NetEase Announces Third Quarter 2022 Unaudited Financial Results

 
 

- 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 third quarter ended September 30, 2022 .

 

  Third   Quarter 2022 Financial Highlights  

 
  • Net revenues were RMB24.4 billion ( US$3.4 billion ), an increase of 10.1% compared with the third quarter of 2021.
  •  

- Games and related value-added services net revenues were RMB18.7 billion ( US$2.6 billion ), an increase of 9.1% compared with the third quarter of 2021. [1]

 

- Youdao net revenues were RMB1.4 billion ( US$197.2 million ), an increase of 1.1% compared with the third quarter of 2021.

 

- Cloud Music net revenues were RMB2.4 billion ( US$331.4 million ), an increase of 22.5% compared with the third quarter of 2021.

 

- Innovative businesses and others net revenues were RMB2.0 billion ( US$276.7 million ), an increase of 13.6% compared with the third quarter of 2021. [1]

 
  • Gross profit was RMB13.7 billion ( US$1.9 billion ), an increase of 16.4% compared with the third quarter of 2021.
  •  
  • Total operating expenses were RMB9.0 billion ( US$1.3 billion ), an increase of 12.0% compared with the third quarter of 2021.
  •  
  • Net income attributable to the Company's shareholders was RMB6.7 billion ( US$941.8 million ). Non-GAAP net income from continuing operations attributable to the Company's shareholders was RMB7.5 billion ( US$1.1 billion ). [2]
  •  
  • Basic net income per share was US$0.29 ( US$1.44 per ADS). Non-GAAP basic net income from continuing operations per share was US$0.32 ( US$1.61 per ADS). [2]
  •  

 

 
 
  
 

   [1] Effective as of the second quarter of 2022, the Company renamed its "online game services" segment as "games and related value-added services," and transferred certain business lines that are related or ancillary to its games from "innovative businesses and others" to "games and related value-added services." The Company retrospectively recast prior periods' segment information to conform to the current period presentation. See "Change in Segment Reporting" in this announcement.  

 
 

   [2] 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.  

 
 
 

 

 

  Third Quarter 2022 and Recent Operational Highlights  

 
  • Extended the longevity of leading franchise titles including both the Fantasy Westward Journey and Westward Journey Online series, and other hit titles including Identity V and Infinite Lagrange .
  •  
  • Delivered exciting anniversary content updates for the popular title Naraka: Bladepoint in August, winning wide acclaim among players.
  •  
  •   Diablo ® Immortal™ , co-developed by NetEase and Blizzard Entertainment, debuted in Chinese mainland, topping the iOS download chart soon after its launch.
  •  
  • Advanced pipeline, propelling new games under development including Naraka: Bladepoint mobile game, Justice mobile game and Ghost World Chronicle.  
  •  
  • Continued preparations for the roll-out of   Harry Potter : Magic Awakened in international markets, which is now expected to be launched globally in 2023.
  •  
  • Net revenues of Youdao maintained healthy growth with increased contributions from sales of new services and smart devices.
  •  
  • Enhanced content and product innovation for Cloud Music, driving solid growth in net revenues and continued margin improvement.
  •  

As previously disclosed, NetEase has entered into certain licensing agreements covering the publication of several Blizzard titles in Chinese mainland . These licenses will expire in January 2023 and will not be renewed . Net revenues and net income contribution from these licensed Blizzard games represented low single digits as a percentage of NetEase's total net revenues and net income in 2021 and in the first nine months of 2022. The expiration of such licenses will have no material impact on NetEase's financial results. The co-development and publishing of Diablo ® Immortal™ is covered by a separate long-term agreement.

 

Commenting on this quarter's financial results, Mr. William Ding , Chief Executive Officer and Director of NetEase said, "Steady growth characterized our third quarter, generating total net revenues of RMB24.4 billion , an increase of 10.1% year-over-year. Our games business continues to see solid gains. Beloved flagship titles such as our Fantasy Westward Journey sagas further grew in the third quarter, impressing the industry with their strength and longevity. The successful launch of thrilling new games such as Diablo ® Immortal™ is a further testament to our robust R&D programs and ability to captivate the attention of players in the international arena."

 

"In addition to our games, we maintained our differentiated offerings with Youdao, Cloud Music and Yanxuan businesses. As we move forward, we will continue to leverage our innovative content and services to drive sustainable growth across each of our carefully cultivated businesses," Mr. Ding concluded.

 

  Third Quarter 2022 Financial Results  

 

  Net   Revenues  

 

Net revenues for the third quarter of 2022 were RMB24,426.8 million ( US$3,433 .9 million), compared with RMB23,159.1 million and RMB22,190 .7 million for the preceding quarter and the third quarter of 2021, respectively.

 

Net revenues from games and related value-added services, which include both the operation of online games as well as other related or ancillary services to the games, were RMB18,699 .1 million ( US$2,628 .7 million) for the third quarter of 2022, compared with RMB18,139 .8 million and RMB17,145 .7 million for the preceding quarter and the third quarter of 2021, respectively. Net revenues from the operation of online games, which is the primary component of this segment, accounted for approximately 92.9% of the segment for the third quarter of 2022, compared with 92.8% and 92.7% for the preceding quarter and the third quarter of 2021, respectively. Net revenues from mobile games accounted for approximately 68.6% of net revenues from the operation of online games for the third quarter of 2022, compared with 66.1% and 69.2% for the preceding quarter and the third quarter of 2021, respectively.

 

Net revenues from Youdao were RMB1,402.4 million ( US$197 .2 million) for the third quarter of 2022, compared with RMB956.2 million and RMB1,387 .3 million for the preceding quarter and the third quarter of 2021, respectively.

 

Net revenues from Cloud Music were RMB2,357.2 million ( US$331 .4 million) for the third quarter of 2022, compared with RMB2,191.5 million and RMB1,924.7 million for the preceding quarter and the third quarter of 2021, respectively.

 

Net revenues from innovative businesses and others were RMB1,968.0 million ( US$276.7 million ) for the third quarter of 2022, compared with RMB1,871.5 million and RMB1,733.1 million for the preceding quarter and the third quarter of 2021, respectively.

 

  Gross Profit  

 

Gross profit for the third quarter of 2022 was RMB13,743.9 million ( US$1,932 .1 million), compared with RMB12,941.5 million and RMB11,810 .8 million for the preceding quarter and the third quarter of 2021, respectively.

 

The quarter-over-quarter and year-over-year increases in games and related value-added services gross profit were primarily due to increased net revenues from online games, including the Fantasy Westward Journey Online series and Infinite Lagrange , and certain newly launched titles.

 

The quarter-over-quarter increase in Youdao gross profit was primarily attributable to the increase in net revenues from improved economies of scale for its learning services as well as increased sales volume of its smart devices.

 

The quarter-over-quarter and year-over-year increases in Cloud Music gross profit were primarily due to increased net revenues from its social entertainment services, as well as continuously improved cost control measures.

 

The quarter-over-quarter and year-over-year increases in innovative businesses and others gross profit were primarily due to increased gross profit contribution from Yanxuan.

 

  Gross Profit Margin  

 

Gross profit margin for games and related value-added services for the third quarter of 2022 was 65.0%, compared with 64.9% and 61.3% for the preceding quarter and the third quarter of 2021, respectively. The year-over-year increase in gross profit margin was mainly due to changes in the revenue contribution from different distribution channels.

 

Gross profit margin for Youdao for the third quarter of 2022 was 54.2%, compared with 42.8% and 56.6% for the preceding quarter and the third quarter of 2021, respectively. The quarter-over-quarter increase was primarily attributable to the factors enumerated above. The year-over-year decrease mainly resulted from a decline in economies of scale due to the decreased net revenues from its learning services.

 

Gross profit margin for Cloud Music was 14.2% for the third quarter of 2022, compared with 13.0% and 2.2% for the preceding quarter and the third quarter of 2021, respectively. The quarter-over-quarter and year-over-year improvements were mainly due to the factors enumerated above.

 

Gross profit margin for innovative businesses and others for the third quarter of 2022 was 25.5%, compared with 25.8% and 27.2% for the preceding quarter and the third quarter of 2021, respectively. The year-over-year fluctuations were mainly due to changes in gross profit margin from advertising services.

 

  Operating Expenses  

 

Total operating expenses for the third quarter of 2022 were RMB9,002.1 million ( US$1,265.5 million ), compared with RMB7,995.2 million and RMB8,035.6 million for the preceding quarter and the third quarter of 2021, respectively. The quarter-over-quarter and year-over-year increases were mainly due to increased marketing expenditures related to games and related value-added services and Youdao, as well as higher staff-related costs.

 

  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 increases were mainly due to investment income arising from the disposal of certain equity investments and net unrealized exchange gains 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 in the third quarter of 2022.

