UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of November 2023
Commission File Number: 000-30666
NETEASE, INC.
NetEase Building, No. 599 Wangshang Road
Binjiang District, Hangzhou, 310052
People’s Republic of China
(Address of principal executive offices)
Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Exhibits
Exhibit 99.1 - NetEase Reports Third Quarter 2023 Unaudited Financial Results
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
NETEASE, INC. |
| |
|
|
| |
By: |
/s/ Charles
Zhaoxuan Yang |
| |
Name: |
Charles Zhaoxuan Yang |
| |
Title: |
Chief Financial Officer |
| |
|
|
| Date: |
November 16, 2023 |
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Exhibit 99.1
Contact for Media and Investors:
Margaret Shi
Email:
ir@service.netease.com
Tel:
(+86) 571-8985-3378
Twitter:
https://twitter.com/NetEase Global
NetEase
Announces Third Quarter 2023 Unaudited Financial Results
Hangzhou, China, November 16, 2023 - 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 third quarter ended September 30, 2023.
Third
Quarter 2023 Financial Highlights
| ● | Net revenues were RMB27.3 billion (US$3.7 billion), an increase of 11.6% compared with the third quarter
of 2022. |
| ● | Games and related value-added services net revenues were RMB21.8 billion (US$3.0 billion), an increase
of 16.5% compared with the third quarter of 2022. |
| ● | Youdao net revenues were RMB1.5 billion (US$210.9 million), an increase of 9.7% compared with the third
quarter of 2022. |
| ● | Cloud Music net revenues were RMB2.0 billion (US$270.4 million), a decrease of 16.3% compared with the
third quarter of 2022. |
| ● | Innovative businesses and others net revenues were RMB2.0 billion (US$271.2 million), a slight increase
compared with the third quarter of 2022. |
| ● | Gross profit was RMB17.0 billion (US$2.3 billion), an increase of 23.4% compared with the third quarter
of 2022. |
| ● | Total operating expenses were RMB9.4 billion (US$1.3 billion), an increase of 4.5% compared with the third
quarter of 2022. |
| ● | Net income attributable to the Company’s shareholders was RMB7.8 billion (US$1.1 billion). Non-GAAP
net income from continuing operations attributable to the Company’s shareholders was RMB8.6 billion (US$1.2 billion).[1] |
| ● | Basic net income per share was US$0.33 (US$1.67 per ADS). Non-GAAP basic net income from continuing operations
per share was US$0.37 (US$1.84 per ADS).[1] |
Third Quarter 2023 and Recent Operational Highlights
| ● | Justice mobile game gained robust revenue and user growth, accumulating over 50 million registered
players. |
| ● | Dunk City Dynasty, NetEase Game’s first self-developed basketball game, topped China’s
iOS top-grossing chart at the end of October. |
| ● | Time-honored flagship titles, including the Fantasy Westward Journey series, continued to invigorate
players, and newer hit games, including Eggy Party, Identity V and Naraka: Bladepoint, maintained ongoing popularity. |
| ● | Hotly anticipated new games spanning diverse genres reached ongoing Company development milestones with
multiple high-profile titles slated for launch in 2024. |
| ● | Cloud Music considerably strengthened its music-centric membership monetization and further improved profitability.
Cloud Music continued to cultivate its music community and introduce premium offerings, including expansive content and innovative features. |
| ● | Youdao achieved record-high revenue, driven by growth in its learning services and online marketing services, and substantially reduced
its loss from operations as an ongoing effort. |
“Our robust and increasingly diversified
games portfolio led our strong results in the third quarter, with total net revenues reaching RMB27.3 billion for a year-over-year increase
of nearly 12%,” said Mr. William Ding, Chief Executive Officer and Director of NetEase. “Our flagship games continue
to win the hearts of players with fan favorites like the Fantasy Westward Journey series. Our newest innovative, first-rate games
in various genres, including Racing Master, Justice mobile game and Dunk City Dynasty, also quickly gained widespread
acclaim. The popularity of our wide-ranging newest hits highlights our exceptional talent in R&D that is expanding our reach in the
casual gaming market while also pushing the boundaries of traditional MMOs, where we are bringing players all-new gaming experiences like
never before.
[1] As used in this announcement, non-GAAP
net income from continuing operations attributable to the Company’s shareholders and non-GAAP basic and diluted net income from
continuing operations per share and per ADS are defined to exclude share-based compensation expenses. See “Unaudited Reconciliation
of GAAP and Non-GAAP Results” at the end of this announcement.
“In
our broader NetEase family, Cloud Music and Youdao are tracking well, delivering innovative content offerings in their respective fields.
Looking forward, creating products and content with a passion that invigorates the market and shapes resonant experiences will drive value
for our users and for our Company,” Mr. Ding concluded.
Third Quarter 2023 Financial Results
Net
Revenues
Net
revenues for the third quarter of 2023 were RMB27,270.4 million (US$3,737.7 million), compared with RMB24,011.3 million and RMB24,426.8
million for the preceding quarter and the third quarter of 2022, respectively.
Net
revenues from games and related value-added services were RMB21,779.9 million (US$2,985.2 million) for the third quarter of 2023,
compared with RMB18,798.6 million and RMB18,699.1 million for the preceding quarter and the third quarter of 2022, respectively. Net revenues
from the operation of online games accounted for approximately 93.7% of the segment’s net revenues for the third quarter of 2023,
compared with 91.7% and 92.9% for the preceding quarter and the third quarter of 2022, respectively. Net revenues from mobile games accounted
for approximately 77.6% of net revenues from the operation of online games for the third quarter of 2023, compared with 73.6% and 68.6%
for the preceding quarter and the third quarter of 2022, respectively.
Net
revenues from Youdao were RMB1,538.8 million (US$210.9 million) for the third quarter of 2023, compared with RMB1,206.6 million
and RMB1,402.4 million for the preceding quarter and the third quarter of 2022, respectively.
Net revenues from Cloud Music were RMB1,973.1
million (US$270.4 million) for the third quarter of 2023, compared with RMB1,948.5 million and RMB2,357.2 million for the preceding quarter
and the third quarter of 2022, respectively.
