HANGZHOU, China, May 24, 2022 /PRNewswire/ -- NetEase, Inc.
(NASDAQ: NTES and HKEX: 9999, "NetEase" or the "Company"), one of
China's leading internet and
online game services providers, today announced its unaudited
financial results for the first quarter ended March 31, 2022.
First Quarter 2022 Financial Highlights
- Net revenues were RMB23.6 billion (US$3.7 billion), an increase of 14.8%
compared with the first quarter of 2021.
- Online game services net
revenues were RMB17.3 billion
(US$2.7 billion), an increase of
15.3% compared with the first quarter of 2021.
- Youdao net revenues were
RMB1.2 billion (US$189.4 million), a decrease of 10.4% compared
with the first quarter of 2021.[1]
- Cloud Music net
revenues were RMB2.1 billion
(US$326.1 million), an increase of
38.6% compared with the first quarter of 2021.
- Innovative businesses and others
net revenues were RMB3.0 billion
(US$475.7 million), an increase of
11.5% compared with the first quarter of 2021.
- Gross profit was RMB12.8 billion
(US$2.0 billion), an increase of
16.1% compared with the first quarter of 2021.
- Total operating expenses were RMB7.3
billion (US$1.2 billion), an
increase of 8.1% compared with the first quarter of 2021.
- Net income attributable to the Company's shareholders was
RMB4.4 billion (US$693.1 million). Non-GAAP net income
attributable to the Company's shareholders was RMB5.1 billion (US$807.3 million).[2]
- Basic net income per share was US$0.21 (US$1.06 per ADS). Non-GAAP basic net income
per share was US$0.25 (US$1.23 per ADS).[2]
[1] Youdao ceased
offering after-school tutoring services for academic subjects under
China's compulsory education system (the "Academic AST Business")
at the end of December 2021. The net revenues from such services
were included in its net revenues from learning services in 2021
and prior periods.
|
[2] As used in
this announcement, non-GAAP net income attributable to the
Company's shareholders and non-GAAP basic net income per share and
per ADS are defined to exclude share-based compensation expenses.
See "Unaudited Reconciliation of GAAP and Non-GAAP Results" in this
announcement.
|
First Quarter 2022 and Recent Operational Highlights
- Announced 2022 launch date for Diablo®
Immortal™, co-developed by NetEase and Blizzard Entertainment,
slated for global market release on June
2 and release in China and
Southeast Asia on June 23.
- Invigorated Naraka: Bladepoint's player community with
captivating content updates and the first World Championship
tournament.
- Delivered strong performances from longstanding flagship titles
including Fantasy Westward Journey Online and New
Westward Journey Online II, and maintained popularity of other
hit titles including LifeAfter and Sky.
- Launched new games in Japan in
April: Revelation mobile game, The Lord of
the Rings: Rise to War and Dead by Daylight Mobile -
NetEase, capturing wide interest from game players.
- Propelled pipeline by advancing new games under development
including console and mobile versions of Naraka: Bladepoint
and Ghost World Chronicle, as well as the roll-out of
Harry Potter: Magic Awakened
in international markets.
- Continued Youdao's business development through the expansion
of its smart devices and learning services portfolio, following its
efficient transition to comply with the changing regulatory
environment in China.
- Advanced NetEase Cloud Music, with healthy growth in net
revenues from both membership subscription and social entertainment
services, and improved gross margin to 12.2%.
"Strong contributions from our steady online game services led
our healthy growth in the first quarter with total net revenues of
RMB23.6 billion, an increase of
14.8% year-over-year," said Mr. William
Ding, CEO and Director of NetEase. "Both our flagship titles
and many of our newer games continued to captivate our enthusiastic
player community. With the April releases of Revelation
mobile game, The Lord of the Rings: Rise to War and Dead
by Daylight Mobile – NetEase,
we reached more players overseas. With confirmed plans to
release Diablo® Immortal™ in June, we are eager
to bring players more amazing titles later this year."
"Our other business lines, including Youdao, NetEase Cloud
Music and Yanxuan, are also on track. We look forward to creating
additional value for our stakeholders and bringing more creative
content to our growing global community through the remainder of
2022," Mr. Ding concluded.
