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 May 2024
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 ¨
Exhibits
Exhibit 99.1
- NetEase Announces First Quarter 2024 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/ William Lei Ding |
| | Name: |
William Lei Ding |
| | Title: |
Chief Executive Officer |
| | |
| Date: May 23, 2024 | |
Exhibit 99.1
Contact for Media and Investors:
Email: ir@service.netease.com
Tel: (+86) 571-8985-3378
NetEase Announces First Quarter 2024 Unaudited
Financial Results
Hangzhou, China, May 23, 2024 - 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 first quarter ended March 31, 2024.
First Quarter 2024 Financial Highlights
| · | Net revenues were RMB26.9 billion (US$3.7 billion), an increase of 7.2% compared with the first quarter
of 2023. |
| · | Games and related value-added services net revenues were RMB21.5 billion (US$3.0 billion), an increase
of 7.0% compared with the first quarter of 2023. |
| · | Youdao net revenues were RMB1.4 billion (US$192.8 million), an increase of 19.7% compared with the first
quarter of 2023. |
| · | Cloud Music net revenues were RMB2.0 billion (US$281.1 million), an increase of 3.6% compared with the
first quarter of 2023. |
| · | Innovative businesses and others net revenues were RMB2.0 billion (US$272.8 million), an increase of 6.1%
compared with the first quarter of 2023. |
| · | Gross profit was RMB17.0 billion (US$2.4 billion), an increase of 14.2% compared with the first quarter
of 2023. |
| · | Total operating expenses were RMB9.4 billion (US$1.3 billion), an increase of 22.4% compared with the
first quarter of 2023. |
| · | Net income attributable to the Company’s shareholders was RMB7.6 billion (US$1.1 billion). Non-GAAP
net income attributable to the Company’s shareholders was RMB8.5 billion (US$1.2 billion).[1] |
| · | Basic net income per share was US$0.33 (US$1.65 per ADS). Non-GAAP basic net income per share was US$0.37
(US$1.84 per ADS).[1] |
First Quarter 2024 and Recent Operational Highlights
| · | Our numerous established game franchises continued their overall high level of popularity with their loyal
user bases, demonstrating ongoing sustainability. |
| · | Hit games, including Eggy Party, Identity V and Infinite Borders, continued to generate
player community enthusiasm. Among them, Identity V achieved a strong performance in the first quarter with continued momentum
during its sixth anniversary celebration event with record-high DAUs in May. |
| · | Expanded recent hit title launches in more regions, bolstering our appeal in broader areas. |
| · | Dunk City Dynasty topped the iOS download charts in Hong Kong, Macau and Taiwan and ranked No. 1
in Taiwan and No. 2 in Hong Kong on the iOS grossing charts, respectively, following its local market introductions in April. |
| · | Powered by seasonal updates in April, Racing Master once again ranked No. 1 on the iOS grossing
chart in Taiwan and rose to the No.1 and No. 2 positions in Macau and Hong Kong, respectively. |
| · | Introduced more exciting new titles to domestic players in the first quarter. Shi Jie Zhi Wai ranked
No. 1 on China’s iOS download chart soon after its launch and ranked No. 3 on China’s iOS grossing chart after releasing
new content updates. |
| · | Strengthened robust game pipeline with multiple highly anticipated games, including Where Winds Meet,
an open-world action-adventure RPG slated for launch in the third quarter, and Justice mobile with planned introductions in more
regions, as well as other exciting titles across different genres, such as Naraka: Bladepoint mobile, Once Human and Marvel
Rivals. |
| · | Renewed a publishing agreement with Blizzard Entertainment to bring beloved titles back to China and entered
into a broader collaboration with Microsoft Gaming. |
[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 sharebased
compensation expenses. See the unaudited reconciliation of GAAP and non-GAAP results at the end of this announcement.
| · | Youdao strategically focused on digital content services, online marketing services and AI-driven subscription-based
membership services, achieving its first sequential quarter of positive net income. |
| · | Cloud Music continued actively prioritizing its core music business, including a recent comprehensive
product upgrade to its NetEase Cloud Music App, aimed at cultivating a music-centric ecosystem and driving sustainable long-term growth. |
“Alongside the enduring success of our time-honored
flagship games, we continue to expand into diverse genres and achieve new milestones in game operations, user expansion and partnership
establishment. With a portfolio featuring premium-quality games and more diversification across genres, we are well-positioned to extend
our exciting gaming experiences to audiences around the globe,” said Mr. William Ding, Chief Executive Officer and Director
of NetEase. “We remain committed to innovation and genre expansion by leveraging our strong R&D capabilities while exploring
more opportunities through collaboration with talent and partners globally.