Net
revenues from innovative businesses and others were RMB1,978.7 million (US$271.2 million) for the third quarter of 2023, compared
with RMB2,057.5 million and RMB1,968.0 million for the preceding quarter and the third quarter of 2022, respectively.
Gross Profit
Gross profit for the third quarter of 2023 was
RMB16,966.3 million (US$2,325.4 million), compared with RMB14,375.4 million and RMB13,743.9 million for the preceding quarter and the
third quarter of 2022, respectively.
The
quarter-over-quarter increase in games and related value-added services’ gross profit was primarily due to increased net
revenues from newly launched games such as Justice mobile game and Racing Master. The year-over-year increase was primarily
due to increased net revenues from the operation of online games such as Eggy Party and those newly launched titles, as well as
decreased royalty fees due to the termination of certain licensed games.
The quarter-over-quarter increase in Youdao’s
gross profit was primarily attributable to the increase in net revenues from its learning services. The year-over-year increase primarily
resulted from increased revenue contribution from both its learning services and online marketing services.
The
quarter-over-quarter and year-over-year increases in Cloud Music’s gross profit primarily resulted from increased net revenues
from sales of membership subscriptions and continued improvement in cost control measures.
The
quarter-over-quarter decrease in innovative businesses and others’ gross profit was primarily due to decreased e-commerce
gross profit from Yanxuan. The year-over-year increase was primarily due to increased gross profit from Yanxuan and several other businesses
included within the segment.
Gross Profit Margin
Gross
profit margin for games and related value-added services for the third quarter of 2023 was 69.0%, compared with 67.4% and 65.0% for the
preceding quarter and the third quarter of 2022, respectively. The quarter-over-quarter increase was primarily attributable to
changes in the revenue mix of NetEase’s self-developed, co-developed and licensed games, as well as the relative revenue contribution
from different channels. The year-over-year increase was mainly attributable to a higher proportion of net revenues contributed
by NetEase’s self-developed games.
Gross
profit margin for Youdao for the third quarter of 2023 was 55.9%, compared with 47.0% and 54.2% for the preceding quarter and the
third quarter of 2022, respectively. The quarter-over-quarter and year-over-year increases were primarily attributable to the factors
enumerated above.
Gross
profit margin for Cloud Music for the third quarter of 2023 was 27.2%, compared with 27.0% and 14.2% for the preceding quarter
and the third quarter of 2022, respectively. The quarter-over-quarter and year-over-year improvements were mainly due to the factors enumerated
above.
Gross
profit margin for innovative businesses and others for the third quarter of 2023 was 27.3%, compared with 29.5% and 25.5% for the
preceding quarter and the third quarter of 2022, respectively. The quarter-over-quarter and year-over-year fluctuations were mainly due
to changes in the product mix within the segment.
Operating Expenses
Total
operating expenses for the third quarter of 2023 were RMB9,408.4 million (US$1,289.5 million), compared with RMB8,312.8 million and RMB9,002.1
million for the preceding quarter and the third quarter of 2022, respectively. The quarter-over-quarter increase was mainly due to increased
marketing expenditures and staff-related costs associated with games and related value-added services. The year-over-year increase
was mainly due to higher research and development investments.
Other Income/ (Expenses)
Other income/ (expenses) consisted of investment
income, interest income, exchange gains/ (losses) and others. The quarter-over-quarter and year-over-year decreases were mainly due to
net unrealized exchange losses arising from the Company’s U.S. dollar-denominated bank deposits and loan balances as the exchange
rate of the U.S. dollar against the RMB fluctuated in the third quarter of 2023.
Income Tax
The Company recorded a net income tax charge of
RMB1,290.4 million (US$176.9 million) for the third quarter of 2023, compared with RMB712.1 million and RMB1,586.7 million for the preceding
quarter and the third quarter of 2022, respectively. The effective tax rate for the third quarter of 2023 was 14.2%, compared with 8.0%
and 19.3% for the preceding quarter and the third quarter of 2022, respectively. The lower effective tax rate for the preceding quarter
was primarily due to tax benefits recognized in that quarter. 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 RMB7,836.9 million (US$1,074.1 million) for the third quarter of 2023, compared with RMB8,242.8 million and RMB6,699.4
million for the preceding quarter and the third quarter of 2022, respectively.
NetEase reported basic net income of US$0.33 per
share (US$1.67 per ADS) for the third quarter of 2023, compared with US$0.35 per share (US$1.75 per ADS) and US$0.28 per share (US$1.41
per ADS) for the preceding quarter and the third quarter of 2022, respectively.
Non-GAAP
net income from continuing operations attributable to the Company’s shareholders totaled RMB8,645.2 million (US$1,184.9 million)
for the third quarter of 2023, compared with RMB9,017.5 million and RMB7,469.6 million for the preceding quarter and the third quarter
of 2022, respectively.
NetEase reported non-GAAP basic net income from
continuing operations of US$0.37 per share (US$1.84 per ADS) for the third quarter of 2023, compared with US$0.38 per share (US$1.92 per
ADS) and US$0.31 per share (US$1.57 per ADS) for the preceding quarter and the third quarter of 2022, respectively.
Other Financial Information
As
of September 30, 2023, the Company’s 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 RMB104.4 billion (US$14.3 billion),
compared with RMB95.6 billion as of December 31, 2022. Net cash provided by operating activities was RMB9.8 billion (US$1.3 billion)
for the third quarter of 2023, compared with RMB7.7 billion and RMB7.5 billion for the preceding quarter and the third quarter of 2022,
respectively.
Quarterly
Dividend
The
board of directors has approved a dividend of US$0.0990 per share (US$0.4950 per ADS) for the third quarter of 2023 to holders
of ordinary shares and holders of ADSs as of the close of business on December 1, 2023, 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 December 1, 2023 (Beijing/ Hong Kong Time). The payment date is expected
to be December 12, 2023 for holders of ordinary shares, and on or around December 15, 2023 for holders of ADSs.
NetEase
paid a dividend of US$0.1050 per share (US$0.5250 per ADS) for the second quarter of 2023 in September 2023.
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 new 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 following the completion of the prior program on January 9, 2023, and will be in effect for a period not to
exceed 36 months from such date. As of September 30, 2023, approximately 6.6 million ADSs had been repurchased under this program
for a total cost of US$587.9 million.
