Investor Relations > News and Events > News Release
News Release
Print Page  | E-mail Page  | RSS Feeds  | E-mail Alerts  | IR Contacts  | Financial Tear Sheet 



Printer Friendly Version View printer-friendly version
<< Back
NetEase Reports Fourth Quarter and Fiscal Year 2014 Unaudited Financial Results
Download PDF Click here for PDF

BEIJING, Feb. 9, 2015 /PRNewswire/ -- NetEase, Inc. (NASDAQ: NTES), one of China's leading Internet and online game services providers, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2014.

"In 2014 we made exciting strides across our three business lines. With considerable advancements among our traditional online and mobile games portfolios, and portal and e-commerce offerings, our total revenues for 2014 grew by 27.7% year-over-year," said Mr. William Ding, Chief Executive Officer and Director of NetEase. "We completed the year with a 42.5% increase in fourth quarter revenues compared to the fourth quarter of 2013, led by a 35.7% increase in online game services, a 22.7% increase in advertising services and a 224.2% increase from our expanding e-mail, e-commerce and others business."

"Our fourth quarter online game services revenues grew by 16.4% compared to the preceding quarter, with standout performances from both our self-developed and licensed online games. Following the launch of a new item-based version in August, New Westward Journey Online II achieved record user statistics in the fourth quarter. Our newly-launched mobile games demonstrated strong traction with users as well, especially our self-developed mobile battle arena game, Battle to the West, and mobile 3-D action adventure, The World HD, which was adapted from our online game Tianxia III. Both of these games have become highly ranked in the China mobile game market. The November launch of the fifth expansion set to Blizzard Entertainment's World of Warcraft®, Warlords of Draenor in mainland China was also met with great player enthusiasm. Moreover, we saw solid performances from the games for which we introduced new expansion packs in the fourth quarter, including Fantasy Westward Journey II, Tianxia III, Ghost II, and Heroes of Tang Dynasty Zero."

"At the beginning of 2015, we initiated the small-scale commercial launch of Revelation, our 3-D oriental fantasy MMORPG, and beta testing for Hegemon-King of Western Chu, our 3-D warfare MMORPG. We are pleased by the positive early feedback for these games. Additionally, in January, Blizzard's free-to-play, online team brawler, Heroes of the Storm, began closed beta testing in China, and we continue to work closely with Blizzard to bring this and other exciting game content to Chinese audiences."

"Mobile Internet is playing an increasing role in China's expanding Internet market. In 2014 we succeeded in releasing 12 self-developed and licensed mobile games, demonstrating our growing capabilities in mobile game developing and publishing. We plan to introduce more mobile games this year. Our YiChat user base also continues to grow, supported by the introduction of new functionalities and features in the fourth quarter. We are expanding our reach with this popular networking site by introducing an enterprise version of YiChat for small and medium-sized enterprises."

"Our advertising business remains strong. In 2014, the growth of our advertising services was driven by increased market demand, mainly from the automobile, communication services and foods and beverages sectors, and greater monetization of our Mobile News Application. The 2014 FIFA World Cup also boosted advertising revenues during the year. In the fourth quarter, the top-performing advertising verticals were automobile, financial services and Internet services. We are optimistic about the growth for this business in 2015 and plan to focus on mobile advertising where we see significant interest from our customers. Additionally, our e-commerce business expanded at a healthy pace in 2014."

"We plan to introduce more mobile games in 2015, including mobile games adapted from or inspired by our existing popular PC client games. We believe this will help to increase stickiness within our community by offering innovative games and services on both traditional and mobile platforms. We recently launched a self-operated cross-border e-commerce platform, Kaola, which we see as an opportunity to provide a new type of service offering to our users. We will continue to strive to attract new users to support healthy growth across our business lines in 2015 and beyond," Mr. Ding concluded.

Fourth Quarter 2014 Financial Results

Revenues

Total revenues for the fourth quarter of 2014 were RMB3,683.6 million (US$593.7 million), compared to RMB3,325.9 million and RMB2,585.1 million for the preceding quarter and the fourth quarter of 2013, respectively.

Revenues from online games were RMB2,863.3 million (US$461.5 million) for the fourth quarter of 2014, compared to RMB2,459.6 million and RMB2,109.5 million for the preceding quarter and the fourth quarter of 2013, respectively.

Revenues from advertising services were RMB439.5 million (US$70.8 million) for the fourth quarter of 2014, compared to RMB478.3 million and RMB358.2 million for the preceding quarter and the fourth quarter of 2013, respectively.