“In our broader NetEase family, Cloud Music
and Youdao are performing well, providing innovative content offerings in their respective domains. Our focus in 2024 remains on crafting
products and content that ignite the market with passion and deliver vibrant experiences, ultimately creating value for both our users
and our Company,” Mr. Ding concluded.
First Quarter 2024 Financial Results
Net Revenues
Net revenues for the first quarter of 2024 were
RMB26.9 billion (US$3.7 billion), compared with RMB27.1 billion and RMB25.0 billion for the preceding quarter and the first quarter of
2023, respectively.
Net revenues from games and related value-added
services were RMB21.5 billion (US$3.0 billion) for the first quarter of 2024, compared with RMB20.9 billion and RMB20.1 billion for the
preceding quarter and the first quarter of 2023, respectively. Net revenues from the operation of online games accounted for approximately
95.2% of the segment’s net revenues for the first quarter of 2024, compared with 93.4% and 92.7% for the preceding quarter and the
first quarter of 2023, respectively. Net revenues from mobile games accounted for approximately 78.6% of net revenues from the operation
of online games for the first quarter of 2024, compared with 76.7% and 72.3% for the preceding quarter and the first quarter of 2023,
respectively.
Net revenues from Youdao were RMB1.4 billion (US$192.8
million) for the first quarter of 2024, compared with RMB1.5 billion and RMB1.2 billion for the preceding quarter and the first quarter
of 2023, respectively.
Net revenues from Cloud Music were RMB2.0 billion
(US$281.1 million) for the first quarter of 2024, compared with RMB2.0 billion for the preceding quarter and the first quarter of 2023.
Net revenues from innovative businesses and others
were RMB2.0 billion (US$272.8 million) for the first quarter of 2024, compared with RMB2.8 billion and RMB1.9 billion for the preceding
quarter and the first quarter of 2023, respectively.
Gross Profit
Gross profit for the first quarter of 2024 was
RMB17.0 billion (US$2.4 billion), compared with RMB16.8 billion and RMB14.9 billion for the preceding quarter and the first quarter of
2023, respectively.
The quarter-over-quarter and year-over-year increases
in games and related value-added services’ gross profit were primarily due to increased net revenues from mobile games such as Eggy
Party and certain newly launched titles.
The quarter-over-quarter decrease in Youdao’s
gross profit was primarily due to decreased revenue contribution from its learning services and sales of smart devices. The year-over-year
increase was primarily due to increased revenue contribution from its online marketing services.
The quarter-over-quarter and year-over-year increases
in Cloud Music’s gross profit primarily resulted from the one-off adjustment of certain copyright costs, 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 net revenues from Yanxuan and advertising services
resulting from seasonality. 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 first quarter of 2024 was 69.5%, compared with 69.5% and 66.7% for the preceding quarter and the first quarter of 2023,
respectively. The year-over-year increase was mainly attributable to changes in revenue contribution from different platforms and self-developed
games.
Gross profit margin for Youdao for the first quarter
of 2024 was 49.0%, compared with 49.9% and 51.7% for the preceding quarter and the first quarter of 2023, respectively. The quarter-over-quarter
and year-over-year decreases were mainly due to increased revenue contribution from its online marketing services, which have a lower
gross profit margin compared to its other products and services.
Gross profit margin for Cloud Music for the first
quarter of 2024 was 38.0%, compared with 30.3% and 22.4% for the preceding quarter and the first quarter of 2023, respectively. The quarter-over-quarter
and year-over-year improvements were mainly due to the factors enumerated above. The one-off adjustment of certain copyright costs mentioned
above increased the gross profit margin in the first quarter of 2024 by approximately five percentage points.
Gross profit margin for innovative businesses
and others for the first quarter of 2024 was 33.4%, compared with 34.4% and 25.4% for the preceding quarter and the first quarter of 2023,
respectively. The quarter-over-quarter decrease was mainly due to decreased revenue contribution from advertising services. The year-over-year
increase was mainly due to improved gross profit margins from Yanxuan and several other businesses included within the segment.
Operating Expenses
Total operating expenses for the first quarter
of 2024 were RMB9.4 billion (US$1.3 billion), compared with RMB10.0 billion and RMB7.7 billion for the preceding quarter and the first
quarter of 2023, respectively. The quarter-over-quarter decrease was mainly due to decreased research and development investments related
to games and related value-added services and marketing expenditures, as well as lower staff-related costs. The year-over-year increase
was mainly due to increased marketing expenditures and higher staff-related costs.
