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Notice of the Annual General Meeting of shareholders 2025 of Telefonaktiebolaget LM Ericsson

STOCKHOLM, Feb. 20, 2025 /PRNewswire/ — The shareholders of Telefonaktiebolaget LM Ericsson (reg. no 556016-0680) (the “Company” or “Ericsson“) are invited to participate in the Annual General Meeting of shareholders (“AGM“) to be held on Tuesday, March 25, 2025 at 1 p.m. CET at the Company’s premises: Open Box, Grönlandsgatan 8, Kista/Stockholm. Registration for the AGM starts at 12 p.m. CET. Shareholders may also exercise their voting rights by post before the AGM.

The AGM will be conducted in Swedish and simultaneously translated into English.

Registration and notice of participation

A) Participation at the meeting venue

Shareholders who wish to attend the meeting venue in person or by proxy must:

  • be recorded as a shareholder in the presentation of the share register prepared by Euroclear Sweden AB, as of Monday, March 17, 2025; and
  • give notice of participation to the Company no later than Wednesday, March 19, 2025
    • by telephone +46 (0)8 402 90 54 on weekdays between 10 a.m. and 4 p.m. CET;
    • by post to Telefonaktiebolaget LM Ericsson, AGM, c/o Euroclear Sweden AB, Box 191, SE-101 23 Stockholm, Sweden;
    • by e-mail to GeneralMeetingService@euroclear.com; or
    • via Ericsson’s website www.ericsson.com.

When giving notice of participation, please include name, date of birth or registration number, address, telephone number and number of participating assistants, if any.

Proxy
If the shareholder is represented by proxy, a written and dated power of attorney signed by the shareholder must be issued for the representative. A power of attorney issued by a legal entity must be accompanied by the entity’s certificate of registration (or a corresponding document of authority). In order to facilitate registration at the AGM, the power of attorney, certificate of registration and other documents of authority should be sent to the Company at the address above, in connection with the notice of participation. Forms of power of attorney in Swedish and English are available on Ericsson’s website, www.ericsson.com.

B) Participation by postal voting

Shareholders who wish to participate in the AGM by postal voting must:

  • be recorded as a shareholder in the presentation of the share register prepared by Euroclear Sweden AB, as of Monday, March 17, 2025; and
  • give notice of participation by casting its postal vote in accordance with the instructions below, so that the postal voting form is received by Euroclear Sweden AB no later than Wednesday, March 19, 2025.

A special form must be used for postal voting. The form is available on Ericsson’s website www.ericsson.com. The completed and signed postal voting form may be sent by post to Telefonaktiebolaget LM Ericsson, AGM, c/o Euroclear Sweden AB, Box 191, SE-101 23 Stockholm, Sweden, or by e-mail to GeneralMeetingService@euroclear.com. Shareholders may also submit their postal votes electronically by verification with BankID via Ericsson’s website, www.ericsson.com. The completed form must be received by the Company/Euroclear Sweden AB no later than Wednesday, March 19, 2025.

The shareholder may not provide special instructions or conditions in the postal voting form. If such instructions or conditions are included, the postal vote (in its entirety) is invalid. Further instructions and conditions are included in the form for postal voting.

If the shareholder submits its postal vote by proxy, a written and dated power of attorney signed by the shareholder must be attached to the postal voting form. If the shareholder is a legal entity, the entity’s certificate of registration (or a corresponding document of authority) must be attached to the form. Forms of power of attorney in Swedish and English are available on Ericsson’s website, www.ericsson.com.

A shareholder who has voted by post may also attend the meeting venue, provided that the notification has been made in accordance with the instructions under the heading Registration and notice of participation – A) Participating at the meeting venue above.

Shares registered in the name of a nominee

In order to be entitled to participate in the AGM, a shareholder whose shares are registered in the name of a nominee must, in addition to giving notice of participation in the AGM, register its shares in its own name so that the shareholder is listed in the presentation of the share register of the Company as of Monday, March 17, 2025. Such re-registration may be temporary (so-called voting rights registration), and request for such voting rights registration shall be made to the nominee, in accordance with the nominee’s procedures, at such a time in advance as required by the nominee.

Voting rights registrations that have been made by the nominee on or before Wednesday, March 19, 2025 will be considered in the presentation of the share register.

Processing of personal data

For information regarding the processing of personal data in connection with the AGM, please see the privacy policy on Euroclear Sweden AB’s website: https://www.euroclear.com/dam/ESw/Legal/Privacy-notice-bolagsstammor-engelska.pdf

If you have questions regarding Ericsson’s processing of your personal data, you can contact the Company by emailing ericsson.group.privacy@ericsson.com. Ericsson has company registration number 556016-0680 and the Board’s registered office is in Stockholm.

Proposed agenda

  1. Election of the Chair of the AGM
  2. Preparation and approval of the voting list
  3. Approval of the agenda of the AGM
  4. Determination whether the AGM has been properly convened
  5. Election of two persons approving the minutes of the AGM
  6. Presentation of the annual report, the auditor’s report, the consolidated accounts, the auditor’s report on the consolidated accounts, the remuneration report and the auditor’s report on whether the guidelines for remuneration to group management have been complied with, as well as the auditor’s presentation of the audit work with respect to 2024
  7. The President’s and CEO’s speech. Questions from the shareholders to the Board of Directors and the management
  8. Resolution with respect to
    8.1 adoption of the income statement and the balance sheet, the consolidated income statement and the consolidated balance sheet;
    8.2 adoption of the remuneration report;
    8.3 discharge of liability for the members of the Board of Directors and the President for 2024; and
    8.4 the appropriation of the results in accordance with the approved balance sheet and determination of the record dates for dividend.
  9. Determination of the number of Board members and deputies of the Board of Directors to be elected by the AGM
  10. Determination of the fees payable to members of the Board of Directors elected by the AGM and members of the Committees of the Board of Directors elected by the AGM
  11. Election of Board members and deputies of the Board of Directors
    The Nomination Committee’s proposal for Board members:
    1. Jon Fredrik Baksaas (re-election)
    2. Jan Carlson (re-election)
    3. Börje Ekholm (re-election)
    4. Eric A. Elzvik (re-election)
    5. Kristin S. Rinne (re-election)
    6. Jonas Synnergren (re-election)
    7. Jacob Wallenberg (re-election)
    8. Christy Wyatt (re-election)
    9. Karl Åberg (re-election)
    10. Christian Cederholm (new election)
    11. Marachel Knight (new election)
    12. Election of the Chair of the Board of Directors
    13. Determination of the number of auditors
    14. Determination of the fees payable to the auditors
    15. Election of auditors
    16. Long-Term Variable Compensation Program 2025 (LTV 2025)
      1. Resolution on implementation of the LTV 2025
      2. Resolution on transfer of treasury stock to employees and on an exchange, directed share issue and acquisition offer for the LTV 2025
      3. Resolution on Equity Swap Agreement with third party in relation to the LTV 2025
    17. Resolution on an addition to the terms of the Long-Term Variable Compensation Programs LTV I 2023, LTV II 2023 and LTV 2024
    18. Resolution on transfer of treasury stock to employees and on an exchange, directed share issue and acquisition offer in relation to the earlier resolution on the Long-Term Variable Compensation Program 2024 (LTV 2024)
    19. Transfer of treasury stock in relation to the resolutions on the ongoing Long-Term Variable Compensation Programs LTV 2022, LTV I 2023 and LTV II 2023
      1. Resolution on transfer of treasury stock on an exchange to cover expenses
      2. Resolution on transfer of treasury stock on an exchange to cover costs for tax and social security liabilities for the Participants
    20. Resolution on proposal from an (employee) shareholder that the AGM resolve that Ericsson implement a policy ensuring that executive bonuses are disbursed only after all employees have received cost-of-living and performance-based salary increases each year
    21. Closing of the AGM

Item 1 Chair of the AGM

The Nomination Committee, appointed in accordance with the Instruction for the Nomination Committee resolved by the AGM 2012, is composed of the Chair of the Nomination Committee Johan Forssell (Investor AB), Helena Stjernholm (AB Industrivärden), Anders Oscarsson (AMF Tjänstepension and AMF Fonder), Christer Gardell (Cevian Capital) and Jan Carlson (Chair of the Board of Directors). The Nomination Committee proposes that Advokat Eva Hägg be elected Chair of the AGM.

Item 2 Preparation and approval of the voting list

The voting list proposed for approval is the voting list drawn up by Euroclear Sweden AB on behalf of the Company, based on the AGM’s register of shareholders, shareholders having given notice of participation and being present at the meeting venue and postal votes received.

Item 8.4 Dividend and record dates

The Board of Directors proposes a dividend to the shareholders of SEK 2.85 per share. The dividend is proposed to be paid in two installments, SEK 1.43 per share with the record date March 27, 2025, and SEK 1.42 per share with the record date September 29, 2025. Assuming these dates will be the record dates, Euroclear Sweden AB is expected to disburse SEK 1.43 per share on April 1, 2025, and SEK 1.42 per share on October 2, 2025.

Item 9 Number of Board members and deputies to be elected by the AGM

According to the articles of association, the Board of Directors shall consist of no less than five and no more than twelve Board members, with no more than six deputies. The Nomination Committee proposes that the number of Board members elected by the AGM shall be eleven and that no deputies be elected.

Item 10 Fees payable to members of the Board of Directors elected by the AGM and to members of the Committees of the Board of Directors elected by the AGM

The Nomination Committee proposes that fees to non-employee Board members elected by the AGM and non-employee members of the Committees of the Board of Directors elected by the AGM be paid as follows:

  • SEK 5,000,000 to the Chair of the Board of Directors (previously SEK 4,640,000);
  • SEK 1,300,000 to each of the other Board members (previously SEK 1,175,000);
  • SEK 560,000 to the Chair of the Audit and Compliance Committee (previously SEK 540,000);
  • SEK 320,000 to each of the other members of the Audit and Compliance Committee (previously SEK 310,000);
  • SEK 235,000 to the Chair of the Enterprise Business and Technology Committee (previously SEK 230,000);
  • SEK 205,000 to each of the other members of the Enterprise Business and Technology Committee (previously SEK 200,000);
  • SEK 225,000 to each Chair of the Finance and the Remuneration Committee (previously SEK 220,000); and
  • SEK 200,000 to each of the other members of the Finance and the Remuneration Committee (previously SEK 195,000).

The Nomination Committee has considered the Board fees with the objective of ensuring that they allow for the recruitment and retention of high quality individuals while also being appropriate in comparison to other technology companies operating globally and with similar size and complexity. As such, the Nomination Committee has concluded that an increase of the fees to all members of the Board and Board Committees, including their Chairs, in accordance with the above is reasonable, well-justified and in the best interests of the Company. The proposal of the Nomination Committee provides for an increase of the fees of approximately 8.48%[1] compared with the total fees to the corresponding number of Board and Committee members for Board and Committee work resolved by the AGM 2024.

In addition to the fees described above, the Nomination Committee proposes that additional compensation be paid to non-employee Board members elected by the AGM for each physical Board meeting attended in Sweden as follows:

Residence of Board member

Compensation per meeting

Nordic Countries

None

Europe (non-Nordic)

 EUR 2,000

Outside of Europe

 USD 5,000

Fees in the form of synthetic shares

Background
The Nomination Committee believes that it is appropriate that Board members elected by the shareholders hold shares in Ericsson, in order to strengthen the Board members’ and the shareholders’ mutual interests in the Company. The Nomination Committee recommends that Board members elected by the shareholders, over a five-year period, build a holding of shares or synthetic shares in Ericsson equal to at least the value of 1.5 times the annual fee (previously one annual fee) (excluding fees for Committee work), and that such holding be kept during the time the Board member remain Board member in Ericsson. This increased shareholding recommendation is being made together with, and in light of, the proposed fee increases.

To enable Board members to create an economic interest in the Company and considering that it is in many cases difficult for Board members to trade in the Company’s share due to applicable insider rules, the Nomination Committee proposes that the Board members should, as previously, be offered the option of receiving part of the Board fees in the form of synthetic shares. A synthetic share constitutes a right to receive payment of an amount which corresponds to the market value of a share of series B in the Company on Nasdaq Stockholm at the time of payment.

Proposal
The Nomination Committee therefore proposes that the AGM 2025 resolve that part of the fees to the Directors, in respect of their Board assignment (however, not in respect of Committee work), may be paid in the form of synthetic shares, on the following terms and conditions.

  • A nominated Director shall be able to choose to receive the fee in respect of his or her Board assignment, according to the following four alternatives:
    • (i) 25 percent in cash – 75 percent in synthetic shares
    • (ii) 50 percent in cash – 50 percent in synthetic shares
    • (iii) 75 percent in cash – 25 percent in synthetic shares
    • (iv) 100 percent in cash.
  • The number of synthetic shares to be allocated shall be valued at the average of the market price of shares of series B in the Company on Nasdaq Stockholm during a period of five trading days immediately following the publication of Ericsson’s interim report for the first quarter of 2025. The synthetic shares are vested during the term of office, with 25 percent per quarter of the year.
  • The synthetic shares give a right to, following the publication of Ericsson’s year-end financial statement in 2030, receive payment of a cash amount per synthetic share corresponding to the market price of shares of series B in the Company in close connection with the time of payment.
  • An amount corresponding to the dividend in respect of shares of series B in the Company, resolved by the AGM during the holding period, shall be disbursed at the same time as the cash amount.
  • Should the Director’s assignment to the Board of Directors come to an end no later than during the third calendar year after the year in which the AGM resolved on allocation of the synthetic shares, payment may take place in the year after the assignment came to an end.
  • The number of synthetic shares may be subject to recalculation in the event of bonus issues, splits, rights issues and similar measures, under the terms and conditions for the synthetic shares.

The complete terms and conditions for the synthetic shares are described in Exhibit 1 to the Nomination Committee’s proposal.

The financial difference for the Company, should all Directors receive part of their fees in the form of synthetic shares compared with the fees being paid in cash only, is assessed to be limited.

Item 11 Election of Board members and deputies of the Board of Directors

The Nomination Committee proposes that the following persons be re-elected as members of the Board:

11.1 Jon Fredrik Baksaas;
11.2 Jan Carlson;
11.3 Börje Ekholm;
11.4 Eric A. Elzvik;
11.5 Kristin S. Rinne;
11.6 Jonas Synnergren;
11.7 Jacob Wallenberg;
11.8 Christy Wyatt; and
11.9 Karl Åberg

The Nomination Committee proposes that the following two persons be elected as new members of the Board:

11.10 Christian Cederholm; and
11.11 Marachel Knight.

Considerations

The Nomination Committee primarily searches for potential Board member candidates for the upcoming mandate period, but also considers longer term future competence needs. It is a long journey to identify the right candidates and long-term planning is essential. In assessing the appropriate composition of the Board of Directors, the Nomination Committee seeks to identify the most qualified candidates and considers, among other things, experience and competence needed on the Board and its Committees, and the value of diversity in age, representation of men and women and cultural/geographic background in compliance with applicable anti-discrimination laws, as well as the need for periodic renewal. The Nomination Committee believes that selecting the most qualified candidates and maintaining diversity on the Board will support Ericsson’s sustainable development and therefore continually focuses on identifying Board member candidates with different backgrounds. While acknowledging increased expectations on transparency relating to diversity on the Board, applicable privacy regulations prevent Ericsson and the Nomination Committee from processing certain sensitive personal data about its Board members, such as information relating to demographic background. The Nomination Committee has applied the Swedish Corporate Governance Code, Section 4.1, as diversity policy. Focusing on improving the balance of men and women Board members over time of the Board, the Nomination Committee particularly works to identify the most qualified women candidates matching the current and future needs of the Board. The Nomination Committee also assesses the appropriateness of the number of Board members and whether the Board members can devote the necessary time required to fulfill their tasks as Board members in Ericsson.

In its appraisal of qualifications and performance of the individual Board members, the Nomination Committee takes into account the competence and experience of each individual member along with the individual member’s contribution to the Board work as a whole and to the Committee work. The Committee has familiarized itself with the results of the Board work evaluation that was led by the Chair of the Board of Directors. The Nomination Committee’s objective is to propose and support the election of a Board that is comprised of individuals of the highest competency and integrity, while also holistically comprising a strong mix of needed skills and experience to effectively oversee and lead Ericsson.