The extent to which NetEase repurchases its ADSs
and its ordinary shares depends upon a variety of factors, including market conditions. These programs may be suspended or discontinued
at any time.
**
The United States dollar (US$) amounts disclosed in this announcement are presented solely for the convenience of the reader. The percentages
stated are calculated based on RMB.
Announcement on Change of Management
The Company also announced today that Mr. Charles
Zhaoxuan Yang has resigned from his position as Chief Financial Officer effective November 30, 2023 for personal reasons and to subsequently
pursue other career interests. Mr. Yang will remain with the Company as a consultant until June 30, 2024 to ensure a smooth
transition as the Company undertakes a search to find a successor.
“We are grateful to Charles for his contributions
to NetEase over the past six years, and he has been instrumental in leading some of our largest capital market transactions, which were
key milestones in the Company’s history. On behalf of the Board and management team, I wish him well in his future endeavors,”
said Mr. Ding.
Mr. Yang said, “It has been a pleasure
to have been able to work together with William, the Board and the management team to help NetEase progress to where it is now. I am committed
to ensuring a smooth transition and have full confidence in NetEase’s prospects for sustainable growth and value creation.”
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, November 16,
2023 (Beijing/ Hong Kong Time: 8:00 p.m., Thursday, November 16, 2023). 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: 10034483, 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: 10034483. The replay will be available through November 23, 2023.
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
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.
NetEase’s
market-leading ESG initiatives are among the most recognized in the global media and entertainment industry, earning it inclusion in
the 2022 Dow Jones Sustainability World Index, 2022 Dow Jones Sustainability Emerging Markets Index and 2023 Bloomberg Gender-Equality
Index, as well as receiving an “A” rating from MSCI. 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 statements. In addition, statements that are not historical facts, including
statements about NetEase’s strategies and business plans, its expectations regarding the growth of its business and its revenue
and the quotations from management in this announcement are or contain forward-looking statements. NetEase may also make forward-looking
statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in announcements made on the
website of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), in press releases and other written materials
and in oral statements made by its officers, directors or employees to third parties. The accuracy of these statements may be impacted
by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated,
including risks related to: the risk that the online 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 government regulation that could adversely affect the industry
and geographical markets in which NetEase operates; the risk that NetEase may not be able to continuously develop new and creative online
services or that NetEase will not be able to set, or follow in a timely manner, trends in the market; the risk related to economic uncertainty
and capital market disruption; the risk related to the expansion of NetEase’s businesses and operations internationally;
the risk associated with cybersecurity threats or incidents; and the risk that fluctuations in the value of the Renminbi with respect
to other currencies could adversely affect NetEase’s business and financial results. Further information regarding these and other
risks is included in NetEase’s filings with the SEC and announcements on the website of the Hong Kong Stock Exchange. NetEase does
not undertake any obligation to update this forward-looking information, except as required under applicable law.
Non-GAAP Financial Measures
NetEase considers and uses non-GAAP financial
measures, such as non-GAAP net income from continuing operations attributable to the Company’s shareholders and non-GAAP basic and
diluted net income from continuing operations 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 from continuing operations attributable to the Company’s shareholders as net income from continuing
operations attributable to the Company’s shareholders excluding share-based compensation expenses. Non-GAAP net income from continuing
operations 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 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. 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 from continuing operations 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 from continuing operations
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 from continuing operations 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 “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.
NETEASE, INC.
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in
thousands)
| | |
December 31, | | |
September 30, | | |