Other Income/(Expenses)
Other income/(expenses) consisted of investment
income/(loss), interest income, exchange (losses)/ gains and others. The quarter-over-quarter increase was mainly due to net exchange
gains in the first quarter of 2024 compared with net exchange losses recorded in the prior quarter. The year-over-year increase was primarily
attributable to higher interest income resulting from the improved net cash position and net exchange gains in the first quarter of 2024,
compared with net exchange losses recorded in the first quarter of 2023.
Income Tax
The Company recorded a net income tax charge of
RMB1.5 billion (US$205.8 million) for the first quarter of 2024, compared with RMB1.1 billion and RMB1.6 billion for the preceding quarter
and the first quarter of 2023, respectively. The effective tax rate for the first quarter of 2024 was 16.0%, compared with 13.8% and 19.5%
for the preceding quarter and the first 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 RMB7.6 billion (US$1.1 billion) for the first quarter of 2024, compared with RMB6.6 billion and RMB6.8 billion for
the preceding quarter and the first quarter of 2023, respectively.
NetEase reported basic net income of US$0.33 per
share (US$1.65 per ADS) for the first quarter of 2024, compared with US$0.28 per share (US$1.42 per ADS) and US$0.29 per share (US$1.45
per ADS) for the preceding quarter and the first quarter of 2023, respectively.
Non-GAAP net income attributable to the Company’s
shareholders totaled RMB8.5 billion (US$1.2 billion) for the first quarter of 2024, compared with RMB7.4 billion and RMB7.6 billion for
the preceding quarter and the first quarter of 2023, respectively.
NetEase reported non-GAAP basic net income of
US$0.37 per share (US$1.84 per ADS) for the first quarter of 2024, compared with US$0.32 per share (US$1.59 per ADS) and US$0.33 per share
(US$1.63 per ADS) for the preceding quarter and the first quarter of 2023, respectively.
Other Financial Information
As of March 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 RMB113.4 billion (US$15.7 billion), compared with RMB110.9 billion as of December 31,
2023. Net cash provided by operating activities was RMB9.6 billion (US$1.3 billion) for the first quarter of 2024, compared with RMB11.8
billion and RMB6.0 billion for the preceding quarter and the first quarter of 2023, respectively.
Quarterly Dividend
The board of directors has approved a dividend
of US$0.0990 per share (US$0.4950 per ADS) for the first quarter of 2024 to holders of ordinary shares and holders of ADSs as of the close
of business on June 6, 2024, 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
June 6, 2024 (Beijing/ Hong Kong Time). The payment date is expected to be June 17, 2024 for holders of ordinary shares and
on or around June 21, 2024 for holders of ADSs.
NetEase paid a dividend of US$0.21597 per share
(US$1.07985 per ADS) for the fourth quarter of 2023 in March 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 March 31, 2024, approximately 8.9 million ADSs had been repurchased under this program for
a total cost of US$811.0 million.
The extent to which NetEase repurchases its ADSs
and its ordinary shares depends upon a variety of factors, including market conditions. These programs may be suspended or discontinued
at any time.
** The United States dollar (US$) amounts disclosed
in this announcement are presented solely for the convenience of the reader. The percentages stated are calculated based on RMB.
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, May 23, 2024 (Beijing/ Hong Kong Time: 7:00 p.m., Thursday,
May 23, 2024). 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: 10038664, 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: 10038664. The replay will be available through May 30, 2024.
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.
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 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; risks related to economic uncertainty and capital market disruption; risks related to the expansion of NetEase’s businesses
and operations internationally; risks 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 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 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 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.
