Mobile games. Revenues from mobile games were RMB991.8 million (US$135.9 million), representing
a decrease of 33% from the same period of 2022, and an increase of 11% quarter-over-quarter. The year-over-year decrease was mainly due to the high base from the release of Space Hunter 3 in June 2022, as well as lower-than-expected revenues
from certain new games in the third quarter of 2023.
IP derivatives and others (formerly known as E-commerce
and others). Revenues from IP derivatives and others were RMB580.0 million (US$79.5 million), representing a decrease of 23% from the same period of 2022, primarily due to a decrease in revenues from IP derivatives sales.
Cost of revenues. Cost of revenues was RMB4.4 billion (US$596.9 million), representing a decrease of 8% from the same period of 2022. The decrease
was mainly due to lower content costs, server and bandwidth costs and others costs led by effective cost control. Revenue-sharing costs, a key component of the cost of revenues, were RMB2.5 billion (US$336.6 million), representing an increase
of 3% from the same period of 2022.
Gross profit. Gross profit was RMB1.5 billion (US$198.8 million), representing an increase of 38% from
the same period of 2022, primarily as a result of the Companys reduction of fixed costs related to platform operations, as the Company enhanced its monetization efficiency.
Total operating expenses. Total operating expenses were RMB2.6 billion (US$350.5 million), representing a decrease of 12% from the same period of
2022.
Sales and marketing expenses. Sales and marketing expenses were RMB992.3 million (US$136.0 million), representing a 19% decrease
year-over-year. The decrease was primarily attributable to reduced promotional spending related to user acquisition in the third quarter of 2023.
General and administrative expenses. General and administrative expenses were RMB499.1 million (US$68.4 million), representing an 8% decrease
year-over-year. The decrease was primarily attributable to a decline in allowance for doubtful accounts, rental costs and other general and administrative expenses in the third quarter of 2023.
Research and development expenses. Research and development expenses were RMB1.1 billion (US$146.1 million), representing a 6% decrease
year-over-year. The decrease was mainly attributable to a decline in staff-related costs in the third quarter of 2023.
Loss from operations. Loss
from operations was RMB1.1 billion (US$151.8 million), narrowing by 40% from the same period of 2022.
Adjusted loss from operations1. Adjusted loss from operations was RMB755.4 million (US$103.5million), narrowing by 51% from the same period of 2022. Adjusted loss from operations is a
non-GAAP measure that excludes share-based compensation expenses, amortization expense related to intangible assets acquired through business acquisitions, expenses related to organizational optimization, and
termination expenses of certain game projects.
Investment income/(loss), net (including impairments). Total investment loss was
RMB245.0 million (US$33.6 million), compared with an investment income of RMB178.6 million in the same period of 2022. The change was primarily attributable to the fair value changes in investments in publicly traded companies. A fair
value loss of RMB137.4 million was recognized in the third quarter of 2023, compared to a fair value gain of RMB343.0 million for the same period of 2022.