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NetEase Inc, NetEase Inc, Youdao Inc, Netease Cloud Music Inc, NetEase Inc

NetEase Announces Third Quarter 2024 Unaudited Financial Results

HANGZHOU, China , Nov. 14, 2024 /PRNewswire/ -- NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, "NetEase" or the "Company"), a leading internet and game services provider, today announced its unaudited financial results for the third quarter ended September 30, 2024.

Third Quarter 202 4  Financial Highlights

  • Net revenues were RMB26.2 billion (US$3.7 billion), a decrease of 3.9% compared with the same quarter of 2023.
    • Games and related value-added services net revenues were RMB20.9 billion (US$3.0 billion), a decrease of 4.2% compared with the same quarter of 2023.
    • Youdao net revenues were RMB1.6 billion (US$224.1 million), an increase of 2.2% compared with the same quarter of 2023.
    • NetEase Cloud Music net revenues were RMB2.0 billion (US$284.9 million), an increase of 1.3% compared with the same quarter of 2023.
    • Innovative businesses and others net revenues were RMB1.8 billion (US$252.8 million), a decrease of 10.3% compared with the same quarter of 2023.
  • Gross profit was RMB16.5 billion (US$2.3 billion), a decrease of 2.9% compared with the same quarter of 2023.
  • Total operating expenses were RMB9.3 billion (US$1.3 billion), a decrease of 0.8% compared with the same quarter of 2023.
  • Net income attributable to the Company's shareholders was RMB6.5 billion (US$931.7 million). Non-GAAP net income attributable to the Company's shareholders was RMB7.5 billion (US$1.1 billion).[1] 
  • Basic net income per share was US$0.29 (US$1.46 per ADS). Non-GAAP basic net income per share was US$0.33 (US$1.67 per ADS).[1]

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

Third Quarter 202 4  and Recent Operational Highlights

  • Launched popular new titles and expanded established games in new regions, strengthening NetEase's competitive edge across more markets in diversified genres.
    • Naraka: Bladepoint mobile game gained significant popularity since its launch in July, reaching No. 4 on the iOS grossing chart with its September seasonal update, effectively catering to growing player demand for action-based PvP games.
    • Racing Master topped the App Store and Google Play free-to-play charts in Japan following its launch in August.
    • World of Warcraft and Hearthstone's return to China reignited historic level of player community enthusiasm. Following their relaunch, World of Warcraft saw a 50% increase in daily active players as compared to levels before the shutdown, while Hearthstone achieved over 150% growth.
  • Generated continued popularity of hit games Identity V and Naraka: Bladepoint, showcasing NetEase's long-term operation capabilities for online games.
  • Strengthened diversified portfolio, announcing more exciting titles in the making, including Destiny: Rising and MARVEL Mystic Mayhem, and new games, such as Marvel Rivals and Where Winds Meet, set for launch in December.
  • Youdao significantly improved its profitability in the third quarter, achieving its first-ever third-quarter operating profit and a record-high quarterly operating profit, compared with a loss in the same period last year.
  • NetEase Cloud Music continued to drive quality development across its music-centric ecosystem, further expanding its subscriber base and sustaining healthy revenue growth momentum in its online music services.

"To further diversify our game portfolio across genres and expand globally, we launched a variety of new games to captivate players worldwide and achieved breakthrough milestones," said Mr. William Ding, Chief Executive Officer and Director of NetEase. "Throughout our development journey over the past two decades, players have remained at the core of our creations and operations, ensuring the long-lasting popularity of our games. As we expand, we will continue to prioritize player demand and propel innovation, bringing more exciting NetEase gaming experiences to players domestically and around the world.

"NetEase Cloud Music and Youdao are both positioned for steady growth alongside our games. Across the NetEase family, we focus on creating unique, engaging and impactful experiences for our community that fuel our ongoing success," Mr. Ding concluded.