NETEASE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| | |
December 31, | | |
March 31, | | |
March 31, | |
| | |
2023 | | |
2024 | | |
2024 | |
| | |
RMB | | |
RMB | | |
USD (Note 1) | |
| Assets | |
| | | |
| | | |
| | |
| Current assets: | |
| | | |
| | | |
| | |
| Cash and cash equivalents | |
| 21,428,902 | | |
| 43,026,904 | | |
| 5,959,157 | |
| Time deposits | |
| 100,856,034 | | |
| 89,473,549 | | |
| 12,391,943 | |
| Restricted cash | |
| 2,777,206 | | |
| 3,055,366 | | |
| 423,163 | |
| Accounts receivable, net | |
| 6,422,417 | | |
| 7,767,599 | | |
| 1,075,800 | |
| Inventories | |
| 695,374 | | |
| 603,981 | | |
| 83,650 | |
| Prepayments and other current assets, net | |
| 6,076,595 | | |
| 5,769,626 | | |
| 799,084 | |
| Short-term investments | |
| 4,436,057 | | |
| 2,095,218 | | |
| 290,184 | |
| Total current assets | |
| 142,692,585 | | |
| 151,792,243 | | |
| 21,022,981 | |
| | |
| | | |
| | | |
| | |
| Non-current assets: | |
| | | |
| | | |
| | |
| Property, equipment and software, net | |
| 8,075,044 | | |
| 8,056,689 | | |
| 1,115,839 | |
| Land use rights, net | |
| 4,075,143 | | |
| 4,048,518 | | |
| 560,713 | |
| Deferred tax assets | |
| 1,560,088 | | |
| 1,476,100 | | |
| 204,437 | |
| Time deposits | |
| 1,050,000 | | |
| 1,050,000 | | |
| 145,423 | |
| Restricted cash | |
| 550 | | |
| 3,250 | | |
| 450 | |
| Other long-term assets | |
| 28,471,568 | | |
| 28,638,072 | | |
| 3,966,328 | |
| Total non-current assets | |
| 43,232,393 | | |
| 43,272,629 | | |
| 5,993,190 | |
| Total assets | |
| 185,924,978 | | |
| 195,064,872 | | |
| 27,016,171 | |
| | |
| | | |
| | | |
| | |
| Liabilities, Redeemable Noncontrolling Interests and Shareholders’ Equity | |
| | | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | | |
| | |
| Accounts payable | |
| 881,016 | | |
| 871,430 | | |
| 120,692 | |
| Salary and welfare payables | |
| 4,857,206 | | |
| 2,700,087 | | |
| 373,958 | |
| Taxes payable | |
| 2,571,534 | | |
| 3,844,879 | | |
| 532,510 | |
| Short-term loans | |
| 19,240,163 | | |
| 24,843,410 | | |
| 3,440,773 | |
| Contract liabilities | |
| 13,362,166 | | |
| 14,911,048 | | |
| 2,065,156 | |
| Accrued liabilities and other payables | |
| 12,930,399 | | |
| 12,878,519 | | |
| 1,783,651 | |
| Total current liabilities | |
| 53,842,484 | | |
| 60,049,373 | | |
| 8,316,740 | |
| | |
| | | |
| | | |
| | |
| Non-current liabilities: | |
| | | |
| | | |
| | |
| Deferred tax liabilities | |
| 2,299,303 | | |
| 2,700,293 | | |
| 373,986 | |
| Long-term loans | |
| 427,997 | | |
| 427,997 | | |
| 59,277 | |
| Other long-term liabilities | |
| 1,271,113 | | |
| 1,248,717 | | |
| 172,945 | |
| Total non-current liabilities | |
| 3,998,413 | | |
| 4,377,007 | | |
| 606,208 | |
| Total liabilities | |
| 57,840,897 | | |
| 64,426,380 | | |
| 8,922,948 | |
| | |
| | | |
| | | |
| | |
| Redeemable noncontrolling interests | |
| 115,759 | | |
| 118,460 | | |
| 16,407 | |
| | |
| | | |
| | | |
| | |
| NetEase, Inc.’s shareholders’ equity | |
| 124,285,776 | | |
| 127,275,764 | | |
| 17,627,490 | |
| Noncontrolling interests | |
| 3,682,546 | | |
| 3,244,268 | | |
| 449,326 | |
| Total equity | |
| 127,968,322 | | |
| 130,520,032 | | |
| 18,076,816 | |
| | |
| | | |
| | | |
| | |
| Total liabilities, redeemable
noncontrolling interests and shareholders’ equity | |
| 185,924,978 | | |
| 195,064,872 | | |
| 27,016,171 | |
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 | |
| | |
March 31, | | |
December 31, | | |
March 31, | | |
March 31, | |
| | |
2023 | | |
2023 | | |