First Quarter 2022 Financial Results
Net Revenues
Net revenues were RMB23,555.8
million (US$3,715.8 million)
for the first quarter of 2022, compared
with RMB24,373.6 million and RMB20,517.2 million for the preceding quarter and
the first quarter of 2021, respectively.
Net revenues from online game services were RMB17,272.7 million (US$2,724.7 million) for the first quarter of
2022, compared with RMB17,397.5 million and RMB14,981.8 million for the preceding quarter and
the first quarter of 2021, respectively. Net revenues from mobile
games accounted for approximately 66.9% of net revenues from online
game services for the first quarter of 2022, compared
with 68.3% and 72.8% for the preceding quarter
and the first quarter of 2021, respectively.
Net revenues from Youdao were RMB1,200.5
million (US$189.4 million) for
the first quarter of 2022, compared with RMB1,333.8
million and RMB1,339.9 million for
the preceding quarter and the first quarter of 2021,
respectively.
Net revenues from Cloud Music were RMB2,067.2 million (US$326.1 million) for the first quarter
of 2022, compared with RMB1,889.3
million and RMB1,491.2 million
for the preceding quarter and the first quarter of 2021,
respectively.
Net revenues from innovative businesses and others were
RMB3,015.4 million (US$475.7 million) for the first quarter of 2022,
compared with RMB3,753.0 million and
RMB2,704.4 million for the preceding
quarter and the first quarter of 2021, respectively.
Gross Profit
Gross profit was RMB12,836.4
million (US$2,024.9 million)
for the first quarter of 2022, compared
with RMB12,917.8 million and RMB11,052.6 million for the preceding quarter and
the first quarter of 2021, respectively.
Online game services gross profit was largely stable in the
first quarter of 2022 compared with the preceding quarter. The
year-over-year increase was mainly due to increased net revenues
from newly launched games such as Naraka:
Bladepoint and Harry
Potter: Magic Awakened.
The quarter-over-quarter and year-over-year decreases
in Youdao gross profit were primarily due to the conclusion of
its Academic AST Business.
The quarter-over-quarter and year-over-year increases in Cloud
Music gross profit were primarily due to increased net revenues
from its membership subscriptions and social entertainment
services, as well as improved cost control.
The quarter-over-quarter decrease in innovative businesses and
others gross profit was primarily due to a decrease in gross
profit from advertising services due to seasonality.
Gross Profit Margin
Gross profit margin for online game services was 65.1% for the
first quarter of 2022, compared with 64.1% and 64.6% for the
preceding quarter and the first quarter of 2021,
respectively. Gross profit margin for online game
services was generally stable, fluctuating within a narrow
band based on the revenue mix of mobile and PC games, as well as
self-developed and licensed games.
Gross profit margin for Youdao was 53.1% for the first quarter
of 2022, compared with 50.7% and 57.3% for the preceding quarter
and the first quarter of 2021, respectively. The
quarter-over-quarter increase was mainly due to gross profit margin
improvement from its learning services. The year-over-year decrease
was mainly due to the conclusion of its Academic AST
Business.
Gross profit margin for Cloud Music was 12.2% for the first
quarter of 2022, compared with 4.1% and a negative gross margin of
3.1% for the preceding quarter and the first quarter of 2021,
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 was
23.3% for the first quarter of 2022, compared with 26.8% and 24.1%
for the preceding quarter and the first quarter of 2021,
respectively. The quarter-over-quarter decrease was primarily due
to the factors enumerated above.
Operating Expenses
Total operating expenses were RMB7,329.3
million (US$1,156.2 million)
for the first quarter of 2022, compared with RMB8,309.6
million and RMB6,777.1 million for
the preceding quarter and the first quarter of 2021, respectively.
The quarter-over-quarter decrease was mainly due to lower
marketing, research and development expenditures related to online
game services. The year-over-year increase was mainly due to
increased marketing expenditures related to online game
services, as well as higher research and development staff-related
costs, which was partially offset by decreased marketing
expenditures related to Youdao.
Other Income/ (Expenses)
Other income/ (expenses) consisted of investment income/ (loss),
interest income, exchange gains/ (losses) and others. The
quarter-over-quarter and year-over-year decreases were mainly due
to higher investment loss arising from fair value
changes of equity investments with readily determinable fair
value.