Third Quarter 202 4  Financial Results

Net Revenues

Net revenues for the third quarter of 2024 were RMB26.2 billion (US$3.7 billion), compared with RMB25.5 billion and RMB27.3 billion for the preceding quarter and the same quarter of 2023, respectively.

Net revenues from games and related value-added services were RMB20.9 billion (US$3.0 billion) for the third quarter of 2024, compared with RMB20.1 billion and RMB21.8 billion for the preceding quarter and the same quarter of 2023, respectively. Net revenues from the operation of online games accounted for approximately 96.8% of the segment's net revenues for the third quarter of 2024, compared with 96.1% and 93.7% for the preceding quarter and the same quarter of 2023, respectively. Net revenues from mobile games accounted for approximately 70.8% of net revenues from the operation of online games for the third quarter of 2024, compared with 76.4% and 77.6% for the preceding quarter and the same quarter of 2023, respectively. 

Net revenues from Youdao were RMB1.6 billion (US$224.1 million) for the third quarter of 2024, compared with RMB1.3 billion and RMB1.5 billion for the preceding quarter and the same quarter of 2023, respectively.

Net revenues from NetEase Cloud Music were RMB2.0 billion (US$284.9 million) for the third quarter of 2024, compared with RMB2.0 billion each for the preceding quarter and the same quarter of 2023.

Net revenues from innovative businesses and others were RMB1.8 billion (US$252.8 million) for the third quarter of 2024, compared with RMB2.1 billion and RMB2.0 billion for the preceding quarter and the same quarter of 2023, respectively.

Gross Profit

Gross profit for the third quarter of 2024 was RMB16.5 billion (US$2.3 billion), compared with RMB16.0 billion and RMB17.0 billion for the preceding quarter and the same quarter of 2023, respectively.

The quarter-over-quarter increase in games and related value-added services' gross profit was primarily due to higher net revenues from PC games. The year-over-year decrease was primarily due to decreased net revenues from mobile games.

The quarter-over-quarter increase in Youdao's gross profit was primarily due to higher net revenues from sales of smart devices and learning services. The year-over-year decrease was primarily due to decreased net revenues from its learning services.

The year-over-year increase in NetEase Cloud Music's gross profit was primarily due to 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 several businesses included within the segment.

Gross Profit Margin

Gross profit margin for games and related value-added services for the third quarter of 2024 was 68.8%, compared with 70.0% and 69.0% for the preceding quarter and the same quarter of 2023, respectively. The quarter-over-quarter and year-over-year decreases were mainly attributable to changes in product mix.

Gross profit margin for Youdao for the third quarter of 2024 was 50.2%, compared with 48.2% and 55.9% for the preceding quarter and the same quarter of 2023, respectively. The quarter-over-quarter and year-over-year fluctuations were mainly due to the factors enumerated above.

Gross profit margin for NetEase Cloud Music for the third quarter of 2024 was 32.8%, compared with 32.1% and 27.2% for the preceding quarter and the same quarter of 2023, respectively. The quarter-over-quarter and year-over-year increases were mainly due to increased net revenues from sales of membership subscriptions and continued improvement in cost control measures.

Gross profit margin for innovative businesses and others for the third quarter of 2024 was 37.8%, compared with 34.0% and 27.3% for the preceding quarter and the same quarter of 2023, respectively. The quarter-over-quarter and year-over-year increases were mainly due to increased gross profit margins from several businesses included within the segment.

Operating Expenses

Total operating expenses for the third quarter of 2024 were RMB9.3 billion (US$1.3 billion), compared with RMB9.0 billion and RMB9.4 billion for the preceding quarter and the same quarter of 2023, respectively. The quarter-over-quarter increase was mainly due to increased marketing expenditures related to games and related value-added services.

Other Income/(Expenses)

Other income/(expenses) consisted of investment income, interest income, exchange (losses)/gains and others. The quarter-over-quarter and year-over-year decreases were mainly due to higher net exchange losses in the third quarter of 2024.

