BEIJING, May 18, 2021 /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, 2021.
First Quarter 2021 Financial Highlights
- Net revenues were RMB20.5 billion
(US$3.1 billion), an increase of
20.2% compared with the first quarter of 2020.
-
- Online game services net revenues were RMB15.0 billion (US$2.3
billion), an increase of 10.8% compared with the first
quarter of 2020.
- Youdao net revenues were RMB1.3
billion (US$204.5 million), an
increase of 147.5% compared with the first quarter of 2020.
- Innovative businesses and others net revenues were RMB4.2 billion (US$640.4
million), an increase of 39.7% compared with the first
quarter of 2020.
- Gross profit was RMB11.1 billion
(US$1.7 billion), an increase of
17.9% compared with the first quarter of 2020.
- Total operating expenses were RMB6.8
billion (US$1.0 billion), an
increase of 38.6% compared with the first quarter of 2020.
- Net income attributable to the Company's shareholders was
RMB4.4 billion (US$677.5 million). Non-GAAP net income
attributable to the Company's shareholders was RMB5.1 billion (US$775.5
million). [1]
- Basic net income per share was US$0.20 (US$1.01
per ADS). Non-GAAP basic net income per share was US$0.23 (US$1.16
per ADS). [1]
First Quarter 2021 and Recent Operational
Highlights
- Attracted new users and expanded portfolio with new game
introductions including:
-
- Revelation mobile game, Yu-Gi-Oh! Duel Links,
Elysium of Legends and Pokémon Quest, all of which
were well received after their launches.
- Infinite Lagrange in European markets in late April,
with plans for additional market introductions in the
near-term.
- Delivered strong performances from longstanding flagship titles
including the Fantasy Westward Journey and Westward
Journey Online series, and maintained popularity of other hit
titles including Life-After, Invincible and
Onmyoji.
- Progressed strong game pipeline with thrilling titles planned
for launch in the coming months including Harry Potter: Magic Awakened, The Lord of
the Rings: Rise to War, Nightmare Breaker,
Diablo® Immortal™ and Ghost World
Chronicle.
- Advanced Youdao's learning services and learning products,
increasing Youdao's net revenues by 147.5% year-over-year to
RMB1.3 billion (US$204.5 million), and drove operating efficiency
with total gross profit margin reaching 57.3% in the first quarter
of 2021, the highest level since Youdao's IPO in October 2019.
"2021 is off to a strong start with our total net revenues
climbing to RMB20.5 billion, up
approximately 20% year-over-year," said Mr. William Ding, Chief Executive Officer and
Director of NetEase. "Net revenues from our online game services
grew to RMB15.0 billion in the first
quarter supported by the impressive longevity of our time-honored
flagship games, as well as newer titles that broaden and diversify
our games portfolio. As we near the launch of additional exciting
new titles for global audiences in the coming months, we are
confident we can deepen our international market presence. Our
other businesses also performed well in
the first quarter, with solid year-over-year net revenues growth
from Youdao, NetEase Cloud Music and Yanxuan. Leveraging our innovation
and technical skills, we plan to bring even more creative products
and high-quality services to our users," Mr. Ding concluded.
[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
"Unaudited Reconciliation of GAAP and Non-GAAP Results" at the end
of this announcement.
|
First Quarter 2021 Financial
Results
Net Revenues
Net revenues were RMB20,517.2
million (US$3,131.5 million)
for the first quarter of 2021, compared to RMB19,761.7 million and RMB17,062.4 million for the preceding quarter and
the first quarter of 2020, respectively.
Net revenues from online game services were RMB14,981.8 million (US$2,286.7 million) for the first quarter of
2021, compared to RMB13,400.2 million
and RMB13,518.2 million for the
preceding quarter and the first quarter of 2020, respectively. Net
revenues from mobile games accounted for approximately 72.8% of net
revenues from online game services for the first quarter of
2021, compared to 72.4% and 70.3% for the
preceding quarter and the first quarter of 2020,
respectively.