 

  Income Taxes  

 

The Company recorded a net income tax charge of RMB1,586.7 million ( US$223.1 million ) for the third quarter of 2022, compared with RMB1,259.3 million and RMB807.6 million for the preceding quarter and the third quarter of 2021, respectively. The effective tax rate for the third quarter of 2022 was 19.3%, compared with 22.0% and 19.6% for the preceding quarter and the third quarter of 2021, respectively. The effective tax rate represents certain estimates by the Company as to the tax obligations and benefits applicable to it in each quarter.

 

  Net Income and Non-GAAP Net Income  

 

Net income attributable to the Company's shareholders totaled RMB6,699 .4 million ( US$941.8 million ) for the third quarter of 2022, compared with RMB5,291.5 million and RMB3,181.8 million for the preceding quarter and the third quarter of 2021, respectively. Net income attributable to the Company's shareholders for the preceding quarter also included net income from discontinued operations of RMB624.9 million which was related to the prior disposal of the Kaola business.

 

Non-GAAP net income from continuing operations attributable to the Company's shareholders totaled RMB7,469.6 million ( US$1,050.1 million ) for the third quarter of 2022, compared with RMB5,409.8 million and RMB3,857.8 million for the preceding quarter and the third quarter of 2021, respectively.

 

NetEase reported basic net income of US$0.29 per share ( US$1.44 per ADS) for the third quarter of 2022, compared with US$0.23 per share ( US$1.14 per ADS) and US$0.13 per share ( US$0.67 per ADS) for the preceding quarter and the third quarter of 2021, respectively.

 

NetEase reported non-GAAP basic net income from continuing operations of US$0.32 per share ( US$1.61 per ADS) for the third quarter of 2022, compared with US$0.23 per share ( US$1.16 per ADS) and US$0.16 per share ( US$0.82 per ADS) for the preceding quarter and the third quarter of 2021, respectively.

 

  Quarterly   Dividend  

 

The board of directors has approved a dividend of US$0.0870 per share ( US$0.4350 per ADS) for the third quarter of 2022 to holders of ordinary shares and holders of ADSs as of the close of business on December 2, 2022 , Beijing / Hong Kong Time and New York Time, respectively, payable in U.S. dollars. For holders of ordinary shares, in order to qualify for the dividend, all valid documents for the transfer of shares accompanied by the relevant share certificates must be lodged for registration with the Company's Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17 th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong no later than 4:30 p.m. on December 2, 2022 ( Beijing / Hong Kong Time). The payment date is expected to be on December 13, 2022 for holders of ordinary shares and on or around December 16, 2022 for holders of ADSs.

 

NetEase paid a dividend of US$0.0720 per share ( US$0.3600 per ADS) for the second quarter of 2022 in September 2022 .

 

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 September 30, 2022 , 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 RMB94.6 billion ( US$13 .3 billion), compared with RMB85.6 billion as of December 31, 2021 . Cash flow generated from operating activities was RMB7 .5 billion ( US$1.1 billion ) for the third quarter of 2022, compared with RMB6 .6 billion and RMB6 .3 billion for the preceding quarter and the third quarter of 2021, respectively.

 

  Change in Segment Reporting  

 

Effective as of the second quarter of 2022, the Company implemented certain changes to align its segment financial reporting more closely with the manner in which the Company's management currently receives and uses financial information to allocate resources and evaluate the performance of reporting segments. The Company renamed its "online game services" segment as "games and related value-added services," and transferred certain business lines that are related or ancillary to its games from "innovative businesses and others" to "games and related value-added services," including the NetEase CC live streaming service (a platform offering various live streaming content with a primary focus on game broadcasting) and other value-added services. The Company retrospectively recast prior periods' segment information to conform to current period presentation. These changes had no impact on NetEase's previously reported consolidated net revenues, net income or net income per share.

 

  Share Repurchase/ P   urchase   Program  

 

On February 25, 2021 , the Company announced that its board of directors had approved a new share repurchase program of up to US$2.0 billion of the Company's outstanding ADSs and ordinary shares in open market transactions for a period not to exceed 24 months beginning on March 2, 2021 . On August 31, 2021 , the Company announced that its board of directors had approved an amendment to such program to increase the total authorized repurchase amount to US$3.0 billion . As of September 30, 2022 , approximately 27.0 million ADSs had been repurchased under this program for a total cost of US$2.5 billion .

 

The Company also announced today that its board of directors has approved a new share repurchase program of up to US$5.0 billion of the Company's ADSs and ordinary shares in open market transactions. This new share repurchase program will be in effect for a period not to exceed 36 months, commencing upon the expiration of the Company's existing share repurchase program or, if earlier, the date on which the Company has repurchased the maximum amount authorized under the existing program.

 

On August 31, 2021 , the Company announced that its board of directors had approved a share purchase program of up to US$50.0 million of Youdao's outstanding ADSs for a period not to exceed 36 months beginning on September 2, 2021 . Under the terms of this program, NetEase may purchase Youdao's ADSs in open-market transactions on the New York Stock Exchange. As of September 30, 2022 , approximately 2.3 million ADSs had been purchased under this program for a total cost of US$20.7 million .

 

NetEase also purchased approximately 0.7 million ordinary shares of Cloud Music in open market transactions on the Hong Kong Stock Exchange for a total cost of US$6.9 million during the third quarter of 2022.

 

The extent to which NetEase repurchases its ADSs and its ordinary shares or purchases Youdao's ADSs and Cloud Music's ordinary shares 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, November 17, 2022 ( Beijing / Hong Kong Time: 8:00 p.m. , Thursday, November 17, 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 1-914-202-3258 and providing conference ID: 10026570, 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: 10026570. The replay will be available through November 24 , 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 https://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 content creation. With extensive offerings across its expanding gaming ecosystem, the Company develops and operates some of China's most popular and longest running mobile and PC games. Powered by industry-leading in-house R&D capabilities in China and globally, 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), China's leading technology-focused intelligent learning company, and Cloud Music (HKEX: 9899), China's leading online music content community, as well as Yanxuan , NetEase's private label consumer lifestyle brand.

 

NetEase's ESG initiatives are among the best in the global media and entertainment industry, earning it a distinction as one of the S&P Global Industry Movers and an "A" rating from MSCI. For more information, please visit: https://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 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 the United States of America ("U.S. GAAP").

 

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 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 from continuing operations attributable to the Company's shareholders is that it does not reflect all items of expense/ income 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 from continuing operations 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 from continuing operations 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.

 

  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,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 

   Assets   

 
 
 
 
 
 
 
 

  Current assets:  

 
 
 
 
 
 
 
 

  Cash and cash equivalents  

 
 
 

  14,498,157  

 
 
 

  17,999,166  

 
 
 

  2,530,283  

 
 

  Time deposits  

 
 
 

  70,754,846  

 
 
 

  89,301,940  

 
 
 

  12,553,868  

 
 

  Restricted cash  

 
 
 

  2,876,628  

 
 
 

  2,844,386  

 
 
 

  399,857  

 
 

  Accounts receivable, net  

 
 
 

  5,507,988  

 
 
 

  5,208,019  

 
 
 

  732,132  

 
 

  Inventories  

 
 
 

  964,733  

 
 
 

  932,905  

 
 
 

  131,146  

 
 

  Prepayments and other current assets, net  

 
 
 

  6,235,857  

 
 
 

  6,371,412  

 
 
 

  895,679  

 
 

  Short-term investments  

 
 
 

  12,281,548  

 
 
 

  8,934,202  

 
 
 

  1,255,950  

 
 

  Assets held for sale  

 
 
 

  497  

 
 
 

  -  

 
 
 

  -  

 
 

  Total current assets  

 
 
 

  113,120,254  

 
 
 

  131,592,030  

 
 
 

  18,498,915  

 
 
 
 
 
 
 
 
 

  Non-current assets:  

 
 
 
 
 
 
 
 

  Property, equipment and software, net  

 
 
 

  5,433,858  

 
 
 

  6,165,151  

 
 
 

  866,683  

 
 

  Land use right, net  

 
 
 

  4,108,090  

 
 
 

  4,134,507  

 
 
 

  581,220  

 
 

  Deferred tax assets  

 
 
 

  1,297,954  

 
 
 

  1,387,083  

 
 
 

  194,993  

 
 

  Time deposits  

 
 
 

  5,823,840  

 
 
 

  4,473,840  

 
 
 

  628,922  

 
 

  Restricted cash  

 
 
 

  1,330  

 
 
 

  850  

 
 
 

  119  

 
 

  Other long-term assets, net  

 
 
 

  23,857,510  

 
 
 

  24,954,210  

 
 
 

  3,508,008  

 
 

  Assets held for sale  

 
 
 

  1,088  

 
 
 

  -  

 
 
 

  -  

 
 

  Total non-current assets  

 
 
 

  40,523,670  

 
 
 

  41,115,641  

 
 
 

  5,779,945  

 
 

  Total assets  

 
 
 

  153,643,924  

 
 
 

  172,707,671  

 
 
