NetEase Announces Second Quarter 2023 Unaudited Financial Results
- Net revenues increase YoY
- Gross profit increases YoY
- Games and related value-added services net revenues increase YoY
- Youdao net revenues increase YoY
- Cloud Music net revenues decrease YoY
- Innovative businesses and others net revenues increase YoY
- None.
Second Quarter 2023 Financial Highlights
- Net revenues were
RMB24.0 billion (US ), an increase of$3.3 billion 3.7% compared with the second quarter of 2022. - Games and related value-added services net revenues were
RMB18.8 billion (US ), an increase of$2.6 billion 3.6% compared with the second quarter of 2022. - Youdao net revenues were
RMB1.2 billion (US ), an increase of$166.4 million 26.2% compared with the second quarter of 2022. - Cloud Music net revenues were
RMB1.9 billion (US ), a decrease of$268.7 million 11.1% compared with the second quarter of 2022. - Innovative businesses and others net revenues were
RMB2.1 billion (US ), an increase of$283.7 million 9.9% compared with the second quarter of 2022. - Gross profit was
RMB14.4 billion (US ), an increase of$2.0 billion 11.1% compared with the second quarter of 2022. - Total operating expenses were
RMB8.3 billion (US ), an increase of$1.1 billion 4.0% compared with the second quarter of 2022. - Net income attributable to the Company's shareholders was
RMB8.2 billion (US ). Non-GAAP net income from continuing operations attributable to the Company's shareholders was$1.1 billion RMB9.0 billion (US ).[1]$1.2 billion - Basic net income per share was
US ($0.35 US per ADS). Non-GAAP basic net income from continuing operations per share was$1.77 US ($0.39 US per ADS).[1]$1.93
[1] As used in this announcement, non-GAAP net income from continuing operations attributable to the Company's shareholders and non-GAAP basic and diluted net income from continuing operations 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. |
Second Quarter 2023 and Recent Operational Highlights
- Released new hit titles in June across diverse genres and strengthened global appeal:
- Justice mobile game led
China's iOS top grossing and download charts following its launch. - Racing Master ranked No. 3 on
China's iOS top grossing chart soon after its launch. - Badlanders ranked No. 2 on
China's iOS top download chart soon after its launch. - Launched Harry Potter: Magic Awakened in the global market, including
Japan ,North America andEurope . - Achieved steady performances with longstanding flagship titles including the Fantasy Westward Journey series and maintained the popularity of hit games including Eggy Party, Identity V and Justice.
- Bolstered robust game pipeline with ongoing development of multiple highly anticipated games in diversified genres.
- Delivered notable growth of subscription-based memberships for Cloud Music, driving meaningful profit margin expansion and setting the stage for future development.
- Achieved robust year-over-year revenue growth and improved operating cash flow for Youdao, driven by the strong performance of learning services and online marketing services.
"Our steady second quarter results reflect our dedication to producing exceptional content across our businesses, which generated total net revenues of
"In addition to games, our Cloud Music and Youdao businesses remain on track and are generating premium content. Throughout the NetEase family, we prioritize the creation of novel and high-quality products and services that grow our global appeal, elevate user experiences, and advance their respective industries," Mr. Ding concluded.
Second Quarter 2023 Financial Results
Net Revenues
Net revenues for the second quarter of 2023 were
Net revenues from games and related value-added services were
Net revenues from Youdao were
Net revenues from Cloud Music were
Net revenues from innovative businesses and others were
Gross Profit
Gross profit for the second quarter of 2023 was
The quarter-over-quarter decrease in games and related value-added services' gross profit was primarily due to decreased net revenues from the operation of online games as a result of seasonality. The year-over-year increase was primarily due to increased net revenues from the operation of online games such as Eggy Party, as well as decreased royalty fees due to the termination of certain licensed games.
The quarter-over-quarter decrease in Youdao's gross profit primarily resulted from decreased revenue contribution from its learning services. The year-over-year increase primarily resulted from increased revenue contribution from its online marketing services and learning services.
The quarter-over-quarter and year-over-year increases in Cloud Music's gross profit primarily resulted from increased net revenues from sales of membership subscriptions and continued improvement in cost control measures.
The quarter-over-quarter and year-over-year increases in innovative businesses and others' gross profit were primarily due to increased e-commerce net revenues from Yanxuan.