Net revenues from Youdao were RMB1,339.9
million (US$204.5 million) for
the first quarter of 2021, compared to RMB1,106.8 million and RMB541.4 million for the preceding quarter and
the first quarter of 2020, respectively.
Net revenues from innovative businesses and others were
RMB4,195.6 million (US$640.4 million) for the first quarter of
2021, compared to RMB5,254.8 million
and RMB3,002.7 million for the
preceding quarter and the first quarter of 2020, respectively.
Gross Profit
Gross profit was RMB11,052.6
million (US$1,687.0 million)
for the first quarter of 2021, compared to RMB9,927.8 million and RMB9,377.6 million for the preceding quarter and
the first quarter of 2020, respectively.
The quarter-over-quarter and year-over-year increases in online
game services gross profit were mainly due to increased net
revenues from both mobile and PC games, including the newly
launched Revelation mobile game and other existing
games.
The quarter-over-quarter and year-over-year increases in Youdao
gross profit were primarily attributable to the significant
increase in net revenues, improved economies of scale, and faculty
compensation structure optimization for its learning services.
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. The
year-over-year increase was primarily due to the improved
performance of NetEase Cloud Music.
Gross Profit Margin
Gross profit margin for online game services was 64.6% for the
first quarter of 2021, compared to 63.1% and 64.1% for the
preceding quarter and the first quarter of 2020,
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 57.3% for the first quarter
of 2021, compared to 47.5% and 43.5% for the preceding quarter and
the first quarter of 2020, respectively. The
quarter-over-quarter and year-over-year increases were mainly due
to the significant increase in net revenues, improved economies of
scale, and faculty compensation structure optimization for its
learning services.
Gross profit margin for innovative businesses and others was
14.4% for the first quarter of 2021, compared to 18.0% and 15.8%
for the preceding quarter and the first quarter of 2020,
respectively. The quarter-over-quarter decrease was primarily due
to seasonality.
Operating Expenses
Total operating expenses were RMB6,777.1
million (US$1,034.4 million)
for the first quarter of 2021, compared to RMB6,915.8 million and RMB4,891.2 million for the preceding quarter and
the first quarter of 2020, respectively. The quarter-over-quarter
decrease was mainly due to lower marketing
expenditures related to online game services and
innovative businesses and others. The year-over-year increase
was mainly due to increased marketing expenditures related to
Youdao and other businesses, as well as higher staff-related costs
and research and development investments.
Other Income/ (Expenses)
Other income/ (expenses) consisted of investment (losses)/
income, interest income, exchange gains/ (losses) and others. The
quarter-over-quarter increase was mainly due to unrealized exchange
gains arising from the Company's U.S. dollar-denominated bank
deposits and short-term loan balances as the exchange rate of the
U.S. dollar against the RMB fluctuated over the periods, as well as
investment income arising from fair value changes of
equity investments with readily determinable fair value. The
year-over-year increase was mainly due to investment income
arising from fair value changes of equity investments
with readily determinable fair value.
Income Taxes
The Company recorded a net income tax charge of RMB1,273.4 million (US$194.4 million) for the first quarter of 2021,
compared to RMB552.7 million and
RMB1,082.0 million for the preceding
quarter and the first quarter of 2020, respectively. The effective
tax rate for the first quarter of 2021 was 22.0%, compared to 37.2%
and 21.5% for the preceding quarter and the first quarter of 2020,
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
RMB4,439.2 million (US$677.5 million) for the first quarter of 2021,
compared to RMB975.7 million and
RMB3,551.0 million for the preceding
quarter and the first quarter of 2020, respectively.
Non-GAAP net income attributable to the Company's shareholders
for the first quarter of 2021 totaled RMB5,080.7 million (US$775.5 million), compared to RMB1,597.9 million and RMB4,212.9 million for the preceding quarter and
the first quarter of 2020, respectively.
