SOURCE NetEase, Inc.

Technology

Media advisory – Minister Hodgson to make energy announcement

Published

19 minutes ago

November 12, 2026

VANCOUVER, BC, Nov. 12, 2026 /CNW/ — The Honourable Tim Hodgson, Minister of Energy and Natural Resources, will make a funding announcement for a liquefied natural gas project that will strengthen Canada’s energy sector and exports. He will be joined by Premier Designate Lorne Doerkson. Media availability will follow.

Date: Friday, November 13, 2026

Time: 10:30 a.m. PT

All accredited media are asked to pre-register by emailing media@nrcan-rncan.gc.ca. Details on how to participate will be provided upon registration.

Follow Natural Resources Canada on LinkedIn

SOURCE Natural Resources Canada

Technology

Tellus Raises Reserve Account Rate to 8.00% APY to Help Savers Fight Inflation

Published

20 minutes ago

November 12, 2026

The new rate is more than twice the latest 12-month inflation rate, 3.7%.

MOUNTAIN VIEW, Calif., Nov. 12, 2026 /PRNewswire/ — Tellus App, Inc. (“Tellus”), the proptech company behind the Tellus savings app, today raised the annual percentage yield (APY) on its Reserve Account from 7.75% to 8.00%. That equals its highest Reserve rate, paid from November 2023 to December 2025.

Consumer prices rose 3.7% in the 12 months to September, up from 3.4% in August, according to the U.S. Bureau of Labor Statistics. Energy prices rose 20.4%. October added another 0.4%.

“You can’t control what prices do, but you can control what you save,” said Jeromee (JJ) Johnson, President of Tellus. “Set money aside in Reserve and you earn 8.00% APY on it. Make it a payday habit, and you fight rising prices one deposit at a time.”

How the account works:

Reserve Account. A sub-account where savers earn more than the Boost base rate, up to a balance limit. Money above the limit flows to the saver’s Boost Account. Boosts do not apply to Reserve.

What changes:

Reserve Account. APY rises from 7.75% to 8.00%, effective Nov. 12, 2026. The rate may change.Who gets it. Existing and new Reserve Accounts. Limits start at $2,500.What stays the same. No fees, no lock-up. The Boost base rate is unchanged.

Tellus is on the App Store and Google Play, and on the web at web.tellusapp.com.

About Tellus
Tellus App, Inc. is a proptech company headquartered in Silicon Valley. The Tellus savings app helps people save with cash accounts powered by real estate, and gives independent landlords property management software. Tellus also offers business-purpose residential lending.

Tellus is not a bank. Tellus is not FDIC-insured. The FDIC-insured Deposit Account is provided by Central Bank of Kansas City, Member FDIC. Eligible deposits held at Central Bank of Kansas City are insured by the FDIC up to applicable limits in the event of the bank’s failure. FDIC insurance does not apply to Tellus itself or to non-deposit products or services.

The Boost Account, Reserve Account and Vaults are not deposit accounts and are not FDIC-insured.

Rewards on Tellus’s non-deposit accounts vary and are determined by each customer’s actions and choices in the app.

See www.TellusApp.com for full terms and conditions.

View original content to download multimedia:https://www.prnewswire.com/news-releases/tellus-raises-reserve-account-rate-to-8-00-apy-to-help-savers-fight-inflation-302938399.html

SOURCE Tellus

Technology

HawkEye 360 Announces Third Quarter 2026 Financial Results

Published

20 minutes ago

November 12, 2026

Revenue of $59.3 million, up 84% compared to the prior-year period of $32.2 million

Achieved record international revenue of 23.3 million, up 76% compared to the prior-year period

Backlog of $300.3 million as of September 30, 2026

Raising full year revenue guidance to $225-$227 million and non-GAAP Adjusted EBITDA guidance to $38-$40 million

HERNDON, Va., Nov. 12, 2026 /PRNewswire/ — HawkEye 360, Inc. (NYSE: HAWK) (“HawkEye 360” or “the Company”), a global leader in signals intelligence data and analytics, today announced its financial results for the third quarter ended September 30, 2026.

“I am pleased with our third quarter results as we continue to see strong momentum for signals intelligence data and analytics. Importantly, growth on the international side of our business continues to gain significant traction, highlighted by revenue increasing 76% year-over-year to $23.3 million,” said Chief Executive Officer John Serafini. “We expect international expansion will continue. We are pleased with the opportunities in front of us, and that our success is translating into tangible financial results.”