 

  24,278,860  

 
 
 
 
 
 
 
 
 

   Liabilities, Redeemable Noncontrolling Interests
and Shareholders' Equity
 
 

 
 
 
 
 
 
 
 

  Current liabilities:  

 
 
 
 
 
 
 
 

  Accounts payable  

 
 
 

  985,059  

 
 
 

  867,298  

 
 
 

  121,923  

 
 

  Salary and welfare payables  

 
 
 

  4,133,254  

 
 
 

  2,701,749  

 
 
 

  379,806  

 
 

  Taxes payable  

 
 
 

  4,537,050  

 
 
 

  3,740,750  

 
 
 

  525,866  

 
 

  Short-term loans  

 
 
 

  19,352,313  

 
 
 

  25,445,617  

 
 
 

  3,577,088  

 
 

  Contract liabilities  

 
 
 

  12,132,743  

 
 
 

  13,901,882  

 
 
 

  1,954,296  

 
 

  Accrued liabilities and other payables  

 
 
 

  9,360,907  

 
 
 

  10,371,294  

 
 
 

  1,457,973  

 
 

  Total current liabilities  

 
 
 

  50,501,326  

 
 
 

  57,028,590  

 
 
 

  8,016,952  

 
 
 
 
 
 
 
 
 

  Non-current liabilities:  

 
 
 
 
 
 
 
 

  Deferred tax liabilities  

 
 
 

  1,345,874  

 
 
 

  1,354,827  

 
 
 

  190,459  

 
 

  Long-term loans  

 
 
 

  1,275,140  

 
 
 

  3,549,900  

 
 
 

  499,037  

 
 

  Other long-term liabilities  

 
 
 

  1,097,708  

 
 
 

  1,125,227  

 
 
 

  158,182  

 
 

  Total non-current liabilities  

 
 
 

  3,718,722  

 
 
 

  6,029,954  

 
 
 

  847,678  

 
 

  Total liabilities  

 
 
 

  54,220,048  

 
 
 

  63,058,544  

 
 
 

  8,864,630  

 
 
 
 
 
 
 
 
 

  Redeemable noncontrolling interests  

 
 
 

  145,238  

 
 
 

  143,354  

 
 
 

  20,152  

 
 
 
 
 
 
 
 
 

  NetEase, Inc.'s shareholders' equity  

 
 
 

  95,328,080  

 
 
 

  105,364,713  

 
 
 

  14,811,937  

 
 

  Noncontrolling interests  

 
 
 

  3,950,558  

 
 
 

  4,141,060  

 
 
 

  582,141  

 
 

  Total shareholders' equity  

 
 
 

  99,278,638  

 
 
 

  109,505,773  

 
 
 

  15,394,078  

 
 
 
 
 
 
 
 
 

  Total liabilities, redeemable noncontrolling
interests and shareholders' equity
 

 
 
 

  153,643,924  

 
 
 

  172,707,671  

 
 
 

  24,278,860  

 
 
 
 
 
 
 
 
 

  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   

 
 
 

   Nine Months Ended   

 
 
 
 

   September 30,   

 
 
 

   June 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 

   2022   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Net revenues   

 
 
 

  22,190,749  

 
 
 

  23,159,078  

 
 
 

  24,426,760  

 
 
 

  3,433,860  

 
 
 

  63,232,461  

 
 
 

  71,141,680  

 
 
 

  10,000,939  

 
 

   Cost of revenues   

 
 
 

  (10,379,981)  

 
 
 

  (10,217,587)  

 
 
 

  (10,682,868)  

 
 
 

  (1,501,774)  

 
 
 

  (29,179,440)  

 
 
 

  (31,619,918)  

 
 
 

  (4,445,058)  

 
 

   Gross profit   

 
 
 

  11,810,768  

 
 
 

  12,941,491  

 
 
 

  13,743,892  

 
 
 

  1,932,086  

 
 
 

  34,053,021  

 
 
 

  39,521,762  

 
 
 

  5,555,881  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Operating expenses:   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Selling and marketing expenses  

 
 
 

  (3,134,030)  

 
 
 

  (3,300,705)  

 
 
 

  (3,768,618)  

 
 
 

  (529,784)  

 
 
 

  (8,914,159)  

 
 
 

  (9,984,812)  

 
 
 

  (1,403,643)  

 
 

  General and administrative expenses  

 
 
 

  (1,140,296)  

 
 
 

  (1,112,755)  

 
 
 

  (1,264,342)  

 
 
 

  (177,738)  

 
 
 

  (3,101,673)  

 
 
 

  (3,392,866)  

 
 
 

  (476,962)  

 
 

  Research and development expenses  

 
 
 

  (3,761,239)  

 
 
 

  (3,581,700)  

 
 
 

  (3,969,156)  

 
 
 

  (557,975)  

 
 
 

  (10,228,287)  

 
 
 

  (10,948,938)  

 
 
 

  (1,539,177)  

 
 

  Total operating expenses  

 
 
 

  (8,035,565)  

 
 
 

  (7,995,160)  

 
 
 

  (9,002,116)  

 
 
 

  (1,265,497)  

 
 
 

  (22,244,119)  

 
 
 

  (24,326,616)  

 
 
 

  (3,419,782)  

 
 

   Operating profit   

 
 
 

  3,775,203  

 
 
 

  4,946,331  

 
 
 

  4,741,776  

 
 
 

  666,589  

 
 
 

  11,808,902  

 
 
 

  15,195,146  

 
 
 

  2,136,099  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Other income/ (expenses):   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Investment (loss)/ income, net  

 
 
 

  (264,611)  

 
 
 

  (707,489)  

 
 
 

  1,347,269  

 
 
 

  189,396  

 
 
 

  1,320,079  

 
 
 

  91,078  

 
 
 

  12,804  

 
 

  Interest income, net  

 
 
 

  349,550  

 
 
 

  505,991  

 
 
 

  556,148  

 
 
 

  78,182  

 
 
 

  1,124,685  

 
 
 

  1,520,383  

 
 
 

  213,732  

 
 

  Exchange gains/ (losses), net  

 
 
 

  153,310  

 
 
 

  865,283  

 
 
 

  1,398,045  

 
 
 

  196,534  

 
 
 

  (159,091)  

 
 
 

  2,165,448  

 
 
 

  304,414  

 
 

  Other, net  

 
 
 

  117,636  

 
 
 

  121,175  

 
 
 

  164,435  

 
 
 

  23,116  

 
 
 

  413,191  

 
 
 

  501,940  

 
 
 

  70,562  

 
 

   Income before tax   

 
 
 

  4,131,088  

 
 
 

  5,731,291  

 
 
 

  8,207,673  

 
 
 

  1,153,817  

 
 
 

  14,507,766  

 
 
 

  19,473,995  

 
 
 

  2,737,611  

 
 

  Income tax  

 
 
 

  (807,648)  

 
 
 

  (1,259,320)  

 
 
 

  (1,586,673)  

 
 
 

  (223,051)  

 
 
 

  (3,194,284)  

 
 
 

  (4,065,264)  

 
 
 

  (571,486)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Net income from continuing operations   

 
 
 

  3,323,440  

 
 
 

  4,471,971  

 
 
 

  6,621,000  

 
 
 

  930,766  

 
 
 

  11,313,482  

 
 
 

  15,408,731  

 
 
 

  2,166,125  

 
 

   Net income from discontinued operations   

 
 
 

  -  

 
 
 

  624,864  

 
 
 

  -  

 
 
 

  -  

 
 
 

  -  

 
 
 

  624,864  

 
 
 

  87,842  

 
 

   Net income   

 
 
 

  3,323,440  

 
 
 

  5,096,835  

 
 
 

  6,621,000  

 
 
 

  930,766  

 
 
 

  11,313,482  

 
 
 

  16,033,595  

 
 
 

  2,253,967  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Accretion of redeemable noncontrolling
interests
 

 
 
 

  (147,825)  

 
 
 

  (754)  

 
 
 

  (781)  

 
 
 

  (110)  

 
 
 

  (437,067)  

 
 
 

  (2,268)  

 
 
 

  (319)  

 
 

  Net loss attributable to noncontrolling
interests
 

 
 
 

  6,167  

 
 
 

  195,395  

 
 
 

  79,145  

 
 
 

  11,126  

 
 
 

  286,273  

 
 
 

  353,536  

 
 
 

  49,699  

 
 

   Net income attributable to the
Company's shareholders
 
 

 
 
 

  3,181,782  

 
 
 

  5,291,476  

 
 
 

  6,699,364  

 
 
 

  941,782  

 
 
 

  11,162,688  

 
 
 

  16,384,863  

 
 
 

  2,303,347  

 
 

   Including:   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  -Net income from continuing operations
attributable to the Company's
shareholders
 

 
 
 

  3,181,782  

 
 
 

  4,666,612  

 
 
 

  6,699,364  

 
 
 