NetEase reported basic net income of US$0.20 per share (US$1.01 per ADS) for the first quarter of 2021,
compared to US$0.04 per share
(US$0.22 per ADS) and US$0.17 per share (US$0.84 per ADS) for the preceding quarter and
the first quarter of 2020, respectively.
NetEase reported non-GAAP basic net income of US$0.23 per share (US$1.16 per ADS) for the first quarter of 2021,
compared to US$0.07 per share
(US$0.36 per ADS) and US$0.20 per share (US$1.00 per ADS) for the preceding quarter and
the first quarter of 2020, respectively.
Quarterly Dividend
The board of directors has approved a dividend of US$0.0600 per share (US$0.3000 per ADS) for the first quarter of
2021, to holders of ordinary shares and holders of ADSs as of the
close of business on June 3, 2021,
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 3,
2021 (Hong Kong Time). The payment date is expected to be on
June 15, 2021 for holders of ordinary
shares and on or around June 18, 2021
for holders of ADSs.
NetEase paid a dividend of US$0.0464 per share (US$0.2320 per ADS) for the first quarter of 2020
in June 2020, a dividend of
US$0.0594 per share (US$0.2970 per ADS) for the second quarter of 2020
in September 2020, a dividend of
US$0.0390 per share (US$0.1950 per ADS) for the third quarter of 2020
in December 2020 and a dividend of
US$0.0120 per share (US$0.0600 per ADS) for the fourth quarter of 2020
in March 2021.
The Company's policy is to set quarterly dividends at an amount
equivalent to approximately 20%-30% of the Company's anticipated
net income after tax in each fiscal quarter. The determination to
make dividend distributions and the amount of such distributions in
any particular quarter will be made at the discretion of the 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, 2021, the
Company's total cash and cash equivalents, current and non-current
time deposits and short-term investments balance totaled
RMB106,249.6 million (US$16,216.9 million), compared to RMB100,099.6 million as of December 31, 2020. Cash flows generated from
operating activities was RMB5,542.7 million (US$846.0 million) for the first quarter of
2021, compared to RMB8,214.2 million
and RMB6,500.6 million for the
preceding quarter and the first quarter of 2020, respectively.
Share Repurchase Program
On February 26, 2020, the Company
announced that its board of directors had approved a share
repurchase program of up to US$1.0
billion of the Company's outstanding ADSs for a period not
to exceed 12 months beginning on March 2,
2020. On May 19, 2020, the
Company announced that its board of directors had approved an
amendment to such program to increase the total authorized
repurchase amount to US$2.0 billion.
Under the terms of this program, NetEase may repurchase its issued
and outstanding ADSs in open-market transactions on the NASDAQ
Global Select Market. At the end of this program on
March 1, 2021, approximately 22.8
million ADSs had been repurchased for a total cost of US$1.8 billion.
On February 25, 2021, the Company
announced that its board of directors had approved a new 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.
The extent to which NetEase repurchases its ADSs and ordinary
shares will depend upon a variety of factors, including market
conditions. This program may be suspended or discontinued at any
time. As of March 31, 2021,
approximately 1.3 million ADSs had been repurchased under this
program for a total cost of US$0.1
billion.
** The United States dollar
(US$) amounts disclosed in this announcement are presented solely
for the convenience of the reader. Translations of amounts from RMB
into United States dollars for the
convenience of the reader were calculated at the noon buying rate
of US$1.00 = RMB6.5518 on March 31,
2021 as set forth in the H.10 statistical release of the
U.S. Federal Reserve Board. No representation is made that the RMB
amounts could have been, or could be, converted into US$ at that
rate on March 31, 2021, or at any
other certain date. 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 18, 2021
(Beijing/Hong Kong Time:
8:00 p.m., May
18, 2021). 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 1-646-828-8193 and providing conference ID: 4996242, 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
4996242#. The replay will be available through May 31, 2021.