Gross Profit Margin
Gross profit margin for games and related value-added services for the second quarter of 2023 was
Gross profit margin for Youdao for the second quarter of 2023 was
Gross profit margin for Cloud Music for the second quarter of 2023 was
Gross profit margin for innovative businesses and others for the second quarter of 2023 was
Operating Expenses
Total operating expenses for the second quarter of 2023 were
Other Income/ (Expenses)
Other income/ (expenses) consisted of investment (loss)/ income, interest income, exchange gains/ (losses) and others. The quarter-over-quarter increase was mainly due to net unrealized exchange gains arising from the Company's
Income Tax
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
NetEase reported basic net income of
Non-GAAP net income from continuing operations attributable to the Company's shareholders totaled
NetEase reported non-GAAP basic net income from continuing operations of
Other Financial Information
As of June 30, 2023, the Company's total cash and cash equivalents, current and non-current time deposits and restricted cash, as well as short-term investments balance, minus short-term and long-term loans, totaled RMB99.6 billion (
Quarterly Dividend
The board of directors has approved a dividend of
NetEase paid 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.
Share Repurchase Program
On November 17, 2022, the Company announced that its board of directors had approved a new share repurchase program of up to
The extent to which NetEase repurchases its ADSs and its ordinary shares depends upon a variety of factors, including market conditions. These programs may be suspended or discontinued at any time.
**
Conference Call
NetEase's management team will host a teleconference call with simultaneous webcast at 8:00 a.m. New York Time on Thursday, August 24, 2023 (
Interested parties may participate in the conference call by dialing 1-914-202-3258 and providing conference ID: 10032534, 15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 1-855-883-1031 and entering PIN: 10032534. The replay will be available through August 31, 2023.
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 and HKEX: 9999, "NetEase") is a leading internet and game services provider centered around premium content. With extensive offerings across its expanding gaming ecosystem, the Company develops and operates some of the most popular and longest running mobile and PC games available in
Powered by one of the largest in-house game R&D teams focused on mobile, PC and console, NetEase creates superior gaming experiences, inspires players, and passionately delivers value for its thriving community worldwide. By infusing play with culture, and education with technology, NetEase transforms gaming into a meaningful vehicle to build a more entertaining and enlightened world.
Beyond games, NetEase service offerings include its majority-controlled subsidiaries Youdao (NYSE: DAO), an intelligent learning company with industry-leading technology, and Cloud Music (HKEX: 9899), a well-known online music platform featuring a vibrant content community, as well as Yanxuan, NetEase's private label consumer lifestyle brand.
NetEase's market-leading ESG initiatives are among the most recognized in the global media and entertainment industry, earning it inclusion in 2022 Dow Jones Sustainability World Index, 2022 Dow Jones Sustainability Emerging Markets Index, and 2023 Bloomberg Gender-Equality Index, as well as receiving an "A" rating from MSCI. 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
Non-GAAP Financial Measures
NetEase considers and uses non-GAAP financial measures, such as non-GAAP net income from continuing operations attributable to the Company's shareholders and non-GAAP basic and diluted net income from continuing operations 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
NetEase defines non-GAAP net income from continuing operations attributable to the Company's shareholders as net income from continuing operations attributable to the Company's shareholders excluding share-based compensation expenses. Non-GAAP net income from continuing operations attributable to the Company's shareholders enables NetEase's management to assess its operating results without considering the impact of share-based compensation expenses. NetEase believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating the Company's current operating performance and prospects in the same manner as management does, if they so choose. NetEase also believes that the use of this non-GAAP financial measure facilitates investors' assessment of its operating performance.