The Nomination Committee is of the opinion that the current Board of Directors and Board work is well functioning. Further, it is the Nomination Committee’s view that the Board fulfills expectations in terms of composition and that the Board of Directors as well as the individual Board members fulfill expectations in terms of expertise. Competencies and experiences represented on the Board include broad international industry experience, experience from the telecom, IT and ICT sectors, technological and technical competencies and experiences (e.g. related to software and digitalization), financial expertise and experience from private equity, M&A and new business. The Nomination Committee further believes that competencies and experiences within the ESG areas (areas within environmental, social and corporate governance) considered most relevant for Ericsson and the sector in which the Company operates are well represented on the Board, including for example related to the technologies the Company develops and delivers as well as relating to ethics and compliance. While the Board is well functioning and has a strong composition, the Nomination Committee believes that the Board would benefit from additional financial and governance expertise as well as experience and expertise from the US telecom industry.

Carolina Dybeck Happe resigned from the Board of Directors on September 23, 2024.

The Nomination Committee proposes re-election of all current Board members Jon Fredrik Baksaas, Jan Carlson, Börje Ekholm, Eric A. Elzvik, Kristin S. Rinne, Jonas Synnergren, Jacob Wallenberg, Christy Wyatt and Karl Åberg, and new election of Christian Cederholm and Marachel Knight as members of the Board. Christian Cederholm is currently President and CEO of Investor, and member of the Board in Investor, Mölnlycke and Patricia Industries. Previously, Mr. Cederholm was Head of Patricia Industries and Investment Manager at Investor. He has extensive experience and strategic competence from an investor and owner perspective. Marachel Knight is currently a member of the Board of Marvell Technology and she is a member of the Defense Business Board at the US Department of Defense. She was formerly Senior Vice President of Strategic Program Realization at AT&T. Ms. Knight has extensive industrial experience within the telecom industry and a deep understanding of the US market.

It is the Nomination Committee’s assessment that each of the proposed Board members, with their respective experiences, adds valuable expertise and experience to the Board. Further it is the Nomination Committee’s assessment that Mr. Cederholm’s experience and strategic competence from an investor and owner perspective, and Ms. Knight’s strong technology and operations expertise, will be of additional value to Ericsson and will further strengthen the Board.

Out of the proposed Board members to be elected by the AGM (excluding the President and CEO) 30% are women. The question on the balance of men and women Board members is an important question to the Nomination Committee and it is the Committee’s ambition to improve such balance on the Board of Directors over time.

Information regarding proposed Board members
Information regarding the proposed Board members is presented in Exhibit 2 to the Nomination Committee’s proposal.

Independence of Board members

The Nomination Committee has made the following assessments in terms of applicable Swedish independence requirements and US NASDAQ independence requirements:

(i) The Nomination Committee considers that the following Board members are independent of the Company and its senior management:

a. Jon Fredrik Baksaas
b. Jan Carlson
c. Christian Cederholm
d. Eric A. Elzvik
e. Marachel Knight
f. Kristin S. Rinne
g. Jonas Synnergren
h. Jacob Wallenberg
i. Christy Wyatt
j. Karl Åberg

(ii) From among the Board members reported in (i) above, the Nomination Committee considers that the following are independent of the Company’s major shareholders:

a. Jon Fredrik Baksaas
b. Jan Carlson
c. Eric A. Elzvik
d. Marachel Knight
e. Kristin S. Rinne
f. Jonas Synnergren
g. Christy Wyatt

Moreover, the Nomination Committee considers that the following Board members are independent in respect of all applicable independence requirements:

a. Jon Fredrik Baksaas
b. Jan Carlson
c. Eric A. Elzvik
d. Marachel Knight
e. Kristin S. Rinne
f. Jonas Synnergen
g. Christy Wyatt

The Nomination Committee concludes that the proposed composition of the Board of Directors meets the independence requirements applicable to Ericsson.

Item 12 Election of the Chair of the Board of Directors

The Nomination Committee proposes that Jan Carlson be re-elected Chair of the Board of Directors.

Item 13 Number of auditors

According to the articles of association, the Company shall have no less than one and no more than three registered public accounting firms as auditor. The Nomination Committee proposes that the Company should have one registered public accounting firm as auditor.

Item 14 Fees payable to the auditor

The Nomination Committee proposes, as in previous years, that the auditor fees be paid against approved account.

Item 15 Election of auditor

In accordance with the recommendation by the Audit and Compliance Committee, the Nomination Committee proposes that Deloitte AB be appointed auditor for the period from the end of the AGM 2025 until the end of the AGM 2026 (re-election).

Item 16 Implementation of LTV 2025 including transfer of treasury stock, directed share issue and authorization for the Board of Directors to decide on an acquisition offer of shares of series C

Background

The Remuneration Committee and the Board of Directors evaluate the long-term variable compensation (“LTV“) programs to the Executive Team (“ET“) and for employees classified as executives (“Executives“) on an ongoing basis. The evaluation considers the LTV programs for effectiveness in serving their purpose to support achieving the Ericsson Group’s strategic business objectives and sustainable long-term interests as well as their facility to increase the long-term focus of the members of the ET and the Executives and align their interests with the long-term expectations and the interests of the shareholders.

In response to investor feedback, and following evaluation by the Remuneration Committee and the Board of Directors of the ongoing LTV programs (LTV 2022, LTV I 2023, LTV II 2023 and LTV 2024), for the ET and the Executives, changes in certain of the LTV performance metrics are proposed for the LTV 2025. The main purposes of the proposed changes to LTV 2025 are to further amplify the long-term focus of the ET and the Executives to ensure alignment with the long-term interests of shareholders, and to strengthen Ericsson’s commitment to long-term sustainability and responsible business practices. The proposed changes also increase the quality and relevance of the plan by establishing a broad comparison group with higher geographical consistency for Relative Total Shareholder Return performance criteria. The ongoing LTV programs have enabled the Company to attract, retain and motivate senior leaders and offer them globally competitive remuneration, and remain committed to create increased shareholder value.

LTV 2025 is an integral part of the Company’s remuneration strategy, and the Board of Directors in particular expects the members of the ET and the Executives to build significant equity holdings to align the interests and expectations of the LTV program participants with those of shareholders.

Proposals
16.1 Implementation of the LTV 2025

The Board of Directors proposes that the AGM 2025 resolve on the LTV 2025 for the ET and the Executives comprising a maximum of 12.7 million shares of series B in the Company as set out below.

Objectives of the LTV program
The LTV program is designed to provide long-term incentives for the ET and the Executives (“Participants“), thereby creating long-term value for the shareholders. The aim is to attract, retain and motivate senior leaders in a competitive market through performance-based share related incentives, to encourage the build-up of significant equity holdings to align the interests of the Participants with those of shareholders and to further strengthen the ET’s and the Executives’ commitment to long-term sustainability and responsible business.

The LTV Program in brief
The LTV Program is proposed to include all members (current and future) of the ET and the Executives, currently comprising approximately 200 employees, including the President and CEO. Awards under LTV 2025 (“Performance Share Awards“) will be granted free of charge entitling the Participant, provided that, among other things, certain performance criteria as set out below are met, to receive a number of shares at no consideration, following expiration of a three-year vesting period (“Vesting Period“). Allotment of shares pursuant to Performance Share Awards will be subject to the achievement of performance criteria, as set out below, and will generally require that the Participant retains his or her employment over the Vesting Period. All major decisions relating to LTV 2025 will be taken by the Remuneration Committee, with approval by the full Board of Directors as required.

Granting of Performance Share Awards
Granting of Performance Share Awards to the Participants will generally take place as soon as practicably possible following the AGM 2025. For 2025, the value of the underlying shares in respect of the Performance Share Awards made to the President and CEO will not exceed 150% of the Annual Base Salary at the time of grant, and for other Participants, the value will not exceed 100% of the Participants’ respective Annual Base Salary at the time of grant, unless the Participant is employed in the USA where the value will not exceed 200% of Participants’ Annual Base Salary.

The share price used to calculate the number of shares to which the Performance Share Awards entitle will be the volume-weighted average of the market price of shares of series B in Ericsson on Nasdaq Stockholm during the five trading days immediately following the publication of the Company’s interim report for the fourth quarter 2024.

Performance criteria
The vesting of the Performance Share Awards will be subject to the average satisfaction of a performance criterion related to Group EBITA (earnings (loss) before interest, taxes, amortizations and excluding write-downs of acquired intangible assets and restructuring charges[2]) for the financial years 2025, 2026 and 2027, along with performance criteria related to three-year total shareholder return (“TSR[3]) and Group Environmental Social Governance (“ESG“), which will determine what portion (if any) of the Performance Share Awards will vest at the end of the Vesting Period.

The three-year average Group EBITA performance criterion relates to 45% of the Performance Share Awards and the maximum vesting level is 200%.

The performance criteria based on TSR are absolute TSR development and relative TSR development for the Ericsson series B share over the period January 1, 2025December 31, 2027 (“Performance Period[4]). The absolute and relative TSR performance criteria relate to 25% and 20%, respectively, of the Performance Share Awards and the maximum vesting level for both TSR performance criteria is 200%.

The Group ESG performance criterion measured over the Performance Period will relate to 10% of the Performance Share Awards, and the maximum vesting level is 200%.

The following conditions will apply to the performance criteria:

  • Group EBITA performance criterion

45% of the Performance Share Awards granted to a Participant will be subject to fulfilment of a Group EBITA performance criterion for the 2025, 2026 and 2027 financial years, calculated as the average of the achievement of the three annual EBITA targets. The Group EBITA performance criterion is established by the Board of Directors and will stipulate a minimum level and a maximum level for each of the financial years 2025, 2026 and 2027. The Group EBITA targets are established annually and not disclosed due to stock market and competition considerations. Target achievement for each financial year will be determined by the Board of Directors when the audited result for each of the financial years is available.

If the maximum performance level for the relevant financial year is reached or exceeded, target achievement for that financial year will be determined at 200%. If performance for the relevant financial year amounts to or is below the minimum level, target achievement for that financial year will be determined at 0%. If performance for the relevant financial year is below the maximum level but exceeds the minimum level, target achievement for that financial year will be determined on a linear pro-rata basis. When audited results for all three financial years are available, the average target achievement will be calculated by adding the target achievement for each year and dividing the sum by three. The vesting level of Performance Share Awards related to Group EBITA performance criterion will equal the average target achievement and be determined by the Board of Directors. The allotment of the shares will not occur until the end of the Vesting Period in 2028.

  • TSR performance criteria

Absolute TSR performance criterion
25% of the Performance Share Awards granted to a Participant will be subject to fulfillment of an absolute TSR performance criterion over the Performance Period. If the absolute TSR development reaches or exceeds 14% per annum compounded, maximum vesting of 200% of the Performance Share Awards related to absolute TSR performance criterion will occur. If the absolute TSR development is below or reaches only 6% per annum compounded, no vesting will occur in respect of the Performance Share Awards related to the absolute TSR performance criterion. A linear pro-rata vesting from 0% to 200% of the Performance Share Awards related to absolute TSR performance criterion will apply if the Company’s absolute TSR performance is between 6% and 14% per annum compounded. The allotment of the shares will not occur until the end of the Vesting Period in 2028.

Relative TSR performance criterion
20% of the Performance Share Awards granted to a Participant will be subject to fulfilment of a relative TSR performance criterion over the Performance Period, compared to a European stock index. The vesting of the relative TSR related Performance Share Awards varies depending on the Company’s TSR performance compared to performance of STOXX EUROPE 600 Index (the “Index“). If the Company’s TSR performance is below performance of the Index, no vesting will occur in respect of the Performance Share Awards related to relative TSR performance criterion. Threshold vesting starts when the Company’s TSR performance is equal to the Index and is set at 85%. Maximum vesting of 200% is set at 22.5043% overperformance compared to the Index over the Performance Period (equal to 7% annual compound overperformance). A linear pro-rata vesting from 85% to 200% will apply between threshold and maximum vesting. The allotment of the shares will not occur until the end of the Vesting Period in 2028.

  • Group ESG performance criterion

10% of the Performance Share Awards granted to a Participant will be subject to fulfilment of a Group ESG performance criterion comprised of two equally weighted subcomponents covering environmental and social aspects of ESG measured over the Performance Period. The allotment of the shares will not occur until the end of the Vesting Period in 2028.

Reduction of greenhouse gas emissions
5% of the Performance Share Awards granted to a Participant will be subject to fulfillment of a performance criterion of reducing greenhouse gas (“GHG“) emissions[5] from service fleet vehicles, energy consumption at facilities and from business travel[6] for the 2025, 2026 and 2027 financial years[7]. The fulfillment of the performance criterion is calculated as the average of the achievement of the three annual GHG emissions targets.

The GHG emissions target levels will be defined annually in alignment with the emissions reduction trajectory set for achieving Net Zero emissions from the Ericsson Group’s own activities by 2030.

For 2025, the GHG emissions target level is 98 ktonne CO2e. If the GHG emissions in the Ericsson Group amount to 84 ktonne CO2e or less by year-end 2025, the achievement level for 2025 will be set to 200%. If the GHG emissions in the Ericsson Group amount to 112 ktonne CO2e or more by year-end 2025, the achievement level for 2025 will be set to 0%. If the GHG emissions in the Ericsson Group by year-end 2025 exceed 84 ktonne CO2e but are below 112 ktonne CO2e, the achievement level for that financial year will be determined on a linear pro-rata basis.

The 2026 and 2027 targets of reducing GHG emissions shall be established annually by the Board of Directors according to the same principles as for 2025 and will stipulate a target level, a minimum level, and a maximum level. Reducing GHG emissions is highly dependent on business strategy and on operational model. Management decisions on e.g., divestiture, acquisitions, facilities, or outsourcing can have short-term major impact on the Ericsson Group’s GHG emissions. A multiannual target based on three-year average will allow the Board of Directors to more accurately account for dynamics impacting Ericsson’s ability to reduce GHG emissions. In addition, the emissions reduction trajectory towards achieving Net Zero emissions from the Ericsson Group’s own activities by 2030 will necessarily shift depending on progress in the constituent years, making it difficult to set meaningful targets for a multi-year period. In light of previous major and rapid achievements in GHG emissions reduction, the Board’s view is that determining a three-year GHG emissions reduction target at the start of a three-year period may, in the context of increasingly rapid development in the area, produce unfavorable outcomes in the form of either excessive remuneration or poor retention, misaligned with the objective of the Company’s guidelines for remuneration to group management. The Board of Directors therefore proposes that the 2026 and 2027 targets of reducing GHG emissions shall be established annually by the Board of Directors according to the same principles as for the financial year 2025. The achievement level for each financial year will be determined by the Board of Directors when the audited result for each of the financial years is available.

The average achievement level will be calculated by adding the achievement level for each year and dividing the sum by three. The vesting level of Performance Share Awards related to the 2025, 2026 and 2027 GHG emissions performance criterion will equal the average achievement level and be determined by the Board of Directors. The allotment of the shares will not occur until the end of the Vesting Period in 2028.

Increasing the representation of women leaders in Ericsson
5% of the Performance Share Awards granted to a Participant will be subject to fulfilment of a subcomponent of increasing the representation of women leaders (i.e., women holding roles with people management responsibility) in the Ericsson Group to 27% by the end of the Performance Period, which is in line with achieving the target trajectory for increasing the representation of women leaders in the Ericsson Group to 30% by 2030.

If the representation of women leaders in the Ericsson Group amounts to 28% or above by the end of the Performance Period, the maximum vesting of 200% of the Performance Share Awards related to this subcomponent will occur. If the representation of women leaders in the Ericsson Group amounts to 26% or below by the end of the Performance Period, no vesting will occur in respect of the Performance Share Awards related to this subcomponent. A linear pro-rata vesting from 0% to 200% of the Performance Share Awards related to increasing the representation of women leaders in the Ericsson Group subcomponent will apply if the representation of women leaders in the Ericsson Group exceeds 26% but is below 28% by the end of the Performance Period.

The vesting level of Performance Share Awards related to the Group ESG performance criterion will be determined by the Board of Directors when the audited results for both subcomponents at the end of the financial year 2027 are available. The allotment of the shares will not occur until the end of the Vesting Period in 2028.

Information about the outcome of the performance criteria will be provided no later than in the annual report for the financial year 2027.

Allotment of shares

Provided that the performance criteria above have been met and that the Participant has retained his or her employment (unless special circumstances are at hand) during the Vesting Period, allotment of vested shares will take place as soon as practicably possible following the expiration of the Vesting Period.

When determining the final vesting level of Performance Share Awards, the Board of Directors shall examine whether the vesting level is reasonable considering the Company’s financial results and position, conditions on the stock market and other circumstances, such as environmental, social, ethics and compliance factors, and if not, as determined by the Board of Directors, reduce the vesting level to the lower level deemed appropriate by the Board of Directors.

In the event delivery of shares to Participants cannot take place under applicable law or at a reasonable cost and employing reasonable administrative measures, the Board of Directors will be entitled to decide that Participants may, instead, be offered a cash settlement.