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") is dedicated to providing 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 intelligent learning services of its
majority-controlled subsidiary, Youdao (NYSE: DAO); music
streaming through its leading NetEase Cloud Music business;
and its private label e-commerce platform, Yanxuan. 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; 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 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, which
are non-cash charges. 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
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
"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,
|
|
|
2020
|
|
2021
|
|
2021
|
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
9,117,219
|
|
8,790,990
|
|
1,341,767
|
Time
deposits
|
|
71,079,327
|
|
75,612,492
|
|
11,540,720
|
Restricted cash
|
|
3,051,386
|
|
3,236,255
|
|
493,949
|
Accounts
receivable, net
|
|
4,576,445
|
|
5,056,686
|
|
771,801
|
Inventories, net
|
|
621,207
|
|
874,702
|
|
133,506
|
Prepayments and other current assets, net
|
|
6,112,433
|
|
6,851,353
|
|
1,045,721
|
Short-term investments
|
|
13,273,026
|
|
15,106,079
|
|
2,305,638
|
Total current
assets
|
|
107,831,043
|
|
115,528,557
|
|
17,633,102
|
|
|
|
|
|
|
|
Non-current
assets:
|
|
|
|
|
|
|
Property, equipment and software, net
|
|
4,555,406
|
|
4,651,507
|
|
709,959
|
Land use
right, net
|
|
4,178,257
|
|
4,156,448
|
|
634,398
|
Deferred
tax assets
|
|
1,086,759
|
|
1,042,468
|
|
159,112
|
Time
deposits
|
|
6,630,000
|
|
6,740,000
|
|
1,028,725
|
Other
long-term assets, net
|
|
17,593,117
|
|
18,384,896
|
|
2,806,082
|
Total non-current
assets
|
|
34,043,539
|
|
34,975,319
|
|
5,338,276
|
Total
assets
|
|
141,874,582
|
|
150,503,876
|
|
22,971,378
|
|
|
|
|
|
|
|
Liabilities,
Redeemable Noncontrolling Interests
and Shareholders' Equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
1,134,413
|
|
1,070,965
|
|
163,461
|
Salary
and welfare payables
|
|
3,538,732
|
|
2,328,788
|
|
355,442
|
Taxes
payable
|
|
4,282,835
|
|
5,841,401
|
|
891,572
|
Short-term loans
|
|
19,504,696
|
|
21,827,017
|
|
3,331,453
|
Deferred
revenue
|
|
10,945,143
|
|
11,686,081
|
|
1,783,644
|
Accrued
liabilities and other payables
|
|
7,337,672
|
|
7,893,542
|
|
1,204,790
|
Total current
liabilities
|
|
46,743,491
|
|
50,647,794
|
|
7,730,362
|
|
|
|
|
|
|
|
Non-current
liabilities:
|
|
|
|
|
|
|
Deferred
tax liabilities
|
|
713,439
|
|
997,222
|
|
152,206
|
Other
long-term payable
|
|
623,728
|
|
737,929
|
|
112,630
|
Total non-current
liabilities
|
|
1,337,167
|
|
1,735,151
|
|
264,836
|
Total
liabilities
|
|
48,080,658
|
|
52,382,945
|
|
7,995,198
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
10,796,120
|
|
10,942,787
|
|
1,670,196
|
|
|
|
|
|
|
|
NetEase, Inc.'s
shareholders' equity
|
|
82,126,798
|
|
85,706,495
|
|
13,081,366
|
Noncontrolling
interests
|
|
871,006
|
|
1,471,649
|
|
224,618
|
