NetEase Reports Fourth Quarter and Fiscal Year 2021 Unaudited Financial Results
NetEase (NTES) reported robust financial results for Q4 2021, with net revenues of RMB24.4 billion (US$3.8 billion), a 23.3% increase year-over-year. Online game services saw significant growth, generating RMB17.4 billion (US$2.7 billion), a 29.8% rise, while Youdao and Cloud Music also experienced revenue growth. Gross profit reached RMB12.9 billion (US$2.0 billion), marking a 30.1% increase compared to Q4 2020. The net income attributable to shareholders stood at RMB5.7 billion (US$893.5 million). The company is optimistic about 2022, expecting further growth with new game launches.
- Net revenues for Q4 2021 increased by 23.3% year-over-year to RMB24.4 billion (US$3.8 billion).
- Online game services revenues grew by 29.8% to RMB17.4 billion (US$2.7 billion).
- Gross profit for Q4 2021 rose by 30.1% to RMB12.9 billion (US$2.0 billion).
- Net income attributable to shareholders increased significantly to RMB5.7 billion (US$893.5 million).
- Successful launch of new titles, enhancing competitive portfolio.
- Youdao's revenues declined from the previous quarter, indicating challenges in after-school tutoring services.
HANGZHOU, China, Feb. 24, 2022 /PRNewswire/ -- NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, "NetEase" or the "Company"), one of China's leading internet and online game services providers, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2021.
Fourth Quarter 2021 Financial Highlights
- Net revenues were RMB24.4 billion (US
$3.8 billion ), an increase of23.3% compared with the fourth quarter of 2020. - Online game services net revenues were RMB17.4 billion (US
$2.7 billion ), an increase of29.8% compared with the fourth quarter of 2020. - Youdao net revenues were RMB1.3 billion (US
$209.3 million ), an increase of20.5% compared with the fourth quarter of 2020. - Cloud Music net revenues were RMB1.9 billion (US
$296.5 million ), an increase of23.9% compared with the fourth quarter of 2020. [1] - Innovative businesses and others net revenues were RMB3.8 billion (US
$588.9 million ), an increase of0.6% compared with the fourth quarter of 2020. - Gross profit was RMB12.9 billion (US
$2.0 billion ), an increase of30.1% compared with the fourth quarter of 2020. - Total operating expenses were RMB8.3 billion (US
$1.3 billion ), an increase of20.2% compared with the fourth quarter of 2020. - Net income attributable to the Company's shareholders was RMB5.7 billion (US
$893.5 million ). Non-GAAP net income attributable to the Company's shareholders was RMB6.6 billion (US$1.0 billion ). [2] - Basic net income per share was US
$0.27 (US$1.36 per ADS). Non-GAAP basic net income per share was US$0.32 (US$1.58 per ADS). [2]
Fourth Quarter 2021 and Early 2022 Operational Highlights
- New hit titles amassed immediate player popularity including:
- Naraka: Bladepoint, which continually hit record-high users and was named a "Top Seller" on Steam's Best of 2021 games list. A new Bruce Lee-themed crossover addition also invigorated the global player community.
- Harry Potter: Magic Awakened, with captivating content updates that drove the game ranking to a leading position on China's iOS download chart and grossing chart multiple times.
- The Showbiz: Dream Chaser, which ranked No. 1 on China's iOS download chart after its December 2021 debut.
- Extended the reach of leading franchise titles including both the Fantasy Westward Journey and Westward Journey Online series.
- Continued the advancement of upcoming games pipeline such as console and mobile versions of Naraka: Bladepoint, Diablo® Immortal™ and Ghost World Chronicle, as well as the roll-out of Harry Potter: Magic Awakened and Dead by Daylight Mobile -NetEase in international markets.
- Achieved continuing operating cash inflow from Youdao for the fourth quarter of 2021, while advancing its learning services and smart devices.
- Successfully completed the initial public offering and listing of Cloud Village Inc. (HKEX: 9899, "Cloud Village") on The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") in December 2021. Increased Cloud Music's MAUs of online music services around
1% from 2020 to 2021. Continued to nurture independent artists, serving more than 400,000 independent musicians by the end of 2021 through Cloud Music platforms.
[1] Effective in the fourth quarter of 2021, the Company changed its segment disclosure to separately report the results of Cloud Music. As a result, the Company now reports segments as online game services, Youdao, Cloud Music and innovative businesses and others. See "Change of segment reporting" in this announcement. |
[2] As used in this announcement, non-GAAP net income attributable to the Company's shareholders and non-GAAP basic and diluted net income per share and per ADS are defined to exclude share-based compensation expenses. See "Unaudited Reconciliation of GAAP and Non-GAAP Results" in this announcement. |
"2021 was a fruitful year with exciting new titles and steady development that propelled growth across our business. We closed the year with total net revenues of RMB24.4 billion in the fourth quarter, up
"Having completed Cloud Village's IPO, we will continue to improve our music platforms' infrastructure and offerings to enrich our users' experience. In 2022 we plan to further cultivate our core interests and enhance content within each of our verticals," Mr. Ding concluded.