In view of the rapidly changing geopolitical, legal and regulatory environments in a number of the jurisdictions in which the Company operates, it is critical that the Company is able to ensure that its operations, including its remuneration programs, comply with law.

Should any of the performance metrics contained in the program be deemed to be in violation of applicable law or if otherwise maintaining such metric would have a material adverse impact on the Company, the Board may amend the program to remove the relevant metric.

The Company has the right to, before delivering vested shares to the Participants, retain and sell the number of shares required to cover the cost for withholding and paying tax and social security liabilities on behalf of the Participants in relation to the Performance Share Awards for remittance to revenue authorities. In such an event, the net amount of vested shares will thus be delivered to the Participants after the vested Performance Share Awards are reduced by the number of shares retained by the Company for such purposes.

Financing

The Board of Directors has considered different financing methods for transfer of shares under the LTV 2025 including transfer of treasury stock and an equity swap agreement with a third party. The Board of Directors considers that a directed issue of shares of series C in the Company, followed by buy-back and transfer of treasury stock is the most cost efficient and flexible method to transfer shares under LTV 2025.

The Company’s current holding of treasury stock is not sufficient for the implementation of the LTV 2025. Therefore, the Board of Directors proposes a directed share issue and buy back of shares as further set out below under item 16.2. Under the proposed transactions, shares are issued at the share’s quota value and repurchased as soon as the shares have been subscribed for and registered. The purchase price paid by the Company to the subscriber equals the subscription price. As compensation to the subscriber for its assistance in the issuance and buy-back of shares under items 16 and 18, the Company will pay to the subscriber an amount totaling SEK 200,000.

The procedure of issuance and buy-back of shares for the Company’s LTV programs has previously been decided by the AGMs in 2001, 2003, 2008, 2009, 2012, 2016, 2017, 2023 and 2024.

Since the costs for the Company in connection with an equity swap agreement will be significantly higher than the costs in connection with transfer of treasury stock, the main alternative is that the financial exposure is secured by transfer of treasury stock and that an equity swap agreement with a third party is an alternative in the event that the required majority for approval is not reached.

Costs

The total effect on the income statement of the LTV 2025, including financing costs and social security fees, is estimated to range between SEK 444 million and SEK 645 million distributed over the years 2025–2028. The costs will depend on the future development of the price of Ericsson series B share.

The administration cost for hedging the financial exposure of the LTV 2025 by way of an equity swap agreement is currently estimated to approximately SEK 70 million, compared to the cost of approximately SEK 200,000 for using newly issued and acquired shares in treasury (SEK 200,000 is the total cost paid to the subscriber in relation to items 16 and 18, regardless of the number of share issuances).

Dilution

The Company has approximately 3.3 billion registered shares. As per February 19, 2025, the Company held approximately 15.6 million shares in treasury. The number of shares that may be required for ongoing LTV programs (2022, I 2023 and II 2023) as per February 19, 2025, is estimated to approximately 12 million shares, corresponding to approximately 0.36 percent of the number of registered shares of the Company. In order to implement the LTV 2025, a total of up to 12.7 million shares are required, which corresponds to approximately 0.38 percent of the total number of registered shares of the Company, hence an issue of new shares of series C, followed by a buy-back, is proposed for the implementation of LTV 2025. The effect on important key figures is only marginal.

16.2 Transfer of treasury stock to employees and on an exchange, directed share issue and acquisition offer for the LTV 2025

a) Transfer of treasury stock under the LTV 2025

To secure the delivery of Performance Shares in accordance with the terms and conditions of the LTV 2025, the Board of Directors proposes that the AGM resolve that the Company shall have the right to transfer no more than 10.9 million shares of series B in the Company less any shares retained by the Company as per item 16.2 c) on the following terms and conditions:

  • The right to acquire shares shall be granted to such persons within the Ericsson Group covered by the terms and conditions pursuant to the LTV 2025. Furthermore, subsidiaries within the Ericsson Group shall have the right to acquire shares, free of consideration, and such subsidiaries shall be obligated to immediately transfer, free of consideration, shares to employees covered by the terms and conditions of the LTV 2025.
  • The employee shall have the right to receive shares during the period when the employee is entitled to receive shares pursuant to the terms and conditions of the LTV 2025.
  • Employees covered by the terms and conditions of the LTV 2025 shall receive shares of series B in the Company free of consideration.
  • The number of shares of series B in the Company that may be transferred under the LTV 2025 may be subject to recalculation in the event of bonus issues, splits, rights issues and/or similar measures, under the terms and conditions of the LTV 2025.

b) Transfer of treasury stock on an exchange to cover expenses for the LTV 2025

The Company may, prior to the AGM in 2026, transfer no more than 1.8 million shares of series B in the Company, in order to cover certain expenses, mainly social security payments. Transfer of the shares shall be effected on Nasdaq Stockholm at a price within the, at each time, prevailing price interval for the share as disseminated by Nasdaq Stockholm.

c) Authorization to decide on transfer of treasury stock on an exchange to cover costs for tax and social security liabilities for the Participants in the LTV 2025

Authorization for the Board of Directors to decide to, in conjunction with the delivery of vested shares under LTV 2025, prior to the AGM in 2026, retain and sell no more than 70% of the vested shares of series B in the Company in order to cover the costs for withholding and paying tax and social security liabilities on behalf of the Participants in relation to the Performance Share Awards for remittance to revenue authorities. Transfer of the shares shall be effected on Nasdaq Stockholm at a price within the, at each time, prevailing price interval for the share as disseminated by Nasdaq Stockholm. These shares form a part of the final number of vested shares to the employees under LTV 2025 and do not incur additional costs to the LTV 2025 for the Company.

d) Directed issue of shares of series C in the Company for the LTV 2025

Increase of the share capital in the Company by SEK 63,500,000.02 through an issue of 12.7 million shares of series C in the Company, each share with a quota value of approximately SEK 5. The terms and conditions of the share issue are the following:

  • The new shares shall – with deviation from the shareholders’ preferential rights – be subscribed for only by Skandinaviska Enskilda Banken AB or its subsidiaries.
  • The new shares shall be subscribed for during the period as from April 28, 2025 up to and including May 5, 2025 Over-subscription may not occur.
  • The amount that shall be paid for each new share shall be the quota value (approximately SEK 5).
  • Payment for the subscribed shares shall be made at the time of subscription.
  • The Board of Directors shall be entitled to extend the period for subscription and payment.
  • The new shares shall not entitle the holders to dividend payment.
  • It is noted that the new shares are subject to restrictions pursuant to Chapter 4, Section 6 (conversion clause) and Chapter 20, Section 31 (redemption clause) of the Swedish Companies Act.

The Board of Directors proposes that the President and CEO shall be authorized to make the minor adjustments to the above resolutions that may prove to be necessary in connection with the registration with the Swedish Companies Registration Office.

Reasons for deviation from the shareholders’ preferential rights and principles on which the subscription price is based

The Board of Directors considers that a directed issue of shares of series C, followed by buy-back and transfer of treasury stock is the most cost efficient and flexible method to transfer shares under the LTV 2025. Shares are issued at the share’s quota value and repurchased as soon as the shares have been subscribed for and registered. The purchase price paid by the Company to the subscriber equals the subscription price.

e) Authorization for the Board of Directors to decide on a directed acquisition offer for the LTV 2025

Authorization for the Board of Directors to decide that 12.7 million shares of series C in the Company be acquired according to the following:

  • Acquisition may occur by an offer to acquire shares directed to all holders of shares of series C in Ericsson.
  • The authorization may be exercised until the AGM in 2026.
  • The acquisition shall be made at a price corresponding to the quota value of the share (approximately SEK 5 per share).
  • Payment for acquired shares shall be made in cash.

16.3 Equity Swap Agreement with third party in relation to the LTV 2025

In the event that the required majority for approval is not reached under item 16.2 above, the financial exposure of the LTV 2025 shall be hedged by the Company entering into an equity swap agreement with a third party, under which the third party may, in its own name, acquire and transfer shares of series B in the Company to employees covered by the LTV 2025.

Majority rules

The resolution of the AGM on implementation of the LTV 2025 according to item 16.1 requires that more than half of the votes cast at the AGM approve the proposal. The resolution of the AGM on transfer of treasury stock to employees and on an exchange, directed share issue and acquisition offer for the LTV 2025 according to item 16.2 requires that shareholders representing at least nine-tenths of the votes cast as well as the shares represented at the AGM approve the proposal. The resolution of the AGM on an Equity Swap Agreement with third party according to item 16.3 requires that more than half of the votes cast at the AGM approve the proposal.

Description of other ongoing long-term variable compensation programs

In addition to the LTV programs for 2022, 2023 and 2024, which are directed at the President and CEO, the ET, and the Executives, the Company has other ongoing long-term variable compensation programs directed at other employees within the Group. These programs are an integral part of the Company’s remuneration strategy as well as a part of the Company’s talent management strategy. The Company has decided to implement one other share-related compensation program for 2025: the Key Contribution Plan 2025 (“KC Plan 2025“). Ericsson has also implemented an all-employee share purchase plan in 2021 (ESPP).

The KC Plan 2025

The KC Plan 2025 is designed to recognize the best talent, individual performance, potential and critical skills as well as encourage the retention of key employees. Approximately 10% to 14% of Ericsson employees will be eligible for the KC Plan 2025. The award levels are assigned to employees mainly within in a range of 10 – 50% of Annual Base Salary to bring greater alignment with the local market conditions.

Participants are assigned a potential award, which is converted into a number of synthetic shares based on the same market price of the shares of series B in Ericsson used for the LTV 2025 at the time of grant. The plan has a three-year total service period (“Service Period“) during which the awards are paid on an annual rolling bases following the below payment schedule:

  • 25% of the award at the end of the first year,
  • 25% of the award at the end of the second year, and
  • 50% of the award at the end of the full Service Period.

The value of each synthetic share is driven by the absolute share price performance of shares of series B in Ericsson shares during the Service Period. At the date of vesting for each instalment of the above-described annual rolling payment schedule, the synthetic shares are converted into a cash amount, based on the market price of the Ericsson series B share on Nasdaq Stockholm at the respective vesting date, and this final amount is paid to the Participant in cash gross before tax. It is estimated that approximately 19.1 million synthetic shares will be awarded under the KC Plan 2025. The maximum total cost effect of the KC Plan 2025 on the income statement, including social security fees, is estimated to be approximately SEK 1.65 billion distributed over the years 2025–2028. The costs will depend on the future development of the market price of the Ericsson series B share.

The Ericsson share purchase plan (“ESPP“)

Ericsson is committed to helping employees thrive and to recognizing them for the impact they create by providing opportunities to enrich their working experience. In order to encourage employees to play an active role in achieving the Company’s purpose, further create sense of belonging and ownership, the ESPP was launched in 2021. In total the ESPP is now live in 67 countries for 63,000 eligible employees of which approximately 13,000 were participating at year-end 2024, representing 21% of eligible population.

The ESPP is an all-employee share purchase plan that enables employees to purchase shares of series B in Ericsson up to a maximum value of SEK 55,000 per year via monthly payroll deduction. In recognition of the employees’ commitment, Ericsson supports the participants with a net cash payment up to 15% of their elected contribution amounts and covers the tax on the Company supported amount, which is payable via payroll. Under the ESPP participants will acquire shares of series B in Ericsson at market price on Nasdaq Stockholm and the ESPP does therefore not have any dilutive effect.

The Company’s ongoing variable compensation programs are described in further detail in the Annual Report 2024 in the Notes to the consolidated financial statements, Note G3: Share-based compensation and on the Company’s website.

Item 17 Resolution on an addition to the terms of the Long-Term Variable Compensation Programs LTV I 2023, LTV II 2023 and LTV 2024

Background

In view of the rapidly changing geopolitical, legal and regulatory environments in a number of the jurisdictions in which the Company operates, it is critical that the Company is able to ensure that its operations, including its remuneration programs, comply with law. The proposal in item 17 seeks to ensure that the Company is able to maintain compliance as required.

Proposal

Further to the proposal in item 16 above on implementation of the LTV 2025, the Board of Directors proposes that the following addition is made to the terms of the Long-Term Variable Compensation Programs LTV I 2023, LTV II 2023 and LTV 2024, to be included as a new final paragraph under “Allotment of shares” in the respective program:

“Should any of the performance metrics contained in the program be deemed to be in violation of applicable law or if otherwise maintaining such metric would have a material adverse impact on the Company, the Board may amend the program to remove the relevant metric.”

Majority rules

The resolution of the AGM on an addition to the terms of the Long-Term Variable Compensation Programs LTV I 2023, LTV II 2023 and LTV 2024 according to item 17 requires that more than half of the votes cast at the AGM approve the proposal.

Item 18 Resolution on transfer of treasury stock to employees and on an exchange, directed share issue and acquisition offer in relation to the earlier resolution on the LTV 2024

The AGM in 2024 resolved to implement Long-Term Variable Compensation Program 2024 (“LTV 2024“) and to secure the Company’s undertakings under LTV 2024 through an equity swap agreement with a third party. The Board of Directors still considers that transfer of treasury stock, a proposal that was not approved by the AGM 2024, is the most cost efficient and flexible method to secure the undertakings under LTV 2024.

The Company has approximately 3.3 billion registered shares. For LTV 2024, a total of up to 10.4 million shares are required, which corresponds to approximately 0.31 percent of the total number of registered shares, hence an issue of new shares of series C, followed by a buy-back, is proposed for LTV 2024. The effect on important key figures is only marginal.

a) Transfer of treasury stock under the LTV 2024

To secure the delivery of Performance Shares in accordance with the terms and conditions of the LTV 2024, the Board of Directors proposes that the AGM resolve that the Company shall have the right to transfer no more than 8.6 million shares of series B in the Company less any shares retained by the Company as per item 18 c) on the following terms and conditions:

  • The right to acquire shares shall be granted to such persons within the Ericsson Group covered by the terms and conditions pursuant to the LTV 2024. Furthermore, subsidiaries within the Ericsson Group shall have the right to acquire shares, free of consideration, and such subsidiaries shall be obligated to immediately transfer, free of consideration, shares to employees covered by the terms and conditions of the LTV 2024.
  • The employee shall have the right to receive shares during the period when the employee is entitled to receive shares pursuant to the terms and conditions of the LTV 2024.
  • Employees covered by the terms and conditions of the LTV 2024 shall receive shares of series B in the Company free of consideration.
  • The number of shares of series B in the Company that may be transferred under the LTV 2024 may be subject to recalculation in the event of bonus issues, splits, rights issues and/or similar measures, under the terms and conditions of the LTV 2024.

b) Transfer of treasury stock on an exchange to cover expenses for the LTV 2024

The Company may, prior to the AGM in 2026, transfer no more than 1.8 million shares of series B in the Company, in order to cover certain expenses, mainly social security payments. Transfer of the shares shall be effected on Nasdaq Stockholm at a price within the, at each time, prevailing price interval for the share as disseminated by Nasdaq Stockholm.

c) Authorization to decide on transfer of treasury stock on an exchange to cover costs for tax and social security liabilities for the Participants in the LTV 2024

Authorization for the Board of Directors to decide to, in conjunction with the delivery of vested shares under LTV 2024, prior to the AGM in 2026, retain and sell no more than 70% of the vested shares of series B in the Company in order to cover the costs for withholding and paying tax and social security liabilities on behalf of the Participants in relation to the Performance Share Awards for remittance to revenue authorities. Transfer of the shares shall be effected on Nasdaq Stockholm at a price within the, at each time, prevailing price interval for the share as disseminated by Nasdaq Stockholm. These shares form a part of the final number of vested shares to the employees under LTV 2024 and do not incur additional costs to the LTV 2024 for the Company.

d) Directed issue of shares of series C in the Company for the LTV 2024

Increase of the share capital in the Company by SEK 52,000,000.01 through an issue of 10.4 million shares of series C in the Company, each share with a quota value of approximately SEK 5. The terms and conditions of the share issue are the following:

  • The new shares shall – with deviation from the shareholders’ preferential rights – be subscribed for only by Skandinaviska Enskilda Banken AB or its subsidiaries.
  • The new shares shall be subscribed for during the period as from April 28, 2025, up to and including May 5, 2025. Over-subscription may not occur.
  • The amount that shall be paid for each new share shall be the quota value (approximately SEK 5).
  • Payment for the subscribed shares shall be made at the time of subscription.
  • The Board of Directors shall be entitled to extend the period for subscription and payment.
  • The new shares shall not entitle the holders to dividend payment.
  • It is noted that the new shares are subject to restrictions pursuant to Chapter 4, Section 6 (conversion clause) and Chapter 20, Section 31 (redemption clause) of the Swedish Companies Act.