“More recently, we reached another milestone in our next phase of constellation expansion with the launches of Clusters 15 and 16 in October,” he continued. “Following deployment, our space operations team successfully established communications with all six satellites across both clusters. Once commissioned, these clusters are expected to increase our revisit rate and allow us to serve a greater number of customers and mission requirements.”

Third Quarter 2026 Financial Highlights:

Revenue of $59.3 million, up 84% compared to the prior-year period of $32.2 million.Increased international revenue to $23.3 million, up 76% year-over-year and 11% sequentially from $21.0 million in the second quarter.Recorded a net loss of $(0.2) million, compared to net income of $1.7 million in the prior year period.Realized Adjusted EBITDA, a non-GAAP metric, of $13.3 million, compared to $9.6 million in the prior-year period.Recognized net cash provided by operating activities of $9.6 million and Free Cash Flow, a non-GAAP metric, of $137.0 thousand, compared to $4.0 million and $(6.0) million, respectively, in the prior-year period.Confirmed backlog of $300.3 million as of September 30, 2026, compared to $292.2 million as of June 30, 2026.

Third Quarter 2026 and Recent Business Highlights:

Signed $54 million in new multi-year contract awards with 11 allied partners and nations, reflecting the growing demand for HawkEye 360’s signals intelligence data and analytics.Announced a contract award under the National Reconnaissance Office’s Commercial Radio Frequency Capability Augmentation program to provide commercial RF data for U.S. national security missions, making HawkEye 360 the first commercial provider to progress from test-and-evaluation studies into an operational augmentation contract.Established a formal collaboration with Leonardo to integrate our RF capabilities into its space architecture, including proposed reserved capacity for European areas of interest delivered through Italian ground stations and EU-based cloud infrastructure.Partnered with ERA of the Czech Republic to serve as an international processing partner for radar products derived from our RF data.Established HawkEye 360 Luxembourg, S.à r.l., the Company’s first European subsidiary, providing a foundation for expanded operations in the European Union and closer engagement with European customers, governments and industry partners as the region strengthens its defense capabilities.Launched Clusters 15 and 16 in October, three days apart from launch sites on opposite sides of the world. They are the first HawkEye 360 satellites built for simultaneous RF collection and mission data downlink, and the Company has secured launch opportunities through 2028 to maintain constellation continuity and support future growth.Subsequent to the third quarter, signed $135 million in global contracts with more than $70 million dedicated to follow-on European contract awards, expanding Hawkeye 360’s support for European Ministries of Defense, intelligence agencies, and allied partners to strengthen sovereign defense capabilities, enhance operational awareness, and inform critical national and coalition security decisions.

Full Year 2026 Outlook

For full-year 2026, the Company is increasing its total revenue expectations to $225 million and $227 million, and non-GAAP Adjusted EBITDA of between $38 million and $40 million.

The Company has not reconciled its non-GAAP Adjusted EBITDA outlook to the most directly comparable GAAP measure because certain reconciling items, such as stock-based compensation, change in fair value of warrant liabilities, and depreciation and amortization, are uncertain or out of the Company’s control and cannot be reasonably predicted. The actual amount of these expenses will have a significant impact on the Company’s future GAAP financial results. Accordingly, a reconciliation of the Company’s non-GAAP Adjusted EBITDA outlook to the most comparable GAAP measures is not available without unreasonable efforts.

Third Quarter 2026 Earnings Conference Call:

The Company will hold a conference call today, November 12, 2026, at 4:30 PM ET. The call can be accessed by dialing 1-877-407-0792 (U.S. participants) or 1-201-689-8263 (International participants). Participants can also listen to a live webcast of the call by going to the Investors section on HawkEye’s website at https://investors.he360.com/. A replay of the call will be available starting on Friday, November 13, 2026, at 11:30 AM ET by dialing 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) and entering the conference ID number:13763186. The replay will be available through Thursday, November 26, 2026, at 11:59 PM ET.