Revenues from e-mail, e-commerce and others were RMB380.8 million (US$61.4 million) for the fourth quarter of 2014, compared to RMB388.0 million and RMB117.5 million for the preceding quarter and the fourth quarter of 2013, respectively.

Sales Taxes

Total sales taxes for the fourth quarter of 2014 were RMB220.6 million (US$35.6 million), compared to RMB209.2 million and RMB162.7 million for the preceding quarter and the fourth quarter of 2013, respectively. The year-over-year and quarter-over-quarter increases in sales tax were mainly due to the increase in NetEase's total revenues.

Gross Profit

Gross profit for the fourth quarter of 2014 was RMB2,485.4 million (US$400.6 million), compared to RMB2,258.4 million and RMB1,727.2 million for the preceding quarter and the fourth quarter of 2013, respectively.

The year-over-year increase in online games gross profit was primarily driven by increased revenues from certain self-developed games, such as Fantasy Westward Journey II and New Westward Journey Online II, and various mobile game products. The quarter-over-quarter increase in online games gross profit was primarily driven by increased revenue from certain self-developed online and mobile games, such as New Westward Journey Online II and Battle to the West, as well as Warlords of Draenor, the fifth expansion set to Blizzard's World of Warcraft.

The year-over-year increase in advertising services gross profit was primarily the result of strong demand from the financial services, communication services and real estate sectors, and NetEase's monetization efforts for its Mobile News Application and other mobile applications. The quarter-over-quarter decrease in advertising services gross profit was mainly due to higher revenue related to the 2014 FIFA World Cup in the preceding quarter.

The year-over-year increase in e-mail, e-commerce and others gross profit was primarily attributable to an increase in revenue from NetEase's e-commerce business. The quarter-over-quarter decrease in e-mail, e-commerce and others gross profit was primarily attributable to a decrease in revenue from the Company's e-commerce business in the fourth quarter.

Gross Profit (Loss) Margin

Gross profit margin for NetEase's online games business for the fourth quarter of 2014 was 76.0%, compared to a gross profit margin of 77.2% and 77.7% for the preceding quarter and the fourth quarter of 2013, respectively. The year-over-year and quarter-over-quarter changes in gross profit margin were mainly due to increased revenue contribution from mobile games and licensed games, which have relatively lower gross profit margins, as a percentage of NetEase's total online game revenues.

Gross profit margin for the advertising services business for the fourth quarter of 2014 was 66.8%, compared to a gross profit margin of 66.3% and 57.8% for the preceding quarter and the fourth quarter of 2013, respectively. The year-over-year increase in gross profit margin was mainly due to enhanced economies of scale driven by revenue growth.

Gross profit margin for the e-mail, e-commerce and others business for the fourth quarter of 2014 was 45.6%, compared to a gross profit margin of 49.6% for the preceding quarter and gross loss margin of 4.0% for the fourth quarter of 2013, respectively. The year-over-year increase in gross profit margin was mainly due to increased revenue from NetEase's e-commerce business, which has a relatively higher gross profit margin.

Operating Expenses

Total operating expenses for the fourth quarter of 2014 were RMB1,239.7 million (US$199.8 million), compared to RMB1,059.2 million and RMB648.3 million for the preceding quarter and the fourth quarter of 2013, respectively. The year-over-year increase in operating expenses was mainly due to increased selling and marketing expenses for the promotion of NetEase's online and mobile games and licensed Blizzard games, promotions for NetEase's e-commerce business and advertising services, as well as staff-related research and development costs resulting from an increase in the number of employees and average compensation. The quarter-over-quarter increase was mainly due to increased selling and marketing expenses for online games and the Company's e-commerce business.

Income Taxes

The Company recorded a net income tax charge of RMB187.9 million (US$30.3 million) for the fourth quarter of 2014, compared to net income tax charges of RMB197.3 million and RMB49.4 million for the preceding quarter and the fourth quarter of 2013, respectively. The effective tax rate for the fourth quarter of 2014 was 12.8%, compared to 14.4% and 3.8% for the preceding quarter and the fourth quarter of 2013, respectively. The year-over-year increase in the effective tax rate was mainly due to the fact that certain subsidiaries of the Company were approved as Key Software Enterprises in the fourth quarter of 2013. Accordingly, they became subject to a preferential tax rate of 10% for the 2013 and 2014 fiscal years, and the resulting 2013 tax credit was recorded in the fourth quarter of 2013.