2024 | | |
2024 | |
| | |
RMB | | |
RMB | | |
RMB | | |
USD (Note 1) | |
| Net revenues | |
| 25,046,287 | | |
| 27,140,165 | | |
| 26,851,741 | | |
| 3,718,923 | |
| Cost of revenues | |
| (10,149,741 | ) | |
| (10,315,030 | ) | |
| (9,835,821 | ) | |
| (1,362,245 | ) |
| Gross profit | |
| 14,896,546 | | |
| 16,825,135 | | |
| 17,015,920 | | |
| 2,356,678 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | | |
| | | |
| | |
| Selling and marketing expenses | |
| (2,905,046 | ) | |
| (4,225,556 | ) | |
| (4,022,204 | ) | |
| (557,069 | ) |
| General and administrative expenses | |
| (1,021,678 | ) | |
| (1,251,869 | ) | |
| (1,196,475 | ) | |
| (165,710 | ) |
| Research and development expenses | |
| (3,749,732 | ) | |
| (4,479,219 | ) | |
| (4,174,758 | ) | |
| (578,197 | ) |
| Total operating expenses | |
| (7,676,456 | ) | |
| (9,956,644 | ) | |
| (9,393,437 | ) | |
| (1,300,976 | ) |
| Operating profit | |
| 7,220,090 | | |
| 6,868,491 | | |
| 7,622,483 | | |
| 1,055,702 | |
| | |
| | | |
| | | |
| | | |
| | |
| Other income/(expenses): | |
| | | |
| | | |
| | | |
| | |
| Investment income/(loss), net | |
| 471,368 | | |
| (8,940 | ) | |
| 179,291 | | |
| 24,832 | |
| Interest income, net | |
| 776,030 | | |
| 1,261,583 | | |
| 1,277,597 | | |
| 176,945 | |
| Exchange (losses)/gains , net | |
| (386,568 | ) | |
| (810,904 | ) | |
| 15,011 | | |
| 2,079 | |
| Other, net | |
| 258,033 | | |
| 434,759 | | |
| 193,888 | | |
| 26,853 | |
| Income before tax | |
| 8,338,953 | | |
| 7,744,989 | | |
| 9,288,270 | | |
| 1,286,411 | |
| Income tax | |
| (1,628,559 | ) | |
| (1,068,657 | ) | |
| (1,485,910 | ) | |
| (205,796 | ) |
| Net income | |
| 6,710,394 | | |
| 6,676,332 | | |
| 7,802,360 | | |
| 1,080,615 | |
| | |
| | | |
| | | |
| | | |
| | |
| Accretion of redeemable noncontrolling interests | |
| (860 | ) | |
| (966 | ) | |
| (958 | ) | |
| (133 | ) |
| Net loss/(income) attributable to
noncontrolling interests and redeemable noncontrolling interests | |
| 45,100 | | |
| (93,103 | ) | |
| (167,456 | ) | |
| (23,192 | ) |
| Net income attributable to the Company’s shareholders | |
| 6,754,634 | | |
| 6,582,263 | | |
| 7,633,946 | | |
| 1,057,290 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net income per share * | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 2.10 | | |
| 2.05 | | |
| 2.38 | | |
| 0.33 | |
| Diluted | |
| 2.07 | | |
| 2.02 | | |
| 2.35 | | |
| 0.33 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net income per ADS * | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 10.49 | | |
| 10.25 | | |
| 11.88 | | |
| 1.65 | |
| Diluted | |
| 10.37 | | |
| 10.12 | | |
| 11.75 | | |
| 1.63 | |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average number of ordinary shares used in calculating net income per share * | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 3,221,083 | | |
| 3,212,328 | | |
| 3,211,665 | | |
| 3,211,665 | |
| Diluted | |
| 3,256,511 | | |
| 3,253,166 | | |
| 3,249,452 | | |
| 3,249,452 | |
* 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 | |
| | |
March 31, | | |
December 31, | | |
March 31, | | |
March 31, | |
| | |
2023 | | |
2023 | | |
2024 | | |
2024 | |
| | |
RMB | | |
RMB | | |
RMB | | |
USD (Note 1) | |
| Cash
flows from operating activities: | |
| | | |
| | | |
| | | |
| | |
| Net
income | |
| 6,710,394 | | |
| 6,676,332 | | |
| 7,802,360 | | |
| 1,080,615 | |
| Adjustments
to reconcile net income to net cash provided by operating activities: | |
| | | |
| | | |
| | | |
| | |
| Depreciation
and amortization | |