September 30, | |
| | |
2022 | | |
2023 | | |
2023 | |
| | |
RMB | | |
RMB | | |
USD (Note 1) | |
| Assets | |
| | | |
| | | |
| | |
| Current assets: | |
| | | |
| | | |
| | |
| Cash and cash equivalents | |
| 24,889,000 | | |
| 15,116,464 | | |
| 2,071,884 | |
| Time deposits | |
| 84,947,679 | | |
| 87,174,226 | | |
| 11,948,222 | |
| Restricted cash | |
| 2,699,055 | | |
| 3,041,312 | | |
| 416,846 | |
| Accounts receivable, net | |
| 5,002,872 | | |
| 6,492,193 | | |
| 889,829 | |
| Inventories | |
| 993,636 | | |
| 721,958 | | |
| 98,953 | |
| Prepayments and other current assets, net | |
| 5,448,284 | | |
| 6,483,086 | | |
| 888,581 | |
| Short-term investments | |
| 7,622,673 | | |
| 8,536,188 | | |
| 1,169,982 | |
| Total current assets | |
| 131,603,199 | | |
| 127,565,427 | | |
| 17,484,297 | |
| | |
| | | |
| | | |
| | |
| Non-current assets: | |
| | | |
| | | |
| | |
| Property, equipment and software, net | |
| 6,342,330 | | |
| 7,582,320 | | |
| 1,039,243 | |
| Land use rights, net | |
| 4,121,767 | | |
| 4,109,744 | | |
| 563,287 | |
| Deferred tax assets | |
| 1,480,789 | | |
| 1,422,599 | | |
| 194,983 | |
| Time deposits | |
| 2,973,840 | | |
| 2,220,840 | | |
| 304,391 | |
| Restricted cash | |
| 270 | | |
| 290 | | |
| 40 | |
| Other long-term assets | |
| 26,238,790 | | |
| 28,673,785 | | |
| 3,930,069 | |
| Total non-current assets | |
| 41,157,786 | | |
| 44,009,578 | | |
| 6,032,013 | |
| Total assets | |
| 172,760,985 | | |
| 171,575,005 | | |
| 23,516,310 | |
| | |
| | | |
| | | |
| | |
| Liabilities, Redeemable Noncontrolling Interests and
Shareholders’ Equity | |
| | | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | | |
| | |
| Accounts payable | |
| 1,507,141 | | |
| 863,331 | | |
| 118,329 | |
| Salary and welfare payables | |
| 4,732,941 | | |
| 2,833,841 | | |
| 388,410 | |
| Taxes payable | |
| 2,813,096 | | |
| 3,072,590 | | |
| 421,133 | |
| Short-term loans | |
| 23,875,704 | | |
| 11,221,194 | | |
| 1,537,993 | |
| Contract liabilities | |
| 12,518,890 | | |
| 14,188,592 | | |
| 1,944,708 | |
| Accrued liabilities and other payables | |
| 11,381,075 | | |
| 11,689,169 | | |
| 1,602,134 | |
| Total current liabilities | |
| 56,828,847 | | |
| 43,868,717 | | |
| 6,012,707 | |
| | |
| | | |
| | | |
| | |
| Non-current liabilities: | |
| | | |
| | | |
| | |
| Deferred tax liabilities | |
| 2,126,120 | | |
| 2,005,689 | | |
| 274,903 | |
| Long-term loans | |
| 3,654,964 | | |
| 427,997 | | |
| 58,662 | |
| Other long-term liabilities | |
| 1,277,574 | | |
| 1,327,427 | | |
| 181,938 | |
| Total non-current liabilities | |
| 7,058,658 | | |
| 3,761,113 | | |
| 515,503 | |
| Total liabilities | |
| 63,887,505 | | |
| 47,629,830 | | |
| 6,528,210 | |
| | |
| | | |
| | | |
| | |
| Redeemable noncontrolling interests | |
| 136,440 | | |
| 144,382 | | |
| 19,789 | |
| | |
| | | |
| | | |
| | |
| NetEase, Inc.’s shareholders’ equity | |
| 104,731,317 | | |
| 119,978,728 | | |
| 16,444,453 | |
| Noncontrolling interests | |
| 4,005,723 | | |
| 3,822,065 | | |
| 523,858 | |
| Total equity | |
| 108,737,040 | | |
| 123,800,793 | | |
| 16,968,311 | |
| | |
| | | |
| | | |
| | |
| Total liabilities, redeemable noncontrolling
interests and shareholders’ equity | |
| 172,760,985 | | |
| 171,575,005 | | |
| 23,516,310 | |
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 | | |
Nine
Months Ended | |
| | |
September 30, | | |
June 30, | | |
September 30, | | |
September 30, | | |
September 30, | | |
September 30, | | |
September 30, | |
| | |
2022 | | |
2023 | | |
2023 | | |
2023 | | |
2022 | | |
2023 | | |
2023 | |
| | |
RMB | | |
RMB | | |
RMB | | |
USD
(Note 1) | | |
RMB | | |
RMB | | |
USD
(Note 1) | |
| Net
revenues | |
| 24,426,760 | | |
| 24,011,301 | | |
| 27,270,406 | | |
| 3,737,720 | | |
| 71,141,680 | | |
| 76,327,994 | | |
| 10,461,622 | |
| Cost
of revenues | |
| (10,682,868 | ) | |
| (9,635,888 | ) | |
| (10,304,106 | ) | |
| (1,412,295 | ) | |
| (31,619,918 | ) | |
| (30,089,735 | ) | |
| (4,124,141 | ) |
| Gross
profit | |
| 13,743,892 | | |
| 14,375,413 | | |
| 16,966,300 | | |
| 2,325,425 | | |
| 39,521,762 | | |
| 46,238,259 | | |
| 6,337,481 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Operating
expenses: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Selling
and marketing expenses | |
| (3,768,618 | ) | |
| (3,271,705 | ) | |
| (3,567,153 | ) | |
| (488,919 | ) | |
| (9,984,812 | ) | |
| (9,743,904 | ) | |
| (1,335,513 | ) |
| General
and administrative expenses | |
| (1,264,342 | ) | |
| (1,132,147 | ) | |
| (1,494,186 | ) | |
| (204,795 | ) | |
| (3,392,866 | ) | |
| (3,648,011 | ) | |
| (500,002 | ) |
| Research
and development expenses | |
| (3,969,156 | ) | |
| (3,908,907 | ) | |
| (4,347,052 | ) | |
| (595,813 | ) | |
| (10,948,938 | ) | |
| (12,005,691 | ) | |
| (1,645,517 | ) |
| Total
operating expenses | |
| (9,002,116 | ) | |
| (8,312,759 | ) | |
| (9,408,391 | ) | |
| (1,289,527 | ) | |
| (24,326,616 | ) | |
| (25,397,606 | ) | |
| (3,481,032 | ) |
| Operating
profit | |
| 4,741,776 | | |
| 6,062,654 | | |
| 7,557,909 | | |
| 1,035,898 | | |
| 15,195,146 | | |
| 20,840,653 | | |
| 2,856,449 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Other