Fourth Quarter 2021 Financial Results
Net Revenues
Net revenues for the fourth quarter of 2021 were RMB24,373.6 million (US
Net revenues from online game services were RMB17,397.5 million (US
Net revenues from Youdao were RMB1,333.8 million (US
Net revenues from Cloud Music were RMB1,889.3 million (US
Net revenues from innovative businesses and others were RMB3,753.0 million (US
Gross Profit
Gross profit for the fourth quarter of 2021 was RMB12,917.8 million (US
The quarter-over-quarter and year-over-year increases in online game services gross profit were primarily due to increased net revenues from new games such as Naraka: Bladepoint and Harry Potter: Magic Awakened.
The quarter-over-quarter decrease in Youdao gross profit was primarily due to decreased net revenues from its after-school tutoring services for academic subjects under China's compulsory education system (the "Academic AST Business") which were included in its learning services. The year-over-year increase was primarily due to business development from its learning services.
The quarter-over-quarter increase in Cloud Music gross profit was primarily due to improved cost control. The year-over-year increase was primarily due to the increased net revenues from its social entertainment services and others as well as improved cost control.
The quarter-over-quarter increase in innovative businesses and others gross profit was primarily due to increased gross profit from advertising services and Yanxuan.
Gross Profit Margin
Gross profit margin for online game services for the fourth quarter of 2021 was
Gross profit margin for Youdao for the fourth quarter of 2021 was
Gross profit margin for Cloud Music for the fourth quarter of 2021 was
Gross profit margin for innovative businesses and others for the fourth quarter of 2021 was
Operating Expenses
Total operating expenses for the fourth quarter of 2021 were RMB8,309.6 million (US
Other Income/ (Expenses)
Other income/ (expenses) consisted of investment (loss)/ income, interest income, exchange (losses)/ gains and others. The quarter-over-quarter increase in net other income was mainly due to higher investment income arising from fair value changes of equity investments, partially offset by higher unrealized exchange losses arising from the Company's U.S. dollar-denominated bank deposits and loans balances as the exchange rate of the U.S. dollar against the RMB fluctuated over the periods. The year-over-year increase in net other income was mainly due to higher investment income arising from fair value changes of equity investments and reduced unrealized exchange losses.
Income Taxes
The Company recorded a net income tax charge of RMB934.0 million (US
Net Income and Non-GAAP Net Income
Net income attributable to the Company's shareholders for the fourth quarter of 2021 totaled RMB5,694.2 million (US
Non-GAAP net income attributable to the Company's shareholders for the fourth quarter of 2021 totaled RMB6,595.6 million (US
NetEase reported basic net income of US
NetEase reported non-GAAP basic net income of US
Fiscal Year 2021 Financial Results
Net Revenues
Net revenues for fiscal year 2021 were RMB87,606.0 million (US
Net revenues from online game services were RMB62,806.5 million (US
Net revenues from Youdao were RMB5,354.4 million (US
Net revenues from Cloud Music were RMB6,997.6 million (US
Net revenues from innovative businesses and others were RMB12,447.6 million (US
Gross Profit
Gross profit for fiscal year 2021 was RMB46,970.8 million (US
The year-over-year increase in online game services gross profit was primarily due to increased net revenues resulting from the launch of new games during the year such as Revelation mobile game, Naraka: Bladepoint and Harry Potter: Magic Awakened, as well as from certain existing games such as the Fantasy Westward Journey series and Sky.
The year-over-year increase in Youdao gross profit was primarily attributable to increased gross profit from its learning services.
The year-over-year increase in Cloud Music gross profit was primarily attributable to increased net revenues as well as improved cost control.
The slight year-over-year decrease in innovative businesses and others gross profit was primarily due to decreased gross profit from advertising business.
Operating Expenses
Total operating expenses for fiscal year 2021 were RMB30,553.7 million (US
Other Income/ (Expenses)
Other income/ (expenses) consisted of investment income, interest income, exchange losses and others. The year-over-year increase in net other income was mainly due to a reduction in unrealized exchange losses recorded as well as higher investment income arising from fair value changes of equity investments.
Income Taxes
The Company recorded a net income tax charge of RMB4,128.3 million (US
Net Income and Non-GAAP Net Income
Net income attributable to the Company's shareholders for fiscal year 2021 totaled RMB16,856.8 million (US
Non-GAAP net income attributable to the Company's shareholders for fiscal year 2021 totaled RMB19,761.9 million (US
NetEase reported basic net income of US
NetEase reported non-GAAP basic net income of US
Quarterly Dividend
The board of directors has approved a dividend of US
NetEase paid a dividend of US
Currently, the Company's policy is to set quarterly dividends at an amount equivalent to approximately
Other Information
As of December 31, 2021, the Company's total cash and cash equivalents, current and non-current time deposits and short-term investments balance totaled RMB103.4 billion (US
Update on Youdao's Disposal of Academic After-School Tutoring Business
Youdao has ceased offering after-school tutoring services for academic subjects under China's compulsory education system and completed the disposal of this business.