Income Taxes
The Company recorded a net income tax charge of RMB1,219.3 million (US$192.3 million) for the first quarter of 2022,
compared with RMB934.0 million
and RMB1,273.4 million for the
preceding quarter and the first quarter of 2021, respectively. The
effective tax rate for the first quarter of 2022 was 22.0%,
compared with 14.2% and 22.0% for the preceding quarter and the
first quarter of 2021, respectively. The effective tax rate
represents certain estimates by the Company regarding 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
RMB4,394.0 million (US$693.1 million) for the first quarter of 2022,
compared with RMB5,694.2 million and
RMB4,439.2 million for the preceding
quarter and the first quarter of 2021, respectively.
Non-GAAP net income attributable to the Company's shareholders
for the first quarter of 2022 totaled RMB5,117.6 million (US$807.3 million), compared with RMB6,595.6 million and RMB5,080.7 million for the preceding quarter and
the first quarter of 2021, respectively.
NetEase reported basic net income of US$0.21 per share (US$1.06 per ADS) for the first quarter of 2022,
compared with US$0.27 per share
(US$1.37 per ADS) and US$0.21 per share (US$1.05 per ADS) for the preceding quarter and
the first quarter of 2021, respectively.
NetEase reported non-GAAP basic net income of US$0.25 per share (US$1.23 per ADS) for the first quarter of 2022,
compared with US$0.32 per share
(US$1.59 per ADS) and US$0.24 per share (US$1.20 per ADS) for the preceding quarter and
the first quarter of 2021, respectively.
Quarterly Dividend
The board of directors has approved a dividend of US$0.0644 per share (US$0.3220 per ADS) for the first quarter of
2022, to holders of ordinary shares and holders of ADSs as of the
close of business on June 8, 2022,
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 8,
2022 (Beijing/ Hong Kong
Time). The payment date is expected to be on June 20,
2022 for holders of ordinary shares and on or around
June 23, 2022 for holders of ADSs.
NetEase paid a dividend of US$0.0810 per share (US$0.4050 per ADS) for the fourth quarter of 2021
in March 2022.
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.
Other Information
As of March 31, 2022, the
Company's total cash and cash equivalents, current and non-current
time deposits and short-term investments balance totaled
RMB107.0 billion (US$16.9 billion), compared with RMB103.4
billion as of December 31, 2021. Cash
flows generated from operating activities was RMB4,582.6 million (US$722.9 million) for the first quarter of
2022, compared with RMB8,368.6 million and RMB5,542.7 million for the preceding quarter and
the first quarter of 2021, respectively.
Share Repurchase/Purchase Program
On February 25, 2021, the Company
announced that its board of directors had approved a share
repurchase program of up to US$2.0
billion of the Company's outstanding ADSs and ordinary
shares in open market transactions for a period not to exceed 24
months beginning on March 2, 2021. On
August 31, 2021, the Company
announced that its board of directors had approved an
amendment to such program to increase the total authorized
repurchase amount to US$3.0 billion.
As of March 31, 2022,
approximately 20.1 million ADSs had been repurchased under
this program for a total cost of US$1.9
billion.
On August 31, 2021, the Company
announced that its board of directors had approved a share
purchase program of up to US$50.0
million of Youdao's outstanding ADSs for a period not to
exceed 36 months beginning on September
2, 2021. Under the terms of this program, NetEase may
purchase Youdao's ADSs in open-market transactions on the New
York Stock Exchange. As of March 31,
2022, approximately 1.2 million ADSs had been purchased
under this program for a total cost of US$14.1 million.
The extent to which NetEase repurchases its ADSs and its
ordinary shares or purchases Youdao's ADSs will depend upon a
variety of factors, including market conditions. These programs may
be suspended or discontinued at any time.
** The United States dollar
(US$) 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
simultaneous webcast at 8:00 a.m. New
York Time on May 24, 2022
(Beijing/Hong Kong Time:
8:00 p.m., May
24, 2022). 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 1-323-701-0160 and providing conference ID: 2366082, 15
minutes prior to the initiation of the call. A replay of the call
will be available by dialing 1-719-457-0820 and entering passcode
2366082#. The replay will be available through June 6, 2022.
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.