Non-GAAP financial measures are not defined under
NetEase compensates for these limitations by reconciling non-GAAP net income from continuing operations attributable to the Company's shareholders to the nearest
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, | June 30, | June 30, | |||||||||||||||||||||||||||||
2022 | 2023 | 2023 | |||||||||||||||||||||||||||||
RMB | RMB | USD (Note 1) | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||||||
Cash and cash equivalents | 24,889,000 | 12,766,270 | 1,760,549 | ||||||||||||||||||||||||||||
Time deposits | 84,947,679 | 90,195,524 | 12,438,532 | ||||||||||||||||||||||||||||
Restricted cash | 2,699,055 | 2,912,852 | 401,701 | ||||||||||||||||||||||||||||
Accounts receivable, net | 5,002,872 | 5,343,028 | 736,837 | ||||||||||||||||||||||||||||
Inventories | 993,636 | 806,960 | 111,285 | ||||||||||||||||||||||||||||
Prepayments and other current assets, net | 5,448,284 | 5,352,876 | 738,195 | ||||||||||||||||||||||||||||
Short-term investments | 7,622,673 | 6,846,342 | 944,154 | ||||||||||||||||||||||||||||
Total current assets | 131,603,199 | 124,223,852 | 17,131,253 | ||||||||||||||||||||||||||||
Non-current assets: | |||||||||||||||||||||||||||||||
Property, equipment and software, net | 6,342,330 | 7,347,204 | 1,013,226 | ||||||||||||||||||||||||||||
Land use rights, net | 4,121,767 | 4,147,468 | 571,962 | ||||||||||||||||||||||||||||
Deferred tax assets | 1,480,789 | 1,320,697 | 182,132 | ||||||||||||||||||||||||||||
Time deposits | 2,973,840 | 2,681,840 | 369,843 | ||||||||||||||||||||||||||||
Restricted cash | 270 | 290 | 40 | ||||||||||||||||||||||||||||
Other long-term assets | 26,238,790 | 28,184,371 | 3,886,803 | ||||||||||||||||||||||||||||
Total non-current assets | 41,157,786 | 43,681,870 | 6,024,006 | ||||||||||||||||||||||||||||
Total assets | 172,760,985 | 167,905,722 | 23,155,259 | ||||||||||||||||||||||||||||
Liabilities, Redeemable Noncontrolling Interests | |||||||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||||||
Accounts payable | 1,507,141 | 740,607 | 102,134 | ||||||||||||||||||||||||||||
Salary and welfare payables | 4,732,941 | 3,386,236 | 466,983 | ||||||||||||||||||||||||||||
Taxes payable | 2,813,096 | 2,560,047 | 353,047 | ||||||||||||||||||||||||||||
Short-term loans | 23,875,704 | 11,881,623 | 1,638,551 | ||||||||||||||||||||||||||||
Contract liabilities | 12,518,890 | 12,943,844 | 1,785,038 | ||||||||||||||||||||||||||||
Accrued liabilities and other payables | 11,381,075 | 10,826,617 | 1,493,060 | ||||||||||||||||||||||||||||
Total current liabilities | 56,828,847 | 42,338,974 | 5,838,813 | ||||||||||||||||||||||||||||
Non-current liabilities: | |||||||||||||||||||||||||||||||
Deferred tax liabilities | 2,126,120 | 2,209,583 | 304,715 | ||||||||||||||||||||||||||||
Long-term loans | 3,654,964 | 3,953,664 | 545,235 | ||||||||||||||||||||||||||||
Other long-term liabilities | 1,277,574 | 1,137,672 | 156,892 | ||||||||||||||||||||||||||||
Total non-current liabilities | 7,058,658 | 7,300,919 | 1,006,842 | ||||||||||||||||||||||||||||
Total liabilities | 63,887,505 | 49,639,893 | 6,845,655 | ||||||||||||||||||||||||||||
Redeemable noncontrolling interests | 136,440 | 135,415 | 18,675 | ||||||||||||||||||||||||||||
NetEase, Inc.'s shareholders' equity | 104,731,317 | 114,264,783 | 15,757,834 | ||||||||||||||||||||||||||||
Noncontrolling interests | 4,005,723 | 3,865,631 | 533,095 | ||||||||||||||||||||||||||||
Total equity | 108,737,040 | 118,130,414 | 16,290,929 | ||||||||||||||||||||||||||||
Total liabilities, redeemable noncontrolling | 172,760,985 | 167,905,722 | 23,155,259 | ||||||||||||||||||||||||||||
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 | Six Months Ended | |||||||||||||||||||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||