Change in Segment Reporting
Effective in the fourth quarter of 2021, the Company changed its segment disclosure to separately report the results of its Cloud Music business, generated from its majority-controlled subsidiary Cloud Village which completed its initial public offering and listing on the Hong Kong Stock Exchange in December 2021. As a result, the Company now reports segments as online game services, Youdao, Cloud Music and innovative businesses and others. This change in segment reporting aligns with the manner, in which the Company's chief operating decision maker ("CODM") currently receives and uses financial information to allocate resources and evaluate the performance of reporting segments. The Company retrospectively revised prior period segment information to conform to current periods presentation.
Share Repurchase / Purchase Program
On February 25, 2021, the Company announced that its board of directors had approved a share repurchase program of up to US
On August 31, 2021, the Company announced that its board of directors had approved a share purchase program of up to US
The extent to which NetEase repurchases its ADSs and its ordinary shares or purchases Youdao's ADSs will depend upon a variety of factors, including market conditions. These programs may be suspended or discontinued at any time.
** The United States dollar (US$) amounts disclosed in this announcement are presented solely for the convenience of the reader. The percentages stated are calculated based on RMB.
Conference Call
NetEase's management team will host a teleconference call with simultaneous webcast at 7:00 a.m. New York Time on Thursday, February 24, 2022 (Beijing/Hong Kong Time: 8:00 p.m., Thursday, February 24, 2022). NetEase's management will be on the call to discuss the quarterly results and answer questions.
Interested parties may participate in the conference call by dialing 1-646-828-8073 and providing conference ID: 6712767, 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 6712767#. The replay will be available through March 9, 2022.
This call will be webcast live and the replay will be available for 12 months. Both will be available on NetEase's Investor Relations website at http://ir.netease.com/.
About NetEase, Inc.
As a leading internet technology company based in China, NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, "NetEase") provides premium online services centered around innovative and diverse content, community, communication and commerce. NetEase develops and operates some of China's most popular mobile and PC games. In more recent years, NetEase has expanded into international markets including Japan and North America. In addition to its self-developed game content, NetEase partners with other leading game developers, such as Blizzard Entertainment and Mojang AB (a Microsoft subsidiary), to operate globally renowned games in China. NetEase's other innovative service offerings include the majority-controlled subsidiaries Youdao (NYSE: DAO), China's leading intelligent learning company, and Cloud Village (HKEX: 9899), also known as NetEase Cloud Music, China's leading online music content community, as well as Yanxuan, NetEase's private label e-commerce platform. For more information, please visit: http://ir.netease.com/.
Forward Looking Statements
This announcement contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. In addition, statements that are not historical facts, including statements about NetEase's strategies and business plans, its expectations regarding the growth of its business and its revenue and the quotations from management in this announcement are or contain forward-looking statements. NetEase may also make forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in announcements made on the website of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to: the risk that the online game market will not continue to grow or that NetEase will not be able to maintain its position in that market in China or globally; the risk that COVID-19 or other health risks in China or globally could adversely affect the Company's operations or financial results; risks associated with NetEase's business and operating strategies and its ability to implement such strategies; NetEase's ability to develop and manage its operations and business; competition for, among other things, capital, technology and skilled personnel; potential changes in government regulation that could adversely affect the industry and geographical markets in which NetEase operates, including, among others, initiatives to enhance supervision of companies listed on an overseas stock exchange and tighten scrutiny over data privacy and data security, as well as the risk that NetEase's ADSs could be barred from trading in the United States as a result of the Holding Foreign Companies Accountable Act and the rules promulgated thereunder; the risk that NetEase may not be able to continuously develop new and creative online services or that NetEase will not be able to set, or follow in a timely manner, trends in the market; competition in NetEase's existing and potential markets; and the risk that fluctuations in the value of the Renminbi with respect to other currencies could adversely affect NetEase's business and financial results. Further information regarding these and other risks is included in NetEase's filings with the SEC and announcements on the website of the Hong Kong Stock Exchange. NetEase does not undertake any obligation to update this forward-looking information, except as required under the applicable law.
Non-GAAP Financial Measures
NetEase considers and uses non-GAAP financial measures, such as non-GAAP net income attributable to the Company's shareholders and non-GAAP basic and diluted net income per share and per ADS, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
NetEase defines non-GAAP net income attributable to the Company's shareholders as net income attributable to the Company's shareholders excluding share-based compensation expenses. Non-GAAP net income attributable to the Company's shareholders enables NetEase's management to assess its operating results without considering the impact of share-based compensation expenses. NetEase believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating the Company's current operating performance and prospects in the same manner as management does, if they so choose. NetEase also believes that the use of this non-GAAP financial measure facilitates investors' assessment of its operating performance.
Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP net income attributable to the Company's shareholders is that it does not reflect all items of income / expense that affect our operations. Share-based compensation expenses have been and may continue to be incurred in NetEase's business and are not reflected in the presentation of non-GAAP net income attributable to the Company's shareholders. In addition, the non-GAAP financial measures NetEase uses may differ from the non-GAAP measures used by other companies, including peer companies, and therefore their comparability may be limited.