The Board of Directors proposes that the President and CEO shall be authorized to make the minor adjustments to the above resolutions that may prove to be necessary in connection with the registration with the Swedish Companies Registration Office.

Reasons for deviation from the shareholders’ preferential rights and principles on which the subscription price is based

The Board of Directors considers that a directed issue of shares of series C, followed by buy-back and transfer of treasury stock is the most cost efficient and flexible method to transfer shares under the LTV 2024. Shares are issued at the share’s quota value and repurchased as soon as the shares have been subscribed for and registered. The purchase price paid by the Company to the subscriber equals the subscription price. As compensation to the subscriber for its assistance in the issuance and buy-back of shares under items 16 and 18, the Company will pay to the subscriber an amount totaling SEK 200,000.

e) Authorization for the Board of Directors to decide on a directed acquisition offer for the LTV 2024

Authorization for the Board of Directors to decide that 10.4 million shares of series C in the Company be acquired according to the following:

  • Acquisition may occur by an offer to acquire shares directed to all holders of shares of series C in Ericsson.
  • The authorization may be exercised until the AGM in 2026.
  • The acquisition shall be made at a price corresponding to the quota value of the share (approximately SEK 5 per share).
  • Payment for acquired shares shall be made in cash.

Majority rules

The resolution of the AGM on transfer of treasury stock to employees and on an exchange, directed share issue and acquisition offer for the LTV 2024 according to item 18 is proposed to be taken as one decision and requires that shareholders representing at least nine-tenths of the votes cast as well as the shares represented at the AGM approve the proposal.

Item 19 Resolutions on transfer of treasury stock in relation to the resolutions on the ongoing LTV 2022, LTV I 2023 and LTV II 2023

19.1 Transfer of treasury stock on an exchange to cover expenses

The AGM in 2024 resolved on a right for the Company to transfer in total no more than 2.2 million shares of series B in the Company on a stock exchange to cover certain payments, mainly social security payments, which may occur in relation to the Long-Term Variable Compensation Programs LTV 2022, LTV I 2023 and LTV II 2023 (the “Programs“).

The resolution is valid up to the following AGM. Resolutions on transfer of treasury stock for the purpose of the above-mentioned programs must therefore be repeated at subsequent AGMs. None of these 2.2 million shares of series B in the Company have been transferred up to February 19, 2025.

The Board of Directors proposes that the AGM resolve that the Company may, prior to the AGM in 2026, transfer no more than 2.2 million shares of series B in the Company, or the lower number of shares of series B, which as per March 25, 2025 remain of the original 2.2 million shares for the purposes of covering certain payments, primarily social security payments that may occur in relation to the Programs. Transfer of the shares shall be effected on Nasdaq Stockholm at a price within the, at each time, prevailing price interval for the share.

19.2 Authorization to decide on transfer of treasury stock on an exchange to cover costs for tax and social security liabilities for the Participants

Previous AGMs have resolved to secure the delivery of Performance Shares in relation to the Programs through transfer of in total no more than 9.8 million shares of series B in the Company to Participants and subsidiaries within the Ericsson Group.

The Board of Directors proposes that the AGM authorize the Board of Directors to decide to, in conjunction with the delivery of vested shares under the Programs, prior to the AGM in 2026, retain and sell no more than 60% of the vested shares of series B in the Company in order to cover the costs for withholding and paying tax and social security liabilities on behalf of the Participants in relation to the Performance Share Awards for remittance to revenue authorities. Transfer of the shares shall be effected on Nasdaq Stockholm at a price within the, at each time, prevailing price interval for the share as disseminated by Nasdaq Stockholm. These shares form a part of the final number of vested shares to the employees under the Programs and do not incur additional costs to the Programs for the Company.

Majority rules
The resolutions of the AGM on transfer of treasury stock on an exchange according to each of items 19.1 and 19.2 requires that shareholders representing at least two-thirds of the votes cast as well as the shares represented at the AGM approve the proposals.

20. Resolution on proposal from an (employee) shareholder that the AGM resolve that Ericsson implement a policy ensuring that executive bonuses are disbursed only after all employees have received cost-of-living and performance-based salary increases each year

The shareholder Christopher Neitzert has proposed the following:

“I propose that Ericsson implement a policy ensuring that executive bonuses are disbursed only after all employees have received cost-of-living and performance-based salary increases each year. If employees do not receive these adjustments, then executive bonuses shall not be awarded.”

Statement from Ericsson’s Board of Directors:

“Firstly, we thank Christopher Neitzert for his proposal and his attention on the topic of employee remuneration. Ericsson’s AGM 2023 have adopted guidelines for remuneration to group management. The remuneration guidelines adopted by the AGM aim to ensure alignment with Ericsson’s current remuneration philosophy and practices applicable for the Company’s employees based on the principles of competitiveness, fairness, transparency, and performance, and they are intended to remain in place for a total period of four years until the AGM 2027. The Company’s remuneration practices are designed to align with Ericsson’s strategic objectives and the long-term interests of shareholders. They enable the Company to attract, retain, and motivate individuals with diverse backgrounds, skills, and abilities, fairly reward exceptional performance, and further strengthen Ericsson’s culture.”

The above-mentioned guidelines were preceded by careful consideration by the Board of Directors and its Remuneration Committee, including consideration of the total remuneration and employment conditions of the Company’s employees by reviewing the application of Ericsson’s remuneration policy for the wider employee population to ensure consistency. The guidelines were further adopted to ensure that the Company’s business strategies and ways of working could be supported through the lifecycle of the guidelines. The proposed policy would conflict with some of the core principles of the Remuneration guidelines and entail significant administrative and financial burdens for the Company. The proposal would impose broad and impractical obligations that would be, in practice, difficult to implement for a global company with a workforce as diverse as Ericsson that spans approximately 180 countries. A blanket requirement for payment of inflation-connected salaries to all global employees before any executive bonuses are paid, would be highly unusual for a multinational corporate of our breadth, and have a significant adverse impact on Ericsson’s competitive position. Ericsson values its employees highly and has a policy of benchmarking remuneration in applicable markets to ensure compensation remains competitive in order to attract and retain the best talent. In addition, Ericsson already undertakes global annual salary reviews as part of its performance management program.

The Board of Directors’ view is, against this background, that the guidelines adopted by Ericsson’s 2023 AGM remain to be the most appropriate guidelines for the Company’s remuneration practices, and that its current policies with respect to remuneration across the group remain fit for purpose.

Shares and votes

There are in total 3,348,251,735 shares in the Company: 261,755,983 shares of series A and 3,086,495,752 shares of series B, corresponding to in total 570,405,558.2 votes. The Company’s holding of treasury stock as of February 19, 2025, amounts to 15,579,561 shares of series B, corresponding to 1,557,956.1 votes.

Shareholders’ right to receive information at the AGM

The Board of Directors and the President and CEO shall, if any shareholder so requests and the Board of Directors believes that it can be done without material harm to the Company, provide information regarding circumstances that may affect the assessment of an item on the agenda and circumstances that may affect the assessment of the Company’s or its subsidiaries’ financial situation and the Company’s relation to other companies within the Group.

Documents

The form of power of attorney, the postal voting form and the complete proposals of the Nomination Committee with respect to items 1, and 9-15 above, including a description of the work of the Nomination Committee and Exhibit 1 and 2 to the Nomination Committee’s proposals, are available at the Company’s website www.ericsson.com. A letter from the shareholder who has submitted the proposal under item 20 is available in full at the Company’s website www.ericsson.com. In respect of all other items, complete proposals are provided under the respective item in the notice. The documents will be sent upon request to shareholders providing their address to the Company.

The annual report (including the Board of Directors’ statement relating to the proposal under item 8.4 above), the auditor’s report, the remuneration report, the auditor’s statement regarding the guidelines for remuneration to group management and the Board of Directors’ statement relating to the proposals under items 16.2 and 18 above will be available at the Company and on the Company’s website www.ericsson.com no later than three weeks prior to the AGM. The documents will be sent upon request to shareholders providing their address to the Company.

Stockholm, February 2025
Telefonaktiebolaget LM Ericsson (publ)

The Board of Directors

[1] Calculated as if the number of non-employed Board members elected by the AGM was nine persons and an unchanged number of Committee members. A calculation in relation to the current proposal of ten non-employed Board members elected by the AGM and an unchanged number of Committee members would instead entail an increase of the fees by approximately 8.61% compared with the total fees to the Board and Committee members resolved by the AGM 2024 (adjusted for ten non-employed Board members).

[2] The definition of Group EBITA in LTV 2025 differs from the definition of Group EBITA in the Company’s Financial report as the definition in the LTV 2025 excludes restructuring charges.

[3] Total shareholder return, i.e., share price growth including dividends.

[4] To provide a stable assessment of performance, the TSR development will be calculated based on the average closing price of the Ericsson series B share on Nasdaq Stockholm for the three-month period immediately prior to the commencement and expiration of the Performance Period.

[5] Measured as the carbon dioxide equivalents (“CO2e”) of several greenhouse gases including, but not limited to, carbon dioxide. The so-called high-altitude effect of greenhouse gas emissions from air travel is not to be considered in these calculations.

[6] Corresponding to emissions in Scope 1, Scope 2 (market-based) and Scope 3 category Business Travel, as defined in the Greenhouse Gas Protocol, and reported in the Company’s annual statutory Sustainability and Corporate Responsibility report.

[7] GHG emissions are reported on a calendar year basis but for practical and timing reasons, some of the emissions in scope of the performance criterion are measured on the twelve-month period December up to and including November.

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KLN Subsidiary Kerry Siam Seaport and South Korean Steelmaker POSCO Group Subsidiary Form Joint Venture to Strengthen Steel Logistics Capabilities in Thailand and Southeast Asia

HONG KONG, Feb. 20, 2025 /PRNewswire/ — Kerry Logistics Network Limited (‘KLN’; Stock Code 0636.HK) has formed a joint venture, POSCO Flow (Thailand), through Kerry Siam Seaport (‘KSSP’), its subsidiary in Thailand, with POSCO Flow, the logistics arm of POSCO Group, the largest steelmaker in South Korea. Under the partnership, KLN will act as the preferred logistics partner of POSCO Flow (Thailand) and provide comprehensive port and logistics support to POSCO Group’s subsidiaries in Thailand as well as other markets in Southeast Asia.

KSSP has been serving POSCO Group since 2017 for all their nominated vessels in Thailand, providing services including port, warehousing, transportation, customs clearance, stuffing/unstuffing, stevedoring and container freight.

POSCO Group, a Fortune 500 company, has production facilities in 16 countries across Asia, the Americas, Africa, Europe and Oceania. The joint venture in Thailand will be a blueprint to further KLN and POSCO Group’s collaboration and strengthen both companies’ steel logistics capabilities in Southeast Asia and worldwide.

Ellis Cheng, Executive Director and Chief Financial Officer of KLN, said, “The establishment of POSCO Flow (Thailand) is a milestone in the long-term collaboration between KLN and POSCO Group. Through this partnership, we not only support POSCO Group’s expansion into Thailand’s logistics market but also enhance the service capabilities of both companies, leveraging KLN’s proven track record and solid presence in Southeast Asia and worldwide. The joint venture is a testament to the service excellence of KSSP and enables KLN to set new benchmarks in industrial logistics.”

Ha Jong-beom, Head of Steel Logistics of POSCO Flow, said, “This joint venture will enable us to secure a competitive advantage in the steel logistics market in Thailand and lay the foundation for expanding our business to the Southeast Asian market. Through this cooperation with KSSP, we will strive to provide the best logistics solutions to the companies under POSCO Group in the region and contribute to their cost competitiveness.”

KSSP is a multi-purpose deep sea port located at the heart of ASEAN that provides wide berth docking, container operations and warehousing services in one strategic location, serving the industrial estates on Thailand’s eastern seaboard and in the Greater Mekong Region. Its joint venture with POSCO Flow marks a major step in the extension of KLN’s industrial project logistics footprint in Asia.

-End-

About Kerry Logistics Network Limited (Stock Code 0636.HK)
KLN is an Asia-based, global 3PL with a highly diversified business portfolio and extensive coverage in Asia. It offers a broad range of supply chain solutions from integrated logistics, international freight forwarding (air, ocean, road, rail and multimodal) and e-commerce to industrial project logistics and infrastructure investment.

With a global presence across 59 countries and territories, KLN has established a solid foothold in half of the world’s emerging markets. Its diverse infrastructure, extensive coverage in international gateways and local expertise span across the Mainland of China, India, Southeast Asia, the CIS, Middle East, LATAM and other locations.

KLN generated a revenue of over HK$47.4 billion in 2023. It is listed on the Hong Kong Stock Exchange and is a constituent of the Hang Seng Corporate Sustainability Benchmark Index.

Youdao Reports Fourth Quarter and Fiscal Year 2024 Unaudited Financial Results

HANGZHOU, China, Feb. 20, 2025 /PRNewswire/ — Youdao, Inc. (“Youdao” or the “Company”) (NYSE: DAO), an intelligent learning company with industry-leading technology in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2024.

Fourth Quarter 2024 Financial Highlights

  • Total net revenues were RMB1.3 billion (US$183.6 million), representing a 9.5% decrease from the same period in 2023.
    – Net revenues from learning services were RMB617.7 million (US$84.6 million), representing a 21.2% decrease from the same period in 2023.
    – Net revenues from smart devices were RMB240.4 million (US$32.9 million), representing an 8.1% increase from the same period in 2023.
    – Net revenues from online marketing services were RMB481.7 million (US$66.0 million), representing a modest increase from the same period in 2023.
  • Gross margin was 47.8%, compared with 49.9% for the same period in 2023.
  • Income from operations was RMB84.2 million (US$11.5 million), representing a 10.3% increase from the same period in 2023.
  • Basic and diluted net income per American depositary share (“ADS”) attributable to ordinary shareholders was RMB0.71 (US$0.10) and RMB0.70 (US$0.10), respectively, compared with RMB0.47 for the same period of 2023.

Fiscal Year 2024 Financial Highlights

  • Total net revenues were RMB5.6 billion (US$770.7 million), representing a 4.4% increase from 2023.
    – Net revenues from learning services were RMB2.7 billion (US$376.4 million), representing a 12.7% decrease from 2023.
    – Net revenues from smart devices were RMB903.7 million (US$123.8 million), remaining stable compared to 2023.
    – Net revenues from online marketing services were RMB2.0 billion (US$270.6 million), representing a 48.3% increase from 2023.
  • Gross margin was 48.9%, compared with 51.4% for 2023.
  • Income from operations was RMB148.8 million (US$20.4 million), compared with loss from operations of RMB466.3 million for 2023.
  • Basic and diluted net income per ADS attributable to ordinary shareholders was RMB0.70 (US$0.10), compared with basic and diluted net loss per ADS attributable to ordinary shareholders of RMB4.53 for 2023.

“We achieved a significant milestone of first-ever full-year profitability in 2024. In terms of products and services, our AI-based and differentiated services enhanced customer loyalty, with retention rate surpassing 70% in the fourth quarter for Youdao Lingshi. In addition, we strengthened collaboration with NetEase in online marketing services, facilitating the long-term development of this segment. AI-driven subscription services continued to upgrade, leading to elevated customer satisfaction and over 130% year-over-year increase in total sales,” said Dr. Feng Zhou, Chief Executive Officer and Director of Youdao.

“Looking ahead, we are launching our AI Native strategy-integrating AI more comprehensively across our business lines, for example, automating our advertising platforms and introducing AI-driven tutoring for our course customers. We are excited by the rapid maturing of reasoning models and eager to deliver these innovative projects to our customers,” Dr. Zhou concluded.

Fourth Quarter 2024 Financial Results

Net Revenues

Net revenues for the fourth quarter of 2024 were RMB1.3 billion (US$183.6 million), representing a 9.5% decrease from RMB1.5 billion for the same period of 2023.

Net revenues from learning services were RMB617.7 million (US$84.6 million) for the fourth quarter of 2024, representing a 21.2% decrease from RMB784.0 million for the same period of 2023. The year-over-year decrease was due to our continued strategic focus on a more selective customer acquisition approach, prioritizing higher ROI (return on investment) engagements. We believe despite the short-term revenue decline, this strategy has enhanced the overall resilience and operational efficiency of our business.

Net revenues from smart devices were RMB240.4 million (US$32.9 million) for the fourth quarter of 2024, representing an 8.1% increase from RMB222.4 million for the same period of 2023, primarily driven by the continued increase in sales of Youdao Dictionary Pen in 2024.