Total shareholders'
equity
|
|
82,997,804
|
|
87,178,144
|
|
13,305,984
|
|
|
|
|
|
|
|
Total liabilities,
redeemable noncontrolling
interests and shareholders'
equity
|
|
141,874,582
|
|
150,503,876
|
|
22,971,378
|
|
|
|
|
|
|
|
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,
|
|
|
2020
|
|
2020
|
|
2021
|
|
2021
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
|
|
|
|
|
|
|
|
|
Net
revenues
|
|
17,062,367
|
|
19,761,738
|
|
20,517,211
|
|
3,131,538
|
Cost of
revenues
|
|
(7,684,745)
|
|
(9,833,976)
|
|
(9,464,572)
|
|
(1,444,576)
|
Gross
profit
|
|
9,377,622
|
|
9,927,762
|
|
11,052,639
|
|
1,686,962
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling and marketing
expenses
|
|
(1,863,071)
|
|
(3,076,499)
|
|
(2,766,682)
|
|
(422,278)
|
General and
administrative expenses
|
|
(885,434)
|
|
(809,956)
|
|
(950,194)
|
|
(145,028)
|
Research and
development expenses
|
|
(2,142,649)
|
|
(3,029,376)
|
|
(3,060,189)
|
|
(467,076)
|
Total operating
expenses
|
|
(4,891,154)
|
|
(6,915,831)
|
|
(6,777,065)
|
|
(1,034,382)
|
Operating
profit
|
|
4,486,468
|
|
3,011,931
|
|
4,275,574
|
|
652,580
|
Other income/
(expenses):
|
|
|
|
|
|
|
|
|
Investment (losses)/
income, net
|
|
(109,731)
|
|
(271,866)
|
|
695,298
|
|
106,123
|
Interest income,
net
|
|
345,184
|
|
410,001
|
|
388,928
|
|
59,362
|
Exchange gains/
(losses), net
|
|
244,057
|
|
(1,801,891)
|
|
279,319
|
|
42,632
|
Other, net
|
|
66,708
|
|
139,321
|
|
147,967
|
|
22,584
|
Income before
tax
|
|
5,032,686
|
|
1,487,496
|
|
5,787,086
|
|
883,281
|
Income tax
|
|
(1,082,033)
|
|
(552,661)
|
|
(1,273,408)
|
|
(194,360)
|
Net
income
|
|
3,950,653
|
|
934,835
|
|
4,513,678
|
|
688,921
|
|
|
|
|
|
|
|
|
|
Accretion and deemed
dividends in connection with
repurchase of redeemable noncontrolling
interests
|
|
(386,019)
|
|
(131,604)
|
|
(143,827)
|
|
(21,952)
|
Net (income)/ loss
attributable to noncontrolling interests
|
|
(13,628)
|
|
172,471
|
|
69,301
|
|
10,577
|
Net income
attributable to the Company's shareholders
|
|
3,551,006
|
|
975,702
|
|
4,439,152
|
|
677,546
|
|
|
|
|
|
|
|
|
|
Net income per
share *
|
|
|
|
|
|
|
|
|
Basic
|
|
1.10
|
|
0.29
|
|
1.33
|
|
0.20
|
Diluted
|
|
1.08
|
|
0.29
|
|
1.31
|
|
0.20
|
|
|
|
|
|
|
|
|
|
Net income per ADS
*
|
|
|
|
|
|
|
|
|
Basic
|
|
5.49
|
|
1.45
|
|
6.63
|
|
1.01
|
Diluted
|
|
5.42
|
|
1.43
|
|
6.53
|
|
1.00
|
|
|
|
|
|
|
|
|
|
Weighted average
number of ordinary shares used in
calculating net income per share
*
|
|
|
|
|
|
|
|
|
Basic
|
|
3,231,395
|
|
3,362,793
|
|
3,349,638
|
|
3,349,638
|
Diluted
|
|
3,273,999
|
|
3,411,169
|
|
3,399,981
|
|
3,399,981
|
|
|
|
|
|
|
|
|
|
* 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,
|
|
|
2020
|
|
2020
|
|
2021
|
|
2021
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net
income
|
|
3,950,653
|
|
934,835
|
|
4,513,678
|
|
688,921
|
Adjustments to reconcile net
income to net cash provided
by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