Net Income After Tax

Net profit for the fourth quarter of 2014 totaled RMB1.3 billion (US$204.9 million), compared to RMB1.2 billion and RMB1.2 billion for the preceding quarter and the fourth quarter of 2013, respectively.

During the fourth quarter of 2014, the Company had a net foreign exchange loss of RMB7.1 million (US$1.1 million), compared to a net foreign exchange gain of RMB2.2 million and a net foreign exchange loss of RMB17.6 million for the preceding quarter and the fourth quarter of 2013, respectively. The quarter-over-quarter and year-over-year changes in foreign exchange gains/(losses) were mainly due to exchange gains/(losses) arising from the Company's foreign currency-denominated bank deposits and short-term loan balances as the exchange rate of the U.S. dollar against the RMB fluctuated over the periods.

NetEase reported basic earnings per ADS of US$1.57 and diluted earnings per ADS of US$1.56 for the fourth quarter of 2014. The Company reported basic earnings per ADS of US$1.43 and diluted earnings per ADS of US$1.42 for the preceding quarter, and reported basic and diluted earnings per ADS of US$1.53 each for the fourth quarter of 2013.

Fiscal Year 2014 Financial Results

Revenues

Total revenues for fiscal year 2014 were RMB12.5 billion (US$2.0 billion), compared to RMB9.8 billion for the preceding fiscal year. Revenues from online games were RMB9.8 billion (US$1.6 billion) for fiscal year 2014, compared to RMB8.3 billion for the preceding fiscal year. Revenues from advertising services were RMB1.6 billion (US$250.1 million) for fiscal year 2014, compared to RMB1.1 billion for the preceding fiscal year. Revenues from e-mail, e-commerce and others were RMB1.1 billion (US$179.5 million) for fiscal year 2014, compared to RMB368.0 million for the preceding fiscal year.

Gross Profit (Loss)

Gross profit for fiscal year 2014 was RMB8.5 billion (US$1.4 billion), compared to RMB6.7 billion for the preceding fiscal year. The increase in gross profit for fiscal year 2014 was primarily driven by increased revenues from online game services, advertising services and e-commerce business.

The increase in online game services gross profit in 2014 was primarily attributable to increased revenues from the Company's self-developed games such as Fantasy Westward Journey II, New Westward Journey Online II and various mobile games, as well as from Blizzard's Hearthstone®: Heroes of Warcraft™.

The increase in advertising services gross profit in 2014 was due to a rise in demand, mainly from the automobile, communication services and foods and beverages sectors, as well as from the increased monetization of the NetEase Mobile News Application and the impact of the 2014 FIFA World Cup.

The improvement in e-mail, e-commerce and others gross profit in 2014 was primarily attributable to an increase in revenue from NetEase's e-commerce business.

Operating Expenses

Total operating expenses for fiscal year 2014 were RMB3.7 billion (US$594.1 million), compared to RMB2.4 billion for the preceding fiscal year. The increase in operating expenses in 2014 was primarily due to increased marketing expenses as a result of marketing and promotional activities for NetEase's online games, e-commerce and advertising services businesses, mainly due to the 2014 FIFA World Cup, and increased research and development expenses resulting from increased headcount and average compensation.

Net Income After Tax

Net profit for fiscal year 2014 totaled RMB4.8 billion (US$766.6 million), compared to RMB4.4 billion for the preceding fiscal year. For fiscal year 2014, the Company reported a net foreign exchange loss of RMB18.0 million (US$2.9 million), compared to a net foreign exchange loss of RMB15.3 million for the preceding fiscal year. The net foreign exchange loss for 2014 was mainly due to exchange losses arising from the Company's U.S. dollar-denominated bank deposit and short-term loan balances as the exchange rate of the U.S. dollar against the RMB fluctuated over these periods. NetEase reported basic earnings per ADS of US$5.87 and diluted earnings per ADS of US$5.85 for fiscal year 2014. The Company reported basic earnings per ADS of US$5.51 and diluted earnings per ADS of US$5.50 for the preceding fiscal year.

Income Taxes

The Company recorded a net income tax charge of RMB662.7 million (US$106.8 million) and RMB530.6 million for fiscal years 2014 and 2013, respectively. The effective tax rate was 12.1% for fiscal year 2014, compared to 10.7% for fiscal year 2013. The change in the effective tax rate was mainly due to a one-off tax benefit of RMB304.6 million that the Company recorded in 2013 due to the fact that certain subsidiaries of the Company were approved in 2013 as Key Software Enterprises with respect to fiscal years 2011 and 2012.