NetEase compensates for these limitations by reconciling non-GAAP net income attributable to the Company's shareholders to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company's performance. See "Unaudited Reconciliation of GAAP and Non-GAAP Results" at the end of this announcement. NetEase encourages you to review its financial information in its entirety and not rely on a single financial measure.
NETEASE, INC. | |||||||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
December 31, | December 31, | December 31, | |||||||||||||||||||
2020 | 2021 | 2021 | |||||||||||||||||||
RMB | RMB | USD (Note 1) | |||||||||||||||||||
Assets | |||||||||||||||||||||
Current assets: | |||||||||||||||||||||
Cash and cash equivalents | 9,117,219 | 14,498,157 | 2,275,077 | ||||||||||||||||||
Time deposits | 71,079,327 | 70,754,846 | 11,102,979 | ||||||||||||||||||
Restricted cash | 3,051,386 | 2,876,628 | 451,406 | ||||||||||||||||||
Accounts receivable, net | 4,576,445 | 5,507,988 | 864,324 | ||||||||||||||||||
Inventories, net | 591,508 | 964,733 | 151,388 | ||||||||||||||||||
Prepayments and other current assets, net | 6,076,543 | 6,235,857 | 978,541 | ||||||||||||||||||
Short-term investments | 13,273,026 | 12,281,548 | 1,927,243 | ||||||||||||||||||
Assets held for sale | 65,589 | 497 | 78 | ||||||||||||||||||
Total current assets | 107,831,043 | 113,120,254 | 17,751,036 | ||||||||||||||||||
Non-current assets: | |||||||||||||||||||||
Property, equipment and software, net | 4,549,943 | 5,433,858 | 852,691 | ||||||||||||||||||
Land use right, net | 4,178,257 | 4,108,090 | 644,649 | ||||||||||||||||||
Deferred tax assets | 1,086,759 | 1,297,954 | 203,677 | ||||||||||||||||||
Time deposits | 6,630,000 | 5,823,840 | 913,888 | ||||||||||||||||||
Restricted cash | - | 1,330 | 209 | ||||||||||||||||||
Other long-term assets, net | 17,593,117 | 23,857,510 | 3,743,763 | ||||||||||||||||||
Assets held for sale | 5,463 | 1,088 | 171 | ||||||||||||||||||
Total non-current assets | 34,043,539 | 40,523,670 | 6,359,048 | ||||||||||||||||||
Total assets | 141,874,582 | 153,643,924 | 24,110,084 | ||||||||||||||||||
Liabilities, Redeemable Noncontrolling Interests | |||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||
Accounts payable | 1,134,413 | 985,059 | 154,577 | ||||||||||||||||||
Salary and welfare payables | 3,538,732 | 4,133,254 | 648,598 | ||||||||||||||||||
Taxes payable | 4,282,835 | 4,537,050 | 711,962 | ||||||||||||||||||
Short-term loans | 19,504,696 | 19,352,313 | 3,036,800 | ||||||||||||||||||
Deferred revenue | 10,398,872 | 12,132,743 | 1,903,892 | ||||||||||||||||||
Accrued liabilities and other payables | 7,337,672 | 9,360,907 | 1,468,931 | ||||||||||||||||||
Liabilites held for sale | 546,271 | - | - | ||||||||||||||||||
Total current liabilities | 46,743,491 | 50,501,326 | 7,924,760 | ||||||||||||||||||
Non-current liabilities: | |||||||||||||||||||||
Deferred tax liabilities | 713,439 | 1,345,874 | 211,197 | ||||||||||||||||||
Long-term loan | - | 1,275,140 | 200,097 | ||||||||||||||||||
Other long-term liabilities | 623,728 | 1,097,708 | 172,254 | ||||||||||||||||||
Total non-current liabilities | 1,337,167 | 3,718,722 | 583,548 | ||||||||||||||||||
Total liabilities | 48,080,658 | 54,220,048 | 8,508,308 | ||||||||||||||||||
Redeemable noncontrolling interests | 10,796,120 | 145,238 | 22,791 | ||||||||||||||||||
NetEase, Inc.'s shareholders' equity | 82,126,798 | 95,328,080 | 14,959,056 | ||||||||||||||||||
Noncontrolling interests | 871,006 | 3,950,558 | 619,929 | ||||||||||||||||||
Total shareholders' equity | 82,997,804 | 99,278,638 | 15,578,985 | ||||||||||||||||||
Total liabilities, redeemable noncontrolling | 141,874,582 | 153,643,924 | 24,110,084 | ||||||||||||||||||
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 | Year Ended | |||||||||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||
2020 | 2021 | 2021 | 2021 | 2020 | 2021 | 2021 | ||||||||||||||||||||
RMB | RMB | RMB | USD (Note 1) | RMB | RMB | USD (Note 1) | ||||||||||||||||||||
Net revenues | 19,761,738 | 22,190,749 | 24,373,565 | 3,824,744 | 73,667,133 | 87,606,026 | 13,747,297 | |||||||||||||||||||