Income Tax

The Company recorded a net income tax charge of RMB1.3 billion (US$183.8 million) for the third quarter of 2024, compared with RMB1.3 billion each for the preceding quarter and the same quarter of 2023. The effective tax rate for the third quarter of 2024 was 16.1%, compared with 16.0% and 14.2% for the preceding quarter and the same quarter of 2023, respectively. The effective tax rate represents certain estimates by the Company as to the tax obligations and benefits applicable to it in each quarter.

Net Income and Non-GAAP Net Income

Net income attributable to the Company's shareholders totaled RMB6.5 billion (US$931.7 million) for the third quarter of 2024, compared with RMB6.8 billion and RMB7.8 billion for the preceding quarter and the same quarter of 2023, respectively.

NetEase reported basic net income of US$0.29 per share (US$1.46 per ADS) for the third quarter of 2024, compared with US$0.30 per share (US$1.50 per ADS) and US$0.35 per share (US$1.74 per ADS) for the preceding quarter and the same quarter of 2023, respectively.

Non-GAAP net income attributable to the Company's shareholders totaled RMB7.5 billion (US$1.1 billion) for the third quarter of 2024, compared with RMB7.8 billion and RMB8.6 billion for the preceding quarter and the same quarter of 2023, respectively.

NetEase reported non-GAAP basic net income of US$0.33 per share (US$1.67 per ADS) for the third quarter of 2024, compared with US$0.35 per share (US$1.73 per ADS) and US$0.38 per share (US$1.92 per ADS) for the preceding quarter and the same quarter of 2023, respectively.

Other Financial Information

As of September 30, 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 RMB120.0 billion (US$17.1 billion), compared with RMB110.9 billion as of December 31, 2023. Net cash provided by operating activities was RMB10.6 billion (US$1.5 billion) for the third quarter of 2024, compared with RMB6.5 billion and RMB9.8 billion for the preceding quarter and the same quarter of 2023, respectively.

Quarterly Dividend

The board of directors approved a dividend of US$0.0870 per share (US$0.4350 per ADS) for the third quarter of 2024 to holders of ordinary shares and holders of ADSs as of the close of business on November 29, 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 November 29, 2024 (Beijing/ Hong Kong Time). The payment date is expected to be December 10, 2024 for holders of ordinary shares and on or around December 13, 2024 for holders of ADSs.

NetEase paid a dividend of US$0.0870 per share (US$0.4350 per ADS) for the second quarter of 2024 in September 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 September 30, 2024, approximately 18.2 million ADSs had been repurchased under this program for a total cost of US$1.6 billion.

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

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

Conference Call

NetEase's management team will host a teleconference call with a simultaneous webcast at 7:00 a.m. New York Time on Thursday, November 14, 2024 (Beijing/Hong Kong Time: 8:00 p.m., Thursday, November 14, 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: 10042941, 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: 10042941. The replay will be available through November 21, 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 NetEaseCloud 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.

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

 

 

NETEASE, INC.


UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands)



 December 31,  


 September 30,   


 September 30, 



2023


2024


2024



  RMB  


  RMB  


 USD (Note 1) 


Assets







Current assets:







   Cash and cash equivalents

21,428,902


20,184,013


2,876,199


   Time deposits

100,856,034


91,195,431


12,995,245


   Restricted cash

2,777,206


2,994,096


426,655


   Accounts receivable, net

6,422,417


6,173,077


879,656


   Inventories

695,374


613,685


87,449


   Prepayments and other current assets, net

6,076,595


6,811,171


970,584


   Short-term investments

4,436,057


12,607,188


1,796,510


Total current assets

142,692,585


140,578,661


20,032,298









Non-current assets:







   Property, equipment and software, net 

8,075,044


8,200,464


1,168,557


   Land use rights, net

4,075,143


4,204,865


599,188


   Deferred tax assets 

1,560,088


1,173,270


167,190


   Time deposits

1,050,000


4,025,000


573,558


   Restricted cash

550


5,277


752


   Other long-term assets

28,471,568


26,708,737


3,805,965


Total non-current assets

43,232,393


44,317,613


6,315,210


Total assets 

185,924,978


184,896,274


26,347,508









Liabilities, Redeemable Noncontrolling Interests
    and Shareholders' Equity







Current liabilities:







   Accounts payable 

881,016


755,372


107,640


   Salary and welfare payables

4,857,206


2,941,618


419,177


   Taxes payable

2,571,534


2,606,842


371,472


   Short-term loans

19,240,163


10,594,342


1,509,682


   Contract liabilities

13,362,166


15,543,023


2,214,863


   Accrued liabilities and other payables

12,930,399


13,270,811


1,891,075


Total current liabilities

53,842,484


45,712,008


6,513,909









Non-current liabilities:







   Deferred tax liabilities

2,299,303


1,828,869


260,612


   Long-term loans

427,997


427,997


60,989


   Other long-term liabilities

1,271,113


1,199,075


170,867


Total non-current liabilities

3,998,413


3,455,941


492,468


Total liabilities

57,840,897


49,167,949


7,006,377









Redeemable noncontrolling interests 

115,759


122,494


17,455









NetEase, Inc.'s shareholders' equity

124,285,776


132,150,155


18,831,246


Noncontrolling interests

3,682,546


3,455,676


492,430


Total equity

127,968,322


135,605,831


19,323,676









Total liabilities, redeemable noncontrolling 
    interests and shareholders' equity    

185,924,978


184,896,274


26,347,508









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,




2023


2024


2024


2024


2023


2024


2024




 RMB 


 RMB 


 RMB 


 USD (Note 1) 


RMB


RMB


USD (Note 1)


















Net revenues


27,270,406


25,485,805


26,209,879


3,734,878


76,327,994


78,547,425


11,192,919


Cost of revenues


(10,304,106)


(9,443,587)


(9,733,274)


(1,386,980)


(30,089,735)


(29,012,682)


(4,134,274)


Gross profit


16,966,300


16,042,218


16,476,605


2,347,898


46,238,259


49,534,743


7,058,645


















Operating expenses:
















Selling and marketing expenses 


(3,567,153)


(3,501,737)


(3,805,071)


(542,218)


(9,743,904)


(11,329,012)


(1,614,371)


General and administrative expenses


(1,494,186)


(1,091,441)


(1,100,328)


(156,795)


(3,648,011)


(3,388,244)


(482,821)


Research and development expenses 


(4,347,052)


(4,455,717)


(4,424,469)


(630,482)


(12,005,691)


(13,054,944)


(1,860,315)


Total operating expenses


(9,408,391)


(9,048,895)


(9,329,868)


(1,329,495)


(25,397,606)


(27,772,200)


(3,957,507)


Operating profit


7,557,909


6,993,323


7,146,737


1,018,403


20,840,653


21,762,543


3,101,138


















Other income/(expenses):
















Investment income, net


556,603


103,674


578,398


82,421


1,315,662


861,363


122,743


Interest income, net


1,147,227


1,186,219


1,282,766


182,793


2,858,835


3,746,582


533,884


Exchange (losses)/gains, net


(400,483)


(239,375)


(1,055,518)


(150,410)


677,905


(1,279,882)


(182,382)


Other, net


240,024


85,694


43,600


6,213


618,883


323,182


46,053


Income before tax


9,101,280


8,129,535


7,995,983


1,139,420


26,311,938


25,413,788


3,621,436


Income tax


(1,290,398)


(1,300,939)


(1,289,545)


(183,759)


(3,631,047)


(4,076,394)


(580,881)


Net income


7,810,882


6,828,596


6,706,438


955,661


22,680,891


21,337,394


3,040,555


















Accretion of redeemable noncontrolling
    interests


(895)


(960)


(962)


(137)


(2,623)


(2,880)


(410)


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


26,901


(68,887)


(167,041)


(23,803)


156,021


(403,384)


(57,482)