Quarterly Dividend

Under the Company's quarterly dividend policy announced on May 13, 2014, quarterly dividends will be set at an amount equivalent to approximately 25% of the Company's anticipated net income after tax in each fiscal quarter.

NetEase paid a dividend of US$0.34 per ADS for the first quarter of 2014 on June 3, 2014, US$0.37 per ADS for the second quarter of 2014 on September 5, 2014 and US$0.36 per ADS for the third quarter of 2014 on December 5, 2014.

The board of directors has approved a dividend of US$0.39 per ADS for the fourth quarter of 2014, which is expected to be paid on March 6, 2015 to shareholders of record as of the close of business on February 25, 2015.

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 December 31, 2014, the Company's total cash and time deposits balance was RMB21.2 billion (US$3.4 billion), compared to RMB18.6 billion as of December 31, 2013. Cash flow generated from operating activities was RMB5.9 billion (US$944.1 million) for fiscal year 2014, compared to RMB5.2 billion for the preceding fiscal year. In addition, as of December 31, 2014, the Company had a loan from an offshore bank in the principal amount of US$90.0 million that was secured by RMB deposits of the Company in an onshore branch of this bank in the amount of RMB614.2 million, which was recognized as a short-term investment.

Share Repurchase Program

In February 2014, the Company announced that its board of directors approved a new share repurchase program of up to US$100 million of the Company's outstanding ADSs for a period not to exceed 12 months.

As of December 31, 2014, no ADSs had been repurchased under this program.

** The United States dollar (US$) amounts disclosed in this press release 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$1.00 = RMB6.2046 on December 31, 2014 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on December 31, 2014, or at any other certain date. The percentages stated are calculated based on RMB.

Notes to Unaudited Financial Information

The unaudited financial information disclosed in this press release is preliminary. The audit of the financial statements and related notes to be included in the Company's annual report on Form 20-F for the year ended December 31, 2014 is still in progress. In addition, because an audit of the Company's internal controls over financial reporting in connection with section 404 of the Sarbanes-Oxley Act of 2002 has not yet been completed, the Company makes no representation as to the effectiveness of those internal controls as of the end of fiscal year 2014.

Adjustments to the financial statements may be identified when the audit work is completed, which could result in significant differences between the Company's audited financial statements and this preliminary unaudited financial information.

Conference Call

NetEase's management team will host a teleconference call with simultaneous webcast at 8:00 p.m. Eastern Time on Monday, February 9, 2015 (Beijing/Hong Kong Time: 9:00 a.m., Tuesday, February 10, 2015). 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 1-888-466-4462 (international: 1-719-457-2085), 10-15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 1-888-203-1112 (international: 1-719-457-0820), and entering passcode 6702328#. The replay will be available through February 23, 2015.

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) is a leading Internet technology company in China. Dedicated to providing online services centered around content, community, communication and commerce, NetEase develops and operates some of China's most popular online games, e-mail services, advertising services, mobile applications and games, and web portals. In partnership with Blizzard Entertainment, NetEase also operates some of the most popular international online games in China, including World of Warcraft®, Hearthstone®: Heroes of Warcraft™, StarCraft® II, Heroes of the Storm™ and Diablo® III. For more information, please visit: http://ir.netease.com/.

* * *

Forward Looking Statements

This press release 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. 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 leading position in that market, which could occur if, for example, its new online games or expansion packs and other improvements to its existing games do not become as popular as management anticipates; the ability of NetEase to successfully expand its mobile Internet and e-commerce offerings; the ability of NetEase to effectively market its games and other services and achieve a positive return on its marketing expenditures; the risk that Shanghai EaseNet will not be able to continue operating World of Warcraft®, Hearthstone®: Heroes of Warcraft™, StarCraft® II, Heroes of the Storm™, Diablo® III or other games licensed by it for a period of time or permanently due to possible governmental actions or the risk that such games will not be popular with game players in China; the risk that changes in Chinese government regulation of the online game or e-commerce markets may limit future growth of NetEase's revenues or cause revenues to decline; competition in the online advertising business and the risk that investments by NetEase in its content and services may not increase the appeal of the NetEase websites among Internet users or result in increased advertising revenues; the risk that NetEase may not be able to continuously develop new and creative online services, including its ability to maintain and enhance the popularity of its e-mail, e-commerce, mobile and micro-blogging services and develop attractive mobile games; the risk that NetEase will not be able to control its expenses in future periods; competition in NetEase's existing and potential markets; governmental uncertainties (including possible changes in the effective tax rates applicable to NetEase and its subsidiaries and affiliates and the ability of NetEase to receive and maintain approvals of the preferential tax treatments and general competition and price pressures in the marketplace); the risk that fluctuations in the value of the Renminbi with respect to other currencies could adversely affect NetEase's business and financial results; and other risks outlined in NetEase's filings with the Securities and Exchange Commission. NetEase does not undertake any obligation to update this forward-looking information, except as required under the applicable law.