Cost of revenues | (9,833,976) | (10,379,981) | (11,455,785) | (1,797,662) | (34,683,731) | (40,635,225) | (6,376,553) | |||||||||||||||||||
Gross profit | 9,927,762 | 11,810,768 | 12,917,780 | 2,027,082 | 38,983,402 | 46,970,801 | 7,370,744 | |||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Selling and marketing expenses | (3,076,499) | (3,134,030) | (3,300,032) | (517,847) | (10,703,788) | (12,214,191) | (1,916,673) | |||||||||||||||||||
General and administrative expenses | (809,956) | (1,140,296) | (1,161,876) | (182,324) | (3,371,827) | (4,263,549) | (669,044) | |||||||||||||||||||
Research and development expenses | (3,029,376) | (3,761,239) | (3,847,704) | (603,789) | (10,369,382) | (14,075,991) | (2,208,830) | |||||||||||||||||||
Total operating expenses | (6,915,831) | (8,035,565) | (8,309,612) | (1,303,960) | (24,444,997) | (30,553,731) | (4,794,547) | |||||||||||||||||||
Operating profit | 3,011,931 | 3,775,203 | 4,608,168 | 723,122 | 14,538,405 | 16,417,070 | 2,576,197 | |||||||||||||||||||
Other income/ (expenses): | ||||||||||||||||||||||||||
Investment (loss)/ income, net | (271,866) | (264,611) | 1,627,642 | 255,413 | 1,610,045 | 2,947,721 | 462,562 | |||||||||||||||||||
Interest income, net | 410,001 | 349,550 | 395,029 | 61,989 | 1,598,618 | 1,519,714 | 238,476 | |||||||||||||||||||
Exchange (losses)/ gains, net | (1,801,891) | 153,310 | (331,390) | (52,003) | (3,112,152) | (490,481) | (76,967) | |||||||||||||||||||
Other, net | 139,321 | 117,636 | 297,244 | 46,644 | 737,168 | 710,435 | 111,482 | |||||||||||||||||||
Income before tax | 1,487,496 | 4,131,088 | 6,596,693 | 1,035,165 | 15,372,084 | 21,104,459 | 3,311,750 | |||||||||||||||||||
Income tax | (552,661) | (807,648) | (933,985) | (146,563) | (3,041,849) | (4,128,269) | (647,815) | |||||||||||||||||||
Net income | 934,835 | 3,323,440 | 5,662,708 | 888,602 | 12,330,235 | 16,976,190 | 2,663,935 | |||||||||||||||||||
Accretion and deemed dividends in | (131,604) | (147,825) | (99,914) | (15,678) | (787,029) | (536,981) | (84,265) | |||||||||||||||||||
Net loss attributable to noncontrolling | 172,471 | 6,167 | 131,360 | 20,613 | 519,548 | 417,633 | 65,536 | |||||||||||||||||||
Net income attributable to the | 975,702 | 3,181,782 | 5,694,154 | 893,537 | 12,062,754 | 16,856,842 | 2,645,206 | |||||||||||||||||||
Net income per share * | ||||||||||||||||||||||||||
Basic | 0.29 | 0.96 | 1.74 | 0.27 | 3.65 | 5.07 | 0.80 | |||||||||||||||||||
Diluted | 0.29 | 0.95 | 1.71 | 0.27 | 3.60 | 5.01 | 0.79 | |||||||||||||||||||
Net income per ADS * | ||||||||||||||||||||||||||
Basic | 1.45 | 4.78 | 8.68 | 1.36 | 18.25 | 25.34 | 3.98 | |||||||||||||||||||
Diluted | 1.43 | 4.73 | 8.57 | 1.34 | 18.01 | 25.03 | 3.93 | |||||||||||||||||||
Weighted average number of ordinary | ||||||||||||||||||||||||||
Basic | 3,362,793 | 3,325,892 | 3,281,172 | 3,281,172 | 3,305,448 | 3,325,864 | 3,325,864 | |||||||||||||||||||
Diluted | 3,411,169 | 3,361,727 | 3,323,004 | 3,323,004 | 3,349,759 | 3,367,478 | 3,367,478 | |||||||||||||||||||
* 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 | Year Ended | |||||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | ||||||||||||||||
2020 | 2021 | 2021 | 2021 | 2020 | 2021 | 2021 | ||||||||||||||||
RMB | RMB | RMB | USD (Note 1) | RMB | RMB | USD (Note 1) | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||
Net income | 934,835 | 3,323,440 | 5,662,708 | 888,602 | 12,330,235 | 16,976,190 | 2,663,935 | |||||||||||||||
Adjustments to reconcile net income to net cash provided | ||||||||||||||||||||||
Depreciation and amortization | 962,526 | 805,485 | 836,042 | 131,193 | 3,457,782 | 3,275,727 | 514,033 | |||||||||||||||
Fair value changes of equity security investments | 559,104 | 1,194,338 | (984,901) | (154,552) | (720,565) | (471,880) | (74,048) | |||||||||||||||
Impairment losses of investments and other long-term assets | 51,795 | 26,055 | 69,572 | 10,917 | 58,395 | 100,424 | 15,759 | |||||||||||||||
Fair value changes of short-term investments | (118,945) | (184,564) | (166,513) | (26,129) | (580,732) | (639,757) | (100,392) | |||||||||||||||
Share-based compensation cost | 628,979 | 688,226 | 1,002,899 | 157,377 | 2,663,489 | 3,041,492 | 477,276 | |||||||||||||||