  941,782  

 
 
 

  11,162,688  

 
 
 

  15,759,999  

 
 
 

  2,215,505  

 
 

  -Net income from discontinued operations
attributable to the Company's shareholders
 

 
 
 

  -  

 
 
 

  624,864  

 
 
 

  -  

 
 
 

  -  

 
 
 

  -  

 
 
 

  624,864  

 
 
 

  87,842  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Basic net income per share *   

 
 
 

  0.96  

 
 
 

  1.62  

 
 
 

  2.05  

 
 
 

  0.29  

 
 
 

  3.34  

 
 
 

  5.01  

 
 
 

  0.70  

 
 

  -Continuing operations  

 
 
 

  0.96  

 
 
 

  1.43  

 
 
 

  2.05  

 
 
 

  0.29  

 
 
 

  3.34  

 
 
 

  4.82  

 
 
 

  0.67  

 
 

  -Discontinued operations  

 
 
 

  -  

 
 
 

  0.19  

 
 
 

  -  

 
 
 

  -  

 
 
 

  -  

 
 
 

  0.19  

 
 
 

  0.03  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Basic net income per ADS *   

 
 
 

  4.78  

 
 
 

  8.08  

 
 
 

  10.27  

 
 
 

  1.44  

 
 
 

  16.71  

 
 
 

  25.04  

 
 
 

  3.52  

 
 

  -Continuing operations  

 
 
 

  4.78  

 
 
 

  7.13  

 
 
 

  10.27  

 
 
 

  1.44  

 
 
 

  16.71  

 
 
 

  24.09  

 
 
 

  3.39  

 
 

  -Discontinued operations  

 
 
 

  -  

 
 
 

  0.95  

 
 
 

  -  

 
 
 

  -  

 
 
 

  -  

 
 
 

  0.95  

 
 
 

  0.13  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Diluted net income per share *   

 
 
 

  0.95  

 
 
 

  1.60  

 
 
 

  2.03  

 
 
 

  0.29  

 
 
 

  3.30  

 
 
 

  4.96  

 
 
 

  0.70  

 
 

  -Continuing operations  

 
 
 

  0.95  

 
 
 

  1.41  

 
 
 

  2.03  

 
 
 

  0.29  

 
 
 

  3.30  

 
 
 

  4.77  

 
 
 

  0.67  

 
 

  -Discontinued operations  

 
 
 

  -  

 
 
 

  0.19  

 
 
 

  -  

 
 
 

  -  

 
 
 

  -  

 
 
 

  0.19  

 
 
 

  0.03  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Diluted net income per ADS *   

 
 
 

  4.73  

 
 
 

  8.00  

 
 
 

  10.17  

 
 
 

  1.43  

 
 
 

  16.50  

 
 
 

  24.79  

 
 
 

  3.48  

 
 

  -Continuing operations  

 
 
 

  4.73  

 
 
 

  7.05  

 
 
 

  10.17  

 
 
 

  1.43  

 
 
 

  16.50  

 
 
 

  23.84  

 
 
 

  3.35  

 
 

  -Discontinued operations  

 
 
 

  -  

 
 
 

  0.95  

 
 
 

  -  

 
 
 

  -  

 
 
 

  -  

 
 
 

  0.95  

 
 
 

  0.13  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Weighted average number of ordinary
shares used in calculating net income
per share *
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Basic  

 
 
 

  3,325,892  

 
 
 

  3,274,695  

 
 
 

  3,262,989  

 
 
 

  3,262,989  

 
 
 

  3,340,925  

 
 
 

  3,271,602  

 
 
 

  3,271,602  

 
 

  Diluted  

 
 
 

  3,361,727  

 
 
 

  3,305,504  

 
 
 

  3,293,766  

 
 
 

  3,293,766  

 
 
 

  3,382,467  

 
 
 

  3,305,081  

 
 
 

  3,305,081  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  *  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   

 
 
 

   Nine Months Ended   

 
 
 
 

   September 30,   

 
 
 

   June 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 

   2022   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 

   Cash flows from operating activities:   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Net income  

 
 
 

  3,323,440  

 
 
 

  5,096,835  

 
 
 

  6,621,000  

 
 
 

  930,766  

 
 
 

  11,313,482  

 
 
 

  16,033,595  

 
 
 

  2,253,967  

 
 

  Net income from discontinued operations  

 
 
 

  -  

 
 
 

  (624,864)  

 
 
 

  -  

 
 
 

  -  

 
 
 

  -  

 
 
 

  (624,864)  

 
 
 

  (87,842)  

 
 

  Adjustments to reconcile net income to net cash provided
by operating activities:
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Depreciation and amortization  

 
 
 

  805,485  

 
 
 

  609,036  

 
 
 

  713,852  

 
 
 

  100,352  

 
 
 

  2,439,685  

 
 
 

  2,089,068  

 
 
 

  293,676  

 
 

  Fair value changes of equity security investments  

 
 
 

  1,194,338  

 
 
 

  735,159  

 
 
 

  680,019  

 
 
 

  95,596  

 
 
 

  513,021  

 
 
 

  2,956,180  

 
 
 

  415,573  

 
 

  Impairment losses of investments and other long-term assets  

 
 
 

  26,055  

 
 
 

  243,085  

 
 
 

  6,763  

 
 
 

  951  

 
 
 

  30,852  

 
 
 

  254,848  

 
 
 

  35,826  

 
 

  Fair value changes of short-term investments  

 
 
 

  (184,564)  

 
 
 

  (119,882)  

 
 
 

  (119,620)  

 
 
 

  (16,816)  

 
 
 

  (473,244)  

 
 
 

  (319,278)  

 
 
 

  (44,884)  

 
 

  Share-based compensation cost  

 
 
 

  688,226  

 
 
 

  764,447  

 
 
 

  786,999  

 
 
 

  110,635  

 
 
 

  2,038,593  

 
 
 

  2,297,600  

 
 
 

  322,991  

 
 

  Allowance for expected credit losses  

 
 
 

  212,010  

 
 
 

  10,965  

 
 
 

  44,126  

 
 
 

  6,203  

 
 
 

  252,998  

 
 
 

  54,778  

 
 
 

  7,701  

 
 

  Losses on disposal of property, equipment and software  

 
 
 

  4,008  

 
 
 

  481  

 
 
 

  528  

 
 
 

  74  

 
 
 

  5,273  

 
 
 

  2,454  

 
 
 

  345  

 
 

  Unrealized exchange (gains)/losses  

 
 
 

  (157,292)  

 
 
 

  (890,066)  

 
 
 

  (1,401,893)  

 
 
 

  (197,075)  

 
 
 

  141,369  

 
 
 

  (2,193,925)  

 
 
 

  (308,417)  

 
 

  Gains on disposal of long-term investments, business and
subsidiaries
 

 
 
 

  (1)  

 
 
 

  -  

 
 
 

  (1,724,433)  

 
 
 

  (242,417)  

 
 
 

  (173,829)  

 
 
 

  (1,728,433)  

 
 
 

  (242,979)  

 
 

  Deferred income taxes  

 
 
 

  307,994  

 
 
 

  (169,539)  

 
 
 

  (234,336)  

 
 
 

  (32,943)  

 
 
 

  838,963  

 
 
 

  (88,647)  

 
 
 

  (12,461)  

 
 

  Share of results on equity method investees and revaluation
results from previously held equity interest
 

 
 
 

  (730,363)  

 
 
 

  (134,569)  

 
 
 

  (159,128)  

 
 
 

  (22,370)  

 
 
 

  (1,125,015)  

 
 
 

  (1,205,195)  

 
 
 

  (169,424)  

 
 

  Changes in operating assets and liabilities:  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Accounts receivable  

 
 
 

  (1,178,290)  

 
 
 

  82,282  

 
 
 

  35,786  

 
 
 

  5,031  

 
 
 

  (1,089,522)  

 
 
 

  330,143  

 
 
 

  46,411  

 
 

  Inventories  

 
 
 

  (154,072)  

 
 
 

  17,791  

 
 
 

  (88,300)  

 
 
 

  (12,413)  

 
 
 

  (417,175)  

 
 
 

  33,082  

 
 
 

  4,651  

 
 

  Prepayments and other assets  

 
 
 

  (38,490)  

 
 
 

  (163,612)  

 
 
 

  368,673  

 
 
 

  51,827  

 
 
 

  (230,335)  

 
 
 

  (364,782)  

 
 
 

  (51,280)  

 
 

  Accounts payable  

 
 
 

  172,696  

 
 
 

  48,452  

 
 
 

  (84,434)  

 
 
 

  (11,870)  

 
 
 

  (66,055)  

 
 
 

  (128,355)  

 
 
 

  (18,044)  

 
 

  Salary and welfare payables  

 
 
 

  (647,029)  

 
 
 

  782,789  

 
 
 

  (567,676)  

 
 
 

  (79,803)  

 
 
 

  (1,016,409)  