Net revenues from online marketing services were RMB481.7 million (US$66.0 million) for the fourth quarter of 2024, representing a modest increase from RMB474.1 million for the same period of 2023.

Gross Profit and Gross Margin

Gross profit for the fourth quarter of 2024 was RMB640.8 million (US$87.8 million), representing a 13.3% decrease from RMB738.8 million for the same period of 2023. Gross margin was 47.8% for the fourth quarter of 2024, compared with 49.9% for the same period of 2023.

Gross margin for learning services was 60.0% for the fourth quarter of 2024, compared with 63.6% for the same period of 2023. The decrease was mainly due to the decline in economies of scale as a result of the decreased revenues from learning services.

Gross margin for smart devices increased to 43.9% for the fourth quarter of 2024 from 38.3% for the same period of 2023. The improvement was mainly attributable to the higher gross margin arising from the newly launched Youdao Dictionary Pen in 2024.

Gross margin for online marketing services was 34.2% for the fourth quarter of 2024, compared with 32.7% for the same period of 2023. The increase was mainly attributable to improved gross margin profile of performance-based advertisements through third parties’ internet properties compared with the same period of last year.

Operating Expenses

Total operating expenses for the fourth quarter of 2024 were RMB556.6 million (US$76.3 million), compared with RMB662.5 million for the same period of last year.

Sales and marketing expenses for the fourth quarter of 2024 were RMB381.8 million (US$52.3 million), representing a decrease of 13.5% from RMB441.4 million for the same period of 2023. This decrease was attributable to the reduced marketing expenditures, as well as declined outsourcing labor service fees and payroll related expenses in learning services.

Research and development expenses for the fourth quarter of 2024 were RMB120.7 million (US$16.5 million), representing a decrease of 28.2% from RMB168.1 million for the same period of 2023. The decrease was primarily due to the decreased headcount for research and development employees, leading to payroll savings in the fourth quarter of 2024.

General and administrative expenses for the fourth quarter of 2024 were RMB54.1 million (US$7.4 million), largely flat compared with RMB53.0 million for the same period of 2023.

Income from Operations

As a result of the foregoing, income from operations for the fourth quarter of 2024 was RMB84.2 million (US$11.5 million), representing a 10.3% increase from RMB76.3 million for the same period in 2023. The margin of income from operations was 6.3%, compared with 5.2% for the same period of last year.

Net Income Attributable to Youdao’s Ordinary Shareholders

Net income attributable to Youdao’s ordinary shareholders for the fourth quarter of 2024 was RMB83.0 million (US$11.4 million), representing a 47.0% increase from RMB56.5 million for the same period of last year. Non-GAAP net income attributable to Youdao’s ordinary shareholders for the fourth quarter of 2024 was RMB91.8 million (US$12.6 million), representing a 32.5% increase from RMB69.3 million for the same period of last year.

Basic and diluted net income per ADS attributable to ordinary shareholders for the fourth quarter of 2024 was RMB0.71 (US$0.10) and RMB0.70 (US$0.10), respectively, compared with RMB0.47 for the same period of 2023. Non-GAAP basic and diluted net income per ADS attributable to ordinary shareholders was RMB0.78 (US$0.11) and RMB0.77 (US$0.11), respectively, compared with RMB0.58 for the same period of 2023.

Other Information

As of December 31, 2024, Youdao’s cash, cash equivalents, current and non-current restricted cash, time deposits and short-term investments totaled RMB662.6 million (US$90.8 million), compared with RMB527.1 million as of December 31, 2023. For the fourth quarter of 2024, net cash provided by operating activities was RMB158.2 million (US$21.7 million). Youdao’s ability to continue as a going concern is dependent on management’s ability to implement an effective business plan amid a changing regulatory environment, generate operating cash flows, and secure external financing for future development. To support Youdao’s future business, NetEase Group has agreed to provide financial support for ongoing operations in the next thirty-six months starting from May 2024. As of December 31, 2024, Youdao has received various forms of financial support from the NetEase Group, including, among others, RMB878.0 million in short-term loan, and US$126.1 million in long-term loans maturing on March 31, 2027 drawn from the US$300.0 million revolving loan facility.

As of December 31, 2024, the Company’s contract liabilities, which mainly consisted of deferred revenues generated from Youdao’s learning services, were RMB961.0 million (US$131.7 million), compared with RMB1.1 billion as of December 31, 2023.

Fiscal Year 2024 Financial Results

Net Revenues

Net revenues for 2024 were RMB5.6 billion (US$770.7 million), representing a 4.4% increase from RMB5.4 billion for 2023.

Net revenues from learning services were RMB2.7 billion (US$376.4 million) for 2024, representing a 12.7% decrease from RMB3.1 billion for 2023. The decrease reflects our commitment to a more selective customer acquisition approach, prioritizing higher ROI engagements. This strategy has contributed to the overall resilience and efficiency of our business.

Net revenues from smart devices were RMB903.7 million (US$123.8 million) for 2024, remaining stable compared to 2023.

Net revenues from online marketing services were RMB2.0 billion (US$270.6 million) for 2024, representing a 48.3% increase from RMB1.3 billion for 2023. The increase was mainly attributable to the increased demand for performance-based advertisements through third parties’ internet properties, which was driven by our continued investments in cutting-edge AI technology.

Gross Profit and Gross Margin

Gross profit for 2024 was RMB2.7 billion (US$376.5 million), remaining stable compared to 2023. Gross margin for 2024 was 48.9%, compared with 51.4% for 2023.

Gross margin for learning services was 61.4% for 2024, compared with 63.2% for 2023. The decrease was mainly due to the decline in economies of scale as a result of the decreased revenues from learning services.

Gross margin for smart devices was 38.7% for 2024, remaining stable compared to 2023.

Gross margin for online marketing services increased to 36.0 % for 2024 from 31.7% for 2023. The increase was mainly attributable to improved gross margin profile of performance-based advertisements through third parties’ internet properties compared with last year.

Operating Expenses

Total operating expenses for 2024 were RMB2.6 billion (US$356.2 million), representing a decrease of 19.6%, compared with RMB3.2 billion for 2023.

Sales and marketing expenses for 2024 were RMB1.9 billion (US$256.5 million), representing a decrease of 17.5%, compared with RMB2.3 billion for 2023. This decrease was primarily attributable to the reduced marketing expenditures, as well as declined outsourcing labor service fees and payroll related expenses in learning services.

Research and development expenses for 2024 were RMB540.0 million (US$74.0 million), representing a decrease of 27.4%, compared with RMB743.4 million for 2023. The decrease was primarily due to the decreased headcount for research and development employees, leading to payroll savings in 2024.

General and administrative expenses for 2024 were RMB187.1 million (US$25.6 million), representing a decrease of 15.7%, compared with RMB222.0 million for 2023. The decrease was primarily due to the decreased headcount for general and administrative employees, leading to payroll savings in 2024.

Income/(Loss) from Operations

Income from operations for 2024 was RMB148.8 million (US$20.4 million), compared with loss from operations of RMB466.3 million for 2023. The margin of income from operations was 2.6%, compared with margin of loss from operations of 8.7% for 2023.

Net Income/(Loss) Attributable to Youdao’s Ordinary Shareholders

Net income attributable to Youdao’s ordinary shareholders for 2024 was RMB82.2 million (US$11.3 million), compared with net loss attributable to Youdao’s ordinary shareholders of RMB549.9 million for 2023. Non-GAAP net income attributable to Youdao’s ordinary shareholders for 2024 was RMB104.8 million (US$14.4 million), compared with non-GAAP net loss attributable to Youdao’s ordinary shareholders of RMB475.4 million for 2023.

Basic and diluted net income per ADS attributable to ordinary shareholders for 2024 was RMB0.70 (US$0.10), compared with basic and diluted net loss per ADS attributable to ordinary shareholders of RMB4.53 for 2023. Non-GAAP basic and diluted net income per ADS attributable to ordinary shareholders was RMB0.89 (US$0.12), compared with non-GAAP basic and diluted net loss per ADS attributable to ordinary shareholders of RMB3.92 for 2023.

Operating Cash Flow

For 2024, net cash used in operating activities was RMB67.9 million (US$9.3 million), compared with RMB438.1 million for 2023.

Share Repurchase Program

On November 17, 2022, the Company announced that its board of directors had authorized the Company to adopt a share repurchase program in accordance with applicable laws and regulations for up to US$20.0 million of its Class A ordinary shares (including in the form of ADSs) during a period of up to 36 months. This amount was subsequently increased to US$40.0 million in August 2023. As of December 31, 2024, the Company had repurchased a total of approximately 7.5 million ADSs for a total consideration of approximately US$33.8 million in the open market under the share repurchase program.

Conference Call

Youdao’s management team will host a teleconference call with simultaneous webcast at 5:00 a.m. Eastern Time on Thursday, February 20, 2025 (Beijing/Hong Kong Time: 6:00 p.m., Thursday, February 20, 2025). Youdao’s management will be on the call to discuss the financial results and answer questions.

Dial-in details for the earnings conference call are as follows:

United States (toll free):

+1-888-346-8982

International:

+1-412-902-4272

Mainland China (toll free):

400-120-1203

Hong Kong (toll free): 

800-905-945

Hong Kong:

+852-3018-4992

Conference ID:

6589745

A live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.youdao.com.

A replay of the conference call will be accessible by phone one hour after the conclusion of the live call at the following numbers, until February 27, 2025:

United States: 

+1-877-344-7529

International:

+1-412-317-0088

Replay Access Code:       

6589745

About Youdao, Inc. 

Youdao, Inc. (NYSE: DAO) is an intelligent learning company with industry-leading technology in China dedicated to developing and using technologies to provide learning content, applications and solutions to users of all ages. Building on the popularity of its online knowledge tools such as Youdao Dictionary and Youdao Translation, Youdao now offers smart devices, STEAM courses, adult and vocational courses, and education digitalization solutions. In addition, Youdao has developed a variety of interactive learning apps. Youdao was founded in 2006 as part of NetEase, Inc. (NASDAQ: NTES; HKEX: 9999), a leading internet technology company in China.

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

Non-GAAP Measures

Youdao considers and uses non-GAAP financial measures, such as non-GAAP net income/(loss) attributable to the Company’s ordinary shareholders and non-GAAP basic and diluted net income/(loss) per ADS, 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 accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Youdao defines non-GAAP net income/(loss) attributable to the Company’s ordinary shareholders as net income/(loss) attributable to the Company’s ordinary shareholders excluding share-based compensation expenses and impairment of long-term investments. Non-GAAP net income/(loss) attributable to the Company’s ordinary shareholders enables Youdao’s management to assess its operating results without considering the impact of these items, which are non-cash charges in nature. Youdao believes that these non-GAAP financial measures provide 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.

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, which possibly do not reflect all items of expense that affect our operations. In addition, the non-GAAP financial measures Youdao uses may differ from the non-GAAP measures uses by other companies, including peer companies, and therefore their comparability may be limited.

For more information on these non-GAAP financial measures, please see the table captioned “Unaudited Reconciliation of GAAP and Non-GAAP Results” set forth at the end of this release.

The accompanying table has more details on the reconciliation between our GAAP financial measures that are mostly directly comparable to non-GAAP financial measures. Youdao encourages you to review its financial information in its entirety and not rely on a single financial measure.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB7.2993 to US$1.00, the exchange rate on December 31, 2024 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Further information regarding such risks, uncertainties or factors is included in the Company’s filings with the SEC. The announced results of the fourth quarter and full year of 2024 are preliminary and subject to adjustments. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.

For investor and media inquiries, please contact:

In China:
Jeffrey Wang
Youdao, Inc.
Tel: +86-10-8255-8163 ext. 89980
E-mail: IR@rd.netease.com 

Piacente Financial Communications
Helen Wu
Tel: +86-10-6508-0677
E-mail: youdao@thepiacentegroup.com 

In the United States:
Piacente Financial Communications
Brandi Piacente
Tel: +1-212-481-2050
E-mail: youdao@thepiacentegroup.com 

 

YOUDAO, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(RMB and USD in thousands)

As of December 31,

As of December 31,

As of December 31,

2023

2024

2024

RMB

RMB

USD (1)

Assets

Current assets:

Cash and cash equivalents

454,536

592,721

81,202

Time deposits

277

Restricted cash

395

3,567

489

Short-term investments

71,848

63,064

8,640

Accounts receivable, net

354,006

418,644

57,354

Inventories

217,067

174,741

23,939

Amounts due from NetEase Group

26,117

79,700

10,919

Prepayment and other current assets

175,705

154,331

21,143

Total current assets

1,299,951

1,486,768

203,686

Non-current assets:

Property, equipment and software, net

70,906

46,725

6,401

Operating lease right-of-use assets, net

89,022

68,494

9,384

Long-term investments

51,396

72,380

9,916

Goodwill

109,944

109,944

15,062

Other assets, net

44,976

30,084

4,122

Total non-current assets

366,244

327,627

44,885

Total assets

1,666,195

1,814,395

248,571

Liabilities, Mezzanine Equity and Shareholders’ Deficit

Current liabilities:

Accounts payables

159,005

145,148

19,885

Payroll payable

282,679

264,520

36,239

Amounts due to NetEase Group

82,430

21,997

3,014

Contract liabilities

1,052,622

961,024

131,660

Taxes payable

52,781

37,603

5,152

Accrued liabilities and other payables

591,770

638,660

87,495

Short-term loans from NetEase Group

878,000

878,000

120,286

Total current liabilities

3,099,287

2,946,952

403,731

Non-current liabilities:

Long-term lease liabilities

49,337

25,566

3,503

Long-term loans from NetEase Group

630,360

913,000

125,080

Other non-current liabilities

16,314

18,189

2,492

Total non-current liabilities

696,011

956,755

131,075

Total liabilities

3,795,298

3,903,707

534,806

Mezzanine equity

37,961

Shareholders’ deficit:

Youdao’s shareholders’ deficit

(2,186,736)

(2,139,958)

(293,173)

Noncontrolling interests

19,672

50,646

6,938

Total shareholders’ deficit

(2,167,064)

(2,089,312)

(286,235)

Total liabilities, mezzanine equity and shareholders’ deficit

1,666,195

1,814,395

248,571

Note 1:

The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB7.2993 on the last trading
day of December  (December 31, 2024) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

 

 

YOUDAO, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(RMB and USD in thousands, except share and per ADS data)

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

December 31,

2023

2024

2024

2024

2023

2024

RMB

RMB

RMB

USD (1)

RMB

RMB

Net revenues:

Learning services

784,012

767,859

617,673

84,621

3,148,114

2,747,290

Smart devices

222,407

315,305

240,444

32,941

909,192

903,669

Online marketing services

474,102

489,377

481,681

65,990

1,331,902

1,974,960

Total net revenues

1,480,521

1,572,541

1,339,798

183,552

5,389,208

5,625,919

Cost of revenues (2)

(741,720)

(783,085)

(699,045)

(95,769)

(2,621,746)

(2,877,428)

Gross profit

738,801

789,456

640,753

87,783

2,767,462

2,748,491

Operating expenses:

Sales and marketing expenses (2)

(441,399)

(519,620)

(381,815)

(52,308)

(2,268,428)

(1,872,586)

Research and development expenses (2)

(168,130)

(119,594)

(120,694)

(16,535)

(743,364)

(539,998)

General and administrative expenses (2)

(52,989)

(42,968)

(54,068)

(7,408)

(221,996)

(187,086)

Total operating expenses

(662,518)

(682,182)

(556,577)

(76,251)

(3,233,788)

(2,599,670)

Income/(Loss) from operations

76,283

107,274

84,176

11,532

(466,326)

148,821

Interest income

1,733

1,057

970

133

8,348

3,919

Interest expense

(18,869)

(15,112)

(16,828)

(2,305)

(69,472)

(73,090)

Others, net

(2,589)

(1,992)

1,594

218

(11,578)

1,585

Income/(Loss) before tax

56,558

91,227

69,912

9,578

(539,028)

81,235

Income tax (expenses)/benefits

(441)

(2,370)

2,386

327

(11,089)

(6,009)

Net income/(loss)

56,117

88,857

72,298

9,905

(550,117)

75,226

Net loss/(income) attributable to noncontrolling interests

365

(2,604)

10,705

1,466

182

6,987

Net income/(loss) attributable to ordinary shareholders of the
Company

56,482

86,253

83,003

11,371

(549,935)

82,213

Basic net income/(loss) per ADS

0.47

0.74

0.71

0.10

(4.53)

0.70

Diluted net income/(loss) per ADS

0.47

0.74

0.70

0.10

(4.53)

0.70

Shares used in computing basic net income/(loss) per ADS

119,764,891

116,965,181

117,259,091

117,259,091

121,381,857

117,426,938

Shares used in computing diluted net income/(loss) per ADS

120,426,624

117,343,848

118,705,233

118,705,233

121,381,857

118,173,469

Note 1:

The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB7.2993 on the last trading day of December (December 31, 2024)
as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

Note 2:

Share-based compensation in each category:

Cost of revenues

(2,975)

(171)

1,025

140

1,645

2,359

Sales and marketing expenses

865

(1,359)

1,069

146

6,071

1,183

Research and development expenses

(312)

1,868

2,402

329

8,020

8,712

General and administrative expenses

5,224

2,072

4,285

588

15,061

10,342

 

 

YOUDAO, INC.