Net income attributable to the
    Company's shareholders


7,836,888


6,758,749


6,538,435


931,721


22,834,289


20,931,130


2,982,663


















Net income per share *
















Basic


2.44


2.10


2.04


0.29


7.10


6.52


0.93


Diluted


2.41


2.08


2.03


0.29


7.02


6.46


0.92


















Net income per ADS *
















Basic


12.19


10.50


10.22


1.46


35.48


32.61


4.65


Diluted


12.06


10.42


10.14


1.44


35.11


32.30


4.60


















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
















Basic


3,213,834


3,217,699


3,198,646


3,198,646


3,217,873


3,209,298


3,209,298


Diluted


3,249,649


3,243,056


3,224,110


3,224,110


3,251,666


3,238,834


3,238,834


















*  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,   



2023


2024


2024


2024


2023


2024


2024



  RMB  


 RMB  


 RMB  


 USD (Note 1) 


 RMB  


 RMB  


 USD (Note 1) 


Cash flows from operating activities:















    Net income 

7,810,882


6,828,596


6,706,438


955,661


22,680,891


21,337,394


3,040,555


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















    Depreciation and amortization

651,856


631,957


520,567


74,180


2,395,488


1,720,447


245,162


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

(382,132)


(7,887)


(824,608)


(117,506)


(686,887)


(1,200,753)


(171,106)


    Impairment losses on investments

280,641


210,741


529,668


75,477


328,511


868,826


123,807


    Fair value changes of short-term investments

(72,875)


(128,295)


(100,071)


(14,260)


(307,675)


(289,176)


(41,207)


    Share-based compensation cost

819,548


1,079,056


978,139


139,384


2,429,823


2,951,495


420,584


    Allowance for expected credit losses

22,386


9,281


36,022


5,133


51,646


56,903


8,109


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

2,649


(326)


(2,920)


(416)


2,291


(1,114)


(159)


    Unrealized exchange losses/(gains)

362,213


(209,311)


1,050,644


149,715


(718,121)


823,824


117,394


    Gains on disposal of long-term investments, business and
        subsidiaries

(3,197)


(141,114)


(118,046)


(16,821)


(25,347)


(272,647)


(38,852)


    Deferred income taxes

(305,703)


(1,280,076)


711,639


101,408


(62,417)


(83,383)


(11,882)


    Share of results on equity method investees

(160,042)


39,200


(28,466)


(4,057)


(385,142)


175,005


24,938


    Changes in operating assets and liabilities: 















        Accounts receivable

(1,177,732)


1,410,478


146,758


20,913


(1,523,463)


198,525


28,289


        Inventories

84,970


29,552


(39,285)


(5,598)


271,710


81,645


11,634


        Prepayments and other assets

(573,631)


530,856


(1,234,390)


(175,899)


(455,037)


(377,394)


(53,778)


        Accounts payable

150,868


(126,862)


6,316


900


(577,862)


(127,547)


(18,175)


        Salary and welfare payables

(588,217)


879,058


(670,750)


(95,581)


(2,055,848)


(1,970,300)


(280,766)


        Taxes payable

515,087


(1,462,700)


224,015


31,922


255,911


33,137


4,722


        Contract liabilities

1,560,628


(1,270,324)


1,928,060


274,746


2,009,423


2,231,822


318,032


        Accrued liabilities and other payables

845,721


(490,048)


755,882


107,712


(104,899)


507,904


72,376


    Net cash provided by operating activities

9,843,920


6,531,832


10,575,612


1,507,013


23,522,996


26,664,613


3,799,677

















Cash flows from investing activities:















    Purchase of property, equipment and software

(643,144)


(168,880)


(379,520)


(54,081)


(1,816,627)


(963,418)


(137,286)


    Proceeds from sale of property, equipment and software

3,101


660


1,072


153


9,897


5,238


746


    Purchase of intangible assets, content and licensed copyrights    

(742,523)


(399,533)


(222,247)


(31,670)


(1,852,526)


(810,601)


(115,510)


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

(1,993,921)