| 1,082,269 | | |
| 659,772 | | |
| 567,923 | | |
| 78,656 | |
| Fair
value changes of equity security and other investments | |
| (226,720 | ) | |
| 151,571 | | |
| (368,258 | ) | |
| (51,003 | ) |
| Impairment
losses on investments and other long-term assets | |
| - | | |
| 140,648 | | |
| 128,417 | | |
| 17,786 | |
| Fair
value changes of short-term investments | |
| (137,916 | ) | |
| (106,532 | ) | |
| (60,810 | ) | |
| (8,422 | ) |
| Share-based
compensation cost | |
| 822,413 | | |
| 812,987 | | |
| 894,300 | | |
| 123,859 | |
| Allowance
for expected credit losses | |
| 20,720 | | |
| 9,500 | | |
| 11,600 | | |
| 1,607 | |
| (Gains)/losses
on disposal of property, equipment and software | |
| (610 | ) | |
| 3,385 | | |
| 2,132 | | |
| 295 | |
| Unrealized
exchange losses/(gains) | |
| 385,961 | | |
| 838,056 | | |
| (17,509 | ) | |
| (2,425 | ) |
| Gains
on disposal of long-term investments, business and subsidiaries | |
| (5,768 | ) | |
| (38,437 | ) | |
| (13,487 | ) | |
| (1,868 | ) |
| Deferred
income taxes | |
| 577,666 | | |
| 193,854 | | |
| 485,054 | | |
| 67,179 | |
| Share
of results on equity method investees and revaluation results from previously held equity interest | |
| (95,808 | ) | |
| (88,805 | ) | |
| 164,271 | | |
| 22,751 | |
| Changes
in operating assets and liabilities: | |
| | | |
| | | |
| | | |
| | |
| Accounts
receivable | |
| (1,116,282 | ) | |
| 53,089 | | |
| (1,358,711 | ) | |
| (188,179 | ) |
| Inventories | |
| 117,330 | | |
| 25,054 | | |
| 91,378 | | |
| 12,656 | |
| Prepayments
and other assets | |
| 125,827 | | |
| 542,593 | | |
| 326,140 | | |
| 45,170 | |
| Accounts
payable | |
| (612,939 | ) | |
| 18,443 | | |
| (7,001 | ) | |
| (970 | ) |
| Salary
and welfare payables | |
| (2,225,737 | ) | |
| 1,992,931 | | |
| (2,178,608 | ) | |
| (301,734 | ) |
| Taxes
payable | |
| 733,716 | | |
| (500,172 | ) | |
| 1,271,822 | | |
| 176,145 | |
| Contract
liabilities | |
| 489,991 | | |
| (847,562 | ) | |
| 1,574,086 | | |
| 218,008 | |
| Accrued
liabilities and other payables | |
| (643,836 | ) | |
| 1,271,572 | | |
| 242,070 | | |
| 33,526 | |
| Net
cash provided by operating activities | |
| 6,000,671 | | |
| 11,808,279 | | |
| 9,557,169 | | |
| 1,323,652 | |
| | |
| | | |
| | | |
| | | |
| | |
| Cash
flows from investing activities: | |
| | | |
| | | |
| | | |
| | |
| Purchase
of property, equipment and software | |
| (652,939 | ) | |
| (484,927 | ) | |
| (415,018 | ) | |
| (57,479 | ) |
| Proceeds
from sale of property, equipment and software | |
| 2,504 | | |
| 405 | | |
| 3,506 | | |
| 486 | |
| Purchase
of intangible assets, content and licensed copyrights | |
| (826,682 | ) | |
| (121,797 | ) | |
| (188,821 | ) | |
| (26,151 | ) |
| Net
changes in short-term investments with terms of three months or less | |
| (723,151 | ) | |
| (690,628 | ) | |
| 2,401,649 | | |
| 332,625 | |
| Proceeds
from maturities of short-term investments with terms over three months | |
| 104,269 | | |
| 4,897,291 | | |
| - | | |
| - | |
| Investment
in long-term investments and acquisition of subsidiaries | |
| (1,229,048 | ) | |
| (914,962 | ) | |
| (481,804 | ) | |
| (66,729 | ) |
| Proceeds
from disposal of long-term investments, businesses and subsidiaries | |
| 41,280 | | |
| 73,855 | | |
| 85,456 | | |
| 11,836 | |
| Placement/rollover
of matured time deposits | |
| (36,320,103 | ) | |
| (46,666,670 | ) | |
| (34,558,836 | ) | |
| (4,786,344 | ) |
| Proceeds
from maturities of time deposits | |
| 22,332,349 | | |
| 33,273,393 | | |
| 46,048,382 | | |