income/ (expenses): | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Investment
income, net | |
| 1,347,269 | | |
| 287,691 | | |
| 556,603 | | |
| 76,289 | | |
| 91,078 | | |
| 1,315,662 | | |
| 180,326 | |
| Interest
income, net | |
| 556,148 | | |
| 935,578 | | |
| 1,147,227 | | |
| 157,241 | | |
| 1,520,383 | | |
| 2,858,835 | | |
| 391,836 | |
| Exchange
gains/ (losses), net | |
| 1,398,045 | | |
| 1,464,956 | | |
| (400,483 | ) | |
| (54,891 | ) | |
| 2,165,448 | | |
| 677,905 | | |
| 92,915 | |
| Other,
net | |
| 164,435 | | |
| 120,826 | | |
| 240,024 | | |
| 32,898 | | |
| 501,940 | | |
| 618,883 | | |
| 84,825 | |
| Income
before tax | |
| 8,207,673 | | |
| 8,871,705 | | |
| 9,101,280 | | |
| 1,247,435 | | |
| 19,473,995 | | |
| 26,311,938 | | |
| 3,606,351 | |
| Income
tax | |
| (1,586,673 | ) | |
| (712,090 | ) | |
| (1,290,398 | ) | |
| (176,864 | ) | |
| (4,065,264 | ) | |
| (3,631,047 | ) | |
| (497,676 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net
income from continuing operations | |
| 6,621,000 | | |
| 8,159,615 | | |
| 7,810,882 | | |
| 1,070,571 | | |
| 15,408,731 | | |
| 22,680,891 | | |
| 3,108,675 | |
| Net
income from discontinued operations | |
| - | | |
| - | | |
| - | | |
| - | | |
| 624,864 | | |
| - | | |
| - | |
| Net
income | |
| 6,621,000 | | |
| 8,159,615 | | |
| 7,810,882 | | |
| 1,070,571 | | |
| 16,033,595 | | |
| 22,680,891 | | |
| 3,108,675 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accretion
of redeemable noncontrolling interests | |
| (781 | ) | |
| (868 | ) | |
| (895 | ) | |
| (123 | ) | |
| (2,268 | ) | |
| (2,623 | ) | |
| (360 | ) |
| Net
loss attributable to noncontrolling interests | |
| 79,145 | | |
| 84,020 | | |
| 26,901 | | |
| 3,687 | | |
| 353,536 | | |
| 156,021 | | |
| 21,384 | |
| Net
income attributable to the Company’s shareholders | |
| 6,699,364 | | |
| 8,242,767 | | |
| 7,836,888 | | |
| 1,074,135 | | |
| 16,384,863 | | |
| 22,834,289 | | |
| 3,129,699 | |
| Including: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| -Net
income from continuing operations attributable to the Company’s shareholders | |
| 6,699,364 | | |
| 8,242,767 | | |
| 7,836,888 | | |
| 1,074,135 | | |
| 15,759,999 | | |
| 22,834,289 | | |
| 3,129,699 | |
| -Net
income from discontinued operations attributable to the Company’s shareholders | |
| - | | |
| - | | |
| - | | |
| - | | |
| 624,864 | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic
net income per share * | |
| 2.05 | | |
| 2.56 | | |
| 2.44 | | |
| 0.33 | | |
| 5.01 | | |
| 7.10 | | |
| 0.97 | |
| -Continuing
operations | |
| 2.05 | | |
| 2.56 | | |
| 2.44 | | |
| 0.33 | | |
| 4.82 | | |
| 7.10 | | |
| 0.97 | |
| -Discontinued
operations | |
| - | | |
| - | | |
| - | | |
| - | | |
| 0.19 | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic
net income per ADS * | |
| 10.27 | | |
| 12.80 | | |
| 12.19 | | |
| 1.67 | | |
| 25.04 | | |
| 35.48 | | |
| 4.86 | |
| -Continuing
operations | |
| 10.27 | | |
| 12.80 | | |
| 12.19 | | |
| 1.67 | | |
| 24.09 | | |
| 35.48 | | |
| 4.86 | |
| -Discontinued
operations | |
| - | | |
| - | | |
| - | | |
| - | | |
| 0.95 | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Diluted
net income per share * | |
| 2.03 | | |
| 2.54 | | |
| 2.41 | | |
| 0.33 | | |
| 4.96 | | |
| 7.02 | | |
| 0.96 | |
| -Continuing
operations | |
| 2.03 | | |
| 2.54 | | |
| 2.41 | | |
| 0.33 | | |
| 4.77 | | |
| 7.02 | | |
| 0.96 | |
| -Discontinued
operations | |
| - | | |
| - | | |
| - | | |
| - | | |
| 0.19 | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Diluted
net income per ADS * | |
| 10.17 | | |
| 12.69 | | |
| 12.06 | | |
| 1.65 | | |
| 24.79 | | |
| 35.11 | | |
| 4.81 | |
| -Continuing
operations | |
| 10.17 | | |
| 12.69 | | |
| 12.06 | | |
| 1.65 | | |
| 23.84 | | |
| 35.11 | | |
| 4.81 | |
| -Discontinued
operations | |
| - | | |
| - | | |
| - | | |
| - | | |
| 0.95 | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Weighted
average number of ordinary shares used in calculating net income per share * | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 3,262,989 | | |
| 3,218,783 | | |
| 3,213,834 | | |
| 3,213,834 | | |
| 3,271,602 | | |
| 3,217,873 | | |
| 3,217,873 | |
| Diluted | |
| 3,293,766 | | |
| 3,248,916 | | |
| 3,249,649 | | |
| 3,249,649 | | |
| 3,305,081 | | |
| 3,251,666 | | |
| 3,251,666 | |
* 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 | | |
Nine
Months Ended | |
| | |
September 30, | | |
June 30, | | |
September 30, | | |
September 30, | | |
September 30, | | |
September 30, | | |
September 30, | |
| | |
2022 | | |
2023 | | |
2023 | | |
2023 | | |
2022 | | |
2023 | | |
2023 | |
| | |
RMB | | |
RMB | | |
RMB | | |
USD
(Note 1) | | |
RMB | | |
RMB | | |
USD
(Note 1) | |
| Cash
flows from operating activities: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net
income | |
| 6,621,000 | | |
| 8,159,615 | | |
| 7,810,882 | | |
| 1,070,571 | | |
| 16,033,595 | | |
| 22,680,891 | | |
| 3,108,675 | |
| Net
income from discontinued operations | |
| - | | |
| - | | |
| - | | |
| - | | |
| (624,864 | ) | |
| - | | |
| - | |
| Adjustments
to reconcile net income to net cash provided by operating activities: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Depreciation