 
 
 

  (1,541,111)  

 
 
 

  (216,646)  

 
 

  Taxes payable  

 
 
 

  (434,893)  

 
 
 

  (538,234)  

 
 
 

  475,245  

 
 
 

  66,809  

 
 
 

  (273,665)  

 
 
 

  10,457  

 
 
 

  1,470  

 
 

  Contract liabilities  

 
 
 

  2,154,751  

 
 
 

  279,669  

 
 
 

  1,580,450  

 
 
 

  222,176  

 
 
 

  2,514,243  

 
 
 

  1,781,919  

 
 
 

  250,498  

 
 

  Accrued liabilities and other payables  

 
 
 

  928,647  

 
 
 

  600,934  

 
 
 

  552,688  

 
 
 

  77,696  

 
 
 

  1,334,899  

 
 
 

  1,050,486  

 
 
 

  147,675  

 
 

  Net cash provided by operating activities  

 
 
 

  6,292,656  

 
 
 

  6,631,159  

 
 
 

  7,486,309  

 
 
 

  1,052,409  

 
 
 

  16,558,129  

 
 
 

  18,700,020  

 
 
 

  2,628,807  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Cash flows from investing activities:   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Purchase of property, equipment and software  

 
 
 

  (407,688)  

 
 
 

  (445,054)  

 
 
 

  (557,028)  

 
 
 

  (78,306)  

 
 
 

  (1,159,306)  

 
 
 

  (1,751,443)  

 
 
 

  (246,214)  

 
 

  Proceeds from sale of property, equipment and software  

 
 
 

  11,030  

 
 
 

  23,338  

 
 
 

  3,307  

 
 
 

  465  

 
 
 

  15,007  

 
 
 

  39,210  

 
 
 

  5,512  

 
 

  Purchase of intangible assets, content and licensed
copyrights
 

 
 
 

  (218,168)  

 
 
 

  (85,121)  

 
 
 

  (152,276)  

 
 
 

  (21,407)  

 
 
 

  (1,211,037)  

 
 
 

  (381,233)  

 
 
 

  (53,593)  

 
 

  Net change in short-term investments with terms of three
months or less
 

 
 
 

  167,978  

 
 
 

  (159,173)  

 
 
 

  156,475  

 
 
 

  21,997  

 
 
 

  5,169,261  

 
 
 

  1,708,147  

 
 
 

  240,127  

 
 

  Purchase of short-term investments with terms over three
months
 

 
 
 

  (630,000)  

 
 
 

  -  

 
 
 

  -  

 
 
 

  -  

 
 
 

  (10,985,000)  

 
 
 

  (1,250,000)  

 
 
 

  (175,722)  

 
 

  Proceeds from maturities of short-term investments with terms
over three months
 

 
 
 

  6,251,750  

 
 
 

  1,459,172  

 
 
 

  1,195,475  

 
 
 

  168,057  

 
 
 

  9,922,302  

 
 
 

  3,208,478  

 
 
 

  451,041  

 
 

  Investment in long-term investments and acquisition of
subsidiaries
 

 
 
 

  (586,124)  

 
 
 

  (899,968)  

 
 
 

  (844,513)  

 
 
 

  (118,720)  

 
 
 

  (4,521,538)  

 
 
 

  (3,434,752)  

 
 
 

  (482,850)  

 
 

  Proceeds from disposal of long-term investments,
businesses and subsidiaries
 

 
 
 

  33,731  

 
 
 

  6,413  

 
 
 

  2,277,625  

 
 
 

  320,183  

 
 
 

  498,915  

 
 
 

  2,318,275  

 
 
 

  325,898  

 
 

  Placement/rollover of matured time deposits  

 
 
 

  (11,723,614)  

 
 
 

  (33,122,029)  

 
 
 

  (18,830,844)  

 
 
 

  (2,647,198)  

 
 
 

  (54,669,947)  

 
 
 

  (75,998,870)  

 
 
 

  (10,683,752)  

 
 

  Proceeds from maturities of time deposits  

 
 
 

  28,328,155  

 
 
 

  32,100,141  

 
 
 

  17,770,581  

 
 
 

  2,498,149  

 
 
 

  65,599,476  

 
 
 

  64,570,517  

 
 
 

  9,077,179  

 
 

  Change in other long-term assets  

 
 
 

  (69,429)  

 
 
 

  (60,900)  

 
 
 

  (31,782)  

 
 
 

  (4,468)  

 
 
 

  (168,959)  

 
 
 

  (262,227)  

 
 
 

  (36,863)  

 
 

  Net cash provided by/ (used in) investing activities  

 
 
 

  21,157,621  

 
 
 

  (1,183,181)  

 
 
 

  987,020  

 
 
 

  138,752  

 
 
 

  8,489,174  

 
 
 

  (11,233,898)  

 
 
 

  (1,579,237)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  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   

 
 
 

   Nine Months Ended   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   September 30,   

 
 
 

   June 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 

   2022   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Cash flows from financing activities:   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Net changes in bank loans with terms of three months or less  

 
 

  (7,967,910)  

 
 
 

  2,721,487  

 
 
 

  (3,645,232)  

 
 
 

  (512,439)  

 
 
 

  (867,227)  

 
 
 

  2,479,450  

 
 
 

  348,556  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Proceed of bank loans with terms over three months  

 
 
 

  612,885  

 
 
 

  1,641,708  

 
 
 

  70,691  

 
 
 

  9,938  

 
 
 

  2,170,415  

 
 
 

  3,627,609  

 
 
 

  509,961  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Payment of bank loans with terms over three months  

 
 
 

  (235,284)  

 
 
 

  (32,273)  

 
 
 

  (50,208)  

 
 
 

  (7,058)  

 
 
 

  (985,312)  

 
 
 

  (82,481)  

 
 
 

  (11,595)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Amounts paid for NetEase's issuance of shares in Hong Kong  

 
 
 

  -  

 
 
 

  -  

 
 
 

  -  

 
 
 

  -  

 
 
 

  (13,800)  

 
 
 

  -  

 
 
 

  -  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Net Amounts received/ (paid) related to capital contribution from
or repurchase of noncontrolling interests and redeemable
noncontrolling interests shareholders
 

 
 
 

  34,800  

 
 
 

  33,200  

 
 
 

  14,305  

 
 
 

  2,011  

 
 
 

  1,550,025  

 
 
 

  (54,537)  

 
 
 

  (7,667)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Cash paid for repurchase of NetEase's ADSs/ purchase of
subsidiaries' ADSs and shares
 

 
 
 

  (6,310,841)  

 
 
 

  (2,119,613)  

 
 
 

  (1,956,829)  

 
 
 

  (275,087)  

 
 
 

  (10,798,277)  

 
 
 

  (5,320,359)  

 
 
 

  (747,924)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Dividends paid to NetEase's shareholders  

 
 
 

  (1,028,116)  

 
 
 

  (1,403,637)  

 
 
 

  (1,617,574)  

 
 
 

  (227,395)  

 
 
 

  (2,567,837)  

 
 
 

  (4,704,683)  

 
 
 

  (661,374)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Net cash (used in)/ provided by financing activities  

 
 
 

  (14,894,466)  

 
 
 

  840,872  

 
 
 

  (7,184,847)  

 
 
 

  (1,010,030)  

 
 
 

  (11,512,013)  

 
 
 

  (4,055,001)  

 
 
 

  (570,043)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Effect of exchange rate changes on cash, cash equivalents and
restricted cash held in foreign currencies
 

 
 
 

  14,435  

 
 
 

  74,898  

 
 
 

  3,470  

 
 
 

  488  

 
 
 

  25,316  

 
 
 

  57,166  

 
 
 

  8,036  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Net increase in cash, cash equivalents and restricted cash  

 
 

  12,570,246  

 
 
 

  6,363,748  

 
 
 

  1,291,952  

 
 
 

  181,619  

 
 
 

  13,560,606  

 
 
 

  3,468,287  

 
 
 

  487,563  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Cash, cash equivalents and restricted cash, at the beginning
of the period
 
 

 
 
 

  13,158,965  

 
 
 

  13,188,702  

 
 
 

  19,552,450  

 
 
 

  2,748,640  

 
 
 

  12,168,605  

 
 
 

  17,376,115  

 
 
 

  2,442,696  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Cash, cash equivalents and restricted cash, at end of the period   

 
 
 

  25,729,211  

 
 
 

  19,552,450  

 
 
 

  20,844,402  

 
 
 

  2,930,259  

 
 
 

  25,729,211  

 
 
 

  20,844,402  

 
 
 

  2,930,259  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Supplemental disclosures of cash flow information:   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Cash paid for income tax, net  

 
 
 

  898,112  

 
 
 

  1,055,096  

 
 
 

  1,550,748  

 
 
 

  218,001  

 
 
 

  2,688,995  

 
 
 

  4,121,174  

 
 
 

  579,345  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Cash paid for interest expense  