As a leading internet technology company based in China, NetEase, Inc. (NASDAQ: NTES and HKEX:
9999, "NetEase") provides premium online services centered around
innovative and diverse content, community, communication and
commerce. NetEase develops and operates some of China's most popular mobile and PC games. In
more recent years, NetEase has expanded into international markets
including Japan and North America. In addition to its
self-developed game content, NetEase partners with other leading
game developers, such as Blizzard Entertainment and Mojang AB (a
Microsoft subsidiary), to operate globally renowned games in
China. NetEase's other innovative
service offerings include the majority-controlled subsidiaries
Youdao (NYSE: DAO), China's
leading technology-focused
intelligent learning company, and Cloud Village (HKEX: 9899), also
known as NetEase Cloud Music, China's leading online music content
community, as well as Yanxuan, NetEase's private label
e-commerce platform. 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
game market will not continue to grow or that NetEase will not be
able to maintain its position in that market in China or globally; the risk that COVID-19 or
other health risks in China or
globally could adversely affect the Company's operations or
financial results; 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, including, among others, initiatives to
enhance supervision of companies listed on an overseas stock
exchange and tighten scrutiny over data privacy and data security,
as well as the risk that NetEase's ADSs could be barred from
trading in the United States as a
result of the Holding Foreign Companies Accountable Act and the
rules promulgated thereunder; 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; competition in NetEase's existing and
potential markets; 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 the 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 share and per ADS, as
supplemental metrics in reviewing and assessing its operating
performance and formulating its business plan. The presentation of
non-GAAP financial measures is not intended to be considered in
isolation or as a substitute for the financial information prepared
and presented in accordance with accounting principles generally
accepted in the United States of
America ("U.S. GAAP").
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 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 attributable to the
Company's shareholders is that it does not reflect all items of
income / expense 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
"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:
Margaret
Shi
Email: ir@service.netease.com
Tel: (+86) 571-8985-3378
Twitter: https://twitter.com/NetEase_Global
NETEASE,
INC.
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
March
31,
|
|
March
31,
|
|
|
2021
|
|
2022
|
|
2022
|
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
14,498,157
|
|
9,851,996
|
|
1,554,114
|
Time
deposits
|
|
70,754,846
|
|
81,302,719
|
|
12,825,189
|
Restricted cash
|
|
2,876,628
|
|
3,335,627
|
|
526,182
|
Accounts
receivable, net
|
|
5,507,988
|
|
5,277,364
|
|
832,484
|
Inventories, net
|
|
964,733
|
|
861,312
|
|
135,869
|
Prepayments and other current assets, net
|
|
6,235,857
|
|
7,097,923
|
|
1,119,671
|
Short-term investments
|
|
12,281,548
|
|
11,346,649
|
|
1,789,890
|
Assets
held for sale
|
|
497
|
|
-
|
|
-
|
Total current
assets
|
|
113,120,254
|
|
119,073,590
|
|
18,783,399
|
|
|
|
|
|
|
|
Non-current
assets:
|
|
|
|
|
|
|
Property, equipment and software, net
|
|
5,433,858
|
|
5,842,168
|
|
921,579
|
Land use
right, net
|
|
4,108,090
|
|
4,149,942
|
|
654,637
|
Deferred
tax assets
|
|
1,297,954
|
|
1,127,257
|
|
177,820
|
Time
deposits
|
|
5,823,840
|
|
4,473,840
|
|
705,731
|
Restricted cash
|
|
1,330
|
|
1,079
|
|
170
|
Other
long-term assets, net