and amortization | |
| 713,852 | | |
| 661,363 | | |
| 651,856 | | |
| 89,344 | | |
| 2,089,068 | | |
| 2,395,488 | | |
| 328,329 | |
| Fair
value changes of equity security investments | |
| 680,019 | | |
| (78,035 | ) | |
| (382,132 | ) | |
| (52,376 | ) | |
| 2,956,180 | | |
| (686,887 | ) | |
| (94,146 | ) |
| Impairment
losses on investments and other long-term assets | |
| 6,763 | | |
| 47,870 | | |
| 280,641 | | |
| 38,465 | | |
| 254,848 | | |
| 328,511 | | |
| 45,026 | |
| Fair
value changes of short-term investments | |
| (119,620 | ) | |
| (96,884 | ) | |
| (72,875 | ) | |
| (9,988 | ) | |
| (319,278 | ) | |
| (307,675 | ) | |
| (42,170 | ) |
| Share-based
compensation cost | |
| 786,999 | | |
| 787,862 | | |
| 819,548 | | |
| 112,328 | | |
| 2,297,600 | | |
| 2,429,823 | | |
| 333,035 | |
| Allowance
for expected credit losses | |
| 44,126 | | |
| 8,540 | | |
| 22,386 | | |
| 3,068 | | |
| 54,778 | | |
| 51,646 | | |
| 7,079 | |
| Losses
on disposal of property, equipment and software | |
| 528 | | |
| 252 | | |
| 2,649 | | |
| 363 | | |
| 2,454 | | |
| 2,291 | | |
| 314 | |
| Unrealized
exchange (gains)/ losses | |
| (1,401,893 | ) | |
| (1,466,295 | ) | |
| 362,213 | | |
| 49,645 | | |
| (2,193,925 | ) | |
| (718,121 | ) | |
| (98,427 | ) |
| Gains
on disposal of long-term investments | |
| (1,724,433 | ) | |
| (16,382 | ) | |
| (3,197 | ) | |
| (438 | ) | |
| (1,728,433 | ) | |
| (25,347 | ) | |
| (3,474 | ) |
| Deferred
income taxes | |
| (234,336 | ) | |
| (334,380 | ) | |
| (305,703 | ) | |
| (41,900 | ) | |
| (88,647 | ) | |
| (62,417 | ) | |
| (8,555 | ) |
| Share
of results on equity method investees | |
| (159,128 | ) | |
| (129,292 | ) | |
| (160,042 | ) | |
| (21,936 | ) | |
| (1,205,195 | ) | |
| (385,142 | ) | |
| (52,788 | ) |
| Changes
in operating assets and liabilities: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accounts
receivable | |
| 35,786 | | |
| 770,551 | | |
| (1,177,732 | ) | |
| (161,422 | ) | |
| 330,143 | | |
| (1,523,463 | ) | |
| (208,808 | ) |
| Inventories | |
| (88,300 | ) | |
| 69,410 | | |
| 84,970 | | |
| 11,646 | | |
| 33,082 | | |
| 271,710 | | |
| 37,241 | |
| Prepayments
and other assets | |
| 368,673 | | |
| (7,233 | ) | |
| (573,631 | ) | |
| (78,623 | ) | |
| (364,782 | ) | |
| (455,037 | ) | |
| (62,368 | ) |
| Accounts
payable | |
| (84,434 | ) | |
| (115,791 | ) | |
| 150,868 | | |
| 20,678 | | |
| (128,355 | ) | |
| (577,862 | ) | |
| (79,203 | ) |
| Salary
and welfare payables | |
| (567,676 | ) | |
| 758,106 | | |
| (588,217 | ) | |
| (80,622 | ) | |
| (1,541,111 | ) | |
| (2,055,848 | ) | |
| (281,777 | ) |
| Taxes
payable | |
| 475,245 | | |
| (992,892 | ) | |
| 515,087 | | |
| 70,599 | | |
| 10,457 | | |
| 255,911 | | |
| 35,076 | |
| Contract
liabilities | |
| 1,580,450 | | |
| (41,196 | ) | |
| 1,560,628 | | |
| 213,903 | | |
| 1,781,919 | | |
| 2,009,423 | | |
| 275,414 | |
| Accrued
liabilities and other payables | |
| 552,688 | | |
| (306,784 | ) | |
| 845,721 | | |
| 115,917 | | |
| 1,050,486 | | |
| (104,899 | ) | |
| (14,378 | ) |
| Net
cash provided by operating activities | |
| 7,486,309 | | |
| 7,678,405 | | |
| 9,843,920 | | |
| 1,349,222 | | |
| 18,700,020 | | |
| 23,522,996 | | |
| 3,224,095 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cash
flows from investing activities: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Purchase
of property, equipment and software | |
| (557,028 | ) | |
| (520,544 | ) | |
| (643,144 | ) | |
| (88,150 | ) | |
| (1,751,443 | ) | |
| (1,816,627 | ) | |
| (248,989 | ) |
| Proceeds
from sale of property, equipment and software | |
| 3,307 | | |
| 4,292 | | |
| 3,101 | | |
| 425 | | |
| 39,210 | | |
| 9,897 | | |
| 1,356 | |
| Purchase
of intangible assets, content and licensed copyrights | |
| (152,276 | ) | |
| (283,321 | ) | |
| (742,523 | ) | |
| (101,771 | ) | |
| (381,233 | ) | |
| (1,852,526 | ) | |
| (253,910 | ) |
| Net
change in short-term investments with terms of three months or less | |
| 156,475 | | |
| 1,630,013 | | |
| (1,993,921 | ) | |
| (273,290 | ) | |
| 1,708,147 | | |
| (1,087,059 | ) | |
| (148,994 | ) |
| Purchase
of short-term investments with terms over three months | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,250,000 | ) | |
| - | | |
| - | |
| Proceeds
from maturities of short-term investments with terms over three months | |
| 1,195,475 | | |
| - | | |
| 376,950 | | |
| 51,665 | | |
| 3,208,478 | | |
| 481,219 | | |
| 65,957 | |
| Investment
in long-term investments and acquisition of subsidiaries | |
| (844,513 | ) | |
| (270,228 | ) | |
| (417,448 | ) | |
| (57,216 | ) | |
| (3,434,752 | ) | |
| (1,916,724 | ) | |
| (262,709 | ) |
| Proceeds
from disposal of long-term investments | |
| 2,277,625 | | |
| 16,531 | | |
| 20,898 | | |
| 2,864 | | |
| 2,318,275 | | |
| 78,709 | | |
| 10,788 | |
| Placement/
rollover of matured time deposits | |
| (18,830,844 | ) | |
| (10,874,831 | ) | |
| (30,831,994 | ) | |
| (4,225,876 | ) | |
| (75,998,870 | ) | |
| (78,026,928 | ) | |
| (10,694,480 | ) |
| Proceeds
from maturities of time deposits | |
| 17,770,581 | | |
| 21,918,791 | | |