2022 | 2023 | 2023 | 2023 | 2022 | 2023 | 2023 | ||||||||||||||||||||||||||||||
RMB | RMB | RMB | USD (Note 1) | RMB | RMB | USD (Note 1) | ||||||||||||||||||||||||||||||
Net revenues | 23,159,078 | 25,046,287 | 24,011,301 | 3,311,310 | 46,714,920 | 49,057,588 | 6,765,351 | |||||||||||||||||||||||||||||
Cost of revenues | (10,217,587) | (10,149,741) | (9,635,888) | (1,328,851) | (20,937,050) | (19,785,629) | (2,728,563) | |||||||||||||||||||||||||||||
Gross profit | 12,941,491 | 14,896,546 | 14,375,413 | 1,982,459 | 25,777,870 | 29,271,959 | 4,036,788 | |||||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||
Selling and marketing expenses | (3,300,705) | (2,905,046) | (3,271,705) | (451,188) | (6,216,194) | (6,176,751) | (851,813) | |||||||||||||||||||||||||||||
General and administrative expenses | (1,112,755) | (1,021,678) | (1,132,147) | (156,130) | (2,128,524) | (2,153,825) | (297,026) | |||||||||||||||||||||||||||||
Research and development expenses | (3,581,700) | (3,749,732) | (3,908,907) | (539,063) | (6,979,782) | (7,658,639) | (1,056,175) | |||||||||||||||||||||||||||||
Total operating expenses | (7,995,160) | (7,676,456) | (8,312,759) | (1,146,381) | (15,324,500) | (15,989,215) | (2,205,014) | |||||||||||||||||||||||||||||
Operating profit | 4,946,331 | 7,220,090 | 6,062,654 | 836,078 | 10,453,370 | 13,282,744 | 1,831,774 | |||||||||||||||||||||||||||||
Other income/ (expenses): | ||||||||||||||||||||||||||||||||||||
Investment (loss)/ income, net | (707,489) | 471,368 | 287,691 | 39,674 | (1,256,191) | 759,059 | 104,679 | |||||||||||||||||||||||||||||
Interest income, net | 505,991 | 776,030 | 935,578 | 129,022 | 964,235 | 1,711,608 | 236,042 | |||||||||||||||||||||||||||||
Exchange gains/ (losses), net | 865,283 | (386,568) | 1,464,956 | 202,027 | 767,403 | 1,078,388 | 148,717 | |||||||||||||||||||||||||||||
Other, net | 121,175 | 258,033 | 120,826 | 16,663 | 337,505 | 378,859 | 52,247 | |||||||||||||||||||||||||||||
Income before tax | 5,731,291 | 8,338,953 | 8,871,705 | 1,223,464 | 11,266,322 | 17,210,658 | 2,373,459 | |||||||||||||||||||||||||||||
Income tax | (1,259,320) | (1,628,559) | (712,090) | (98,202) | (2,478,591) | (2,340,649) | (322,790) | |||||||||||||||||||||||||||||
Net income from continuing operations | 4,471,971 | 6,710,394 | 8,159,615 | 1,125,262 | 8,787,731 | 14,870,009 | 2,050,669 | |||||||||||||||||||||||||||||
Net income from discontinued operations | 624,864 | - | - | - | 624,864 | - | - | |||||||||||||||||||||||||||||
Net income | 5,096,835 | 6,710,394 | 8,159,615 | 1,125,262 | 9,412,595 | 14,870,009 | 2,050,669 | |||||||||||||||||||||||||||||
Accretion of redeemable noncontrolling | (754) | (860) | (868) | (120) | (1,487) | (1,728) | (238) | |||||||||||||||||||||||||||||
Net loss attributable to noncontrolling | 195,395 | 45,100 | 84,020 | 11,587 | 274,391 | 129,120 | 17,806 | |||||||||||||||||||||||||||||
Net income attributable to the | 5,291,476 | 6,754,634 | 8,242,767 | 1,136,729 | 9,685,499 | 14,997,401 | 2,068,237 | |||||||||||||||||||||||||||||
Including: | ||||||||||||||||||||||||||||||||||||
-Net income from continuing operations | 4,666,612 | 6,754,634 | 8,242,767 | 1,136,729 | 9,060,635 | 14,997,401 | 2,068,237 | |||||||||||||||||||||||||||||
-Net income from discontinued operations | 624,864 | - | - | - | 624,864 | - | - | |||||||||||||||||||||||||||||
Basic net income per share * | 1.62 | 2.10 | 2.56 | 0.35 | 2.96 | 4.66 | 0.64 | |||||||||||||||||||||||||||||
-Continuing operations | 1.43 | 2.10 | 2.56 | 0.35 | 2.77 | 4.66 | 0.64 | |||||||||||||||||||||||||||||
-Discontinued operations | 0.19 | - | - | - | 0.19 | - | - | |||||||||||||||||||||||||||||