| 6,377,627 | |
| Change
in other long-term assets | |
| (120,841 | ) | |
| (90,635 | ) | |
| (34,625 | ) | |
| (4,796 | ) |
| Net
cash (used in)/provided by investing activities | |
| (17,392,362 | ) | |
| (10,724,675 | ) | |
| 12,859,889 | | |
| 1,781,075 | |
| | |
| | | |
| | | |
| | | |
| | |
| Cash
flows from financing activities: | |
| | | |
| | | |
| | | |
| | |
| Net
changes from loans with terms of three months or less | |
| 2,638,040 | | |
| 6,179,979 | | |
| (399,726 | ) | |
| (55,361 | ) |
| Proceeds
of loans with terms over three months | |
| 1,279,559 | | |
| 2,511,000 | | |
| 6,998,250 | | |
| 969,246 | |
| Payment
of loans with terms over three months | |
| (40,422 | ) | |
| (695,000 | ) | |
| (957,000 | ) | |
| (132,543 | ) |
| Net
amounts received related to capital contribution from noncontrolling interests shareholders | |
| 24,349 | | |
| 28,009 | | |
| 42,214 | | |
| 5,847 | |
| Cash
paid for repurchase of NetEase’s ADSs/purchase of subsidiaries’ ADSs and shares | |
| (2,116,757 | ) | |
| (625,832 | ) | |
| (1,233,780 | ) | |
| (170,877 | ) |
| Dividends
paid to NetEase’s shareholders | |
| (1,212,340 | ) | |
| (2,258,892 | ) | |
| (4,945,016 | ) | |
| (684,877 | ) |
| Net
cash provided by/(used in) financing activities | |
| 572,429 | | |
| 5,139,264 | | |
| (495,058 | ) | |
| (68,565 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Effect
of exchange rate changes on cash, cash equivalents and restricted cash held in foreign currencies | |
| 15,498 | | |
| (174,276 | ) | |
| (43,138 | ) | |
| (5,975 | ) |
| Net
(decrease)/increase in cash, cash equivalents and restricted cash | |
| (10,803,764 | ) | |
| 6,048,592 | | |
| 21,878,862 | | |
| 3,030,187 | |
| Cash,
cash equivalents and restricted cash, at the beginning of the period | |
| 27,588,325 | | |
| 18,158,066 | | |
| 24,206,658 | | |
| 3,352,583 | |
| Cash,
cash equivalents and restricted cash, at end of the period | |
| 16,784,561 | | |
| 24,206,658 | | |
| 46,085,520 | | |
| 6,382,770 | |
| | |
| | | |
| | | |
| | | |
| | |
| Supplemental
disclosures of cash flow information: | |
| | | |
| | | |
| | | |
| | |
| Cash
paid for income taxes, net | |
| 1,074,579 | | |
| 1,030,932 | | |
| 1,182,711 | | |
| 163,804 | |
| Cash
paid for interest expenses | |
| 275,714 | | |
| 71,847 | | |
| 146,455 | | |
| 20,284 | |
The accompanying notes are an integral part of this announcement.
NETEASE, INC.
UNAUDITED SEGMENT INFORMATION
(in thousands, except percentages)
| | |
Three Months Ended | |
| | |
March 31, | | |
December 31, | | |
March 31, | | |
March 31, | |
| | |
2023 | | |
2023 | | |
2024 | | |
2024 | |
| | |
RMB | | |
RMB | | |
RMB | | |
USD (Note 1) | |
| Net revenues: | |
| | | |
| | | |
| | | |
| | |
| Games and related value-added services | |
| 20,065,597 | | |
| 20,921,355 | | |
| 21,460,378 | | |
| 2,972,228 | |
| Youdao | |
| 1,163,270 | | |
| 1,480,521 | | |
| 1,391,859 | | |
| 192,770 | |
| Cloud Music | |
| 1,959,841 | | |
| 1,985,548 | | |
| 2,029,541 | | |
| 281,088 | |
| Innovative businesses and others | |
| 1,857,579 | | |
| 2,752,741 | | |
| 1,969,963 | | |
| 272,837 | |
| Total net revenues | |
| 25,046,287 | | |
| 27,140,165 | | |
| 26,851,741 | | |
| 3,718,923 | |
| | |
| | | |
| | | |
| | | |
| | |
| Cost of revenues: | |
| | | |
| | | |
| | | |
| | |
| Games and related value-added services | |
| (6,683,048 | ) | |
| (6,383,474 | ) | |
| (6,555,311 | ) | |
| (907,900 | ) |
| Youdao | |
| (561,420 | ) | |
| (741,720 | ) | |
| (710,356 | ) | |
| (98,383 | ) |
| Cloud Music | |
| (1,520,378 | ) | |