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(RMB and USD in thousands)




December 31,



December 31,



December 31,



2013


2014


2014



RMB


RMB


USD (Note 1)

Assets














Current assets:







    Cash and cash equivalents


1,458,298


2,021,453


325,799

    Time deposits


16,625,468


18,496,574


2,981,107

    Restricted cash


2,136,749


2,628,847


423,693

    Accounts receivable, net


402,511


873,137


140,724

    Prepayments and other current assets


1,144,272


1,451,919


234,007

    Short-term investments


901,183


2,058,552


331,778

    Deferred tax assets


129,282


202,040


32,563

Total current assets


22,797,763


27,732,522


4,469,671








Non-current assets:







    Property, equipment and software, net


872,113


1,281,225


206,496

    Land use right, net


11,271


77,648


12,515

    Deferred tax assets


23,085


21,160


3,410

    Time deposits


500,000


673,000


108,468

    Other long-term assets


342,098


569,116


91,725

Total non-current assets


1,748,567


2,622,149


422,614

Total assets


24,546,330


30,354,671


4,892,285








Liabilities, Mezzanine Classified Noncontrolling
    Interests and Shareholders' Equity














Current liabilities:







    Accounts payable


219,259


410,722


66,196

    Salary and welfare payables


377,117


534,565


86,156

    Taxes payable


74,463


334,290


53,878

    Short-term loan


975,504


2,049,865


330,378

    Deferred revenue


1,481,036


1,967,780


317,149

    Accrued liabilities and other payables


957,299


1,357,228


218,746

    Deferred tax liabilities


148,506


101,997


16,439

Total current liabilities


4,233,184


6,756,447


1,088,942








Long-term payable:







    Other long-term payable


144,883


106,430


17,153

Total liabilities


4,378,067


6,862,877


1,106,095








Total mezzanine classified noncontrolling interests
    and shareholders' equity


20,168,263


23,491,794


3,786,190








Total liabilities, mezzanine classified noncontrolling
    interests and shareholders' equity


24,546,330


30,354,671


4,892,285








The accompanying notes are an integral part of this press release.







 

 

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(RMB and USD in thousands, except per share data)




Quarter Ended


Year Ended



December 31,


September 30,


December 31,


December 31,


December 31,


December 31,


December 31,



2013


2014


2014


2014


2013


2014


2014



RMB


RMB


RMB


USD (Note 1)


RMB


RMB


USD (Note 1)

Revenues:















Online game services


2,109,456


2,459,596


2,863,299


461,480


8,308,618


9,815,019


1,581,894

Advertising services


358,153


478,330


439,507


70,836


1,094,623


1,551,652


250,081

E-mail, e-commerce and others


117,473


387,987


380,800


61,374


368,014


1,113,773


179,507

Total revenues


2,585,082


3,325,913


3,683,606


593,690


9,771,255


12,480,444


2,011,482

Sales taxes


(162,660)


(209,174)


(220,613)


(35,556)


(575,080)


(767,610)


(123,716)

Total net revenues


2,422,422


3,116,739


3,462,993


558,134


9,196,175


11,712,834


1,887,766
















Total cost of revenues


(695,214)


(858,298)


(977,565)


(157,556)


(2,478,516)


(3,261,544)


(525,665)
















Gross profit


1,727,208


2,258,441


2,485,428


400,578


6,717,659


8,451,290


1,362,101
















Selling and marketing expenses


(328,152)


(533,838)


(704,211)


(113,498)


(1,093,612)


(1,894,998)


(305,418)

General and administrative expenses


(82,168)


(128,928)


(143,850)


(23,185)


(349,832)


(467,669)


(75,375)

Research and development expenses


(237,960)


(396,442)


(391,591)


(63,113)


(921,618)


(1,323,498)


(213,309)

Total operating expenses


(648,280)


(1,059,208)


(1,239,652)