 
 
 

  52,765  

 
 
 

  93,079  

 
 
 

  193,329  

 
 
 

  27,178  

 
 
 

  144,749  

 
 
 

  324,149  

 
 
 

  45,568  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  The accompanying notes are an integral part of this announcement.  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 

 

 

 

 
 
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
 

   NETEASE, INC.   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   UNAUDITED SEGMENT INFORMATION   

 
 
 
 
 
 
 
 
 
 
 
 
 
 

   (in thousands, except percentages)   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Three Months Ended   

 
 
 

   Nine Months Ended   

 
 
 
 

   September 30,   

 
 
 

   June 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 

   2022   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 

   Net revenues:   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Games and related value-added services  

 
 
 

  17,145,668  

 
 
 

  18,139,843  

 
 
 

  18,699,106  

 
 
 

  2,628,679  

 
 
 

  49,027,297  

 
 
 

  55,480,763  

 
 
 

  7,799,362  

 
 

  Youdao  

 
 
 

  1,387,292  

 
 
 

  956,225  

 
 
 

  1,402,434  

 
 
 

  197,151  

 
 
 

  4,020,566  

 
 
 

  3,559,200  

 
 
 

  500,344  

 
 

  Cloud Music  

 
 
 

  1,924,683  

 
 
 

  2,191,510  

 
 
 

  2,357,248  

 
 
 

  331,377  

 
 
 

  5,108,357  

 
 
 

  6,615,964  

 
 
 

  930,057  

 
 

  Innovative businesses and others  

 
 
 

  1,733,106  

 
 
 

  1,871,500  

 
 
 

  1,967,972  

 
 
 

  276,653  

 
 
 

  5,076,241  

 
 
 

  5,485,753  

 
 
 

  771,176  

 
 

  Total net revenues  

 
 
 

  22,190,749  

 
 
 

  23,159,078  

 
 
 

  24,426,760  

 
 
 

  3,433,860  

 
 
 

  63,232,461  

 
 
 

  71,141,680  

 
 
 

  10,000,939  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Cost of revenues:   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Games and related value-added services  

 
 
 

  (6,634,238)  

 
 
 

  (6,375,598)  

 
 
 

  (6,551,193)  

 
 
 

  (920,952)  

 
 
 

  (18,660,292)  

 
 
 

  (19,978,841)  

 
 
 

  (2,808,581)  

 
 

  Youdao  

 
 
 

  (601,741)  

 
 
 

  (546,498)  

 
 
 

  (642,254)  

 
 
 

  (90,287)  

 
 
 

  (1,790,817)  

 
 
 

  (1,751,443)  

 
 
 

  (246,214)  

 
 

  Cloud Music  

 
 
 

  (1,881,859)  

 
 
 

  (1,905,954)  

 
 
 

  (2,023,600)  

 
 
 

  (284,473)  

 
 
 

  (5,042,912)  

 
 
 

  (5,745,203)  

 
 
 

  (807,648)  

 
 

  Innovative businesses and others  

 
 
 

  (1,262,143)  

 
 
 

  (1,389,537)  

 
 
 

  (1,465,821)  

 
 
 

  (206,062)  

 
 
 

  (3,685,419)  

 
 
 

  (4,144,431)  

 
 
 

  (582,615)  

 
 

  Total cost of revenues  

 
 
 

  (10,379,981)  

 
 
 

  (10,217,587)  

 
 
 

  (10,682,868)  

 
 
 

  (1,501,774)  

 
 
 

  (29,179,440)  

 
 
 

  (31,619,918)  

 
 
 

  (4,445,058)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Gross profit:   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Games and related value-added services  

 
 
 

  10,511,430  

 
 
 

  11,764,245  

 
 
 

  12,147,913  

 
 
 

  1,707,727  

 
 
 

  30,367,005  

 
 
 

  35,501,922  

 
 
 

  4,990,781  

 
 

  Youdao  

 
 
 

  785,551  

 
 
 

  409,727  

 
 
 

  760,180  

 
 
 

  106,864  

 
 
 

  2,229,749  

 
 
 

  1,807,757  

 
 
 

  254,130  

 
 

  Cloud Music  

 
 
 

  42,824  

 
 
 

  285,556  

 
 
 

  333,648  

 
 
 

  46,904  

 
 
 

  65,445  

 
 
 

  870,761  

 
 
 

  122,409  

 
 

  Innovative businesses and others  

 
 
 

  470,963  

 
 
 

  481,963  

 
 
 

  502,151  

 
 
 

  70,591  

 
 
 

  1,390,822  

 
 
 

  1,341,322  

 
 
 

  188,561  

 
 

  Total gross profit  

 
 
 

  11,810,768  

 
 
 

  12,941,491  

 
 
 

  13,743,892  

 
 
 

  1,932,086  

 
 
 

  34,053,021  

 
 
 

  39,521,762  

 
 
 

  5,555,881  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   Gross profit margin:   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Games and related value-added services  

 
 
 

  61.3 %  

 
 
 

  64.9 %  

 
 
 

  65.0 %  

 
 
 

  65.0 %  

 
 
 

  61.9 %  

 
 
 

  64.0 %  

 
 
 

  64.0 %  

 
 

  Youdao  

 
 
 

  56.6 %  

 
 
 

  42.8 %  

 
 
 

  54.2 %  

 
 
 

  54.2 %  

 
 
 

  55.5 %  

 
 
 

  50.8 %  

 
 
 

  50.8 %  

 
 

  Cloud Music  

 
 
 

  2.2 %  

 
 
 

  13.0 %  

 
 
 

  14.2 %  

 
 
 

  14.2 %  

 
 
 

  1.3 %  

 
 
 

  13.2 %  

 
 
 

  13.2 %  

 
 

  Innovative businesses and others  

 
 
 

  27.2 %  

 
 
 

  25.8 %  

 
 
 

  25.5 %  

 
 
 

  25.5 %  

 
 
 

  27.4 %  

 
 
 

  24.5 %  

 
 
 

  24.5 %  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  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 = RMB7.1135 on the last trading day of September 2022 ( September 30, 2022 ) 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 September 30, 2022 , 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   

 
 
 

   Nine Months Ended   

 
 
 
 
 
 

   September 30,   

 
 
 

   June 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 
 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 

   2022   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 
 
 

  Share-based compensation cost included in:  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Cost of revenues  

 
 
 

  180,669  

 
 
 

  173,840  

 
 
 

  190,645  

 
 
 

  26,800  

 
 
 

  565,965  

 
 
 

  562,620  

 
 
 

  79,092  

 
 
 
 

  Operating expenses  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Selling and marketing expenses  

 
 
 

  29,289  

 
 
 

  31,817  

 
 
 

  24,980  

 
 
 

  3,512  

 
 
 

  79,954  

 
 
 

  87,170  

 
 
 

  12,254  

 
 
 
 

  General and administrative expenses  

 
 
 

  258,805  

 
 
 

  297,891  

 
 
 

  288,598  

 
 
 

  40,570  

 
 
 

  746,952  

 
 
 

  865,551  

 
 
 

  121,677  

 
 
 
 

  Research and development expenses  

 
 
 

  219,463  

 
 
 

  260,899  

 
 
 

  282,776  

 
 
 

  39,752  

 
 
 

  645,722  

 
 
 

  782,259  

 
 
 

  109,968  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  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 U.S. GAAP or different accounting standards requirement.

 

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   

 
 
 

   Nine Months Ended   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   September 30,   

 
 
 

   June 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 

   September 30,   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 

   2022   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Net income from continuing operations attributable to the
Company's shareholders
 

 
 
 

  3,181,782  

 
 
 

  4,666,612  

 
 
 

  6,699,364  

 
 
 

  941,782  

 
 
 

  11,162,688  

 
 
 

  15,759,999  

 
 
 

  2,215,505  

 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Add: Share-based compensation  

 
 
 

  675,999  

 
 
 

  743,198  

 
 
 

  770,255  

 
 
 

  108,281  

 
 
 

  2,003,644  

 
 
 

  2,237,056  

 
 
 

  314,480  

 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Non-GAAP net income from continuing operations
attributable to the Company's shareholders
 

 
 
 

  3,857,781  

 
 
 

  5,409,810  

 
 
 

  7,469,619  

 
 
 

  1,050,063  

 
 
 

  13,166,332  

 
 
 

  17,997,055  

 
 
 

  2,529,985  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Non-GAAP basic net income from continuing
operations per share *
 

 
 
 

  1.16  

 
 
 

  1.65  

 
 
 

  2.29  

 
 
 

  0.32  

 
 
 

  3.94  

 
 
 

  5.50  

 
 
 

  0.77  

 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Non-GAAP basic net income from continuing
operations per ADS *
 

 
 
 

  5.80  

 
 
 

  8.26  

 
 
 

  11.45  

 
 
 

  1.61  

 
 
 

  19.70  

 
 
 

  27.50  

 
 
 

  3.87  

 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Non-GAAP diluted net income from continuing
operations per share *
 

 
 
 

  1.15  

 
 
 

  1.64  

 
 
 

  2.27  

 
 
 

  0.32  

 
 
 

  3.89  

 
 
 

  5.45  

 
 
 

  0.77  

 
 
 
 
 
 
 
 
 
 
 
 
 
 

  Non-GAAP diluted net income from continuing
operations per ADS *
 

 
 
 

  5.74  

 
 
 

  8.18  

 
 
 

  11.34  

 
 
 

  1.59  

 
 
 

  19.46  

 
 
 

  27.23  

 
 
 

  3.83  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  *  Each ADS represents five ordinary shares.  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

  The accompanying notes are an integral part of this announcement.  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 

 

 

 Cision View original content: https://www.prnewswire.com/news-releases/netease-announces-third-quarter-2022-unaudited-financial-results-301681177.html  

 

SOURCE NetEase, Inc.