(Reversal of)/ allowance for expected credit losses | (5,888) | 212,010 | 12,932 | 2,029 | 40,600 | 265,930 | 41,730 | |||||||||||||||
Losses on disposal of property, equipment and software | 2,730 | 4,008 | 48,779 | 7,654 | 6,482 | 54,052 | 8,482 | |||||||||||||||
Unrealized exchange losses/ (gains) | 1,796,532 | (157,292) | 347,235 | 54,489 | 3,102,492 | 488,604 | 76,673 | |||||||||||||||
Losses/ (gains) on disposal of long-term investments, | 178 | (1) | (13,091) | (2,054) | (27,063) | (186,920) | (29,332) | |||||||||||||||
Deferred income taxes | (74,041) | 307,994 | (431,015) | (67,636) | 88,179 | 407,948 | 64,016 | |||||||||||||||
Share of results on equity method investees and revaluation | (216,528) | (730,363) | (448,053) | (70,309) | (302,602) | (1,573,068) | (246,849) | |||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||
Accounts receivable | 355,495 | (1,178,290) | (97,064) | (15,231) | (530,413) | (1,186,586) | (186,201) | |||||||||||||||
Inventories | (96,499) | (154,072) | 73,588 | 11,548 | 29,699 | (343,587) | (53,916) | |||||||||||||||
Prepayments and other assets | 791,254 | (38,490) | 870,684 | 136,629 | (13,554) | 640,349 | 100,485 | |||||||||||||||
Accounts payable | 136,213 | 172,696 | (89,207) | (13,999) | (86,352) | (155,262) | (24,364) | |||||||||||||||
Salary and welfare payables | 1,382,442 | (647,029) | 1,521,743 | 238,795 | 528,927 | 505,334 | 79,298 | |||||||||||||||
Taxes payable | 220,244 | (434,893) | 528,725 | 82,968 | 1,126,648 | 255,060 | 40,024 | |||||||||||||||
Deferred revenue | 568,704 | 2,154,751 | (1,162,982) | (182,497) | 2,342,916 | 1,351,261 | 212,042 | |||||||||||||||
Accrued liabilities and other payables | 335,117 | 928,647 | 786,517 | 123,422 | 1,373,608 | 2,121,416 | 332,896 | |||||||||||||||
Net cash provided by operating activities | 8,214,247 | 6,292,656 | 8,368,598 | 1,313,216 | 24,888,171 | 24,926,727 | 3,911,547 | |||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||
Purchase of property, equipment and software | (303,347) | (407,688) | (442,524) | (69,442) | (1,055,572) | (1,601,830) | (251,362) | |||||||||||||||
Proceeds from sale of property, equipment and software | 7,895 | 11,030 | 56,517 | 8,869 | 17,540 | 71,524 | 11,224 | |||||||||||||||
Purchase of intangible assets, content and licensed | (333,507) | (218,168) | (297,142) | (46,628) | (2,234,915) | (1,508,179) | (236,666) | |||||||||||||||
Net change in short-term investments with terms of three | (2,257,404) | 167,978 | (1,474,371) | (231,361) | (1,655,930) | 3,694,890 | 579,809 | |||||||||||||||
Purchase of short-term investments with terms over three | (2,200,000) | (630,000) | (4,300,000) | (674,764) | (19,905,000) | (15,285,000) | (2,398,550) | |||||||||||||||
Proceeds from maturities of short-term investments with terms | 3,597,659 | 6,251,750 | 3,313,543 | 519,967 | 24,126,210 | 13,235,845 | 2,076,993 | |||||||||||||||
Investment in long-term investments and acquisition of | (1,034,392) | (586,124) | (2,020,029) | (316,987) | (2,407,692) | (6,541,567) | (1,026,515) | |||||||||||||||
Proceeds from disposal of long-term investments, | 93,926 | 33,731 | 616,542 | 96,749 | 722,076 | 1,115,457 | 175,039 | |||||||||||||||
Placement/rollover of matured time deposits | (14,720,632) | (11,723,614) | (26,628,133) | (4,178,535) | (91,518,767) | (81,298,080) | (12,757,443) | |||||||||||||||
Proceeds from maturities of time deposits | 18,246,875 | 28,328,155 | 15,707,821 | 2,464,900 | 64,880,317 | 81,307,297 | 12,758,889 | |||||||||||||||
Change in other long-term assets | (52,092) | (69,429) | (99,692) | (15,644) | (160,674) | (268,651) | (42,157) | |||||||||||||||
Net cash provided by/(used in) investing activities | 1,044,981 | 21,157,621 | (15,567,468) | (2,442,876) | (29,192,407) | (7,078,294) | (1,110,739) | |||||||||||||||
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 | Year Ended | |||||||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | ||||||||||||||||||
2020 | 2021 | 2021 | 2021 | 2020 | 2021 | 2021 | ||||||||||||||||||
RMB | RMB | RMB | USD (Note 1) | RMB | RMB | USD (Note 1) | ||||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||