(199,796)


(2,365,062)


(3,686,165)


(594,102)
















Operating profit


1,078,928


1,199,233


1,245,776


200,782


4,352,597


4,765,125


767,999

Other income:















Investment income/(loss)


4,890


8,693


(2,492)


(402)


37,255


27,373


4,412

Interest income


139,082


156,084


156,747


25,263


506,181


601,502


96,944

Exchange (losses)/gains


(17,568)


2,184


(7,124)


(1,148)


(15,348)


(17,998)


(2,901)

Other, net


90,341


1,872


72,282


11,651


95,136


82,438


13,287
















Net income before tax


1,295,673


1,368,066


1,465,189


236,146


4,975,821


5,458,440


879,741

Income tax


(49,421)


(197,340)


(187,893)


(30,283)


(530,603)


(662,735)


(106,814)
















Net income after tax


1,246,252


1,170,726


1,277,296


205,863


4,445,218


4,795,705


772,927

Net income attributable to noncontrolling interests
    and mezzanine classified noncontrolling interests


(9,227)


(11,581)


(6,027)


(971)


(1,308)


(39,082)


(6,299)

Net income attributable to
    the Company's shareholders


1,237,025


1,159,145


1,271,269


204,892


4,443,910


4,756,623


766,628
















Comprehensive income


1,246,252


1,170,726


1,277,296


205,863


4,445,218


4,795,705


772,927

Net income attributable to noncontrolling interests
    and mezzanine classified noncontrolling interests


(9,227)


(11,581)


(6,027)


(971)


(1,308)


(39,082)


(6,299)

Comprehensive income attributable
    to the Company's shareholders


1,237,025


1,159,145


1,271,269


204,892


4,443,910


4,756,623


766,628
















Earnings per share, basic


0.38


0.35


0.39


0.06


1.37


1.46


0.24

Earnings per ADS, basic


9.51


8.87


9.73


1.57


34.21


36.43


5.87

Earnings per share, diluted


0.38


0.35


0.39


0.06


1.36


1.45


0.23

Earnings per ADS, diluted


9.48


8.83


9.67


1.56


34.12


36.29


5.85
















Weighted average number of
    ordinary shares outstanding, basic


3,250,284


3,267,786


3,268,019


3,268,019


3,247,874


3,264,450


3,264,450

Weighted average number of
    ADS outstanding, basic


130,011


130,711


130,721


130,721


129,915


130,578


130,578

Weighted average number of
    ordinary shares outstanding, diluted


3,262,605


3,280,435


3,286,120


3,286,120


3,256,297


3,277,049


3,277,049

Weighted average number of
    ADS outstanding, diluted


130,504


131,217


131,445


131,445


130,252


131,082


131,082
















The accompanying notes are an integral part of this press release.
































 

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(RMB and USD in thousands)



Quarter Ended


Year Ended


December 31,


September 30,


December 31,


December 31 ,


December 31 ,


December 31 ,


December 31 ,


2013


2014


2014


2014


2013


2014


2014


RMB


RMB


RMB


USD (Note 1)


RMB


RMB


USD (Note 1)

Cash flows from operating activities:














    Net income

1,246,252


1,170,726


1,277,296


205,863


4,445,218


4,795,705


772,927

    Adjustments to reconcile net income to net














        cash provided by operating activities:

    Depreciation and amortization

40,378


36,921


64,965


10,471


158,363


174,462


28,118

    Investment impairment

-


-


24,040


3,875


-


24,040


3,875

    Share-based compensation cost

84,994


96,619


124,267


20,028


306,308


349,277


56,293

    (Reversal of)/allowance for provision

(5,380)


3,086


(282)


(45)


(2,007)


3,765


607

        for doubtful debts

    (Gain)/loss on disposal of property,

(22)


(67)


1,619


261


(509)


1,507


243

        equipment and software

    Unrealized exchange loss

17,770


1,686


10,070


1,623


12,266


18,764


3,024

    Deferred income taxes

60,220


32,882


(100,860)


(16,256)


142,283


(117,328)


(18,910)

    Net equity share of loss from

3,474


12,858


1,987


320


5,321


33,634


5,421

        associated companies

    Fair value changes of short-term investments

17,419


(16,516)


(17,885)


(2,883)


12,355


(64,249)


(10,355)

    Changes in operating assets and liabilities:














        Accounts receivable

2,580


(203,257)


(104,705)


(16,875)


(131,030)


(474,381)


(76,456)

