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NetEase Reports First Quarter 2022 Unaudited Financial Results
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
-
- Cloud Music net revenues were
- Innovative businesses and others net revenues were
- 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 wasRMB5.1 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 wasUS$0 .25 (US$1 .23 per ADS).[2]
[1] |
[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 andBlizzard Entertainment , slated for global market release onJune 2 and release inChina andSoutheast Asia onJune 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 ofHarry 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 inChina . - 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
"Our other business lines, including
First Quarter 2022 Financial Results
Net Revenues
Net revenues were
Net revenues from online game services were
Net revenues from
Net revenues from
Net revenues from innovative businesses and others were
Gross Profit
Gross profit was
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
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
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
Gross profit margin for
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
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
Net Income and Non-GAAP Net Income
Net income attributable to the Company's shareholders totaled
Non-GAAP net income attributable to the Company's shareholders for the first quarter of 2022 totaled
Quarterly Dividend
The board of directors has approved a dividend of
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
Share Repurchase/Purchase Program
On
On
The extent to which
**
Conference Call
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
This call will be webcast live and the replay will be available for 12 months. Both will be available on
About
As a leading internet technology company based in
Forward Looking Statements
This announcement contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the
Non-GAAP Financial Measures
Non-GAAP financial measures are not defined under
Contact for Media and Investors:
Margaret Shi
Email: ir@service.netease.com
Tel: (+86) 571-8985-3378
Twitter: https://twitter.com/NetEase_Global
|
|||||||||||||||||||
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 |
|||||||||||||||||||
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 |
||||||||||||||||
|
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 |
153,643,924 |
159,248,109 |
25,120,772 |
||||||||||||||||
The accompanying notes are an integral part of this announcement. |
|
|||||||||
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, |
||||||
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 |
(143,827) |
(99,914) |
(733) |
(116) |
|||||
Net loss attributable to noncontrolling |
69,301 |
131,360 |
78,996 |
12,461 |
|||||
Net income attributable to the |
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 |
|||||||||
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. |
|
||||||||
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 |
||||||||
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 |
(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 |
(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 |
3,332,610 |
(1,474,371) |
1,710,845 |
269,879 |
||||
Purchase of short-term investments with terms over three |
(7,905,000) |
(4,300,000) |
(1,250,000) |
(197,183) |
||||
Proceeds from maturities of short-term investments with terms |
2,857,341 |
3,313,543 |
553,831 |
87,365 |
||||
Investment in long-term investments and acquisition of |
(558,441) |
(2,020,029) |
(1,690,271) |
(266,634) |
||||
Proceeds from disposal of long-term investments, businesses |
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. |
|
||||||||
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 |
(13,800) |
- |
- |
- |
||||
Net Amounts received/ (paid) related to capital contribution from |
1,507,049 |
1,320,122 |
(102,042) |
(16,097) |
||||
Cash paid for repurchase of |
(2,018,467) |
(2,112,256) |
(1,243,917) |
(196,223) |
||||
Dividends paid to noncontrolling interest shareholders |
- |
(731,250) |
- |
- |
||||
Dividends paid to |
(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 |
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 |
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. |
|
|||||||||
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 |
|||||
|
1,339,867 |
1,333,791 |
1,200,541 |
189,381 |
|||||
|
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) |
|||||
|
(572,415) |
(657,329) |
(562,691) |
(88,762) |
|||||
|
(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 |
|||||
|
767,452 |
676,462 |
637,850 |
100,619 |
|||||
|
(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% |
|||||
|
57.3% |
50.7% |
53.1% |
53.1% |
|||||
|
(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. |
NOTES TO UNAUDITED FINANCIAL INFORMATION
Note 1: The conversion of Renminbi (RMB) into
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 |
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|
|
|
|
|||||
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
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 |
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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 |
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. |
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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
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