Proceed of bank loan with terms over three months | 607,043 | 612,885 | 2,277,171 | 357,338 | 1,136,495 | 4,447,586 | 697,923 | |||||||||||||||||
Payment of bank loan with terms over three months | (361,973) | (235,284) | (1,311,823) | (205,854) | (818,539) | (2,297,135) | (360,471) | |||||||||||||||||
Net changes in bank loans with terms of three months or less | (2,152,677) | (7,967,910) | 425,020 | 66,695 | 3,723,109 | (442,207) | (69,392) | |||||||||||||||||
(Paid for)/ net amounts received from NetEase's issuance of | (171,440) | - | - | - | 21,911,815 | (13,800) | (2,165) | |||||||||||||||||
Capital contribution from/ (repurchase of) noncontrolling interests | 10,609 | 34,800 | 1,320,122 | 207,156 | (268,343) | 2,870,147 | 450,389 | |||||||||||||||||
Cash paid for repurchase of NetEase's ADSs/ purchase of | (3,445,930) | (6,310,841) | (2,112,256) | (331,459) | (11,490,988) | (12,910,533) | (2,025,944) | |||||||||||||||||
Dividends paid to noncontrolling shareholders | - | - | (731,250) | (114,749) | - | (731,250) | (114,749) | |||||||||||||||||
Dividends paid to NetEase's shareholders | (861,211) | (1,028,116) | (940,540) | (147,591) | (4,280,462) | (3,508,377) | (550,541) | |||||||||||||||||
Net cash (used in)/ provided by financing activities | (6,375,579) | (14,894,466) | (1,073,556) | (168,464) | 9,913,087 | (12,585,569) | (1,974,950) | |||||||||||||||||
Effect of exchange rate changes on cash, cash equivalents | ||||||||||||||||||||||||
and restricted cash held in foreign currencies | (67,229) | 14,435 | (80,670) | (12,659) | 161,894 | (55,354) | (8,686) | |||||||||||||||||
Net increase/ (decrease) in cash, cash equivalents and restricted cash | 2,816,420 | 12,570,246 | (8,353,096) | (1,310,783) | 5,770,745 | 5,207,510 | 817,172 | |||||||||||||||||
Cash, cash equivalents and restricted cash, at the beginning | 9,352,185 | 13,158,965 | 25,729,211 | 4,037,475 | 6,397,860 | 12,168,605 | 1,909,520 | |||||||||||||||||
Cash, cash equivalents and restricted cash, at end of the period | 12,168,605 | 25,729,211 | 17,376,115 | 2,726,692 | 12,168,605 | 17,376,115 | 2,726,692 | |||||||||||||||||
Supplemental disclosures of cash flow information: | ||||||||||||||||||||||||
Cash paid for income tax, net | 347,389 | 898,112 | 858,304 | 134,687 | 2,046,119 | 3,547,299 | 556,649 | |||||||||||||||||
Cash paid for interest expense | 46,177 | 52,765 | 42,879 | 6,729 | 246,051 | 187,628 | 29,443 | |||||||||||||||||
The accompanying notes are an integral part of this announcement. | ||||||||||||||||||||||||
NETEASE, INC. | ||||||||||||||||||||||||||
UNAUDITED SEGMENT INFORMATION | ||||||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||
2020 | 2021 | 2021 | 2021 | 2020 | 2021 | 2021 | ||||||||||||||||||||
RMB | RMB | RMB | USD (Note 1) | RMB | RMB | USD (Note 1) | ||||||||||||||||||||
Net revenues: | ||||||||||||||||||||||||||
Online game services | 13,400,182 | 15,899,070 | 17,397,517 | 2,730,050 | 54,608,717 | 62,806,453 | 9,855,703 | |||||||||||||||||||
Youdao | 1,106,796 | 1,387,292 | 1,333,791 | 209,301 | 3,167,515 | 5,354,357 | 840,215 | |||||||||||||||||||
Cloud Music | 1,524,509 | 1,924,683 | 1,889,265 | 296,467 | 4,895,731 | 6,997,622 | 1,098,080 | |||||||||||||||||||
Innovative businesses and others | 3,730,251 | 2,979,704 | 3,752,992 | 588,926 | 10,995,170 | 12,447,594 | 1,953,299 | |||||||||||||||||||
Total net revenues | 19,761,738 | 22,190,749 | 24,373,565 | 3,824,744 | 73,667,133 | 87,606,026 | 13,747,297 | |||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||||
Online game services | (4,942,484) | (5,637,027) | (6,239,410) | (979,100) | (19,847,846) | (22,101,116) | (3,468,147) | |||||||||||||||||||
Youdao | (581,327) | (601,741) | (657,329) | (103,149) | (1,713,229) | (2,448,146) | (384,168) | |||||||||||||||||||
Cloud Music | (1,632,497) | (1,881,859) | (1,812,036) | (284,348) | (5,491,066) | (6,854,948) | (1,075,691) | |||||||||||||||||||
Innovative businesses and others | (2,677,668) | (2,259,354) | (2,747,010) | (431,065) | (7,631,590) | (9,231,015) | (1,448,547) | |||||||||||||||||||
Total cost of revenues | (9,833,976) | (10,379,981) | (11,455,785) | (1,797,662) | (34,683,731) | (40,635,225) | (6,376,553) | |||||||||||||||||||