        Prepayments and other current assets

(32,949)


(140,636)


(61,818)


(9,963)


(21,933)


(292,416)


(47,129)

        Accounts payable

55,567


22,539


138,360


22,300


70,959


190,453


30,695

        Salary and welfare payables

154,401


(44,225)


226,233


36,462


87,269


157,448


25,376

        Taxes payable

(262,248)


31,742


60,923


9,819


(315,001)


259,828


41,877

        Deferred revenue

161,152


58,072


217,560


35,064


321,018


486,744


78,449

        Accrued liabilities and other payables

79,185


84,683


41,228


6,645


145,010


310,449


50,035

            Net cash provided by operating activities

1,622,793


1,147,113


1,902,998


306,709


5,235,890


5,857,702


944,090















Cash flows from investing activities:














    Purchase of property, equipment and software

(109,038)


(116,172)


(301,156)


(48,538)


(218,936)


(537,376)


(86,609)

    Proceeds from sale of property,

3,544


404


896


144


4,516


1,463


236

        equipment and software

    Purchase of other intangible assets

-


-


(1,725)


(278)


(900)


(14,011)


(2,258)

    Purchase of land use right

-


(29,387)


(37,570)


(6,055)


-


(66,957)


(10,792)

    Net change in short-term investments

(180,000)


335,803


(262,558)


(42,317)


(480,000)


247,406


39,875

        with terms of three months or less

    Purchase of short-term investments

(300,000)


(593,805)


(300,000)


(48,351)


(400,000)


(2,358,122)


(380,060)

    Proceeds from maturities of short-term investments

520,000


203,589


203,271


32,761


1,040,000


1,017,596


164,007

    Investment in an associated company

-


(20,000)


-


-


(200,000)


(20,000)


(3,223)

    Dividend from an associated company

-


15,321


-


-


-


15,321


2,469

    Transfer to restricted cash

(152,871)


(98,517)


(173,252)


(27,923)


(1,566,244)


(492,149)


(79,320)

    Placement/rollover of matured time deposits

(4,426,928)


(4,934,854)


(5,068,797)


(816,942)


(21,807,617)


(21,955,012)


(3,538,506)

    Proceeds from maturities of time deposits

3,583,767


5,020,322


4,064,596


655,094


18,231,797


19,905,004


3,208,104

    Net change in other assets

(16,326)


(105,195)


(43,634)


(7,033)


(55,895)


(248,008)


(39,972)

        Net cash used in investing activities

(1,077,852)


(322,491)


(1,919,929)


(309,438)


(5,453,279)


(4,504,845)


(726,049)















Cash flows from financing activities:














    Proceeds of short-term bank loan

-


-


-


-


1,005,680


2,046,669


329,863

    Payment of short-term bank loan

-


-


-


-


-


(975,504)


(157,223)

    Proceeds from employees exercising stock options

-


870


-


-


2,474


2,917


470

    Capital contribution from noncontrolling interests and

-


-


130,376


21,013


916


130,486


21,031

        mezzanine classified noncontrolling interests

    Repurchase of shares

-


-


-


-


(106,809)


-


-

    Dividends paid to shareholders

-


(298,142)


(288,686)


(46,528)


(815,413)


(1,983,010)


(319,603)

            Net cash (used in)/provided by financing activities

-


(297,272)


(158,310)


(25,515)


86,848


(778,442)


(125,462)















    Effect of exchange rate changes on cash














        held in foreign currencies

(3,945)


(1,397)


1,760


284


(1,930)


(11,260)


(1,815)

            Net increase/(decrease) in cash and cash equivalents

540,996


525,953


(173,481)


(27,960)


(132,471)


563,155


90,764

Cash and cash equivalents, beginning of the period

917,302


1,668,981


2,194,934


353,759


1,590,769


1,458,298


235,035

Cash and cash equivalents, end of the period

1,458,298


2,194,934


2,021,453


325,799


1,458,298


2,021,453


325,799















Supplemental disclosures of cash flow information:














    Cash paid for income tax, net

238,424


153,567


186,347


30,034


687,454


551,303


88,854

Supplemental schedule of non-cash investing














    and financing activities:














    Fixed asset purchases financed by

10,071


49,891


80,575


12,986


10,071


80,575


12,986

        accounts payable and accrued liabilities

 

NETEASE, INC.