|
|
23,857,510
|
|
24,580,233
|
|
3,877,436
|
Assets
held for sale
|
|
1,088
|
|
-
|
|
-
|
Total non-current
assets
|
|
40,523,670
|
|
40,174,519
|
|
6,337,373
|
Total
assets
|
|
153,643,924
|
|
159,248,109
|
|
25,120,772
|
|
|
|
|
|
|
|
Liabilities,Redeemable Noncontrolling
Interests
and Shareholders' Equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
985,059
|
|
924,572
|
|
145,848
|
Salary
and welfare payables
|
|
4,133,254
|
|
2,401,213
|
|
378,782
|
Taxes
payable
|
|
4,537,050
|
|
4,614,865
|
|
727,977
|
Short-term loans
|
|
19,352,313
|
|
22,679,519
|
|
3,577,606
|
Contract
liabilities
|
|
12,132,743
|
|
12,050,962
|
|
1,900,992
|
Accrued
liabilities and other payables
|
|
9,360,907
|
|
9,093,256
|
|
1,434,426
|
Total current
liabilities
|
|
50,501,326
|
|
51,764,387
|
|
8,165,631
|
|
|
|
|
|
|
|
Non-current
liabilities:
|
|
|
|
|
|
|
Deferred
tax liabilities
|
|
1,345,874
|
|
1,490,406
|
|
235,106
|
Long-term loans
|
|
1,275,140
|
|
3,174,100
|
|
500,702
|
Other
long-term payable
|
|
1,097,708
|
|
1,044,882
|
|
164,826
|
Total non-current
liabilities
|
|
3,718,722
|
|
5,709,388
|
|
900,634
|
Total
liabilities
|
|
54,220,048
|
|
57,473,775
|
|
9,066,265
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
145,238
|
|
146,754
|
|
23,150
|
|
|
|
|
|
|
|
NetEase, Inc.'s
shareholders' equity
|
|
95,328,080
|
|
97,671,521
|
|
15,407,304
|
Noncontrolling
interests
|
|
3,950,558
|
|
3,956,059
|
|
624,053
|
Total shareholders'
equity
|
|
99,278,638
|
|
101,627,580
|
|
16,031,357
|
|
|
|
|
|
|
|
Total liabilities,
redeemable noncontrolling
interests and shareholders'
equity
|
|
153,643,924
|
|
159,248,109
|
|
25,120,772
|
|
|
|
|
|
|
|
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,
|
|
|
|
2021
|
|
2021
|
|
2022
|
|
2022
|
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
|
|
20,517,211
|
|
24,373,565
|
|
23,555,842
|
|
3,715,843
|
Cost of
revenues
|
|
|
(9,464,572)
|
|
(11,455,785)
|
|
(10,719,463)
|
|
(1,690,954)
|
Gross
profit
|
|
|
11,052,639
|
|
12,917,780
|
|
12,836,379
|
|
2,024,889
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Selling and marketing
expenses
|
|
|
(2,766,682)
|
|
(3,300,032)
|
|
(2,915,489)
|
|
(459,907)
|
General and
administrative expenses
|
|
|
(950,194)
|
|
(1,161,876)
|
|
(1,015,769)
|
|
(160,234)
|
Research and
development expenses
|
|
|
(3,060,189)
|
|
(3,847,704)
|
|
(3,398,082)
|
|
(536,034)
|
Total operating
expenses
|
|
|
(6,777,065)
|
|
(8,309,612)
|
|
(7,329,340)
|
|
(1,156,175)
|
Operating
profit
|
|
|
4,275,574
|
|
4,608,168
|
|
5,507,039
|
|
868,714
|
|
|
|
|
|
|
|
|
|
|
Other income/
(expenses):
|
|
|
|
|
|
|
|
|
|
Investment income/
(loss), net
|
|
|
695,298
|
|
1,627,642
|
|
(548,702)
|
|
(86,556)
|
Interest income,
net
|
|
|
388,928
|
|
395,029
|
|
458,244
|
|
72,286
|
Exchange gains/
(losses), net
|
|
|
279,319
|
|
(331,390)
|
|
(97,880)
|
|
(15,440)
|
Other, net
|
|
|
147,967
|
|
297,244
|
|
216,330
|
|
34,125
|
Income before
tax
|
|
|
5,787,086
|
|
6,596,693
|
|
5,535,031
|
|
873,129
|
Income tax
|
|
|
(1,273,408)
|
|
(933,985)
|
|
(1,219,271)
|
|
(192,335)
|
Net
income
|
|
|
4,513,678
|
|
5,662,708
|
|
4,315,760
|
|
680,794
|
|
|
|
|
|
|
|
|
|
|
Accretion of
redeemable noncontrolling
interests
|
|
|
(143,827)
|
|
(99,914)
|
|
(733)
|
|
(116)
|
Net loss attributable
to noncontrolling
interests
|
|
|
69,301
|
|
131,360
|
|
78,996
|
|
12,461
|
Net income
attributable to the
Company's shareholders
|
|
|
4,439,152
|
|
5,694,154
|
|
4,394,023
|
|
693,139
|
|
|
|
|
|
|
|
|
|
|
Net income per
share *
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
1.33
|
|
1.74
|
|
1.34
|
|
0.21
|
Diluted
|
|
|
1.31
|
|
1.71
|
|
1.33
|
|
0.21
|
|
|
|
|
|
|
|
|
|
|
Net income per ADS
*
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
6.63
|
|
8.68
|
|
6.70
|
|
1.06
|
Diluted
|
|
|
6.53
|
|
8.57
|
|
6.63
|
|
1.05
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of ordinary