Basic net income per ADS * | 8.08 | 10.49 | 12.80 | 1.77 | 14.78 | 23.29 | 3.21 | |||||||||||||||||||||||||||||
-Continuing operations | 7.13 | 10.49 | 12.80 | 1.77 | 13.83 | 23.29 | 3.21 | |||||||||||||||||||||||||||||
-Discontinued operations | 0.95 | - | - | - | 0.95 | - | - | |||||||||||||||||||||||||||||
Diluted net income per share * | 1.60 | 2.07 | 2.54 | 0.35 | 2.93 | 4.61 | 0.64 | |||||||||||||||||||||||||||||
-Continuing operations | 1.41 | 2.07 | 2.54 | 0.35 | 2.74 | 4.61 | 0.64 | |||||||||||||||||||||||||||||
-Discontinued operations | 0.19 | - | - | - | 0.19 | - | - | |||||||||||||||||||||||||||||
Diluted net income per ADS * | 8.00 | 10.37 | 12.69 | 1.75 | 14.63 | 23.05 | 3.18 | |||||||||||||||||||||||||||||
-Continuing operations | 7.05 | 10.37 | 12.69 | 1.75 | 13.69 | 23.05 | 3.18 | |||||||||||||||||||||||||||||
-Discontinued operations | 0.95 | - | - | - | 0.94 | - | - | |||||||||||||||||||||||||||||
Weighted average number of ordinary | ||||||||||||||||||||||||||||||||||||
Basic | 3,274,695 | 3,221,083 | 3,218,783 | 3,218,783 | 3,275,980 | 3,219,926 | 3,219,926 | |||||||||||||||||||||||||||||
Diluted | 3,305,504 | 3,256,511 | 3,248,916 | 3,248,916 | 3,310,809 | 3,252,707 | 3,252,707 | |||||||||||||||||||||||||||||
* 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 | Six Months Ended | |||||||||||||||||||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||
2022 | 2023 | 2023 | 2023 | 2022 | 2023 | 2023 | ||||||||||||||||||||||||||||||
RMB | RMB | RMB | USD (Note 1) | RMB | RMB | USD (Note 1) | ||||||||||||||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||||||||||||||
Net income | 5,096,835 | 6,710,394 | 8,159,615 | 1,125,262 | 9,412,595 | 14,870,009 | 2,050,669 | |||||||||||||||||||||||||||||
Net income from discontinued operations | (624,864) | - | - | - | (624,864) | - | - | |||||||||||||||||||||||||||||
Adjustments to reconcile net income to net cash provided | ||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 609,036 | 1,082,269 | 661,363 | 91,206 | 1,375,216 | 1,743,632 | 240,458 | |||||||||||||||||||||||||||||
Fair value changes of equity security investments | 735,159 | (226,720) | (78,035) | (10,762) | 2,276,161 | (304,755) | (42,028) | |||||||||||||||||||||||||||||
Impairment losses of investments and other long-term assets | 243,085 | - | 47,870 | 6,602 | 248,085 | 47,870 | 6,602 | |||||||||||||||||||||||||||||
Fair value changes of short-term investments | (119,882) | (137,916) | (96,884) | (13,361) | (199,658) | (234,800) | (32,380) | |||||||||||||||||||||||||||||
Share-based compensation cost | 764,447 | 822,413 | 787,862 | 108,652 | 1,510,601 | 1,610,275 | 222,067 | |||||||||||||||||||||||||||||
Allowance for expected credit losses | 10,965 | 20,720 | 8,540 | 1,178 | 10,652 | 29,260 | 4,035 | |||||||||||||||||||||||||||||
Losses/ (gains) on disposal of property, equipment and software | 481 | (610) | 252 | 35 | 1,926 | (358) | (49) | |||||||||||||||||||||||||||||
Unrealized exchange (gains)/ losses | (890,066) | 385,961 | (1,466,295) | (202,211) | (792,032) | (1,080,334) | (148,985) | |||||||||||||||||||||||||||||
Gains on disposal of long-term investments | - | (5,768) | (16,382) | (2,259) | (4,000) | (22,150) | (3,055) | |||||||||||||||||||||||||||||
Deferred income taxes | (169,539) | 577,666 | (334,380) | (46,113) | 145,689 | 243,286 | 33,551 | |||||||||||||||||||||||||||||
Share of results on equity method investees | (134,569) | (95,808) | (129,292) | (17,830) | (1,046,067) | (225,100) | (31,043) | |||||||||||||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||||||||||||||
Accounts receivable | 82,282 | (1,116,282) | 770,551 | 106,264 | 294,357 | (345,731) | (47,678) | |||||||||||||||||||||||||||||
Inventories | 17,791 | 117,330 | 69,410 | 9,572 | 121,382 | 186,740 | 25,753 | |||||||||||||||||||||||||||||