UNAUDITED ADDITIONAL INFORMATION

(RMB and USD in thousands)

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

December 31,

2023

2024

2024

2024

2023

2024

RMB

RMB

RMB

USD

RMB

RMB

Net revenues

Learning services

784,012

767,859

617,673

84,621

3,148,114

2,747,290

Smart devices

222,407

315,305

240,444

32,941

909,192

903,669

Online marketing services

474,102

489,377

481,681

65,990

1,331,902

1,974,960

Total net revenues

1,480,521

1,572,541

1,339,798

183,552

5,389,208

5,625,919

Cost of revenues

Learning services

285,383

290,877

247,059

33,847

1,159,357

1,060,177

Smart devices

137,150

180,390

134,896

18,481

552,810

553,620

Online marketing services

319,187

311,818

317,090

43,441

909,579

1,263,631

Total cost of revenues

741,720

783,085

699,045

95,769

2,621,746

2,877,428

Gross margin

Learning services

63.6 %

62.1 %

60.0 %

60.0 %

63.2 %

61.4 %

Smart devices

38.3 %

42.8 %

43.9 %

43.9 %

39.2 %

38.7 %

Online marketing services

32.7 %

36.3 %

34.2 %

34.2 %

31.7 %

36.0 %

Total gross margin

49.9 %

50.2 %

47.8 %

47.8 %

51.4 %

48.9 %

 

 

YOUDAO, INC.

UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(RMB and USD in thousands, except share and per ADS data)

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

December 31,

2023

2024

2024

2024

2023

2024

RMB

RMB

RMB

USD

RMB

RMB

Net income/(loss) attributable to ordinary shareholders of the
Company

56,482

86,253

83,003

11,371

(549,935)

82,213

Add: share-based compensation

2,802

2,410

8,781

1,203

30,797

22,596

         impairment of long-term investments

10,000

43,740

Non-GAAP net income/(loss) attributable to ordinary shareholders of
the Company

69,284

88,663

91,784

12,574

(475,398)

104,809

Non-GAAP basic net income/(loss) per ADS

0.58

0.76

0.78

0.11

(3.92)

0.89

Non-GAAP diluted net income/(loss) per ADS

0.58

0.76

0.77

0.11

(3.92)

0.89

Non-GAAP shares used in computing basic net income/(loss) per ADS

119,764,891

116,965,181

117,259,091

117,259,091

121,381,857

117,426,938

Non-GAAP shares used in computing diluted net income/(loss) per ADS

120,426,624

117,343,848

118,705,233

118,705,233

121,381,857

118,173,469

 

 

NetEase Announces Fourth Quarter and Fiscal Year 2024 Unaudited Financial Results

HANGZHOU, China, Feb. 20, 2025 /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 fourth quarter and fiscal year ended December 31, 2024.

Fourth Quarter 2024 Financial Highlights

  • Net revenues were RMB26.7 billion (US$3.7 billion), a decrease of 1.4% compared with the same quarter of 2023.
    • Games and related value-added services net revenues were RMB21.2 billion (US$2.9 billion), an increase of 1.5% compared with the same quarter of 2023.
    • Youdao net revenues were RMB1.3 billion (US$183.6 million), a decrease of 9.5% compared with the same quarter of 2023.
    • NetEase Cloud Music net revenues were RMB1.9 billion (US$257.6 million), a decrease of 5.3% compared with the same quarter of 2023.
    • Innovative businesses and others net revenues were RMB2.3 billion (US$313.1 million), a decrease of 17.0% compared with the same quarter of 2023.
  • Gross profit was RMB16.3 billion (US$2.2 billion), a decrease of 3.3% compared with the same quarter of 2023.
  • Total operating expenses were RMB8.5 billion (US$1.2 billion), a decrease of 15.1% compared with the same quarter of 2023.
  • Net income attributable to the Company’s shareholders was RMB8.8 billion (US$1.2 billion). Non-GAAP net income attributable to the Company’s shareholders was RMB9.7 billion (US$1.3 billion).[1]
  • Basic net income per share was US$0.38 (US$1.89 per ADS). Non-GAAP basic net income per share was US$0.42 (US$2.09 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 at the end of this announcement.

Fourth Quarter 2024 and Early 2025 Operational Highlights

  • Introduced more new blockbuster games around the globe, reinforcing NetEase’s leadership across diverse genres and growing global momentum.
    • Marvel Rivals topped Steam’s global top sellers chart shortly after its launch on December 6, amassing over 10 million registered users within 72 hours and over 40 million to date. Its Season 1 update in January 2025 sparked another surge, claiming the No. 1 spots on Steam’s top sellers and most-played charts worldwide.
    • Where Winds Meet surpassed 3 million downloads in China within four days of its PC launch and topped the iOS download chart for approximately two weeks following its mobile launch. A successful release of the game’s mobile version drove total players across PC and mobile to over 15 million within two weeks.
    • Justice mobile game topped the iOS download charts in Hong Kong, Macau and Taiwan and reached No. 1 position on the iOS top grossing chart in Taiwan in January 2025.
  • Blizzard titles World of Warcraft and Hearthstone continued to generate strong enthusiasm from the Chinese gaming community, while the return of Overwatch 2 on February 19, 2025 further fueled players’ passion.
  • Established titles maintained their popularity, such as Westward Journey Online 2, Fantasy Westward Journey Online and mobile game, Infinite Borders, Onmyoji, Identity V, Naraka: Bladepoint and Justice franchise, demonstrating NetEase’s prowess in long-term game operations.
  • New game lineup for global markets, including Fragpunk, Destiny: Rising and MARVEL Mystic Mayhem, positioned to further diversify game portfolio.
  • Youdao continued to focus on technology-driven innovation and profitability enhancement, achieving a 10.3% year-over-year increase in operating profit during the fourth quarter and recording first-ever annual operating profit in 2024.
  • NetEase Cloud Music continued to drive quality development across its music-centric ecosystem, remaining committed to nurturing its unique community and enriching its distinctive content offering. It also further improved music-oriented monetization supported by enlarging subscription-based memberships.

“We boldly pushed the boundaries of innovation once again in 2024, delivering groundbreaking gaming experiences that captivated players worldwide,” said Mr. William Ding, Chief Executive Officer and Director of NetEase. “Our new hit titles not only redefined gameplay but also set new industry benchmarks, while our legacy franchises gained fresh momentum through striking enhancements in design, storytelling and immersive content. As our diverse game portfolio expands across more genres and engages an ever-growing global audience, we remain dedicated to fostering creativity and collaborating with top talent and strategic partners to shape the next wave of gaming trends.

“Beyond gaming, Youdao and NetEase Cloud Music maintained healthy development in 2024, led by our focus on meticulously crafted content and exceptional user experiences. Our enduring pursuit of innovation, global expansion and game diversification is fueling lasting value creation across the industries we serve and for our partners and shareholders alike,” Mr. Ding concluded.

Fourth Quarter 2024 Financial Results

Net Revenues

Net revenues for the fourth quarter of 2024 were RMB26.7 billion (US$3.7 billion), compared with RMB26.2 billion and RMB27.1 billion for the preceding quarter and the same quarter of 2023, respectively.

Net revenues from games and related value-added services were RMB21.2 billion (US$2.9 billion) for the fourth quarter of 2024, compared with RMB20.9 billion each for the preceding quarter and the same quarter of 2023. Net revenues from the operation of online games accounted for approximately 96.7% of the segment’s net revenues for the fourth quarter of 2024, compared with 96.8% and 93.4% for the preceding quarter and the same quarter of 2023, respectively. Net revenues from mobile games accounted for approximately 65.3% of net revenues from the operation of online games for the fourth quarter of 2024, compared with 70.8% and 76.7% for the preceding quarter and the same quarter of 2023, respectively. The change in revenue mix was mainly due to the increased net revenues from PC games, including certain licensed titles. 

Net revenues from Youdao were RMB1.3 billion (US$183.6 million) for the fourth quarter of 2024, compared with RMB1.6 billion and RMB1.5 billion for the preceding quarter and the same quarter of 2023, respectively. 

Net revenues from NetEase Cloud Music were RMB1.9 billion (US$257.6 million) for the fourth quarter of 2024, compared with RMB2.0 billion each for the preceding quarter and the same quarter of 2023. 

Net revenues from innovative businesses and others were RMB2.3 billion (US$313.1 million) for the fourth quarter of 2024, compared with RMB1.8 billion and RMB2.8 billion for the preceding quarter and the same quarter of 2023, respectively.

Gross Profit

Gross profit for the fourth quarter of 2024 was RMB16.3 billion (US$2.2 billion), compared with RMB16.5 billion and RMB16.8 billion for the preceding quarter and the same quarter of 2023, respectively.

The quarter-over-quarter and year-over-year decreases in games and related value-added services’ gross profit were primarily due to decreased net revenues from certain mobile games, partially offset by increased net revenues from PC games, including certain licensed titles.

The quarter-over-quarter and year-over-year decreases in Youdao’s gross profit were primarily due to decreased net revenues from its learning services.

The quarter-over-quarter decrease in NetEase Cloud Music’s gross profit was primarily due to decreased net revenues from social entertainment services.

The quarter-over-quarter increase in innovative businesses and others’ gross profit was primarily due to increased gross profit from Yanxuan and advertising services. The year-over-year decrease was primarily due to decreased gross profit from several businesses within the segment including advertising services.

Gross Profit Margin

Gross profit margin for games and related value-added services for the fourth quarter of 2024 was 66.7%, compared with 68.8% and 69.5% for the preceding quarter and the same quarter of 2023, respectively. The quarter-over-quarter and year-over-year decreases were mainly attributable to higher revenue contribution from licensed games which have comparatively lower gross profit margins.

Gross profit margin for Youdao for the fourth quarter of 2024 was 47.8%, compared with 50.2% and 49.9% for the preceding quarter and the same quarter of 2023, respectively. The quarter-over-quarter and year-over-year decreases were mainly due to decreased revenue contribution from its learning services.

Gross profit margin for NetEase Cloud Music for the fourth quarter of 2024 was 31.9%, compared with 32.8% and 30.3% for the preceding quarter and the same quarter of 2023, respectively. The year-over-year increase was mainly due to increased net revenues from sales of membership subscriptions and continued improvement in cost control measures. 

Gross profit margin for innovative businesses and others for the fourth quarter of 2024 was 37.8%, compared with 37.8% and 34.4% for the preceding quarter and the same quarter of 2023, respectively. The year-over-year increase was mainly due to increased gross profit margins from Yanxuan.

Operating Expenses

Total operating expenses for the fourth quarter of 2024 were RMB8.5 billion (US$1.2 billion), compared with RMB9.3 billion and RMB10.0 billion for the preceding quarter and the same quarter of 2023, respectively. The quarter-over-quarter and year-over-year decreases were mainly due to decreased marketing expenditures related to games and related value-added services.

Other Income/(Expenses)

Other income/(expenses) consisted of investment (losses)/income, interest income, exchange gains/(losses) and others. The quarter-over-quarter and year-over-year increases were mainly due to net exchange gains in the fourth quarter of 2024 compared with net exchange losses recorded in the preceding quarter and the same quarter of 2023.

Income Tax

The Company recorded a net income tax charge of RMB1.4 billion (US$189.7 million) for the fourth quarter of 2024, compared with RMB1.3 billion and RMB1.1 billion for the preceding quarter and the same quarter of 2023, respectively. The effective tax rate for the fourth quarter of 2024 was 13.4%, compared with 16.1% and 13.8% for the preceding quarter and the same quarter of 2023, respectively. The effective tax rate represents certain estimates by the Company 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 RMB8.8 billion (US$1.2 billion) for the fourth quarter of 2024, compared with RMB6.5 billion and RMB6.6 billion for the preceding quarter and the same quarter of 2023, respectively.

Basic net income was US$0.38 per share (US$1.89 per ADS) for the fourth quarter of 2024, compared with US$0.28 per share (US$1.40 per ADS) each for the preceding quarter and the same quarter of 2023, respectively.

Non-GAAP net income attributable to the Company’s shareholders totaled RMB9.7 billion (US$1.3 billion) for the fourth quarter of 2024, compared with RMB7.5 billion and RMB7.4 billion for the preceding quarter and the same quarter of 2023, respectively.

Non-GAAP basic net income was US$0.42 per share (US$2.09 per ADS) for the fourth quarter of 2024, compared with US$0.32 per share (US$1.61 per ADS) and US$0.32 per share (US$1.57 per ADS) for the preceding quarter and the same quarter of 2023, respectively.  

Fiscal Year 2024 Financial Results

Net Revenues

Net revenues for fiscal year 2024 were RMB105.3 billion (US$14.4 billion), compared with RMB103.5 billion for fiscal year 2023.

Net revenues from games and related value-added services were RMB83.6 billion (US$11.5 billion) for fiscal year 2024, compared with RMB81.6 billion for fiscal year 2023. Net revenues from the operation of online games accounted for approximately 96.2% of the segment’s total net revenues for fiscal year 2024, compared with 92.9% for fiscal year 2023. Net revenues from mobile games accounted for approximately 72.7% of net revenues from the operation of online games for fiscal year 2024, compared with 75.2% for fiscal year 2023. The change in revenue mix was mainly due to higher net revenues generated by PC games such as Naraka: Bladepoint and licensed titles.

Net revenues from Youdao were RMB5.6 billion (US$770.7 million) for fiscal year 2024, compared with RMB5.4 billion for fiscal year 2023.

Net revenues from NetEase Cloud Music were RMB8.0 billion (US$1.1 billion) for fiscal year 2024, compared with RMB7.9 billion for fiscal year 2023.

Net revenues from innovative businesses and others were RMB8.1 billion (US$1.1 billion) for fiscal year 2024, compared with RMB8.6 billion for fiscal year 2023.

Gross Profit

Gross profit for fiscal year 2024 was RMB65.8 billion (US$9.0 billion), compared with RMB63.1 billion for fiscal year 2023.

The year-over-year increase in games and related value-added services’ gross profit was primarily due to increased net revenues from the operation of online games, such as Identity V and Naraka: Bladepoint PC and mobile games.

The slight year-over-year decrease in Youdao’s gross profit was mainly due to decreased revenue contribution from its learning services, which was partially offset by increased revenue contribution from its online marketing services.

The year-over-year increase in NetEase Cloud Music’s gross profit was primarily attributable to increased net revenues from sales of membership subscriptions and continued improvement in cost control measures.

The year-over-year increase in innovative businesses and others’ gross profit was primarily due to increased gross profits from Yanxuan and several other businesses included within the segment.

Operating Expenses

Total operating expenses for fiscal year 2024 were RMB36.2 billion (US$5.0 billion), compared with RMB35.4 billion for fiscal year 2023. The year-over-year increase was primarily due to higher research and development investments for games and related value-added services.

Other Income/(Expenses)

The year-over-year decrease was mainly due to higher impairment provisions related to certain investments, which was partially offset by higher interest income resulting from the Company’s increased net cash position.

Income Taxes

The Company recorded a net income tax charge of RMB5.5 billion (US$748.2 million) for fiscal year 2024, compared with RMB4.7 billion for fiscal year 2023. The effective tax rate was 15.3% for fiscal year 2024, compared with 13.8% for fiscal year 2023.

Net Income and Non-GAAP Net Income

Net income attributable to the Company’s shareholders for fiscal year 2024 totaled RMB29.7 billion (US$4.1 billion), compared with RMB29.4 billion for fiscal year 2023.

Basic net income was US$1.27 per share (US$6.36 per ADS) for fiscal year 2024, compared with US$1.25 per share (US$6.26 per ADS) for fiscal year 2023.

Non-GAAP net income attributable to the Company’s shareholders for fiscal year 2024 totaled RMB33.5 billion (US$4.6 billion), compared with RMB32.6 billion for fiscal year 2023.

Non-GAAP basic net income was US$1.43 per share (US$7.17 per ADS) for fiscal year 2024, compared with US$1.39 per share (US$6.94 per ADS) for fiscal year 2023.