shares used in calculating net income
per share *
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
3,349,638
|
|
3,281,172
|
|
3,277,280
|
|
3,277,280
|
Diluted
|
|
|
3,399,981
|
|
3,323,004
|
|
3,316,129
|
|
3,316,129
|
|
|
|
|
|
|
|
|
|
|
* 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,
|
|
|
2021
|
|
2021
|
|
2022
|
|
2022
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
4,513,678
|
|
5,662,708
|
|
4,315,760
|
|
680,794
|
Adjustments to reconcile net income to net cash provided
by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
819,830
|
|
836,042
|
|
766,180
|
|
120,862
|
Fair value changes of equity security investments
|
|
(477,597)
|
|
(984,901)
|
|
1,541,002
|
|
243,087
|
Impairment losses of investments and other long-term
assets
|
|
-
|
|
69,572
|
|
5,000
|
|
789
|
Fair value changes of short-term investments
|
|
(118,004)
|
|
(166,513)
|
|
(79,776)
|
|
(12,584)
|
Share-based compensation cost
|
|
650,253
|
|
1,002,899
|
|
746,154
|
|
117,703
|
Allowance for/ (reversal of) expected credit losses
|
|
13,604
|
|
12,932
|
|
(313)
|
|
(49)
|
(Gains)/ losses on disposal of property, equipment and
software
|
|
(159)
|
|
48,779
|
|
1,445
|
|
228
|
Unrealized exchange (gains)/ losses
|
|
(274,047)
|
|
347,235
|
|
98,034
|
|
15,464
|
Gains on disposal of long-term investments, business and
subsidiaries
|
|
(7,323)
|
|
(13,091)
|
|
(4,000)
|
|
(631)
|
Deferred income taxes
|
|
328,075
|
|
(431,015)
|
|
315,228
|
|
49,726
|
Share of results on equity method investees and revaluation
results from previously
held equity interest
|
|
(51,892)
|
|
(448,053)
|
|
(911,498)
|
|
(143,785)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(484,343)
|
|
(97,064)
|
|
212,075
|
|
33,454
|
Inventories
|
|
(253,495)
|
|
73,588
|
|
103,591
|
|
16,341
|
Prepayments and other assets
|
|
(785,224)
|
|
870,684
|
|
(569,843)
|
|
(89,891)
|
Accounts
payable
|
|
(60,654)
|
|
(89,207)
|
|
(92,373)
|
|
(14,571)
|
Salary and
welfare payables
|
|
(1,226,155)
|
|
1,521,743
|
|
(1,756,224)
|
|
(277,038)
|
Taxes
payable
|
|
1,558,618
|
|
528,725
|
|
73,446
|
|
11,586
|
Contract
liabilities
|
|
740,938
|
|
(1,162,982)
|
|
(78,200)
|
|
(12,336)
|
Accrued
liabilities and other payables
|
|
656,564
|
|
786,517
|
|
(103,136)
|
|
(16,269)
|
Net cash provided by operating activities
|
|
5,542,667
|
|
8,368,598
|
|
4,582,552
|
|
722,880
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Purchase of property, equipment and software
|
|
(329,746)
|
|
(442,524)
|
|
(749,361)
|
|
(118,209)
|
Proceeds from sale of property, equipment and software
|
|
1,519
|
|
56,517
|
|
12,565
|
|
1,982
|
Purchase of intangible assets, content and licensed
copyrights
|
|
(426,133)
|
|
(297,142)
|
|
(143,836)
|
|
(22,690)
|
Net change in short-term investments with terms of three
months or
less
|
|
3,332,610
|
|
(1,474,371)
|
|
1,710,845
|
|
269,879
|
Purchase of short-term investments with terms over three
months
|
|
(7,905,000)
|
|
(4,300,000)
|
|
(1,250,000)
|
|
(197,183)
|
Proceeds from maturities of short-term investments with terms
over three
months
|
|
2,857,341
|
|
3,313,543
|
|
553,831
|
|
87,365
|
Investment in long-term investments and acquisition of
subsidiaries
|
|
(558,441)
|
|
(2,020,029)
|
|
(1,690,271)
|
|
(266,634)
|
Proceeds from disposal of long-term investments, businesses
and
subsidiaries
|
|
198,900
|
|
616,542
|
|
34,237
|
|
5,401
|
Placement/rollover of matured time deposits
|
|
(15,722,749)
|
|
(26,628,133)
|
|
(24,045,997)
|
|
(3,793,163)
|
Proceeds from maturities of time deposits
|
|
11,481,135
|
|
15,707,821
|
|
14,699,795
|
|
2,318,836
|
Change in other long-term assets
|
|
(54,653)
|
|
(99,692)
|
|
(169,545)
|
|
(26,745)
|
Net cash used in investing activities
|
|
(7,125,217)
|
|
(15,567,468)
|
|
(11,037,737)
|
|
(1,741,161)
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of this announcement.