Prepayments and other assets | (163,612) | 125,827 | (7,233) | (997) | (733,455) | 118,594 | 16,355 | |||||||||||||||||||||||||||||
Accounts payable | 48,452 | (612,939) | (115,791) | (15,968) | (43,921) | (728,730) | (100,496) | |||||||||||||||||||||||||||||
Salary and welfare payables | 782,789 | (2,225,737) | 758,106 | 104,548 | (973,435) | (1,467,631) | (202,396) | |||||||||||||||||||||||||||||
Taxes payable | (538,234) | 733,716 | (992,892) | (136,926) | (464,788) | (259,176) | (35,742) | |||||||||||||||||||||||||||||
Contract liabilities | 279,669 | 489,991 | (41,196) | (5,681) | 201,469 | 448,795 | 61,892 | |||||||||||||||||||||||||||||
Accrued liabilities and other payables | 600,934 | (643,836) | (306,784) | (42,312) | 497,798 | (950,620) | (131,099) | |||||||||||||||||||||||||||||
Net cash provided by operating activities | 6,631,159 | 6,000,671 | 7,678,405 | 1,058,899 | 11,213,711 | 13,679,076 | 1,886,431 | |||||||||||||||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||||||||||||||
Purchase of property, equipment and software | (445,054) | (652,939) | (520,544) | (71,786) | (1,194,415) | (1,173,483) | (161,831) | |||||||||||||||||||||||||||||
Proceeds from sale of property, equipment and software | 23,338 | 2,504 | 4,292 | 592 | 35,903 | 6,796 | 937 | |||||||||||||||||||||||||||||
Purchase of intangible assets, content and licensed copyrights | (85,121) | (826,682) | (283,321) | (39,072) | (228,957) | (1,110,003) | (153,076) | |||||||||||||||||||||||||||||
Net change in short-term investments with terms of three | (159,173) | (723,151) | 1,630,013 | 224,789 | 1,551,672 | 906,862 | 125,062 | |||||||||||||||||||||||||||||
Purchase of short-term investments with terms over three | - | - | - | - | (1,250,000) | - | - | |||||||||||||||||||||||||||||
Proceeds from maturities of short-term investments with terms | 1,459,172 | 104,269 | - | - | 2,013,003 | 104,269 | 14,379 | |||||||||||||||||||||||||||||
Investment in long-term investments | (899,968) | (1,229,048) | (270,228) | (37,266) | (2,590,239) | (1,499,276) | (206,760) | |||||||||||||||||||||||||||||
Proceeds from disposal of long-term investments | 6,413 | 41,280 | 16,531 | 2,280 | 40,650 | 57,811 | 7,973 | |||||||||||||||||||||||||||||
Placement/ rollover of matured time deposits | (33,122,029) | (36,320,103) | (10,874,831) | (1,499,708) | (57,168,026) | (47,194,934) | (6,508,479) | |||||||||||||||||||||||||||||
Proceeds from maturities of time deposits | 32,100,141 | 22,332,349 | 21,918,791 | 3,022,740 | 46,799,936 | 44,251,140 | 6,102,511 | |||||||||||||||||||||||||||||
Change in other long-term assets | (60,900) | (120,841) | (31,189) | (4,301) | (230,445) | (152,030) | (20,966) | |||||||||||||||||||||||||||||
Net cash (used in)/ provided by investing activities | (1,183,181) | (17,392,362) | 11,589,514 | 1,598,268 | (12,220,918) | (5,802,848) | (800,250) | |||||||||||||||||||||||||||||
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 | Six Months Ended | |||||||||||||||||||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||
2022 | 2023 | 2023 | 2023 | 2022 | 2023 | 2023 | ||||||||||||||||||||||||||||||
RMB | RMB | RMB | USD (Note 1) | RMB | RMB | USD (Note 1) | ||||||||||||||||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||||||||||||||
Net changes from loans with terms of three months or less | 2,721,487 | 2,638,040 | (14,970,935) | (2,064,586) | 6,124,682 | (12,332,895) | (1,700,784) | |||||||||||||||||||||||||||||
Proceed of loans with terms over three months | 1,641,708 | 1,279,559 | 2,171,541 | 299,469 | 3,556,918 | 3,451,100 | 475,928 | |||||||||||||||||||||||||||||
Payment of loans with terms over three months | (32,273) | (40,422) | (3,233,500) | (445,920) | (32,273) | (3,273,922) | (451,494) | |||||||||||||||||||||||||||||
