Q3 Earnings Season: A "Profit and Loss Guide" for Gaming Companies

On October 20, as the summer blockbuster season came to a close, the China Gaming Industry Report for the Third Quarter of 2026 was released. The report shows that in the third quarter of 2026, the domestic Chinese gaming market generated actual sales revenue of 92.522 billion yuan, representing a 1.36% increase from the previous quarter and a 5.11% increase year-over-year.

Domestic publicly traded game companies have also begun releasing their Q3 2026 financial reports.

Based on the data released so far, industry performance has shown a clear trend of divergence. On the one hand, some companies have achieved simultaneous growth in revenue and profits thanks to the launch of new games or the expansion of their overseas operations; on the other hand, some companies have experienced a decline in profits or even quarterly losses due to gaps in their product cycles, the expiration of older projects, or the front-loading of sales expenses.

Below is a review of three categories of financial performance, compiled based on the financial reports disclosed by various companies.

Blockbusters and Global Expansion

Giants Network: In the third quarter, the company reported operating revenue of 1.996 billion yuan, up 16.98% year-over-year; net income attributable to shareholders of 742 million yuan, up 16.01% year-over-year; and net income attributable to shareholders after excluding non-recurring gains and losses of 862 million yuan, up 27.18% year-over-year.In the first three quarters of this year, all three metrics have already surpassed last year’s full-year levels. In the gaming business, *Supernatural Task Force* surpassed 12 million daily active users on August 24, setting a new all-time high; it launched on Douyin’s mini-games center in July and quickly rose to become one of the platform’s top three titles.

Century Huatong: Third-quarter revenue reached 11.181 billion yuan, up 11.63% year-over-year, maintaining positive growth quarter-over-quarter and marking the 14th consecutive quarter of revenue growth;Net profit attributable to shareholders reached 1.832 billion yuan, up 7.69% year-over-year; net profit excluding non-recurring items totaled 2.097 billion yuan, up 22.79% year-over-year. Overseas SLG titles (“Endless Winter” and “Kingshot”) continued to generate strong revenue, with five titles ranking in the top 30 of September’s overseas mobile game revenue chart;Domestically, *Endless Winter* remained firmly in the top 10 of the best-selling charts, demonstrating extremely stable long-term operational performance. In terms of overseas operations, CenturyGames had five titles rank among the top 30 on the September revenue chart for Chinese mobile games exported overseas; domestically, DianDian Interactive’s *Endless Winter* remained firmly in the top 10 of both the iOS and WeChat game best-selling charts.

Perfect World: The company’s third-quarter revenue was 2.362 billion yuan, up 36.85% year-over-year; net profit was 506 million yuan, up 211.47% year-over-year.In the first three quarters, the gaming business generated revenue of 4.792 billion yuan, an increase of 7.09% year-over-year, primarily driven by additional revenue from the open beta of *The Ring*. As of October 28, 2026,*The Ring*’s cumulative global revenue exceeded 2.7 billion yuan, with official global channels accounting for nearly 60% of that total; overseas revenue contributed more than the domestic market. On the other hand, revenue from self-developed games such as *Zhu Xian World* and licensed titles like *CS:GO (Counter-Strike: Global Offensive)*and *The Legend of the Condor Heroes 2: Flying Dragon Battles the Heavens*, saw a year-over-year decline in revenue, partially offsetting the aforementioned growth.

Xinghui Entertainment: In the first three quarters, the company reported operating revenue of 796 million yuan and net income attributable to shareholders of 158 million yuan, representing a year-over-year increase of 18.80 percent. Net income from the gaming business rose 267.06 percent year-over-year, serving as the primary driver of the company’s profit growth.In August, *Three Kingdoms: Conquest of the Nine Provinces* topped the free game charts on both the App Store and Google Play, and ranked among the top ten best-selling strategy games on the App Store. According to the company’s disclosure, its game pipeline has established a dual-track approach of “published titles and games in development.”

Shengtian Network: In the third quarter, the company reported operating revenue of 318 million yuan, up 3.97% year-over-year; net profit attributable to shareholders was 21.69 million yuan, up 200.42% year-over-year.”Star Wings” is the core driver: The game’s Q2 revenue reached 54.3171 million yuan, a significant quarter-over-quarter increase from Q1’s 20.2453 million yuan. Overseas revenue accounted for over 80% of the total, and revenue continued to grow in Q3.

Revenue Grows but Profits Don’t: The Growing Pains of Long-Term Volume Growth and Upfront Expenses

Kaiying Network: Third-quarter revenue reached 2.461 billion yuan, up 64.42% year-over-year, with net profit attributable to shareholders of 641 million yuan, up 1.22% year-over-year.Notably, the company has moved forward with the integration of IP rights; in September, it announced plans to invest $298 million to indirectly acquire approximately 19.7% of Yumedia’s equity, thereby expanding its overseas market channels;In terms of new releases, *The Chronicles of Gu Long’s Heroes*, an officially licensed mobile game based on Gu Long’s wuxia novels, entered open beta in September. Several games received publication licenses within the year, and overseas operations continued to grow steadily.

37 Interactive Entertainment: In the third quarter, the company reported operating revenue of 4.091 billion yuan, up 2.93% year-over-year and 15.11% quarter-over-quarter. Net profit attributable to shareholders of the listed company, excluding non-recurring gains and losses, was 181 million yuan, down 79.28% year-over-year.The company attributed the decline in net profit excluding non-recurring gains and losses to the front-loading of sales expenses during the promotional periods for new titles—*Last Asylum: Plague*, *Z Route: Redemption*, and *Dream Back to the Legend of Zhen Huan*—combined with a natural decline in revenue from existing titles.The company emphasized that these new titles are “performing exceptionally well” and that the increased spending was a strategic move to secure a long-term operational window; the issue relates to the timing of expense recognition rather than any problems with the games’ revenue streams themselves.