| 33,893,436 | | |
| 4,645,482 | | |
| 64,570,517 | | |
| 78,144,576 | | |
| 10,710,605 | |
| Change
in other long-term assets | |
| (31,782 | ) | |
| (31,189 | ) | |
| (181,263 | ) | |
| (24,844 | ) | |
| (262,227 | ) | |
| (333,293 | ) | |
| (45,682 | ) |
| Net
cash provided by/ (used in) investing activities | |
| 987,020 | | |
| 11,589,514 | | |
| (515,908 | ) | |
| (70,711 | ) | |
| (11,233,898 | ) | |
| (6,318,756 | ) | |
| (866,058 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cash
flows from financing activities: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net
changes from loans with terms of three months or less | |
| (3,645,232 | ) | |
| (14,970,935 | ) | |
| (7,501,788 | ) | |
| (1,028,206 | ) | |
| 2,479,450 | | |
| (19,834,683 | ) | |
| (2,718,569 | ) |
| Proceed
of loans with terms over three months | |
| 70,691 | | |
| 2,171,541 | | |
| 7,607,060 | | |
| 1,042,634 | | |
| 3,627,609 | | |
| 11,058,160 | | |
| 1,515,647 | |
| Payment
of loans with terms over three months | |
| (50,208 | ) | |
| (3,233,500 | ) | |
| (4,250,550 | ) | |
| (582,586 | ) | |
| (82,481 | ) | |
| (7,524,472 | ) | |
| (1,031,315 | ) |
| Net
amounts received/ (paid) related to capital contribution from or repurchase of noncontrolling interests shareholders | |
| 14,305 | | |
| 22,228 | | |
| 11,573 | | |
| 1,586 | | |
| (54,537 | ) | |
| 58,150 | | |
| 7,970 | |
| Cash
paid for repurchase of NetEase’s ADSs/ purchase of subsidiaries’ ADSs and shares | |
| (1,956,829 | ) | |
| (2,195,210 | ) | |
| (296,495 | ) | |
| (40,638 | ) | |
| (5,320,359 | ) | |
| (4,608,462 | ) | |
| (631,642 | ) |
| Dividends
paid to NetEase’s shareholders | |
| (1,617,574 | ) | |
| (2,119,316 | ) | |
| (2,423,355 | ) | |
| (332,148 | ) | |
| (4,704,683 | ) | |
| (5,755,011 | ) | |
| (788,790 | ) |
| Net
cash used in financing activities | |
| (7,184,847 | ) | |
| (20,325,192 | ) | |
| (6,853,555 | ) | |
| (939,358 | ) | |
| (4,055,001 | ) | |
| (26,606,318 | ) | |
| (3,646,699 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Effect
of exchange rate changes on cash, cash equivalents and restricted cash held in foreign currencies | |
| 3,470 | | |
| (47,876 | ) | |
| 4,197 | | |
| 575 | | |
| 57,166 | | |
| (28,181 | ) | |
| (3,863 | ) |
| Net
increase/ (decrease) in cash, cash equivalents and restricted cash | |
| 1,291,952 | | |
| (1,105,149 | ) | |
| 2,478,654 | | |
| 339,728 | | |
| 3,468,287 | | |
| (9,430,259 | ) | |
| (1,292,525 | ) |
| Cash,
cash equivalents and restricted cash, at the beginning of the period | |
| 19,552,450 | | |
| 16,784,561 | | |
| 15,679,412 | | |
| 2,149,042 | | |
| 17,376,115 | | |
| 27,588,325 | | |
| 3,781,295 | |
| Cash,
cash equivalents and restricted cash, at end of the period | |
| 20,844,402 | | |
| 15,679,412 | | |
| 18,158,066 | | |
| 2,488,770 | | |
| 20,844,402 | | |
| 18,158,066 | | |
| 2,488,770 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Supplemental
disclosures of cash flow information: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cash
paid for income tax, net | |
| 1,550,748 | | |
| 1,625,045 | | |
| 1,165,196 | | |
| 159,703 | | |
| 4,121,174 | | |
| 3,864,820 | | |
| 529,718 | |
| Cash
paid for interest expenses | |
| 193,329 | | |
| 326,646 | | |
| 105,665 | | |
| 14,483 | | |
| 324,149 | | |
| 708,025 | | |
| 97,043 | |
The
accompanying notes are an integral part of this announcement.
NETEASE, INC.
UNAUDITED
SEGMENT INFORMATION
(in
thousands, except percentages)
| | |
Three
Months Ended | | |
Nine
Months Ended | |
| | |
September 30, | | |
June 30, | | |
September 30, | | |
September 30, | | |
September 30, | | |
September 30, | | |
September 30, | |
| | |
2022 | | |
2023 | | |
2023 | | |
2023 | | |
2022 | | |
2023 | | |
2023 | |
| | |
RMB | | |
RMB | | |
RMB | | |
USD
(Note 1) | | |
RMB | | |
RMB | | |
USD
(Note 1) | |
| Net
revenues: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Games
and related value-added services | |
| 18,699,106 | | |
| 18,798,646 | | |
| 21,779,851 | | |
| 2,985,177 | | |
| 55,480,763 | | |
| 60,644,094 | | |
| 8,311,965 | |
| Youdao | |
| 1,402,434 | | |
| 1,206,634 | | |
| 1,538,783 | | |
| 210,908 | | |
| 3,559,200 | | |
| 3,908,687 | | |
| 535,730 | |
| Cloud
Music | |
| 2,357,248 | | |
| 1,948,539 | | |
| 1,973,064 | | |
| 270,431 | | |
| 6,615,964 | | |
| 5,881,444 | | |
| 806,119 | |
| Innovative
businesses and others | |
| 1,967,972 | | |
| 2,057,482 | | |
| 1,978,708 | | |
| 271,204 | | |
| 5,485,753 | | |
| 5,893,769 | | |
| 807,808 | |
| Total
net revenues | |
| 24,426,760 | | |
| 24,011,301 | | |
| 27,270,406 | | |
| 3,737,720 | | |
| 71,141,680 | | |
| 76,327,994 | | |
| 10,461,622 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cost
of revenues: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Games
and related value-added services | |
| (6,551,193 | ) | |
| (6,122,836 | ) | |
| (6,749,507 | ) | |
| (925,096 | ) | |
| (19,978,841 | ) | |
| (19,555,391 | ) | |
| (2,680,290 | ) |
| Youdao | |
| (642,254 | ) | |
| (639,459 | ) | |
| (679,147 | ) | |
| (93,085 | ) | |
| (1,751,443 | ) | |
| (1,880,026 | ) | |
| (257,679 | ) |
| Cloud
Music | |
| (2,023,600 | ) | |
| (1,422,855 | ) | |
| (1,436,552 | ) | |
| (196,896 | ) | |