| (1,384,537 | ) | |
| (1,259,006 | ) | |
| (174,370 | ) |
| Innovative businesses and others | |
| (1,384,895 | ) | |
| (1,805,299 | ) | |
| (1,311,148 | ) | |
| (181,592 | ) |
| Total cost of revenues | |
| (10,149,741 | ) | |
| (10,315,030 | ) | |
| (9,835,821 | ) | |
| (1,362,245 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Gross profit: | |
| | | |
| | | |
| | | |
| | |
| Games and related value-added services | |
| 13,382,549 | | |
| 14,537,881 | | |
| 14,905,067 | | |
| 2,064,328 | |
| Youdao | |
| 601,850 | | |
| 738,801 | | |
| 681,503 | | |
| 94,387 | |
| Cloud Music | |
| 439,463 | | |
| 601,011 | | |
| 770,535 | | |
| 106,718 | |
| Innovative businesses and others | |
| 472,684 | | |
| 947,442 | | |
| 658,815 | | |
| 91,245 | |
| Total gross profit | |
| 14,896,546 | | |
| 16,825,135 | | |
| 17,015,920 | | |
| 2,356,678 | |
| | |
| | | |
| | | |
| | | |
| | |
| Gross profit margin: | |
| | | |
| | | |
| | | |
| | |
| Games and related value-added services | |
| 66.7 | % | |
| 69.5 | % | |
| 69.5 | % | |
| 69.5 | % |
| Youdao | |
| 51.7 | % | |
| 49.9 | % | |
| 49.0 | % | |
| 49.0 | % |
| Cloud Music | |
| 22.4 | % | |
| 30.3 | % | |
| 38.0 | % | |
| 38.0 | % |
| Innovative businesses and others | |
| 25.4 | % | |
| 34.4 | % | |
| 33.4 | % | |
| 33.4 | % |
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 = RMB7.2203 on the last trading day of March 2024 (March 29,
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 March 29, 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 | |
| | |
March 31, | | |
December 31, | | |
March 31, | | |
March 31, | |
| | |
2023 | | |
2023 | | |
2024 | | |
2024 | |
| | |
RMB | | |
RMB | | |
RMB | | |
USD (Note 1) | |
| Share-based compensation cost included in: | |
| | | |
| | | |
| | | |
| | |
| Cost of revenues | |
| 203,514 | | |
| 216,717 | | |
| 254,935 | | |
| 35,308 | |
| Operating expenses | |
| | | |
| | | |
| | | |
| | |
| Selling and marketing expenses | |
| 32,353 | | |
| 35,575 | | |
| 17,869 | | |
| 2,475 | |
| General and administrative expenses | |
| 294,281 | | |
| 262,830 | | |
| 289,636 | | |
| 40,114 | |
| Research and development expenses | |
| 292,265 | | |
| 297,865 | | |
| 331,860 | | |
| 45,962 | |
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 | |
| | |
March 31, | | |
December 31, | | |
March 31, | | |
March 31, | |
| | |
2023 | | |
2023 | | |
2024 | | |
2024 | |
| | |
RMB | | |
RMB | | |
RMB | | |
USD (Note 1) | |
| Net income attributable to the Company’s shareholders | |
| 6,754,634 | | |
| 6,582,263 | | |
| 7,633,946 | | |
| 1,057,290 | |
| Add: Share-based compensation | |
| 811,600 | | |
| 797,194 | | |
| 876,898 | | |
| 121,449 | |
| Non-GAAP net income attributable to the Company’s shareholders | |
| 7,566,234 | | |
| 7,379,457 | | |
| 8,510,844 | | |
| 1,178,739 | |
| | |
| | | |
| | | |
| | | |
| | |
| Non-GAAP net income per share * | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 2.35 | | |
| 2.30 | | |
| 2.65 | | |
| 0.37 | |
| Diluted | |
| 2.32 | | |
| 2.27 | | |
| 2.62 | | |
| 0.36 | |
| | |
| | | |
| | | |
| | | |
| | |
| Non-GAAP net income per ADS * | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 11.74 | | |
| 11.49 | | |
| 13.25 | | |
| 1.84 | |
| Diluted | |
| 11.62 | | |
| 11.34 | | |
| 13.10 | | |
| 1.81 | |
* Each ADS represents five ordinary shares.
The accompanying notes are an integral part of this announcement.
NetEase (NASDAQ:NTES)
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NetEase (NASDAQ:NTES)
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