Shenzhou Taiyue: Net profit attributable to shareholders for the first three quarters was 541 million yuan, down 25.36% year-over-year. The company’s gaming business is primarily managed by Kemu Games, with flagship titles including *Age of Origins* and *War and Order*.Over the past few years, overseas SLG titles have been the company’s most significant source of growth; however, as mature titles have entered a stabilization phase, revenue growth has begun to slow. While the cumulative revenue for both core SLG titles has exceeded $1 billion, revenue from the gaming business in the first half of 2026 declined by 17.73% year-over-year.

Baotong Technology: In the third quarter, the company reported operating revenue of 1.062 billion yuan, a year-over-year increase of 25.02%; net income attributable to shareholders was 14 million yuan, a year-over-year decrease of 79.03%. Its current lineup of live-service games includes *Mosaic Heroes*, *Dungeon Hunter*, *Destiny: The Sacred Covenant**The Strongest Patriarch*, *The Witch and the Dragon: Chapters of Light and Darkness*, and *ATHENA: Blood Twins*, among others, as well as a pipeline of products such as *Code Name M*. The changes in performance were primarily due to increases in the company’s advertising expenses, employee compensation, and stock-based compensation expenses.

Tomcat: Net income attributable to shareholders in the third quarter was 13.9488 million yuan, up 202.47% year-over-year. However, revenue fell 13.86% year-over-year, and the profit growth was driven more by cost reductions than by business expansion.

From Profit to Loss

Youzu Network: In the third quarter, the company reported operating revenue of 366 million yuan, up 10.75% year-over-year and 6.99% quarter-over-quarter; net profit excluding non-recurring items was 9.3891 million yuan, a 132.88% increase from the previous quarter.Youzu Network’s quarterly loss was primarily attributable to financial consolidation and concentrated cash outflows resulting from the acquisition of a subsidiary involved in AI computing power. Its core gaming business continues to rely on established titles such as *Youth Three Kingdoms* to maintain its core user base, with no signs of a decline in performance.

Zhangzu Technology: Third-quarter operating revenue totaled approximately 158 million yuan, down 10.42% year-over-year; net loss attributable to shareholders was 47.6795 million yuan.The financial report explains that the sharp decline in cash flow was primarily due to increased marketing expenses resulting from the launch of new games, coupled with a decrease in sales receipts. A gap in the product lifecycle—with revenue from older games declining while new games are still in the development and promotion phases—led to a loss.

Gigabit: Third-quarter revenue totaled 1.77 billion yuan, down 10.07% year-over-year; net profit attributable to shareholders was 493 million yuan, down 13.34% year-over-year.Overseas, revenue from international markets for the first three quarters reached 1.095 billion yuan, a significant year-over-year increase of 86.27%, driven primarily by the European and American versions of *Legend of the Sword*, the Hong Kong, Macau, and Taiwan versions, and new titles such as *Ask the Sword for Immortality*.

Yaoji Technology: The company’s third-quarter report did not break out its gaming business, but according to the company, the decline in Q3 profits was attributed to a fluctuation and subsequent decline in revenue from the gaming segment, resulting in lower profits from the gaming business.

Other

Tencent and NetEase have not yet released their Q3 results, but the market has already made predictions.

Tencent: The market consensus is that Tencent’s domestic gaming business will maintain steady double-digit growth. Guohai Securities forecasts domestic growth of 11%, while GF Securities and Guosen Securities have also issued similarly optimistic projections, driven primarily by long-running titles and new game releases.Disagreement arises regarding the overseas market: Guohai Securities expects overseas game revenue to remain flat year-over-year, while UBS, citing Supercell’s high base from the same period last year, has issued a conservative forecast of a 6% year-over-year decline. This has led Guohai to project Tencent’s overall game revenue growth at around 7%.

NetEase: In contrast, the divergence in forecasts for NetEase is entirely centered on the transition between new and existing domestic products. Haitong International and Nomura issued cautious forecasts of 7% and 5.3% growth in gaming revenue, respectively, citing the underperformance of the July release *Sea of Forgetfulness* and the high-base pressure from *Fantasy Westward Journey*;However, Bank of America Securities believes competition risks are limited and has issued an optimistic forecast of 12% growth in online game revenue; CICC, on the other hand, takes a relatively conservative stance, emphasizing the boost to game revenue from the fourth anniversary of *Egg Party* and the summer season, and believes the flagship products remain resilient.

Note: Zhongqingbao, Xunyou Technology, Zhe Shu Culture, and Caesar Culture have not yet released their Q3 figures.

In addition, regarding Hong Kong-listed companies, here is what we currently know:

Xindong’s first-half game revenue reached 2.318 billion yuan, up 11.9% year-over-year; however, with no new game releases scheduled for the second half of the year, Huaxing Securities expects game revenue to face quarter-over-quarter pressure;Qingci Games reported a net profit of 315 million yuan in the first half of the year, up 348.76% year-over-year, though this was primarily driven by the long-term operation of *The Strongest Snail* and cost control. The company confirmed that during its sixth-anniversary event, both ARPU and ARPPU for its core user base saw double-digit year-over-year growth, indicating that its flagship product is in its mature phase;Bio Family Interactive reported 9.6 million active accounts in Q3, a 30.9% quarter-over-quarter decline.