 
 

News Provided by PR Newswire via QuoteMedia

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Mobile Gaming Stocks: 10 Biggest Companies in 2025

According to market intelligence firm Newzoo, global gaming revenue came in at US$177.9 billion in 2024, with mobile gaming accounting for more than half of that amount at US$97.6 billion.

The firm states that the mobile gaming market has reached maturity but still achieved higher growth than the console and PC segments, with revenue up by 2.8 percent globally last year. The regions driving that growth are North America and Europe, where markets rebounded due to big releases and diversified revenue streams.

Mobile games are typically accessed through three core operating systems: Apple's (NASDAQ:AAPL) iOS, Microsoft's (NASDAQ:MSFT) Windows and Alphabet's (NASDAQ:GOOGL) Android. Notably, the iOS App Store generated nearly 37 percent of its revenue from mobile gaming apps in 2024, totaling US$3.83 billion. However, figures show that most mobile games on the market today are developed for Android, representing 75 percent of total mobile game downloads.

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NorthStar Gaming Announces Revocation of Management Cease Trade Order

NorthStar Gaming Announces Revocation of Management Cease Trade Order

NorthStar Gaming Holdings Inc. (TSXV: BET) (OTCQB: NSBBF) ("NorthStar" or the "Company") is pleased to announce that effective May 16, 2025, the Ontario Securities Commission has revoked the temporary management cease trade order ("MCTO") it had previously granted to the Company on May 8, 2025 under National Policy 12-203 Management Cease Trade Orders, as the Company successfully completed the filing of its annual audited financial statements, management's discussion and analysis, and related certifications for the year ended December 31, 2024 (collectively, the "Annual Filings") on May 14, 2025.

The revocation of the MCTO means members of management are no longer prevented from trading the Company's securities. All of the Annual Filings are available under the Company's profile on SEDAR+ at www.sedarplus.ca.

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NorthStar Gaming Reports Year-End 2024 Results

NorthStar Gaming Reports Year-End 2024 Results

 

Annual Revenue Growth of 57%, Gross Margin up 91%

 

NorthStar Gaming Holdings Inc. (TSXV: BET) (OTCQB: NSBBF) ("NorthStar" or the "Company") today announced its financial results for the three months and year ended December 31, 2024. The Company also announced that it will discuss the results on an investor webinar to be held Thursday, May 15, 2025 at 11:00am (please see below for details). All dollar figures are quoted in Canadian dollars.

 

"We delivered strong financial results in 2024, highlighted by 57% growth in revenue and a 91% increase in gross margin. At the same time, we held marketing expense to a 10% increase and reduced G&A expense, demonstrating the continually improving operating leverage built into our business model," said Michael Moskowitz, Chair and CEO of NorthStar. "Equally important, our team rolled out innovations in both our sportsbook and casino that have further differentiated NorthStar Bets as a premium offering and helped drive the retention of, and engagement with, our loyal customers."

 

Restatement of Results

 

The comparative results for the three months and twelve months ended December 31, 2023 have been restated in the financial statements and management's discussion & analysis ("FY2024 MD&A") for the year ended December 31, 2024 to include additional merchant fees and player bonus expenses which were not captured in the previously published financial statements (note 2 of the Financial Statements for the year ended December 31, 2024). The Company's payment processor deducted the additional merchant fee from the daily remittances to the Company, and the deductions were not accounted for by the Company. These additional fees were identified as part of the year-end reconciliation of the amount due from the payment processor, and the financial statements and FY2024 MD&A have been adjusted accordingly. These restatements did not impact the cash balances reported for the years ended December 31, 2022, 2023, or 2024. However, they did result in adjustments to the reported current asset balances for those periods.

 

Financial Highlights for the Fourth Quarter Ended December 31, 2024 ("Q4 2024"):

 
  •  Total Wagers1 at Northstarbets.ca were $303.0 million in Q4 2024, a 42% increase compared to $213.3 million in Q4 2023.
  •  
  •  Gross Gaming Revenue2 at Northstarbets.ca was $10.0 million in Q4 2024, a 31.6% increase from $7.6 million in Q4 2023.
  •  
  •  Revenue2 was $9.5 million in Q4 2024, a 51% increase from $6.3 million in Q4 2023. Revenue in Q4 2024 includes $1.5 million of managed services revenue, which compares to $0.2 million in Q4 2023.
  •  
  •  Gross Margin was $3.6 million, a 71% increase from $2.1 million in Q4 2023, while the Gross Margin percentage increased to 38.1%, up from 33.6% in Q4 2023.
  •  
  •  Profit/(loss) before marketing and other expenses1 was $0.6 million in Q4 2024 compared to a loss of $2.5 million in Q4 2023, indicating that gross margin is now sufficient to cover the Company's overhead expenses.
  •  

Financial Highlights for the Year Ended December 31, 2024 ("FY 2024"):

 
  •  Total Wagers2 at Northstarbets.ca were $980.0 million in FY 2024, a 51% increase compared to $648.8 million in the year ended December 31, 2023.
  •  
  •  Gross Gaming Revenue2 at Northstarbets.ca was $34.0 million in FY 2024, a 51% increase from $22.5 million in FY 2023.
  •  
  •  Revenue2 was $29.6 million in FY 2024, a 57% increase from $18.8 million in FY 2023. Revenue in FY 2024 includes $2.3 million of managed services revenue, which compares to $0.5 million in FY 2023.3
  •  
  •  Gross Margin was $10.5 million, marking a 91% increase from $5.5 million in FY 2023, with the Gross Margin increasing to 35.7%, up from 29.3% in FY 2023.
  •  
  •  Profit/(loss) before marketing and other expenses1 was $0.1 million in FY 2024 compared to a loss of $6.7 million in YTD 2023, an improvement of $6.8 million.
  •  

"Early in 2025, we completed our most significant fund-raising to date, with a $43.4 million debt financing. This capital gives us a long runway on which to continue our trajectory of growth in wagering, gross margins and improving operating leverage. This was a milestone event for our business," added Mr. Moskowitz.

 

2024 Operating Highlights:

 
  • Completed the inaugural Blackjack Championship tournament, an innovative online competition that helped drive the acquisition of new high-value players and engagement for existing customers while increasing Blackjack wagering activity.
  •  
  • Implemented a series of enhancements to the NorthStar Bets platform, highlighted by streamlined navigation in both the Casino and Sportsbook sections, a doubling of Casino game selection since the start of 2024, personalized prop bets and intelligent parlay suggestions.
  •  
  • Introduced the "NorthStar Elite" program and branded tables to help secure the loyalty and satisfaction of our most active players and reinforcing the Company's positioning as a premium offering.
  •  
  • Launched "Sports Insights 2.0," a robust suite of enhancements to our content vertical that includes a redesigned home page, comprehensive team and player statistics, injury and player news feeds, added coverage of popular sports and strengthened casino content.
  •  
  • Gained significant traction outside the Ontario market with managed services revenue from Northstarbets.com site, owned by the Abenaki Council of Wolinak, increasing from $0.5 million in FY 2023 to $2.3 million in FY 2024.
  •  
  • Outpaced the industry growth rates reported by iGaming Ontario in 2024 in both Total Wagers (51% for NorthStar vs. 33% for the industry) and Gross Gaming Revenue (51% for NorthStar vs. 31.5% for the industry).
  •  

Outlook

 

"We expect our consistent pattern of year-over-year revenue increases to continue throughout 2025, based on our ongoing success in attracting and engaging high-value players," said Mr. Moskowitz. "We will maintain disciplined control over costs so that incremental gross margin falls primarily to the bottom line. As we continue to focus on operational excellence, we remain confident that we have the capital necessary to reach profitability based on our current business platform."

 

FY 2024 Corporate Update Webinar

 

On May 15, 2025, Michael Moskowitz will present an in-depth Corporate Update, including a discussion of the Company's FY 2024 Earnings, current operations and strategic priorities. All investors and other interested parties are invited to register for the webinar at the link below.