About HawkEye 360

HawkEye 360 is equipping defense, intelligence and national security leaders with mission-critical signals intelligence to enable faster, better decision-making. By detecting, geolocating and characterizing radio-frequency emissions worldwide, HawkEye 360 delivers trusted domain awareness and early-warning indicators to the US Government and allied partners. Our space-based collection, proprietary signal processing and AI-powered analytics transform knowledge of RF spectrum into a strategic advantage. Proven by operational mission success, HawkEye 360 is redefining how signals intelligence strengthens national and global security.

Non-GAAP Financial Measures

In addition to the financial information prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company reports Adjusted EBITDA and Free Cash Flow, which are non-GAAP financial measures. The Company defines Adjusted EBITDA as net income (loss) before interest income, interest expense, income tax expense or benefit, depreciation and amortization, as well as significant non-cash and/or non-recurring expenses that are not considered part of the Company’s operations and revenue-generating activities, or are nonrecurring or infrequent in nature. Management believes these items are not useful in evaluating the Company’s core operating performance. These items include, but are not limited to, stock-based compensation expense; acquisition-related costs, one-time costs related to the IPO, settlements, net of related legal expenses, changes in fair value of contingent and deferred consideration, changes in fair value of warrant liabilities, and gains or losses on extinguishment of debt. The Company defines Free Cash Flow as net cash provided by (used in) operating activities less purchases of satellites, property, and equipment.

The Company uses Adjusted EBITDA and Free Cash Flow in conjunction with other GAAP measures to evaluate the effectiveness of its business strategies, make strategic decisions, and communicate with its board of directors and investors concerning its financial performance. The Company uses these non-GAAP financial measures to assess its financial performance because they allow the Company to compare its operating performance on a consistent basis across periods by removing the effects of its capital structure (such as varying levels of interest expense and income), asset base (such as depreciation and capital expenditures) and other items (such as non-recurring or non-cash costs) that impact the comparability of financial results from period to period.

The Company believes that the presentation of these non-GAAP financial measures will provide useful information to investors and analysts in assessing its financial performance and results of operations across reporting periods by excluding items it does not believe are indicative of its core operating performance. Net Income (Loss) is the U.S. GAAP measure most directly comparable to Adjusted EBITDA. Net cash provided by (used in) operating activities is the U.S. GAAP measure most directly comparable to Free Cash Flow. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are presented below under the headings “Reconciliation of Net Income (Loss) to Adjusted EBITDA” and “Reconciliation of Net Cash Provided By (Used In) Operating Activities to Free Cash Flow.” The Company’s non-GAAP financial measures should not be considered as an alternative to the most directly comparable U.S. GAAP financial measure. You are encouraged to evaluate each of these adjustments and the reasons management considers them appropriate for supplemental analysis.

In evaluating Adjusted EBITDA and Free Cash Flow, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in such presentation. The Company’s presentation of these non-GAAP financial measures should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. The Company may modify the presentation of Adjusted EBITDA and Free Cash Flow in the future, and any such modification may be material. Adjusted EBITDA and Free Cash Flow have important limitations as analytical tools, and you should not consider these non-GAAP financial measures in isolation or as a substitute for analysis of the Company’s operating results as reported under U.S. GAAP. Adjusted EBITDA and Free Cash Flow may be defined differently by other companies in the Company’s industry and may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Other Key Metric

Backlog is a key measure of the Company’s business. The Company’s backlog supports predictable revenue expansion through a recurring model, enabling forward revenue visibility. Management uses backlog to more effectively forecast the Company’s future business and results, which supports decisions around capital allocation. It also helps the Company identify future growth or operating trends that may not otherwise be apparent. The Company also believes backlog is useful for investors in forecasting the Company’s future results and understanding the growth of its business.