Other Financial Information

As of December 31, 2024, 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 short-term and long-term loans) totaled RMB131.5 billion (US$18.0 billion), compared with RMB110.9 billion as of December 31, 2023. Net cash provided by operating activities was RMB39.7 billion (US$5.4 billion) for fiscal year 2024, compared with RMB35.3 billion for fiscal year 2023.

Quarterly Dividend

The board of directors approved a dividend of US$0.24405 per share (US$1.22025 per ADS) for the fourth quarter of 2024 to holders of ordinary shares and holders of ADSs as of the close of business on March 6, 2025, Beijing/Hong Kong Time and New York Time, respectively, payable in U.S. dollars. For holders of ordinary shares, in order to qualify for the dividend, all valid documents for the transfer of shares accompanied by the relevant share certificates must be lodged for registration with the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, no later than 4:30 p.m. on March 6, 2025 (Beijing/Hong Kong Time). The payment date is expected to be March 17, 2025, for holders of ordinary shares and on or around March 20, 2025, for holders of ADSs.

NetEase paid a dividend of US$0.0870 per share (US$0.4350 per ADS) for the third quarter of 2024 in December 2024.

Under the Company’s current dividend policy, the determination to make dividend distributions and the amount of such distribution in any particular quarter will be made at the discretion of its board of directors and will be based upon the Company’s operations and earnings, cash flow, financial condition and other relevant factors.

Share Repurchase Program

On November 17, 2022, the Company announced that its board of directors had approved a share repurchase program of up to US$5.0 billion of the Company’s ADSs and ordinary shares in open market transactions. This share repurchase program commenced on January 10, 2023 and will be in effect for a period not to exceed 36 months from such date. As of December 31, 2024, approximately 21.2 million ADSs had been repurchased under this program for a total cost of US$1.9 billion.

The extent to which NetEase repurchases its ADSs and its ordinary shares depends upon a variety of factors, including market conditions. These programs may be suspended or discontinued at any time.

** 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. 

Conference Call

NetEase’s management team will host a teleconference call with a simultaneous webcast at 7:00 a.m. New York Time on Thursday, February 20, 2025 (Beijing/Hong Kong Time: 8:00 p.m., Thursday, February 20, 2025). NetEase’s management will be on the call to discuss the quarterly results and answer questions.

Interested parties may participate in the conference call by dialing 1-914-202-3258 and providing conference ID: 10044895, 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: 10044895. The replay will be available through February 27, 2025.

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 company with industry-leading technology, 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/.

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 regulation environment in the markets where NetEase operates; the risk that NetEase may not be able to continuously develop new and creative online services or that NetEase will not be able to set, or follow in a timely manner, trends in the market; risks related to evolving economic cycles and geopolitical events; 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 accounting principles generally accepted in the United States of America (“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 our 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. See the unaudited reconciliation of GAAP and non-GAAP results at the end of this announcement. NetEase encourages you to review its financial information in its entirety and not rely on a single financial measure.

Contact for Media and Investors:
Email: ir@service.netease.com
Tel: (+86) 571-8985-3378

 

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 December 31,  

 December 31,  

 December 31,  

2023

2024

2024

 RMB  

 RMB  

 USD (Note 1) 

Assets

Current assets:

   Cash and cash equivalents

21,428,902

51,383,310

7,039,485

   Time deposits

100,856,034

75,441,355

10,335,423

   Restricted cash

2,777,206

3,086,405

422,836

   Accounts receivable, net

6,422,417

5,669,027

776,654

   Inventories

695,374

571,548

78,302

   Prepayments and other current assets, net

6,076,595

6,416,868

879,107

   Short-term investments

4,436,057

10,756,143

1,473,586

Total current assets

142,692,585

153,324,656

21,005,393

Non-current assets:

   Property, equipment and software, net 

8,075,044

8,520,101

1,167,249

   Land use rights, net

4,075,143

4,172,465

571,625

   Deferred tax assets 

1,560,088

1,113,435

152,540

   Time deposits

1,050,000

3,025,000

414,423

   Restricted cash

550

5,208

713

   Other long-term assets

28,471,568

25,830,685

3,538,789

Total non-current assets

43,232,393

42,666,894

5,845,339

Total assets 

185,924,978

195,991,550

26,850,732

Liabilities, Redeemable Noncontrolling Interests
    and Shareholders’ Equity

Current liabilities:

   Accounts payable 

881,016

720,549

98,715

   Salary and welfare payables

4,857,206

4,683,009

641,570

   Taxes payable

2,571,534

2,759,185

378,007

   Short-term loans

19,240,163

11,805,051

1,617,285

   Contract liabilities

13,362,166

15,299,222

2,095,985

   Accrued liabilities and other payables

12,930,399

14,400,641

1,972,879

Total current liabilities

53,842,484

49,667,657

6,804,441

Non-current liabilities:

   Deferred tax liabilities

2,299,303

2,173,117

297,716

   Long-term loans

427,997

427,997

58,635

   Other long-term liabilities

1,271,113

1,228,641

168,323

Total non-current liabilities

3,998,413

3,829,755

524,674

Total liabilities

57,840,897

53,497,412

7,329,115

Redeemable noncontrolling interests 

115,759

84,272

11,545

NetEase, Inc.’s shareholders’ equity

124,285,776

138,685,606

18,999,850

Noncontrolling interests

3,682,546

3,724,260

510,222

Total equity

127,968,322

142,409,866

19,510,072

Total liabilities, redeemable noncontrolling 
    interests and shareholders’ equity    

185,924,978

195,991,550

26,850,732

The accompanying notes are an integral part of this announcement.

 

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

 Three Months Ended 

Year Ended

December 31, 

September 30, 

December 31, 

 December 31,  

 December 31,  

December 31, 

December 31, 

2023

2024

2024

2024

2023

2024

2024

 RMB 

 RMB 

 RMB 

 USD (Note 1) 

RMB

RMB

USD (Note 1)

Net revenues

27,140,165

26,209,879

26,747,811

3,664,435

103,468,159

105,295,236

14,425,388

Cost of revenues

(10,315,030)

(9,733,274)

(10,475,470)

(1,435,134)

(40,404,765)

(39,488,152)

(5,409,855)

Gross profit

16,825,135

16,476,605

16,272,341

2,229,301

63,063,394

65,807,084

9,015,533

Operating expenses:

Selling and marketing expenses 

(4,225,556)

(3,805,071)

(2,818,645)

(386,153)

(13,969,460)

(14,147,657)

(1,938,221)

General and administrative expenses

(1,251,869)

(1,100,328)

(1,162,381)

(159,246)

(4,899,880)

(4,550,625)

(623,433)

Research and development expenses 

(4,479,219)

(4,424,469)

(4,469,868)

(612,369)

(16,484,910)

(17,524,812)

(2,400,889)

Total operating expenses

(9,956,644)

(9,329,868)

(8,450,894)

(1,157,768)

(35,354,250)

(36,223,094)

(4,962,543)

Operating profit

6,868,491

7,146,737

7,821,447

1,071,533

27,709,144

29,583,990

4,052,990

Other income/(expenses):

Investment (losses)/income, net

(8,940)

578,398

(506,077)

(69,332)

1,306,722

355,286

48,674

Interest income, net

1,261,583

1,282,766

1,174,333

160,883

4,120,418

4,920,915

674,163

Exchange (losses)/gains, net

(810,904)

(1,055,518)

1,535,312

210,337

(132,999)

255,430

34,994

Other, net

434,759

43,600

278,952

38,216

1,053,642

602,134

82,492

Income before tax

7,744,989

7,995,983

10,303,967

1,411,637

34,056,927

35,717,755

4,893,313

Income tax

(1,068,657)

(1,289,545)

(1,385,014)

(189,746)

(4,699,704)

(5,461,408)

(748,210)

Net income

6,676,332

6,706,438

8,918,953

1,221,891

29,357,223

30,256,347

4,145,103

Accretion of redeemable noncontrolling
    interests

(966)

(962)

(1,039)

(142)

(3,589)

(3,919)

(537)

Net (income)/loss attributable to noncontrolling
    interests and redeemable noncontrolling
    interests

(93,103)

(167,041)

(151,435)

(20,747)

62,918

(554,819)

(76,010)

Net income attributable to the
    Company’s shareholders

6,582,263

6,538,435

8,766,479

1,201,002

29,416,552

29,697,609

4,068,556

Net income per share *

Basic

2.05

2.04

2.76

0.38

9.15

9.28

1.27

Diluted

2.02

2.03

2.73

0.37

9.05

9.19

1.26

Net income per ADS *

Basic

10.25

10.22

13.81

1.89

45.73

46.40

6.36

Diluted

10.12

10.14

13.67

1.87

45.23

45.95

6.29

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

Basic

3,212,328

3,198,646

3,174,113

3,174,113

3,216,475

3,200,453

3,200,453

Diluted

3,253,166

3,224,110

3,206,100

3,206,100

3,252,029

3,230,602

3,230,602

*  Each ADS represents five ordinary shares.

The accompanying notes are an integral part of this announcement.

     

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three Months Ended

Year Ended

 December 31,  

 September 30,   

 December 31,  

 December 31,  

 December 31,  

 December 31,  

 December 31,  

2023

2024

2024

2024

2023

2024

2024

 RMB  

 RMB  

 RMB  

 USD (Note 1) 

 RMB  

 RMB  

 USD (Note 1) 

Cash flows from operating activities:

    Net income 

6,676,332

6,706,438

8,918,953

1,221,891

29,357,223

30,256,347

4,145,103

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

    Depreciation and amortization

659,772

520,567

697,447

95,550

3,055,260

2,417,894

331,250

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

151,571

(824,608)

358,852

49,163

(535,316)

(841,901)

(115,340)

    Impairment losses on investments

140,648

529,668

422,801

57,924

469,159

1,291,627

176,952

    Fair value changes of short-term investments

(106,532)

(100,071)

(241,431)

(33,076)

(414,207)

(530,607)

(72,693)

    Share-based compensation cost

812,987

978,139

931,444

127,608

3,242,810

3,882,939

531,960

    Allowance for expected credit losses

9,500

36,022

12,031

1,648

61,146

68,934

9,444

    Losses/(gains) on disposal of property, equipment and software 

3,385

(2,920)

(3,644)

(499)

5,676

(4,758)

(652)

    Unrealized exchange losses/(gains)

838,056

1,050,644

(1,542,986)

(211,388)

119,935

(719,162)

(98,525)

    (Gains)/losses on disposal of long-term investments,
        business and subsidiaries

(38,437)

(118,046)

232

32

(63,784)

(272,415)

(37,321)

    Deferred income taxes

193,854

711,639

404,109

55,363

131,437

320,726

43,939

    Share of results on equity method investees and revaluation
        results from previously held equity interest

(88,805)

(28,466)

(19,437)

(2,663)

(473,947)

155,568

21,313

    Changes in operating assets and liabilities: 

        Accounts receivable

53,089

146,758

517,850

70,945

(1,470,374)

716,375

98,143

        Inventories

25,054

(39,285)

42,135

5,772

296,764

123,780

16,958

        Prepayments and other assets

542,593

(1,234,390)

(432,196)

(59,211)

87,556

(809,590)

(110,913)

        Accounts payable

18,443

6,316

218,689

29,960

(559,419)

91,142

12,486

        Salary and welfare payables

1,992,931

(670,750)

1,759,382

241,034

(62,917)

(210,918)

(28,896)

        Taxes payable

(500,172)

224,015

154,651

21,187

(244,261)

187,788

25,727

        Contract liabilities

(847,562)

1,928,060

(209,626)

(28,719)

1,161,861

2,022,196

277,041

        Accrued liabilities and other payables

1,271,572

755,882

1,022,944

140,143

1,166,673

1,530,848

209,725

    Net cash provided by operating activities

11,808,279

10,575,612

13,012,200

1,782,664

35,331,275

39,676,813

5,435,701

Cash flows from investing activities:

    Purchase of property, equipment and software

(484,927)

(379,520)

(311,982)

(42,741)

(2,301,554)

(1,275,400)

(174,729)

    Proceeds from sale of property, equipment and software

405

1,072

9,295

1,273

10,302

14,533

1,991

    Purchase of intangible assets, content and licensed copyrights

(121,797)

(222,247)

(120,387)

(16,493)

(1,974,323)

(930,988)

(127,545)

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

(690,628)

1,585,395

3,798,989

520,460

(1,777,687)

(408,256)

(55,931)

    Purchase of short-term investments with terms over three
        months

(3,675,000)

(4,560,000)

(624,717)

(8,235,000)

(1,128,190)

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

4,897,291

2,853,778

390,966

5,378,510

2,853,778

390,966

    Investment in long-term investments and acquisition of
        subsidiaries

(914,962)

(226,086)

(201,686)

(27,631)

(2,831,686)

(1,103,026)

(151,114)

    Proceeds from disposal of long-term investments, businesses,
        subsidiaries and other financial instruments

73,855

1,541,338

355,142

48,654

152,564

2,822,585

386,692

    Placement/rollover of matured time deposits

(46,666,670)

(36,766,094)

(21,691,769)

(2,971,760)

(124,693,598)

(154,792,305)

(21,206,459)

    Proceeds from maturities of time deposits

33,273,393

37,546,192

40,570,700

5,558,163

111,417,969

179,377,113

24,574,564

    Change in other long-term assets

(90,635)

(125,911)

(73,553)

(10,077)

(423,928)

(406,632)

(55,708)

    Net cash (used in)/provided by investing activities

(10,724,675)

(720,861)

20,628,527

2,826,097

(17,043,431)

17,916,402

2,454,537

Cash flows from financing activities:

    Net changes from loans with terms of three months or less  

6,179,979

(4,778,301)

606,092

83,034

(13,654,704)

(6,656,988)

(912,004)

    Proceeds of loans with terms over three months

2,511,000

5,395,810

457,000

62,609

13,569,160

13,920,080

1,907,043

    Payment of loans with terms over three months

(695,000)

(3,100,520)

(8,219,472)

(14,739,347)

(2,019,282)

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

28,009

(8,394)

51,614

7,071

86,159

136,006

18,633

    Cash paid for repurchase of NetEase’s ADSs/purchase of
        subsidiaries’ ADSs and shares      

(625,832)

(3,994,212)

(1,595,093)

(218,527)

(5,234,294)

(8,830,115)

(1,209,721)

    Dividends paid to NetEase’s shareholders

(2,258,892)

(1,972,928)

(1,982,595)

(271,614)

(8,013,903)

(11,165,338)

(1,529,645)

    Net cash provided/(used in) by financing activities

5,139,264

(8,458,545)

(2,462,982)

(337,427)

(21,467,054)

(27,335,702)

(3,744,976)

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

(174,276)

(68,136)

113,792

15,589

(202,457)

10,752

1,473

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

6,048,592

1,328,070

31,291,537

4,286,923

(3,381,667)

30,268,265

4,146,735

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

18,158,066

21,855,316

23,183,386

3,176,111

27,588,325

24,206,658

3,316,299

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

24,206,658

23,183,386

54,474,923

7,463,034

24,206,658

54,474,923

7,463,034

Supplemental disclosures of cash flow information:

    Cash paid for income taxes, net

1,030,932

554,867

603,514

82,681

4,895,752

5,189,585

710,970

    Cash paid for interest expenses

71,847

165,881

24,343

3,335

779,872

489,622

67,078

The accompanying notes are an integral part of this announcement.

 

NETEASE, INC.