|
|
|
|
|
|
|
|
|
NETEASE,
INC.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
|
(in
thousands)
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
December
31,
|
|
March
31,
|
|
March
31,
|
|
|
2021
|
|
2021
|
|
2022
|
|
2022
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Net changes in bank loans with terms of three months or
less
|
|
2,122,041
|
|
425,020
|
|
3,403,195
|
|
536,841
|
Proceed of bank loans with terms over three months
|
|
236,916
|
|
2,277,171
|
|
1,915,210
|
|
302,117
|
Payment of bank loans with terms over three months
|
|
(167,700)
|
|
(1,311,823)
|
|
-
|
|
-
|
Amounts paid for NetEase's issuance of shares in Hong
Kong
|
|
(13,800)
|
|
-
|
|
-
|
|
-
|
Net Amounts received/ (paid) related to capital contribution
from
or repurchase of
noncontrolling interests and redeemable
noncontrolling interests
shareholders
|
|
1,507,049
|
|
1,320,122
|
|
(102,042)
|
|
(16,097)
|
Cash paid for repurchase of NetEase's ADSs/ purchase of
subsidiaries' ADSs and
shares
|
|
(2,018,467)
|
|
(2,112,256)
|
|
(1,243,917)
|
|
(196,223)
|
Dividends paid to noncontrolling interest shareholders
|
|
-
|
|
(731,250)
|
|
-
|
|
-
|
Dividends paid to NetEase's shareholders
|
|
(260,842)
|
|
(940,540)
|
|
(1,683,472)
|
|
(265,561)
|
Net cash provided by/ (used in) financing
activities
|
|
1,405,197
|
|
(1,073,556)
|
|
2,288,974
|
|
361,077
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash held in
foreign currencies
|
|
35,993
|
|
(80,670)
|
|
(21,202)
|
|
(3,345)
|
Net decrease in cash,
cash equivalents and restricted
cash
|
|
(141,360)
|
|
(8,353,096)
|
|
(4,187,413)
|
|
(660,549)
|
Cash, cash
equivalents and restricted cash, at the beginning
of the period
|
|
12,168,605
|
|
25,729,211
|
|
17,376,115
|
|
2,741,015
|
Cash, cash
equivalents and restricted cash, at end of the
period
|
|
12,027,245
|
|
17,376,115
|
|
13,188,702
|
|
2,080,466
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for income tax, net
|
|
550,191
|
|
858,304
|
|
1,515,330
|
|
239,037
|
Cash paid for interest expense
|
|
43,902
|
|
42,879
|
|
37,741
|
|
5,953
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2021
|
|
2021
|
|
2022
|
|
2022
|
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
Online game
services
|
|
|
14,981,784
|
|
17,397,517
|
|
17,272,650
|
|
2,724,694
|
Youdao
|
|
|
1,339,867
|
|
1,333,791
|
|
1,200,541
|
|
189,381
|
Cloud
Music
|
|
|
1,491,167
|
|
1,889,265
|
|
2,067,206
|
|
326,094
|
Innovative businesses
and others
|
|
|
2,704,393
|
|
3,752,992
|
|
3,015,445
|
|
475,674
|
Total net
revenues
|
|
|
20,517,211
|
|
24,373,565
|
|
23,555,842
|
|
3,715,843
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
|
Online game
services
|
|
|
(5,302,713)
|
|
(6,239,410)
|
|
(6,027,519)
|
|
(950,818)
|
Youdao
|
|
|
(572,415)
|
|
(657,329)
|
|
(562,691)
|
|
(88,762)
|
Cloud
Music
|
|
|
(1,537,726)
|
|
(1,812,036)
|
|
(1,815,649)
|
|
(286,412)
|
Innovative businesses
and others
|
|
|
(2,051,718)
|
|
(2,747,010)
|
|
(2,313,604)
|
|
(364,962)
|
Total cost of
revenues
|
|
|
(9,464,572)
|
|
(11,455,785)