| (5,745,203 | ) | |
| (4,379,785 | ) | |
| (600,299 | ) |
| Innovative
businesses and others | |
| (1,465,821 | ) | |
| (1,450,738 | ) | |
| (1,438,900 | ) | |
| (197,218 | ) | |
| (4,144,431 | ) | |
| (4,274,533 | ) | |
| (585,873 | ) |
| Total
cost of revenues | |
| (10,682,868 | ) | |
| (9,635,888 | ) | |
| (10,304,106 | ) | |
| (1,412,295 | ) | |
| (31,619,918 | ) | |
| (30,089,735 | ) | |
| (4,124,141 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Gross
profit: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Games
and related value-added services | |
| 12,147,913 | | |
| 12,675,810 | | |
| 15,030,344 | | |
| 2,060,081 | | |
| 35,501,922 | | |
| 41,088,703 | | |
| 5,631,675 | |
| Youdao | |
| 760,180 | | |
| 567,175 | | |
| 859,636 | | |
| 117,823 | | |
| 1,807,757 | | |
| 2,028,661 | | |
| 278,051 | |
| Cloud
Music | |
| 333,648 | | |
| 525,684 | | |
| 536,512 | | |
| 73,535 | | |
| 870,761 | | |
| 1,501,659 | | |
| 205,820 | |
| Innovative
businesses and others | |
| 502,151 | | |
| 606,744 | | |
| 539,808 | | |
| 73,986 | | |
| 1,341,322 | | |
| 1,619,236 | | |
| 221,935 | |
| Total
gross profit | |
| 13,743,892 | | |
| 14,375,413 | | |
| 16,966,300 | | |
| 2,325,425 | | |
| 39,521,762 | | |
| 46,238,259 | | |
| 6,337,481 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Gross
profit margin: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Games
and related value-added services | |
| 65.0 | % | |
| 67.4 | % | |
| 69.0 | % | |
| 69.0 | % | |
| 64.0 | % | |
| 67.8 | % | |
| 67.8 | % |
| Youdao | |
| 54.2 | % | |
| 47.0 | % | |
| 55.9 | % | |
| 55.9 | % | |
| 50.8 | % | |
| 51.9 | % | |
| 51.9 | % |
| Cloud
Music | |
| 14.2 | % | |
| 27.0 | % | |
| 27.2 | % | |
| 27.2 | % | |
| 13.2 | % | |
| 25.5 | % | |
| 25.5 | % |
| Innovative
businesses and others | |
| 25.5 | % | |
| 29.5 | % | |
| 27.3 | % | |
| 27.3 | % | |
| 24.5 | % | |
| 27.5 | % | |
| 27.5 | % |
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 = RMB7.2960 on the last trading day of September 2023 (September 29,
2023) 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 September 29, 2023, 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 | | |
Nine
Months Ended | |
| | |
September 30, | | |
June 30, | | |
September 30, | | |
September 30, | | |
September 30, | | |
September 30, | | |
September 30, | |
| | |
2022 | | |
2023 | | |
2023 | | |
2023 | | |
2022 | | |
2023 | | |
2023 | |
| | |
RMB | | |
RMB | | |
RMB | | |
USD
(Note 1) | | |
RMB | | |
RMB | | |
USD
(Note 1) | |
| Share-based
compensation cost included in: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cost
of revenues | |
| 190,645 | | |
| 193,001 | | |
| 210,533 | | |
| 28,856 | | |
| 562,620 | | |
| 607,048 | | |
| 83,203 | |
| Operating
expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Selling
and marketing expenses | |
| 24,980 | | |
| 31,069 | | |
| 33,804 | | |
| 4,633 | | |
| 87,170 | | |
| 97,226 | | |
| 13,326 | |
| General
and administrative expenses | |
| 288,598 | | |
| 281,326 | | |
| 280,581 | | |
| 38,457 | | |
| 865,551 | | |
| 856,188 | | |
| 117,350 | |
| Research
and development expenses | |
| 282,776 | | |
| 282,466 | | |
| 294,630 | | |
| 40,382 | | |
| 782,259 | | |
| 869,361 | | |
| 119,156 | |
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 subsidiaries to
meet the disclosure requirements under U.S. GAAP or 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 | | |
Nine
Months Ended | |
| | |
September 30, | | |
June 30, | | |
September 30, | | |
September 30, | | |
September 30, | | |
September 30, | | |
September 30, | |
| | |
2022 | | |
2023 | | |
2023 | | |
2023 | | |
2022 | | |
2023 | | |
2023 | |
| | |
RMB | | |
RMB | | |
RMB | | |
USD
(Note 1) | | |
RMB | | |
RMB | | |
USD
(Note 1) | |
| Net
income from continuing operations attributable to the Company’s shareholders | |
| 6,699,364 | | |
| 8,242,767 | | |
| 7,836,888 | | |
| 1,074,135 | | |
| 15,759,999 | | |
| 22,834,289 | | |
| 3,129,699 | |
| Add:
Share-based compensation | |
| 770,255 | | |
| 774,683 | | |
| 808,276 | | |
| 110,783 | | |
| 2,237,056 | | |
| 2,394,559 | | |
| 328,202 | |
| Non-GAAP
net income from continuing operations attributable to the Company’s shareholders | |
| 7,469,619 | | |
| 9,017,450 | | |
| 8,645,164 | | |
| 1,184,918 | | |
| 17,997,055 | | |
| 25,228,848 | | |
| 3,457,901 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Non-GAAP
basic net income from continuing operations per share * | |
| 2.29 | | |
| 2.80 | | |
| 2.69 | | |
| 0.37 | | |
| 5.50 | | |
| 7.84 | | |
| 1.07 | |
| Non-GAAP
basic net income from continuing operations per ADS * | |
| 11.45 | | |
| 14.01 | | |
| 13.45 | | |
| 1.84 | | |
| 27.50 | | |
| 39.20 | | |
| 5.37 | |
| Non-GAAP
diluted net income from continuing operations per share * | |
| 2.27 | | |
| 2.78 | | |
| 2.66 | | |
| 0.36 | | |
| 5.45 | | |
| 7.76 | | |
| 1.06 | |
| Non-GAAP
diluted net income from continuing operations per ADS * | |
| 11.34 | | |
| 13.88 | | |
| 13.30 | | |
| 1.82 | | |
| 27.23 | | |
| 38.79 | | |
| 5.32 | |
* Each ADS represents five ordinary shares.
The accompanying notes are an integral part of this announcement.
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