Net Amounts received/ (paid) related to capital contribution from | 33,200 | 24,349 | 22,228 | 3,065 | (68,842) | 46,577 | 6,423 | |||||||||||||||||||||||||||||
Cash paid for repurchase of NetEase's ADSs/ purchase of | (2,119,613) | (2,116,757) | (2,195,210) | (302,733) | (3,363,530) | (4,311,967) | (594,647) | |||||||||||||||||||||||||||||
Dividends paid to NetEase's shareholders | (1,403,637) | (1,212,340) | (2,119,316) | (292,267) | (3,087,109) | (3,331,656) | (459,456) | |||||||||||||||||||||||||||||
Net cash provided by/ (used in) financing activities | 840,872 | 572,429 | (20,325,192) | (2,802,972) | 3,129,846 | (19,752,763) | (2,724,030) | |||||||||||||||||||||||||||||
Effect of exchange rate changes on cash, cash equivalents and | 74,898 | 15,498 | (47,876) | (6,602) | 53,696 | (32,378) | (4,465) | |||||||||||||||||||||||||||||
Net increase/ (decrease) in cash, cash equivalents and restricted cash | 6,363,748 | (10,803,764) | (1,105,149) | (152,407) | 2,176,335 | (11,908,913) | (1,642,314) | |||||||||||||||||||||||||||||
Cash, cash equivalents and restricted cash, at the beginning | 13,188,702 | 27,588,325 | 16,784,561 | 2,314,697 | 17,376,115 | 27,588,325 | 3,804,604 | |||||||||||||||||||||||||||||
Cash, cash equivalents and restricted cash, at end of the period | 19,552,450 | 16,784,561 | 15,679,412 | 2,162,290 | 19,552,450 | 15,679,412 | 2,162,290 | |||||||||||||||||||||||||||||
Supplemental disclosures of cash flow information: | ||||||||||||||||||||||||||||||||||||
Cash paid for income tax, net | 1,055,096 | 1,074,579 | 1,625,045 | 224,104 | 2,570,426 | 2,699,624 | 372,295 | |||||||||||||||||||||||||||||
Cash paid for interest expense | 93,079 | 275,714 | 326,646 | 45,047 | 130,820 | 602,360 | 83,069 | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of this announcement. |
NETEASE, INC. | ||||||||||||||||||||||||||||||||
UNAUDITED SEGMENT INFORMATION | ||||||||||||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||
2022 | 2023 | 2023 | 2023 | 2022 | 2023 | 2023 | ||||||||||||||||||||||||||
RMB | RMB | RMB | USD (Note 1) | RMB | RMB | USD (Note 1) | ||||||||||||||||||||||||||
Net revenues: | ||||||||||||||||||||||||||||||||
Games and related value-added services | 18,139,843 | 20,065,597 | 18,798,646 | 2,592,452 | 36,781,657 | 38,864,243 | 5,359,624 | |||||||||||||||||||||||||
Youdao | 956,225 | 1,163,270 | 1,206,634 | 166,402 | 2,156,766 | 2,369,904 | 326,825 | |||||||||||||||||||||||||
Cloud Music | 2,191,510 | 1,959,841 | 1,948,539 | 268,716 | 4,258,716 | 3,908,380 | 538,990 | |||||||||||||||||||||||||
Innovative businesses and others | 1,871,500 | 1,857,579 | 2,057,482 | 283,740 | 3,517,781 | 3,915,061 | 539,912 | |||||||||||||||||||||||||
Total net revenues | 23,159,078 | 25,046,287 | 24,011,301 | 3,311,310 | 46,714,920 | 49,057,588 | 6,765,351 | |||||||||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||||||||||
Games and related value-added services | (6,375,598) | (6,683,048) | (6,122,836) | (844,379) | (13,427,648) | (12,805,884) | (1,766,012) | |||||||||||||||||||||||||
Youdao | (546,498) | (561,420) | (639,459) | (88,185) | (1,109,189) | (1,200,879) | (165,609) | |||||||||||||||||||||||||
Cloud Music | (1,905,954) | (1,520,378) | (1,422,855) | (196,221) | (3,721,603) | (2,943,233) | (405,890) | |||||||||||||||||||||||||
Innovative businesses and others | (1,389,537) | (1,384,895) | (1,450,738) | (200,066) | (2,678,610) | (2,835,633) | (391,052) | |||||||||||||||||||||||||
Total cost of revenues | (10,217,587) | (10,149,741) | (9,635,888) | (1,328,851) | (20,937,050) | (19,785,629) | (2,728,563) | |||||||||||||||||||||||||
Gross profit: | ||||||||||||||||||||||||||||||||