690,057
|
|
962,526
|
|
819,830
|
|
125,131
|
Fair value changes of equity
security investments
|
|
327,040
|
|
559,104
|
|
(477,597)
|
|
(72,896)
|
Impairment losses of
investments and other intangible
assets
|
|
6,600
|
|
51,795
|
|
-
|
|
-
|
Fair value changes of
short-term investments
|
|
(153,106)
|
|
(118,945)
|
|
(118,004)
|
|
(18,011)
|
Share-based compensation
cost
|
|
665,814
|
|
628,979
|
|
650,253
|
|
99,247
|
Allowance for/ (reversal of) expected credit
losses
|
|
49,939
|
|
(5,888)
|
|
13,604
|
|
2,076
|
Losses/ (gains) on disposal of property, equipment and
software
|
|
37
|
|
2,730
|
|
(159)
|
|
(24)
|
Unrealized exchange (gains)
/ losses
|
|
(242,508)
|
|
1,796,532
|
|
(274,047)
|
|
(41,828)
|
(Gains)/ losses on disposal of long-term investments,
business and
subsidiaries
|
|
(15,433)
|
|
178
|
|
(7,323)
|
|
(1,118)
|
Deferred income
taxes
|
|
212,848
|
|
(74,041)
|
|
328,075
|
|
50,074
|
Share of results on equity
method investees and revaluation
gains from previously held
equity interest
|
|
(46,211)
|
|
(216,528)
|
|
(51,892)
|
|
(7,920)
|
Changes in operating assets
and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
(430,535)
|
|
355,495
|
|
(484,343)
|
|
(73,925)
|
Inventories
|
|
88,440
|
|
(96,499)
|
|
(253,495)
|
|
(38,691)
|
Prepayments
and other assets
|
|
(1,103,798)
|
|
791,254
|
|
(785,224)
|
|
(119,848)
|
Accounts payable
|
|
(98,679)
|
|
136,213
|
|
(60,654)
|
|
(9,257)
|
Salary and welfare payables
|
|
(537,907)
|
|
1,382,442
|
|
(1,226,155)
|
|
(187,148)
|
Taxes payable
|
|
1,234,078
|
|
220,244
|
|
1,558,618
|
|
237,892
|
Deferred revenue
|
|
1,379,126
|
|
568,704
|
|
740,938
|
|
113,089
|
Accrued liabilities and other payables
|
|
524,194
|
|
335,117
|
|
656,564
|
|
100,211
|
Net cash provided by
operating activities
|
|
6,500,649
|
|
8,214,247
|
|
5,542,667
|
|
845,975
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Purchase of property,
equipment and software
|
|
(164,320)
|
|
(303,347)
|
|
(329,746)
|
|
(50,329)
|
Proceeds from sale of
property, equipment and software
|
|
772
|
|
7,895
|
|
1,519
|
|
232
|
Purchase of intangible
assets, content and licensed
copyrights
|
|
(306,835)
|
|
(333,507)
|
|
(426,133)
|
|
(65,041)
|
Net change in short-term
investments with terms of three
months or
less
|
|
(780,535)
|
|
(2,257,404)
|
|
3,332,610
|
|
508,656
|
Purchase of short-term
investments
|
|
(10,070,000)
|
|
(2,200,000)
|
|
(7,905,000)
|
|
(1,206,539)
|
Proceeds from maturities of
short-term investments
|
|
6,887,976
|
|
3,597,659
|
|
2,857,341
|
|
436,115
|
Investment in long-term
investments and acquisition of
subsidiaries
|
|
(205,005)
|
|
(1,034,392)
|
|
(558,441)
|
|
(85,235)
|
Proceeds from disposal of
long-term investments,
businesses and
subsidiaries
|
|
196,952
|
|
93,926
|
|
198,900
|
|
30,358
|
Placement/rollover of
matured time deposits
|
|
(11,667,487)
|
|
(14,720,632)
|
|
(15,722,749)
|
|
(2,399,760)
|
Proceeds from maturities of
time deposits
|
|