UNAUDITED SEGMENT INFORMATION

(in thousands, except percentages)

Three Months Ended

Year Ended

 December 31,  

 September 30,   

 December 31,  

 December 31,  

 December 31,  

December 31, 

December 31, 

2023

2024

2024

2024

2023

2024

2024

RMB

RMB

RMB

USD (Note 1)

RMB

RMB

USD (Note 1)

Net revenues:

Games and related value-added services 

20,921,355

20,864,036

21,242,410

2,910,198

81,565,449

83,622,643

11,456,254

Youdao

1,480,521

1,572,541

1,339,798

183,552

5,389,208

5,625,919

770,748

NetEase Cloud Music

1,985,548

1,999,163

1,880,490

257,626

7,866,992

7,950,146

1,089,166

Innovative businesses and others

2,752,741

1,774,139

2,285,113

313,059

8,646,510

8,096,528

1,109,220

Total net revenues

27,140,165

26,209,879

26,747,811

3,664,435

103,468,159

105,295,236

14,425,388

Cost of revenues:

Games and related value-added services 

(6,383,474)

(6,503,146)

(7,075,562)

(969,348)

(25,938,865)

(26,142,623)

(3,581,525)

Youdao

(741,720)

(783,085)

(699,045)

(95,769)

(2,621,746)

(2,877,428)

(394,206)

NetEase Cloud Music

(1,384,537)

(1,343,921)

(1,279,951)

(175,353)

(5,764,322)

(5,268,634)

(721,800)

Innovative businesses and others

(1,805,299)

(1,103,122)

(1,420,912)

(194,664)

(6,079,832)

(5,199,467)

(712,324)

Total cost of revenues

(10,315,030)

(9,733,274)

(10,475,470)

(1,435,134)

(40,404,765)

(39,488,152)

(5,409,855)

Gross profit:

Games and related value-added services 

14,537,881

14,360,890

14,166,848

1,940,850

55,626,584

57,480,020

7,874,729

Youdao

738,801

789,456

640,753

87,783

2,767,462

2,748,491

376,542

NetEase Cloud Music

601,011

655,242

600,539

82,273

2,102,670

2,681,512

367,366

Innovative businesses and others

947,442

671,017

864,201

118,395

2,566,678

2,897,061

396,896

Total gross profit

16,825,135

16,476,605

16,272,341

2,229,301

63,063,394

65,807,084

9,015,533

Gross profit margin:

Games and related value-added services 

69.5 %

68.8 %

66.7 %

66.7 %

68.2 %

68.7 %

68.7 %

Youdao

49.9 %

50.2 %

47.8 %

47.8 %

51.4 %

48.9 %

48.9 %

NetEase Cloud Music

30.3 %

32.8 %

31.9 %

31.9 %

26.7 %

33.7 %

33.7 %

Innovative businesses and others

34.4 %

37.8 %

37.8 %

37.8 %

29.7 %

35.8 %

35.8 %

The accompanying notes are an integral part of this announcement.

 

NETEASE, INC.

NOTES TO UNAUDITED FINANCIAL INFORMATION

Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00 = RMB7.2993 on the last trading day of December 2024 (December 31, 2024) 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 December 31, 2024, or at any other certain date.

Note 2: Share-based compensation cost reported in the Company’s unaudited condensed consolidated statements of comprehensive income is set out as follows in RMB and USD (in thousands):

Three Months Ended

Year Ended

December 31,

September 30, 

December 31,

December 31,

December 31,

December 31,

December 31,

2023

2024

2024

2024

2023

2024

2024

RMB

RMB

RMB

USD (Note 1)

RMB

RMB

USD (Note 1)

Share-based compensation cost included in:

Cost of revenues

216,717

306,283

304,687

41,742

823,765

1,185,854

162,461

Operating expenses

  Selling and marketing expenses

35,575

36,365

7,435

1,019

132,801

104,534

14,321

  General and administrative expenses

262,830

247,440

246,424

33,760

1,119,018

1,069,850

146,569

  Research and development expenses

297,865

388,051

372,898

51,087

1,167,226

1,522,701

208,609

The accompanying notes are an integral part of this announcement.

 

Note 3: The financial information prepared and presented in this announcement might be different from those published and to be published by NetEase’s listed subsidiary to meet the disclosure requirements under different accounting standards requirements.

Note 4: The unaudited reconciliation of GAAP and non-GAAP results is set out as follows in RMB and USD (in thousands, except per share data or per ADS data):

Three Months Ended

Year Ended

 December 31, 

 September 30,  

 December 31, 

 December 31, 

 December 31, 

December 31,

December 31,

2023

2024

2024

2024

2023

2024

2024

RMB

RMB

RMB

USD (Note 1)

RMB

RMB

USD (Note 1)

Net income attributable to the Company’s shareholders

6,582,263

6,538,435

8,766,479

1,201,002

29,416,552

29,697,609

4,068,556

Add: Share-based compensation

797,194

960,706

915,489

125,421

3,191,753

3,813,032

522,383

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

7,379,457

7,499,141

9,681,968

1,326,423

32,608,305

33,510,641

4,590,939

Non-GAAP net income per share *

Basic

2.30

2.34

3.05

0.42

10.14

10.47

1.43

Diluted

2.27

2.33

3.02

0.41

10.03

10.37

1.42

Non-GAAP net income per ADS *

Basic

11.49

11.72

15.25

2.09

50.69

52.35

7.17

Diluted

11.34

11.63

15.09

2.07

50.14

51.85

7.10

*  Each ADS represents five ordinary shares.

The accompanying notes are an integral part of this announcement.

 

Kratom TikTokers Arrested in Vientiane Drug Crackdown

Kratom TikTokers Arrested in Vientiane Drug Crackdown
One of the offenders during a questioning session with an officer (photo credit: Lao Phattahana News)

On 18 February, authorities in Vientiane Province arrested two online Kratom sellers along with five of their customers for distributing and consuming the drug through social media platforms. 

Nuvoton Releases Plan to Launch Mass Production of New Industrial BM-ICs

KYOTO, Japan, Feb. 20, 2025 /PRNewswire/ — Nuvoton Technology Corporation Japan (NTCJ) has developed new industrial 17-cell BM-ICs “KA49701A” and “KA49702A” for 48V batteries. Mass production will start from April 2025. These products enhance the safety of battery systems and ensure simple safe system construction.

Image: https://cdn.kyodonewsprwire.jp/prwfile/release/M108245/202502124110/_prw_PI1fl_tJjts0mQ.png 

1. The battery monitoring ICs play a role in ensuring the system operates safely during anomalies such as overcharging or over-discharging of the battery. However, if the main circuits performing cell voltage measurements such as the AD converter or multiplexer of the BM-IC fail, it needs to ensure system safety with external protection circuits, but this increases board area and system cost. The major internal circuits of this product are equipped with diagnostic and fail-safe functions. This diagnostic function can detect main circuit failures and control the cut-off switch, achieving both enhanced BMS safety and reduced system cost.

Figure (English): https://cdn.kyodonewsprwire.jp/prwfile/release/M108245/202502124110/_prw_PI2fl_4z4nlNQ9.png 

Figure (Simplified Chinese): https://cdn.kyodonewsprwire.jp/prwfile/release/M108245/202502124110/_prw_PI3fl_EmXC0o1F.png 

Figure (Traditional Chinese): https://cdn.kyodonewsprwire.jp/prwfile/release/M108245/202502124110/_prw_PI4fl_ins2617Q.png 

2. By reducing noise levels on the 16-bit AD converter and incorporating a digital filter, NTCJ has achieved industry-leading voltage measurement accuracy of +/-2.9mV (*1). By improving voltage measurement accuracy, maximum battery capacity can be used. Furthermore, precise voltage measurement has been achieved over a wide temperature range. It is also suitable for applications requiring high voltage measurement accuracy in cold and hot environments, such as stationary battery systems compliant with the relevant Chinese national standard (*2).

(*1) According to a survey by Nuvoton in the industrial BM-IC field as of February 2025.
(*2) GB/T34131-2023, within the system +/-5mV @-20C to 65C.

3. By shortening the cell voltage measurement time, which has high power consumption, operating current has been achieved at 260 microampere, less than 1/10th of NTCJ’s previous standards. This enables long battery drive times. Also, optimization of the circuit design has reduced shutdown current consumption to 0.1 microampere or less. Using NTCJ’s IC, self-discharge can be minimized, preventing deterioration due to over-discharge when LIBs are transported over long distances and stored long-term.

For more details about the product, please visit: https://www.nuvoton.com/products/battery-management/battery-monitoring-ics/non-stackable/ 

About Nuvoton Technology Corporation Japan: https://www.nuvoton.co.jp/en/ 

KuCoin EU Files MiCAR Application in Austria to Ensure Compliant EEA Operations

Key Takeaways:

  • KuCoin EU Exchange GmbH (“KuCoin EU“) is applying for a Markets in Crypto-Assets Regulation (“MiCAR“) license in Austria to operate as a fully compliant crypto-asset service provider in the EU/EEA.
  • After receiving the license, KuCoin EU will be leveraging KuCoin’s cutting-edge technology and fostering the well-respected KuCoin brand to offer secure and innovative crypto products and services to KuCoin EU’s customers in EU/EEA.
  • Vienna emerges as a strategic European crypto hub with its progressive regulatory framework and access to exceptional talent.
  • Crypto industry leaders Oliver Stauber (CEO) and Christian Niedermüller (COO) will ensure operational excellence and full compliance with European Regulatory Standards as Managing Directors of KuCoin EU.

VIENNA, Feb. 20, 2025 /PRNewswire/ — KuCoin, a leading global cryptocurrency exchange, has announced that KuCoin EU Exchange GmbH is in the midst of filing an application for a MiCAR license in Austria. This application underscores KuCoin’s commitment to meeting the highest standards of regulatory compliance while solidifying its presence in the EU/EEA region.

The MiCAR license will enable KuCoin EU to serve its customers across all 30 EU and EEA member countries, ensuring consistent access to crypto products and services under a robust regulatory framework. This initiative aligns with KuCoin’s vision of fostering transparency, trust, and accountability in administering best-in-class digital asset services, offering users a secure and compliant trading platform.

KuCoin EU will set up its headquarters in Vienna, Austria, marking the city a strategic hub for all European activities and is actively hiring talents for its operations. The decision to choose Austria was primarily driven by the timely implementation of the MiCAR accompanying laws, stable and foreseeable regulatory environment as well as the huge talent pool. KuCoin EU acknowledges Austria’s efforts, e.g. driven by the City of Vienna, in creating a transparent, efficient, and best-in-class framework for crypto businesses to operate while safeguarding investors interests and fostering innovation in the financial sector.

Commenting on the establishment of the EU hub, KuCoin’s CEO BC Wong said “As a globally leading crypto exchange, we place compliance and user experience at the forefront of our mission. Today, I am proud to announce the establishment of our new EU hub in Vienna and that KuCoin EU intends to file for a MiCAR application in Austria. This marks a significant milestone in our steadfast commitment to executing a global, compliant strategy. Upon receiving a MiCAR license, we will enter the EEA market, which we deem strategically important. By advancing our compliance efforts, we are poised to better serve local users with more convenient, secure, and seamlessly localized products and experiences. We remain dedicated to fostering a transparent, responsible, and sustainable global digital asset ecosystem.”

Oliver Stauber, former General Counsel and Managing Director at Bitpanda, and Christian Niedermueller, former CEO of another European digital asset exchange, both veterans of the European crypto industry and seasoned financial executives with legal background, have been appointed as the Managing Directors of KuCoin EU Exchange GmbH. Stauber and Niedermueller bring extensive expertise in financial market regulation and crypto exchange management, strengthening KuCoin’s leading position as it navigates the complexities of Europe’s evolving crypto regulations while ensuring a successful and regulatory compliant business operation in the EU and EEA.

I am absolutely thrilled to embark on this journey as the CEO of KuCoin EU, where we are set to revolutionize the crypto landscape across the EU and EEA with innovative products and services. At KuCoin EU, our mission is clear: to create Europe’s premier, regulatory-compliant crypto asset service provider. We are excited to announce that we will apply for a MiCAR license in Austria. Upon receiving the MiCAR license we are committed to delivering secure, compliant, and cutting-edge crypto solutions that will redefine trust and innovation in the EU’s fintech arena. Get ready for a new era in crypto!”

–       Oliver Stauber, CEO of KuCoin EU

“After having scaled up another European exchange and having my toes in the digital asset industry now for more than 9 years, I am very happy to help bringing KuCoin to the next level in Europe. We aim to build a fantastic local team, have a sophisticated localized operational & product setup and also strengthen brand awareness massively in the years to come. Being a KuCoin customer myself since the very beginning in 2017, I couldn’t be prouder to support KuCoin now at this stage.”

–       Christian Niedermueller, COO of KuCoin EU

Once KuCoin EU has been granted its MiCAR license, KuCoin EU will be well-positioned to provide services for European users, offering access to a wide range of digital assets while ensuring compliance with EU regulations. The company’s long-term vision includes contributing to the broader adoption of blockchain technology and strengthening the EU’s position as a leader in the global crypto ecosystem.

As KuCoin takes this step forward, the exchange remains focused on fostering innovation and trust in the digital asset space while aligning its operations with regulatory frameworks worldwide.

About KuCoin EU

KuCoin EU Exchange GmbH, based in Vienna, Austria, is committed to establishing a fully compliant digital asset brokerage under the MiCAR framework. By leveraging KuCoin’s advanced technology and nurturing the respected KuCoin brand, KuCoin EU aims to deliver secure and innovative crypto products and services to its customers within the European Economic Area (EEA).

KuCoin EU Exchange GmbH currently does not offer any services in the EU/EEA and will only commence operation upon receiving appropriate licensing.

About KuCoin

Founded in 2017, KuCoin is one of the pioneering and most globally recognized technology platforms supporting digital economies, built on a robust foundation of cutting-edge blockchain infrastructure, liquidity solutions, and an exceptional user experience. With a connected user base exceeding 39 million worldwide, KuCoin offers comprehensive digital asset solutions across wallets, trading, wealth management, payments, research, ventures, and AI-powered bots.

KuCoin has garnered accolades such as “Best Crypto Apps & Exchanges” by Forbes and has been recognized among the “Top 50 Global Unicorns” by Hurun in 2024. This recognition reflects its commitment to user-centric principles and core values, which include integrity, accountability, collaboration, and a relentless pursuit of excellence.

KuCoin is not licensed in the EU/EEA and does not actively offer any services in the EU/EEA.

Kerry Launches 2025 Supplement Taste Charts: Pioneering the Future of Flavour in Wellness

SINGAPORE  , Feb. 20, 2025 /PRNewswire/ — Kerry Group, a global leader in taste and nutrition solutions, has launched its 2025 Supplement Taste Charts, a comprehensive guide to evolving flavour trends and innovations in the wellness industry. These charts serve as an essential tool for supplement and nutraceutical manufacturers, helping them anticipate market shifts and create health and flavour-forward products.

From gummies to powders to chewables, Kerry's 2025 Supplement Taste Charts empower brands to anticipate market shifts and deliver health benefits with flavours consumers will love
From gummies to powders to chewables, Kerry’s 2025 Supplement Taste Charts empower brands to anticipate market shifts and deliver health benefits with flavours consumers will love

Taste is a critical factor in supplement innovation. From gummies, liquid shots, effervescent powders to chewables, consumers expect their wellness products to offer enjoyable and recognisable flavours while supporting their health goals.

In Asia Pacific, Middle East & Africa, the dietary supplements market size grew to USD75 billion in 2024, up from USD61 billion in 20201, due to rising consumer awareness of the importance of health, a growing ageing population, and higher disposable income.

“Consumers today want personalised solutions for wellbeing and vitality, and flavour is a significant factor in their supplement choices. Whether it’s masking undesirable tastes, creating unique flavour combinations, or enhancing the overall sensory experience, flavour has become key in shaping the perceived value of supplements,” said Olivier De Salmiech, Vice President, Nutritional Supplements, Kerry Asia Pacific, Middle East & Africa.

Flavour Trends Reshaping the Supplement Industry

Global and regional influences continue to reshape the landscape of supplement flavours:

  • Tropical and vibrant fruit notes like lychee, mangosteen, and pi pa in Southeast Asia are rapidly expanding, matching consumer demand for hydration and immune support.
  • Around the world, botanical and herbal flavours inspired by traditional wellness practices continue to grow in popularity, with ginger, hawthorn, and lime being particularly notable in Asia.
  • Orange remains a mainstream flavour across the world – a staple in immunity-boosting formulations and functional beverages.
  • Cocoa, lavender, and rose are emerging in Australia and New Zealand, catering to consumers who want both functionality and indulgence.
  • In South Korea and Japan, consumers are seeking Asian flavours such as acai, black sesame, and chestnut in their supplement choices.
  • Turmeric, thyme for their perceived health benefits, and fun flavours such as tutti frutti, coconut, caramel & cream are growing across the Middle East.

The industry is increasingly moving away from traditional tablets and capsules, with new flavour-forward formats like gummies, stick packs, chewables, meltables, popsicles, and lollipops emerging as popular choices. These non-pill formats are growing rapidly globally and now account for 61.8% of market sales, with gummies leading at 23.4% of total sales, followed by powders at 15.7% and capsules at 14.5%2. This growth is attributed to consumers’ demand for more enjoyable, convenient ways to take supplements, driven by factors like convenience, bioavailability, and sustainability.

“Consumer demand for exceptional taste is reshaping the supplements industry,” said Olivier De Salmiech. “With the 2025 Supplement Taste Charts, Kerry empowers brands to stay ahead of these market shifts. By blending science, sustainability and authentic flavour with region specific solutions, Kerry is shaping the future of supplements, delivering health benefits with flavours consumers will love.”