UNAUDITED SEGMENT INFORMATION

(RMB and USD in thousands, except percentages)

















Quarter Ended


Year Ended



December 31,


September 30,


 December 31, 


 December 31, 


December 31,


 December 31, 


 December 31, 



2013


2014


2014


2014


2013


2014


2014



RMB


RMB


RMB


USD (Note 1)


RMB


RMB


USD (Note 1)

Revenues:















Online game services


2,109,456


2,459,596


2,863,299


461,480


8,308,618


9,815,019


1,581,894

Advertising services


358,153


478,330


439,507


70,836


1,094,623


1,551,652


250,081

E-mail, e-commerce and others


117,473


387,987


380,800


61,374


368,014


1,113,773


179,507

Total revenues


2,585,082


3,325,913


3,683,606


593,690


9,771,255


12,480,444


2,011,482
















Sales taxes:  















Online game services


(120,543)


(137,582)


(155,764)


(25,105)


(444,154)


(548,861)


(88,460)

Advertising services


(34,594)


(47,328)


(44,278)


(7,136)


(107,156)


(154,583)


(24,914)

E-mail, e-commerce and others


(7,523)


(24,264)


(20,571)


(3,315)


(23,770)


(64,166)


(10,342)

Total sales taxes


(162,660)


(209,174)


(220,613)


(35,556)


(575,080)


(767,610)


(123,716)
















Net revenues:















Online game services


1,988,913


2,322,014


2,707,535


436,375


7,864,464


9,266,158


1,493,434

Advertising services


323,559


431,002


395,229


63,700


987,467


1,397,069


225,167

E-mail, e-commerce and others


109,950


363,723


360,229


58,059


344,244


1,049,607


169,165

Total net revenues


2,422,422


3,116,739


3,462,993


558,134


9,196,175


11,712,834


1,887,766
















Cost of revenues:















Online game services


(444,180)


(529,871)


(650,323)


(104,813)


(1,649,803)


(2,111,701)


(340,344)

Advertising services


(136,698)


(145,119)


(131,388)


(21,176)


(461,286)


(528,665)


(85,205)

E-mail, e-commerce and others


(114,336)


(183,308)


(195,854)


(31,567)


(367,427)


(621,178)


(100,116)

Total cost of revenues


(695,214)


(858,298)


(977,565)


(157,556)


(2,478,516)


(3,261,544)


(525,665)
















Gross profit/(loss) :















Online game services


1,544,733


1,792,143


2,057,212


331,562


6,214,661


7,154,457


1,153,090

Advertising services


186,861


285,883


263,841


42,524


526,181


868,404


139,962

E-mail, e-commerce and others


(4,386)


180,415


164,375


26,492


(23,183)


428,429


69,049

Total gross profit


1,727,208


2,258,441


2,485,428


400,578


6,717,659


8,451,290


1,362,101
















Gross profit/(loss)  margin:















Online game services


77.7%


77.2%


76.0%


76.0%


79.0%


77.2%


77.2%

Advertising services


57.8%


66.3%


66.8%


66.8%


53.3%


62.2%


62.2%

E-mail, e-commerce and others


(4.0%)


49.6%


45.6%


45.6%


(6.7%)


40.8%


40.8%
















The accompanying notes are an integral part of this press release.











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 = RMB6.2046 on the last trading day of December 2014 (December 31, 2014)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):



Quarter Ended


Year Ended



December 31,


September 30,


December 31,


December 31,


December 31,


December 31,


December 31,



2013


2014


2014


2014


2013


2014


2014



RMB


RMB


RMB


USD (Note 1)


RMB


RMB


USD (Note 1)

Share-based compensation cost included in:















Cost of revenue


48,654


43,336


58,826


9,481


165,708


169,621


27,338

Operating expenses















- Selling and marketing expenses


4,820


6,720


7,910


1,275


17,967


23,253


3,748

- General and administrative expenses


13,380


15,347


18,130


2,922


48,350


51,475


8,296

- Research and development expenses


18,140


31,216


39,401


6,350


74,283


104,928


16,911
















The accompanying notes are an integral part of this press release.











Contact for Media and Investors:

Cassia Curran
NetEase, Inc.
cassia@corp.netease.com
Tel: (+86) 571-8985-2076

Brandi Piacente
Investor Relations
brandi@corp.netease.com
Tel: (+1) 212-481-2050 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/netease-reports-fourth-quarter-and-fiscal-year-2014-unaudited-financial-results-300033092.html

SOURCE NetEase, Inc.


Privacy Policy, Terms and ConditionsCopyright , NetEase, Inc. All Rights Reserved.