The Company’s backlog represents the portion of legally binding contracts that are expected to result in future revenue. Backlog may also include change orders for any contracts that have been formally contracted. This includes firm contracts that contain remaining performance obligations, including the cancellable portion of the contract value for contracts that provide the customer with a right to terminate for convenience without incurring a substantive termination penalty. Backlog also can include up to the remaining ceiling on single award IDIQ contracts where no task orders have been issued. Backlog excludes the value of unexercised options to extend contracts, the value of multi-award IDIQ contracts, and the value of any contracts, or a portion thereof, where management deems execution to be unlikely to result in revenue due to customer-specific or other factors.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical fact, including statements regarding the Company’s liquidity and financial flexibility, the Company’s financial outlook for the year ended December 31, 2026, the Company’s expected constellation growth and increased collection capacity, the Company’s expanding international presence, the Company continuing to scale the business and growing customer demand, are forward-looking statements and represent the Company’s views as of the date of this press release. The words “will,” “expects,” “plans,” “could,” “would,” “believes,” “anticipates,” “intends,” “may,” “continue,” “estimate,” or similar expressions are intended to identify forward-looking statements. The Company has based these forward-looking statements on its current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of assumptions and risks and uncertainties, many of which involve factors or circumstances that are beyond the Company’s control that could affect its financial results. These risks and uncertainties are detailed in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, to be filed with the Securities and Exchange Commission (the “SEC”) on November 12, 2026, and other filings that the Company makes from time to time with the SEC, which are available on the SEC’s website at sec.gov. Moreover, the Company operates in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for management to predict all risks, nor can the Company assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements the Company may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in any forward-looking statements. Except as required by law, the Company is under no obligation to update these forward-looking statements subsequent to the date of this press release, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

HawkEye 360, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share and share amounts)

As of September 30, 2026

As of December 31, 2025

Assets

Current assets:

Cash and cash equivalents

$ 494,850

$ 92,686

Contract accounts receivable

41,384

32,320

Contract accounts receivable from related parties

—

20,969

Other accounts receivable

1,091

Inventory

3,516

4,025

Contract assets

17,494

4,639

Contract assets from related parties

—

4,748

Prepaid expenses and other current assets

7,148

9,183

Total current assets

565,483

168,591

Long-term assets:

Satellites, property and equipment, net

139,413

110,873

Intangibles, net

30,393

35,973

Goodwill

117,958

116,866

Operating lease – right-of-use-assets

19,397

15,403

Deposits

21,104

35,932

Restricted cash

6,584

4,587

Other long-term assets

2,613

1,715

Total long-term assets

337,462

321,349

Total assets

$ 902,945

$ 489,940

Liabilities, mezzanine equity and stockholders’ equity (deficit)

Current liabilities:

Accounts payable

8,638

18,486

Accrued expenses and other current liabilities

8,408

5,017

Accrued compensation payable

11,376

10,511

Contract liabilities

10,798

3,262

Current tax payable

311

—

Current portion of operating lease liabilities

4,334

3,437

Total current liabilities

43,865

40,713

Long-term liabilities:

Long-term debt, net of unamortized debt issuance cost

—

46,315

Long term contract liabilities

19,112

19,892

Other liabilities

17,553

23,800

Deferred tax liabilities

1,071

977

Warrant liabilities

—

4,267

Operating lease liabilities, net of current portion

16,059

12,893

Total long-term liabilities

53,795

108,144

Total liabilities

$ 97,660

$ 148,857

Commitments and contingencies – Note 15

Mezzanine equity:

Redeemable, convertible preferred stock Series A – $0.0001 par value, 0 and 24,947,154
shares authorized at September 30, 2026, and December 31, 2025, respectively,
and 0 and 24,947,154 shares issued and outstanding at September 30, 2026, and
December 31, 2025, respectively

$ —

$ 34,174

Redeemable, convertible preferred stock Series B – $0.0001 par value, 0 and 11,574,841
shares authorized at September 30, 2026, and December 31, 2025, respectively, and 0
and 11,574,841 shares issued and outstanding at September 30, 2026, and
December 31, 2025, respectively

—

66,442

Redeemable, convertible preferred stock Series C – $0.0001 par value, 0 and 6,960,439
shares authorized at September 30, 2026, and December 31, 2025, respectively, and, 0 and
6,960,439 shares issued and outstanding at September 30, 2026, and December 31,
2025, respectively

—

48,761

Redeemable, convertible preferred stock Series D – $0.0001 par value, 0 and 12,857,720
shares authorized at September 30, 2026, and December 31, 2025, respectively, and 0
and 12,857,720 shares issued and outstanding at September 30, 2026, and
December 31, 2025, respectively

—

136,715

Redeemable, convertible preferred stock Series D-1 –$0.0001 par value, 0 and 6,085,161
shares authorized at September 30, 2026, and December 31, 2025, respectively, and 0
and 6,085,161 shares issued and outstanding at September 30, 2026, and December 31,
2025, respectively