13,640,617
|
|
18,246,875
|
|
11,481,135
|
|
1,752,364
|
Change in other long-term
assets
|
|
(10,522)
|
|
(52,092)
|
|
(54,653)
|
|
(8,342)
|
Net cash (used in)/ provided
by investing activities
|
|
(2,478,387)
|
|
1,044,981
|
|
(7,125,217)
|
|
(1,087,521)
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
2020
|
|
2020
|
|
2021
|
|
2021
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds of short-term
loans
|
|
100,000
|
|
607,043
|
|
236,916
|
|
36,160
|
Payment of short-term
loans
|
|
(98,395)
|
|
(361,973)
|
|
(167,700)
|
|
(25,596)
|
Net changes in short-term
loans with terms of three months
or less
|
|
2,539,570
|
|
(2,152,677)
|
|
2,122,041
|
|
323,887
|
Net amounts paid for
issuance of shares in Hong Kong
|
|
-
|
|
(171,440)
|
|
(13,800)
|
|
(2,106)
|
(Repurchase of) /
capital injection from noncontrolling interests
and redeemable
noncontrolling interests shareholders, net
|
|
(447,632)
|
|
10,609
|
|
1,507,049
|
|
230,021
|
Cash paid for repurchase of
NetEase's/ purchase of Youdao's
ADSs
|
|
(2,560,897)
|
|
(3,445,930)
|
|
(2,018,467)
|
|
(308,078)
|
Dividends paid to
shareholders
|
|
(926,545)
|
|
(861,211)
|
|
(260,842)
|
|
(39,812)
|
Net cash (used in) /
provided by financing
activities
|
|
(1,393,899)
|
|
(6,375,579)
|
|
1,405,197
|
|
214,476
|
|
|
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash, cash equivalents
|
|
|
|
|
|
|
|
|
and restricted cash held in
foreign currencies
|
|
74,100
|
|
(67,229)
|
|
35,993
|
|
5,494
|
Net increase /
(decrease) in cash, cash equivalents and restricted
cash
|
|
2,702,463
|
|
2,816,420
|
|
(141,360)
|
|
(21,576)
|
Cash, cash
equivalents and restricted cash, at the beginning
of the period
|
|
6,397,860
|
|
9,352,185
|
|
12,168,605
|
|
1,857,292
|
Cash, cash
equivalents and restricted cash, at end of the
period
|
|
9,100,323
|
|
12,168,605
|
|
12,027,245
|
|
1,835,716
|
Less: Cash, cash
equivalents and restricted cash of held for sale
at end of the period
|
|
371
|
|
-
|
|
-
|
|
-
|
Cash, cash
equivalents and restricted cash at end of the
period
|
|
9,099,952
|
|
12,168,605
|
|
12,027,245
|
|
1,835,716
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for income tax,
net
|
|
202,044
|
|
347,389
|
|
550,191
|
|
83,976
|
Cash paid for interest
expense
|
|
96,711
|
|
46,177
|
|
43,902
|
|
6,701
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
2020
|
|
2020
|
|
2021
|
|
2021
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Net
revenues:
|
|
|
|
|
|
|
|
|
Online game
services
|
|
13,518,244
|
|
13,400,182
|
|
14,981,784
|
|
2,286,667
|
Youdao
|
|
541,388
|
|
1,106,796
|
|
1,339,867
|
|
204,503
|
Innovative businesses
and others
|
|
3,002,735
|
|
5,254,760
|
|
4,195,560
|
|
640,368
|
Total net
revenues
|
|
17,062,367
|
|
19,761,738
|
|
20,517,211
|
|
3,131,538
|
|
|
|
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
Online game
services
|
|
(4,851,831)
|
|
(4,942,484)
|
|
(5,302,713)
|
|
(809,352)
|
Youdao
|
|
(305,663)
|
|
(581,327)