(8,194,289)


1,585,395


225,917


(1,087,059)


(4,207,245)


(599,528)


    Purchase of short-term investments with terms over three
        months

-


-


(3,675,000)


(523,683)


-


(3,675,000)


(523,683)


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

376,950


-


-


-


481,219


-


-


    Investment in long-term investments and acquisition of
        subsidiaries

(417,448)


(193,450)


(226,086)


(32,217)


(1,916,724)


(901,340)


(128,440)


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

20,898


840,649


1,541,338


219,639


78,709


2,467,443


351,608


    Placement/rollover of matured time deposits

(30,831,994)


(61,775,606)


(36,766,094)


(5,239,127)


(78,026,928)


(133,100,536)


(18,966,675)


    Proceeds from maturities of time deposits

33,893,436


55,211,839


37,546,192


5,350,289


78,144,576


138,806,413


19,779,756


    Change in other long-term assets

(181,263)


(172,543)


(125,911)


(17,942)


(333,293)


(333,079)


(47,463)


    Net cash used in investing activities

(515,908)


(14,851,153)


(720,861)


(102,722)


(6,318,756)


(2,712,125)


(386,475)

















Cash flows from financing activities:















    Net changes from loans with terms of three months or less  

(7,501,788)


(2,085,053)


(4,778,301)


(680,902)


(19,834,683)


(7,263,080)


(1,034,981)


    Proceeds of loans with terms over three months

7,607,060


1,069,020


5,395,810


768,897


11,058,160


13,463,080


1,918,473


    Payment of loans with terms over three months

(4,250,550)


(10,681,827)


(3,100,520)


(441,821)


(7,524,472)


(14,739,347)


(2,100,340)


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

11,573


50,572


(8,394)


(1,196)


58,150


84,392


12,026


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

(296,495)


(2,007,030)


(3,994,212)


(569,171)


(4,608,462)


(7,235,022)


(1,030,982)


    Dividends paid to NetEase's shareholders

(2,423,355)


(2,264,799)


(1,972,928)


(281,140)


(5,755,011)


(9,182,743)


(1,308,530)


    Net cash used in financing activities     

(6,853,555)


(15,919,117)


(8,458,545)


(1,205,333)


(26,606,318)


(24,872,720)


(3,544,334)

















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

4,197


8,234


(68,136)


(9,710)


(28,181)


(103,040)


(14,683)


Net increase/(decrease) in cash, cash equivalents and restricted cash               2,478,654


(24,230,204)


1,328,070


189,248


(9,430,259)


(1,023,272)


(145,815)


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

15,679,412


46,085,520


21,855,316


3,114,358


27,588,325


24,206,658


3,449,421


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

18,158,066


21,855,316


23,183,386


3,303,606


18,158,066


23,183,386


3,303,606

















Supplemental disclosures of cash flow information:















    Cash paid for income taxes, net

1,165,196


2,848,493


554,867


79,068


3,864,820


4,586,071


653,510


    Cash paid for interest expenses

105,665


152,943


165,881


23,638


708,025


465,279


66,302

















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,



2023


2024


2024


2024


2023


2024


2024



RMB  


RMB  


RMB  


USD (Note 1)


RMB  


RMB  


USD (Note 1)

Net revenues:















Games and related value-added services 


21,779,851


20,055,819


20,864,036


2,973,102


60,644,094


62,380,233


8,889,113

Youdao


1,538,783


1,321,721


1,572,541


224,085


3,908,687


4,286,121


610,767

NetEase Cloud Music


1,973,064


2,040,952


1,999,163


284,878


5,881,444


6,069,656


864,919

Innovative businesses and others


1,978,708


2,067,313


1,774,139


252,813


5,893,769


5,811,415


828,120

Total net revenues


27,270,406


25,485,805


26,209,879


3,734,878


76,327,994


78,547,425


11,192,919
















Cost of revenues:















Games and related value-added services


(6,749,507)


(6,008,604)


(6,503,146)