—

58,894

Redeemable, convertible preferred stock Series E – $0.0001 par value, 0 and 14,578,457
shares authorized at September 30, 2026, and December 31, 2025, respectively, and 0
and 5,567,364 shares issued and outstanding at September 30, 2026, and December 31,
2025, respectively

—

102,600

Total mezzanine equity

$ —

$ 447,586

Stockholders’ equity (deficit):

Common stock – $.0001 par value, 2,000,000,000 and 111,000,000 shares authorized at
September 30, 2026 and December 31, 2025, respectively and 99,091,643 and
4,168,374 shares issued and outstanding at September 30, 2026, and December 31,
2025, respectively

$ 10

$ 2

Additional paid-in-capital

975,546

39,336

Accumulated deficit

(170,271)

(145,841)

Total stockholders’ equity (deficit)

805,285

(106,503)

Total liabilities, mezzanine equity, and stockholders’ equity

$ 902,945

$ 489,940

HawkEye 360, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share and share amounts)

Three months ended September 30,

Nine months ended September 30,

2026

2025

2026

2025

Revenue

$ 59,336

$ 27,405

$ 152,718

$ 68,458

Revenue from related parties

—

4,791

6,226

13,366

Total revenue

59,336

32,196

158,944

81,824

Operating expenses:

Direct cost of sales, excluding depreciation and amortization

17,110

5,453

48,040

15,312

Indirect cost of sales and other expenses, excluding depreciation and amortization

4,973

398

13,921

1,067

Selling, general and administrative

24,308

10,505

67,430

27,245

Research and development

8,040

8,175

25,455

20,941

Depreciation and amortization

9,275

5,934

25,631

16,790

Total operating expenses

63,706

30,465

180,477

81,355

Income (loss) from operations

(4,370)

1,731

(21,533)

469

Other income (expense):

Interest income

4,377

853

8,046

2,707

Interest expense

(139)

(17)

(2,390)

(52)

Loss from changes in fair value of financial liabilities

—

(886)

(5,701)

(1,423)

Loss from extinguishment of debt

—

(2,729)

—

Other income, net

121

—

284

—

Total other income (expense), net

4,359

(50)

(2,490)

1,232

Income (loss) before tax

(11)

1,681

(24,023)

1,701

Income tax expense

(152)

—

(407)

—

Net income (loss)

$ (163)

$ 1,681

$ (24,430)

$ 1,701

Preferred stock dividend

—

(561)

10,376

(1,663)

Income allocated to participating securities

—

(1,000)

—

(34)

Net income (loss) attributable to common shareholders

$ (163)

$ 120

$ (14,054)

$ 4

Net income (loss) per share of common stock, basic

$ —

$ 0.02

$ (0.25)

$ —

Net income (loss) per share of common stock, diluted

$ —

$ 0.01

$ (0.25)

$ —

Weighted-average shares outstanding, basic

98,251,708

7,535,397

56,507,890

7,387,613

Weighted-average shares outstanding, diluted

98,251,708

14,362,624

56,507,890

12,633,530

HawkEye 360, Inc. and Subsidiaries

Consolidated Statement of Cash Flows (Unaudited)

(in thousands)

Nine months ended September 30,

2026

2025

Cash flows from operating activities

Net income (loss)

$ (24,430)

$ 1,701

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

25,631

16,790

Amortization of debt issuance costs and other noncash debt costs

577

Fair value loss on revaluation of warrants

4,471

1,423

Fair value loss on revaluation of deferred consideration

1,500

—

Fair value gain on revaluation of contingent consideration

(270)

—

Loss from extinguishment of debt

2,729

—

Stock-based compensation

17,193

3,147

Amortization of operating lease right-of-use assets

3,894

2,971

Realized gain (loss) on short-term investments

—

(12)

Changes in operating assets and liabilities, net of effect of acquisitions:

Contract accounts receivable

(9,064)

(11,149)

Contract accounts receivable from related parties

20,969

Other accounts receivable

(1,070)

Contract assets

(7,427)

(200)

Contract assets from related parties

(1,212)

(3,571)

Prepaid expenses and other assets

(11,791)

(3,312)

Operating lease liabilities

(3,825)

(2,974)

Accounts payable

(11,039)

(6,299)