|
|
(10,719,463)
|
|
(1,690,954)
|
|
|
|
|
|
|
|
|
|
|
Gross
profit:
|
|
|
|
|
|
|
|
|
|
Online game
services
|
|
|
9,679,071
|
|
11,158,107
|
|
11,245,131
|
|
1,773,876
|
Youdao
|
|
|
767,452
|
|
676,462
|
|
637,850
|
|
100,619
|
Cloud
Music
|
|
|
(46,559)
|
|
77,229
|
|
251,557
|
|
39,682
|
Innovative businesses
and others
|
|
|
652,675
|
|
1,005,982
|
|
701,841
|
|
110,712
|
Total gross
profit
|
|
|
11,052,639
|
|
12,917,780
|
|
12,836,379
|
|
2,024,889
|
|
|
|
|
|
|
|
|
|
|
Gross profit
margin:
|
|
|
|
|
|
|
|
|
|
Online game
services
|
|
|
64.6%
|
|
64.1%
|
|
65.1%
|
|
65.1%
|
Youdao
|
|
|
57.3%
|
|
50.7%
|
|
53.1%
|
|
53.1%
|
Cloud
Music
|
|
|
(3.1%)
|
|
4.1%
|
|
12.2%
|
|
12.2%
|
Innovative businesses
and others
|
|
|
24.1%
|
|
26.8%
|
|
23.3%
|
|
23.3%
|
|
|
|
|
|
|
|
|
|
|
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 =
RMB6.3393 on the last trading
day of March 2022 (March 31, 2022) 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 31, 2022, or at any other certain date.
Note 2: Share-based compensation cost reported in the Company's
unaudited condensed consolidated statements of income is set out as
follows in RMB and USD (in thousands):
|
|
Three Months
Ended
|
|
|
March
31,
|
|
December
31,
|
|
March
31,
|
|
March
31,
|
|
|
2021
|
|
2021
|
|
2022
|
|
2022
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Share-based
compensation cost included in:
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
187,926
|
|
267,424
|
|
198,135
|
|
31,255
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Selling and
marketing expenses
|
|
24,231
|
|
38,657
|
|
30,373
|
|
4,791
|
General and
administrative expenses
|
|
229,603
|
|
358,595
|
|
279,062
|
|
44,021
|
Research and
development expenses
|
|
208,493
|
|
338,223
|
|
238,584
|
|
37,636
|
|
|
|
|
|
|
|
|
|
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
requirement.
Note 4: The unaudited reconciliation on 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,
|
|
|
2021
|
|
2021
|
|
2022
|
|
2022
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Net income
attributable to the Company's shareholders
|
|
4,439,152
|
|
5,694,154
|
|
4,394,023
|
|
693,139
|
Add: Share-based
compensation
|
|
641,534
|
|
901,421
|
|
723,603
|
|
114,146
|
Non-GAAP net income
attributable to the Company's
shareholders
|
|
5,080,686
|
|
6,595,575
|
|
5,117,626
|
|
807,285
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
income per share *
|
|
|
|
|
|
|
|
|
Basic
|
|
1.52
|
|
2.01
|
|
1.56
|
|
0.25
|
Diluted
|
|
1.49
|
|
1.98
|
|
1.54
|
|
0.24
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
income per ADS *
|
|
|
|
|
|
|
|
|
Basic
|
|
7.58
|
|
10.05
|
|
7.81
|
|
1.23
|
Diluted
|
|
7.47
|
|
9.92
|
|
7.72
|
|
1.22
|
|
|
|
|
|
|
|
|
|
* Each ADS
represents five ordinary shares.
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of this announcement.
|
|
|
|
|
|
|
|
|
View original
content:https://www.prnewswire.com/news-releases/netease-reports-first-quarter-2022-unaudited-financial-results-301553555.html
SOURCE NetEase, Inc.