(926,691)


(19,555,391)


(19,067,061)


(2,717,034)

Youdao


(679,147)


(684,942)


(783,085)


(111,588)


(1,880,026)


(2,178,383)


(310,417)

NetEase Cloud Music


(1,436,552)


(1,385,756)


(1,343,921)


(191,507)


(4,379,785)


(3,988,683)


(568,383)

Innovative businesses and others


(1,438,900)


(1,364,285)


(1,103,122)


(157,194)


(4,274,533)


(3,778,555)


(538,440)

Total cost of revenues


(10,304,106)


(9,443,587)


(9,733,274)


(1,386,980)


(30,089,735)


(29,012,682)


(4,134,274)
















Gross profit:















Games and related value-added services


15,030,344


14,047,215


14,360,890


2,046,411


41,088,703


43,313,172


6,172,079

Youdao


859,636


636,779


789,456


112,497


2,028,661


2,107,738


300,350

NetEase Cloud Music


536,512


655,196


655,242


93,371


1,501,659


2,080,973


296,536

Innovative businesses and others


539,808


703,028


671,017


95,619


1,619,236


2,032,860


289,680

Total gross profit


16,966,300


16,042,218


16,476,605


2,347,898


46,238,259


49,534,743


7,058,645
















Gross profit margin:















Games and related value-added services


69.0 %


70.0 %


68.8 %


68.8 %


67.8 %


69.4 %


69.4 %

Youdao


55.9 %


48.2 %


50.2 %


50.2 %


51.9 %


49.2 %


49.2 %

NetEase Cloud Music


27.2 %


32.1 %


32.8 %


32.8 %


25.5 %


34.3 %


34.3 %

Innovative businesses and others


27.3 %


34.0 %


37.8 %


37.8 %


27.5 %


35.0 %


35.0 %
















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 = RMB7.0176 on the last trading day of September 2024 (September 30, 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 September 30, 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


 Nine Months Ended















September 30,


June 30,


September 30,


September 30,


September 30,


September 30,


September 30,















2023


2024


2024


2024


2023


2024


2024















RMB


RMB


RMB


USD (Note 1)


RMB


RMB


USD (Note 1)














Share-based compensation cost included in:



























Cost of revenues

210,533


319,949


306,283


43,645


607,048


881,167


125,565














Operating expenses



























  Selling and marketing expenses

33,804


42,865


36,365


5,182


97,226


97,099


13,836














  General and administrative expenses

280,581


286,350


247,440


35,260


856,188


823,426


117,337














  Research and development expenses

294,630


429,892


388,051


55,297


869,361


1,149,803


163,846









































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


 Nine Months Ended



 September 30,  


 June 30, 


 September 30, 


 September 30, 


 September 30, 


September 30,


September 30,



2023


2024


2024


2024


2023


2024


2024



 RMB


 RMB


 RMB


USD (Note 1)


 RMB


 RMB


USD (Note 1)

Net income attributable to the Company's shareholders


7,836,888


6,758,749


6,538,435


931,721


22,834,289


20,931,130


2,982,663

Add: Share-based compensation


808,276


1,059,939


960,706


136,900


2,394,559


2,897,543


412,897

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


8,645,164


7,818,688


7,499,141


1,068,621


25,228,848


23,828,673


3,395,560
















Non-GAAP net income per share *















Basic


2.69


2.43


2.34


0.33


7.84


7.42


1.06

Diluted


2.66


2.41


2.33


0.33


7.76


7.35


1.05
















Non-GAAP net income per ADS *















Basic


13.45


12.15


11.72


1.67


39.20


37.12


5.29

Diluted


13.30


12.05


11.63


1.66


38.79


36.77


5.24
















*  Each ADS represents five ordinary shares.















The accompanying notes are an integral part of this announcement.















 

 

Cision View original content:https://www.prnewswire.com/news-releases/netease-announces-third-quarter-2024-unaudited-financial-results-302305327.html

SOURCE NetEase, Inc.