Gross profit: | ||||||||||||||||||||||||||
Online game services | 8,457,698 | 10,262,043 | 11,158,107 | 1,750,950 | 34,760,871 | 40,705,337 | 6,387,556 | |||||||||||||||||||
Youdao | 525,469 | 785,551 | 676,462 | 106,152 | 1,454,286 | 2,906,211 | 456,047 | |||||||||||||||||||
Cloud Music | (107,988) | 42,824 | 77,229 | 12,119 | (595,335) | 142,674 | 22,389 | |||||||||||||||||||
Innovative businesses and others | 1,052,583 | 720,350 | 1,005,982 | 157,861 | 3,363,580 | 3,216,579 | 504,752 | |||||||||||||||||||
Total gross profit | 9,927,762 | 11,810,768 | 12,917,780 | 2,027,082 | 38,983,402 | 46,970,801 | 7,370,744 | |||||||||||||||||||
Gross profit margin: | ||||||||||||||||||||||||||
Online game services | ||||||||||||||||||||||||||
Youdao | ||||||||||||||||||||||||||
Cloud Music | ( | ( | ||||||||||||||||||||||||
Innovative businesses and others | ||||||||||||||||||||||||||
The accompanying notes are an integral part of this announcement. | ||||||||||||||||||||||||||
NETEASE, INC.
Notes to Unaudited Financial Information
Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00 = RMB6.3726 on the last trading day of December 2021 (December 30, 2021) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on December 30, 2021, or at any other certain date.
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 | Year Ended | |||||||||||||||||
December 30, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | ||||||||||||
2020 | 2021 | 2021 | 2021 | 2020 | 2021 | 2021 | ||||||||||||
RMB | RMB | RMB | USD (Note 1) | RMB | RMB | USD (Note 1) | ||||||||||||
Share-based compensation cost included in: | ||||||||||||||||||
Cost of revenues | 181,871 | 180,669 | 267,424 | 41,965 | 794,855 | 833,389 | 130,777 | |||||||||||
Operating expenses | ||||||||||||||||||
- Selling and marketing expenses | 24,892 | 29,289 | 38,657 | 6,066 | 102,300 | 118,611 | 18,613 | |||||||||||
- General and administrative expenses | 214,730 | 258,805 | 358,595 | 56,271 | 929,013 | 1,105,547 | 173,484 | |||||||||||
- Research and development expenses | 207,486 | 219,463 | 338,223 | 53,075 | 837,321 | 983,945 | 154,402 | |||||||||||
The accompanying notes are an integral part of this announcement. | ||||||||||||||||||
Note 3: 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 to shareholders for the year ended December 31, 2021 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 2021.
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.
Note 4: 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 U.S. GAAP or different accounting standards requirement.
Note 5: 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 | Year Ended | ||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||||||||
2020 | 2021 | 2021 | 2021 | 2020 | 2021 | 2021 | |||||||||||||
RMB | RMB | RMB | USD (Note 1) | RMB | RMB | USD (Note 1) | |||||||||||||
Net income attributable to the Company's shareholders | 975,702 | 3,181,782 | 5,694,154 | 893,537 | 12,062,754 | 16,856,842 | 2,645,206 | ||||||||||||
Add: Share-based compensation | 622,185 | 675,999 | 901,421 | 141,453 | 2,643,287 | 2,905,065 | 455,868 | ||||||||||||
Non-GAAP net income attributable to the Company's | 1,597,887 | 3,857,781 | 6,595,575 | 1,034,990 | 14,706,041 | 19,761,907 | 3,101,074 | ||||||||||||
Non-GAAP net income per share * | |||||||||||||||||||
Basic | 0.48 | 1.16 | 2.01 | 0.32 | 4.45 | 5.94 | 0.93 | ||||||||||||
Diluted | 0.47 | 1.15 | 1.98 | 0.31 | 4.39 | 5.87 | 0.92 | ||||||||||||
Non-GAAP net income per ADS * | |||||||||||||||||||
Basic | 2.38 | 5.80 | 10.05 | 1.58 | 22.25 | 29.71 | 4.66 | ||||||||||||
Diluted | 2.34 | 5.74 | 9.92 | 1.56 | 21.95 | 29.34 | 4.60 | ||||||||||||
* Each ADS represents five ordinary shares. | |||||||||||||||||||
The accompanying notes are an integral part of this announcement. | |||||||||||||||||||
Contact for Media and Investors:
Margaret Shi
Email: ir@service.netease.com
Tel: (+86) 571-8985-3378
Twitter: https://twitter.com/NetEase_Global
View original content:https://www.prnewswire.com/news-releases/netease-reports-fourth-quarter-and-fiscal-year-2021-unaudited-financial-results-301489341.html
SOURCE NetEase, Inc.
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