|
|
(572,415)
|
|
(87,367)
|
Innovative businesses
and others
|
|
(2,527,251)
|
|
(4,310,165)
|
|
(3,589,444)
|
|
(547,857)
|
Total cost of
revenues
|
|
(7,684,745)
|
|
(9,833,976)
|
|
(9,464,572)
|
|
(1,444,576)
|
|
|
|
|
|
|
|
|
|
Gross
profit:
|
|
|
|
|
|
|
|
|
Online game
services
|
|
8,666,413
|
|
8,457,698
|
|
9,679,071
|
|
1,477,315
|
Youdao
|
|
235,725
|
|
525,469
|
|
767,452
|
|
117,136
|
Innovative businesses
and others
|
|
475,484
|
|
944,595
|
|
606,116
|
|
92,511
|
Total gross
profit
|
|
9,377,622
|
|
9,927,762
|
|
11,052,639
|
|
1,686,962
|
|
|
|
|
|
|
|
|
|
Gross profit
margin:
|
|
|
|
|
|
|
|
|
Online game
services
|
|
64.1%
|
|
63.1%
|
|
64.6%
|
|
64.6%
|
Youdao
|
|
43.5%
|
|
47.5%
|
|
57.3%
|
|
57.3%
|
Innovative businesses
and others
|
|
15.8%
|
|
18.0%
|
|
14.4%
|
|
14.4%
|
|
|
|
|
|
|
|
|
|
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 =
RMB6.5518 on the last trading
day of March 2021 (March 31, 2021) as set forth in the
H.10 statistical release of the U.S. Federal Reserve Board.
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,
|
|
|
2020
|
|
2020
|
|
2021
|
|
2021
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Share-based
compensation cost included in:
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
207,915
|
|
181,871
|
|
187,926
|
|
28,683
|
Operating
expenses
|
|
|
|
|
|
|
|
|
- Selling and
marketing expenses
|
|
24,811
|
|
24,892
|
|
24,231
|
|
3,698
|
- General and
administrative expenses
|
|
230,371
|
|
214,730
|
|
229,603
|
|
35,044
|
- Research and
development expenses
|
|
202,717
|
|
207,486
|
|
208,493
|
|
31,822
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of this announcement.
|
NETEASE,
INC.
|
|
|
|
|
|
|
|
|
UNAUDITED
RECONCILIATION OF GAAP AND NON-GAAP RESULTS
|
(in thousands,
except per share data or per ADS data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
December
31,
|
|
March
31,
|
|
March
31,
|
|
|
2020
|
|
2020
|
|
2021
|
|
2021
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Net income
attributable to the Company's shareholders
|
|
3,551,006
|
|
975,702
|
|
4,439,152
|
|
677,546
|
Add: Share-based
compensation
|
|
661,871
|
|
622,185
|
|
641,534
|
|
97,917
|
Non-GAAP net income
attributable to the Company's
shareholders
|
|
4,212,877
|
|
1,597,887
|
|
5,080,686
|
|
775,463
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
income per share *
|
|
|
|
|
|
|
|
|
Basic
|
|
1.30
|
|
0.48
|
|
1.52
|
|
0.23
|
Diluted
|
|
1.29
|
|
0.47
|
|
1.49
|
|
0.23
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
income per ADS *
|
|
|
|
|
|
|
|
|
Basic
|
|
6.52
|
|
2.38
|
|
7.58
|
|
1.16
|
Diluted
|
|
6.43
|
|
2.34
|
|
7.47
|
|
1.14
|
|
|
|
|
|
|
|
|
|
* Each ADS
represents five ordinary shares.
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of this announcement.
|
View original
content:http://www.prnewswire.com/news-releases/netease-reports-first-quarter-2021-unaudited-financial-results-301293308.html
SOURCE NetEase, Inc.