Games and related value-added services | 11,764,245 | 13,382,549 | 12,675,810 | 1,748,073 | 23,354,009 | 26,058,359 | 3,593,612 | |||||||||||||||||||||||||
Youdao | 409,727 | 601,850 | 567,175 | 78,217 | 1,047,577 | 1,169,025 | 161,216 | |||||||||||||||||||||||||
Cloud Music | 285,556 | 439,463 | 525,684 | 72,495 | 537,113 | 965,147 | 133,100 | |||||||||||||||||||||||||
Innovative businesses and others | 481,963 | 472,684 | 606,744 | 83,674 | 839,171 | 1,079,428 | 148,860 | |||||||||||||||||||||||||
Total gross profit | 12,941,491 | 14,896,546 | 14,375,413 | 1,982,459 | 25,777,870 | 29,271,959 | 4,036,788 | |||||||||||||||||||||||||
Gross profit margin: | ||||||||||||||||||||||||||||||||
Games and related value-added services | 64.9 % | 66.7 % | 67.4 % | 67.4 % | 63.5 % | 67.0 % | 67.0 % | |||||||||||||||||||||||||
Youdao | 42.8 % | 51.7 % | 47.0 % | 47.0 % | 48.6 % | 49.3 % | 49.3 % | |||||||||||||||||||||||||
Cloud Music | 13.0 % | 22.4 % | 27.0 % | 27.0 % | 12.6 % | 24.7 % | 24.7 % | |||||||||||||||||||||||||
Innovative businesses and others | 25.8 % | 25.4 % | 29.5 % | 29.5 % | 23.9 % | 27.6 % | 27.6 % | |||||||||||||||||||||||||
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
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 | Six Months Ended | ||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | |||||||
2022 | 2023 | 2023 | 2023 | 2022 | 2023 | 2023 | |||||||
RMB | RMB | RMB | USD (Note 1) | RMB | RMB | USD (Note 1) | |||||||
Share-based compensation cost included in: | |||||||||||||
Cost of revenues | 173,840 | 203,514 | 193,001 | 26,616 | 371,975 | 396,515 | 54,682 | ||||||
Operating expenses | |||||||||||||
Selling and marketing expenses | 31,817 | 32,353 | 31,069 | 4,285 | 62,190 | 63,422 | 8,746 | ||||||
General and administrative expenses | 297,891 | 294,281 | 281,326 | 38,797 | 576,953 | 575,607 | 79,380 | ||||||
Research and development expenses | 260,899 | 292,265 | 282,466 | 38,954 | 499,483 | 574,731 | 79,259 | ||||||
The accompanying notes are an integral part of this announcement. |
Note 3: The financial information prepared and presented in this announcement might be different from those published and to be published by NetEase's listed subsidiaries to meet the disclosure requirements under
Note 4: The unaudited reconciliation of 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 | Six Months Ended | |||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | ||||||||
2022 | 2023 | 2023 | 2023 | 2022 | 2023 | 2023 | ||||||||
RMB | RMB | RMB | USD (Note 1) | RMB | RMB | USD (Note 1) | ||||||||
Net income from continuing operations attributable to the | 4,666,612 | 6,754,634 | 8,242,767 | 1,136,729 | 9,060,635 | 14,997,401 | 2,068,237 | |||||||
Add: Share-based compensation | 743,198 | 811,600 | 774,683 | 106,834 | 1,466,801 | 1,586,283 | 218,758 | |||||||
Non-GAAP net income from continuing operations | 5,409,810 | 7,566,234 | 9,017,450 | 1,243,563 | 10,527,436 | 16,583,684 | 2,286,995 | |||||||
Non-GAAP basic net income from continuing | 1.65 | 2.35 | 2.80 | 0.39 | 3.21 | 5.15 | 0.71 | |||||||
Non-GAAP basic net income from continuing | 8.26 | 11.74 | 14.01 | 1.93 | 16.07 | 25.75 | 3.55 | |||||||
Non-GAAP diluted net income from continuing | 1.64 | 2.32 | 2.78 | 0.38 | 3.18 | 5.10 | 0.70 | |||||||
Non-GAAP diluted net income from continuing | 8.18 | 11.62 | 13.88 | 1.91 | 15.90 | 25.49 | 3.52 | |||||||
* Each ADS represents five ordinary shares. |
The accompanying notes are an integral part of this announcement. |
Note 5: A reconciliation statement to the International Financial Reporting Standards in respect of the Company's unaudited financial results for the six months ended June 30, 2023 prepared in accordance with
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SOURCE NetEase, Inc.