Current tax payable

311

—

Accrued expenses and other liabilities

3,114

(764)

Deferred tax liabilities

—

Accrued compensation payable

865

—

Contract liabilities

6,756

3,220

Net cash provided by (used in) operating activities

17,976

1,097

Cash flows from investing activities

Proceeds from redemption of short-term investments

—

39,716

Purchase of satellites, property and equipment

(19,779)

(19,086)

Net cash provided by (used in) investing activities

(19,779)

20,630

Cash flows from financing activities

Payment of debt issuance cost

(85)

—

Payment of deferred acquisition consideration

(7,500)

—

Exercise of warrants

202

—

Exercise of stock options

6,933

Proceeds from common stock in initial public offering

478,400

—

Payment of offering costs, including underwriting commissions

(40,601)

—

Repayment of term loans

(49,453)

—

Proceeds from issuance of preferred stock

18,774

—

Payment of preferred stock issuance costs

(706)

—

Net cash provided by (used in) financing activities

405,964

Net increase in cash, cash equivalents and restricted cash

404,161

21,785

Cash, cash equivalents and restricted cash, beginning of period

97,273

71,766

Cash, cash equivalents and restricted cash, end of period

$ 501,434

$ 93,551

Reconciliation of cash, cash equivalents and restricted cash

Cash and cash equivalents

494,850

88,964

Restricted cash

6,584

4,587

Total cash, cash equivalents and restricted cash at the end of the period

$ 501,434

$ 93,551

Nine months ended September 30,

2026

2025

Supplemental disclosures of cash flow information

Cash paid for interest

$ 1,235

$ —

Operating cash outflows – payment on operating leases

5,042

2,626

Operating lease right-of-use assets obtained in exchange for lease liabilities

7,888

1,322

Non-cash investing and financing activities

Conversion of warrant liabilities to additional paid-in-capital, including those settled in the IPO

8,737

—

Conversion of redeemable convertible preferred stock to common stock

465,654

—

Reclassification of deposits to satellites, property and equipment

28,345

—

Fixed assets in accounts payable at period end

468

—

Payment of offering costs, including underwriting commissions, in accounts payable at period end

300

—

Interest paid in kind

189

—

Reconciliation of Net Income (Loss) to Adjusted EBITDA

The following table presents a reconciliation of Net Income (loss), the most directly comparable financial measure presented in accordance with U.S. GAAP, to Adjusted EBITDA:

Three months ended September 30,

Nine months ended September 30,

(in thousands)

2026

2025

2026

2025

Net income (loss)

$ (163)

$ 1,681

$ (24,430)

$ 1,701

Adjusted for:

Interest income

(4,377)

(853)

(8,046)

(2,707)

Interest expense

139

2,390

Income tax expense

152

—

407

—

Depreciation and amortization

9,275

5,934

25,631

16,790

Stock-based compensation

7,384

1,317

17,233

3,147

Acquisition costs(1)

350

—

1,942

—

One-time costs related to IPO(2)

515

4,100

Settlements, net of related legal expenses(3)

—

494

751

Change in fair value of contingent and deferred consideration

—

1,230

—

Change in fair value of warrant liabilities

—

886

4,471

1,423

Loss on extinguishment of debt

—

2,729

—

Adjusted EBITDA

$ 13,275

$ 9,557

$ 27,707

$ 21,238

(1) Represents costs for legal and advisory fees, key employee retention incentives, integration, and other costs incurred in connection with acquisitions.
(2) Represents costs incurred related to the IPO that do not meet the direct and incremental criteria per SEC Staff Accounting Bulletin Topic 5.A to be netted against the gross proceeds of the offering and that are not expected to recur in the future, which such costs include accounting and advisory fees, SOX readiness and internal control implementation costs, and other professional fees.
(3) Represents costs for legal fees and settlement related to litigation initiated by us against a third party, which are not part of our ordinary legal expenses and not reflective of our core operating performance.

Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow

The following table presents a reconciliation of net cash (used in) provided by operating activities, the most directly comparable financial measure presented in accordance with U.S. GAAP, to Free Cash Flow:

Three months ended September 30,

Nine months ended September 30,

(in thousands)

2026

2025

2026

2025

Net cash provided by (used in) operating activities

9,621

$ 3,978

17,976

$ 1,097