 

Date: Thursday, May 15, 2025
Time: 11:00 am EDT
Register: Webinar Registration

 

Management will be available to answer your questions following the presentation on the webinar platform. You may also submit your question(s) beforehand in the registration form linked above.

 

Extension of Strategic Marketing Agreement

 

The Company also announced that its wholly owned subsidiary, NorthStar Gaming (Ontario) Inc. ("NorthStar Ontario"), has extended its strategic partnership with Playtech Software Limited ("Playtech Software") through the renewal of their previously announced strategic marketing agreement. Under the agreement, Playtech Software contributes services designed to accelerate NorthStar Ontario's player acquisition strategy in the province. The agreement was first implemented in June 2023 and has since been renewed several times. Pursuant to the latest renewal, Playtech Software will reimburse marketing expenses valued at a total of up to $1.5 million over a 3-month period through to March 31, 2025. Playtech Software will be compensated through a share of revenue from the income generated in connection with the marketing initiatives to which it contributes. The Transaction between Playtech and NorthStar Ontario is exempted from Multilateral Instrument 61-101 Protection of Minority Securityholders in Special Transactions.

 

"We are very pleased to renew the marketing services agreement with Playtech Software," said Michael Moskowitz, Chair and CEO of NorthStar. "The agreement serves to extend our marketing budget and has contributed to our tremendous growth in Ontario. Playtech plc continues to be a valuable strategic partner and we look forward to further collaboration."

 

Continuous Disclosure

 

Further to a review by the staff of the Ontario Securities Commission (the "OSC") of the Company's continuous disclosure, the FY2024 MD&A includes enhanced disclosures with respect to:

 
  • the Company's regulatory framework, licensing regimes applicable to its business operations and the legal authorizations necessary to conduct its business operations;
  •  
  • specific risk factors relating to the Company's business operations which include risks relating to operating in a heavily regulated industry, cyber security risks and risks relating to conflicts of interest with respect to directors and officers of the Company; and
  •  
  • the relationship between the Abenaki Council of Wolinak and the Company as well as its subsidiary, Slapshot Media Inc.
  •  

Such amended disclosure is being included in the FY2024 MD&A to address comments received from the OSC on its management's discussion & analysis, for the period ended September 30, 2024, and to improve the Company's disclosure.

 

As a result of having to include such enhanced disclosure after the OSC review, the Company will be placed on the public list of Refilings and Errors in accordance with OSC Staff Notice 51-711 (Revised) - Refilings and Corrections of Errors for a period of three (3) years.

 

Additional Information

 

For additional information, please refer to the Company's condensed consolidated financial statements for the year ended December 31, 2024, and the corresponding FY2024 MD&A. These documents are available on SEDAR+ at www.sedarplus.ca, and on the Company's corporate website at www.northstargaming.ca.

 

About NorthStar

 

NorthStar proudly owns and operates NorthStar Bets, a Canadian-born casino and sportsbook platform that delivers a premium, distinctly local gaming experience. Designed with high-stakes players in mind, NorthStar Bets Casino offers a curated selection of the most popular games, ensuring an elevated user experience. Our sportsbook stands out with its exclusive Sports Insights feature, seamlessly integrating betting guidance, stats, and scores, all tailored to meet the expectations of a premium audience.

 

As a Canadian company, NorthStar is uniquely positioned to cater to customers who seek a high-quality product and an exceptional level of personalized service, setting a new standard in the industry. NorthStar is committed to operating at the highest level of responsible gaming standards.

 

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange ("TSXV") nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.

 

Non-IFRS Financial Measures [/ Reconciliation of Non-IFRS Measures to IFRS Measures]

 

Throughout this document, management uses certain non-IFRS financial measures and supplementary financial measures to evaluate the performance of the Company. The terms "Gross Gaming Revenue" "Total Wagers" and "Profit/(Loss) before marketing and other expenses" are non-IFRS financial measures. These measures are not recognized measures under International Financial Reporting Standards ("IFRS") and do not have a standardized meaning prescribed by IFRS and are, therefore, not necessarily comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective and to discuss NorthStar's financial outlook. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures, including industry metrics, in the evaluation of companies in our industry. Management also uses non-IFRS measures and industry metrics in order to facilitate operating performance comparisons from period to period, the preparation of annual operating budgets and forecasts and to determine components of executive compensation.

 

Total Wagers

 

Total Wagers are calculated as the total amount of money bet by customers in respect of bets that have settled in the applicable period. Total Wagers does not include free bets or other promotional incentives, nor money bet by customers in respect of bets that are open at period end. Total Wagers is used to provide investors with supplemental measures of our operating performance and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures.

 

Gross Gaming Revenue

 

Gross Gaming Revenue is calculated as dollar amounts bet by customers less the dollar amounts paid out to the customers in respect of such bets which have settled in the applicable period.

 

Reconciliation of Non-IFRS Measures to IFRS Measures

 
                                
 In Q4 2024, the Company reported $10.0 million of Gross Gaming Revenue ($34.0 million in FY 2024) and has provided a reconciliation to the most comparable IFRS financial measure (Revenue) as follows:
$ Millions (unaudited)
Unaudited Three
months ended
Year ended
 Dec 31,
2024 
 Dec 31,
2023 
 Dec 31,
2024 
 Dec 31,
2023 
Gross gaming revenue from wagered games$10.0$ 7.6$ 34.0$22.5
Bonuses, promotional costs and free bets(2.0)(1.5)(6.7)(4.2)
Sub-total Gaming revenue8.06.127.318.3
Other revenue from managed services1.50.22.30.5
Revenue$ 9.5$ 6.3$ 29.6$ 18.8
 

 

 

Operating Results

 

Marketing expenses are a key driver of the business but are completely discretionary. Management considers "Profit/(Loss) before marketing and other expenses" to be a good indication of the extent to which the business' Gross Margin is in excess of its overhead costs, and therefore offsetting some portion of marketing expenses, reflecting improving economies of scale.

 
                                                    
$ Millions (unaudited) Unaudited Three 
months ended 
Year ended
 Dec 31,
2024 
 Dec 31,
2023 
 Dec 31,
2024 
 Dec 31,
2023 
Revenue$ 9,478$ 6,275$ 29,556$ 18,845
Cost of Revenues5,8684,16719,01313,317
Gross Margin3,6102,10810,5435,528
General and administrative expenses3,0334,45210,45312,277
 Profit/(Loss) before marketing and other expenses (1) 577(2,344)90(6,749)
Marketing5,2495,47215,45614,094
Loss before other expenses (1) (4,672)(7,816)(15,366)(20,843)
Other expenses(1,070)1493,6456,547
Net loss$ (3,602)$ (7,965)$ (19,011)$ (27,390)
 

 

 

(1) These measures are not defined by IFRS, do not have standard meanings and may not be comparable with other industries or companies.

 

Cautionary Note Regarding Forward-Looking Information and Statements

 

This communication contains "forward-looking information" within the meaning of applicable securities laws in Canada ("forward-looking statements"), including without limitation, statements with respect to the following: expected performance of the Company's business, the Company's growth plans being fully funded, expansion into new markets and future growth opportunities, and expected benefits of transactions. The foregoing are provided for the purpose of presenting information about management's current expectations and plans relating to the future and allowing investors and others to get a better understanding of the Company's anticipated financial position, results of operations, and operating environment. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. This forward-looking information is based on management's opinions, estimates and assumptions that, while considered by NorthStar to be appropriate and reasonable as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, levels of activity, performance, or achievements to be materially different from those expressed or implied by such forward-looking information. Such factors include, among others, the following: risks related to the Company's business and financial position; risks associated with general economic conditions; adverse industry risks; future legislative and regulatory developments; the ability of the Company to implement its business strategies; and those factors discussed in greater detail under the "Risk Factors" section of the Company's most recent annual information form, which is available under NorthStar's profile on SEDAR+ at www.sedarplus.ca. Many of these risks are beyond the Company's control.

 

If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking statements. Although the Company has attempted to identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements, there may be other risk factors not presently known to the Company or that the Company presently believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking statements. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents NorthStar's expectations as of the date specified herein, and are subject to change after such date. However, the Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

 

All of the forward-looking information contained in this press release is expressly qualified by the foregoing cautionary statements.

 
 

For further information:

 

Company Contact:

 

Corey Goodman
Chief Development Officer 647-530-2387
investorrelations@northstargaming.ca

 

Investor Relations:
RB Milestone Group LLC (RBMG)
Northstar@rbmilestone.com

 
 

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NorthStar Gaming Announces Receipt of Management Cease Trade Order

NorthStar Gaming Announces Receipt of Management Cease Trade Order

NorthStar Gaming Holdings Inc. (TSXV: BET) (OTCQB: NSBBF) ("NorthStar" or the "Company") today announces that its principal regulator, the Ontario Securities Commission, has granted its request for a management cease trade order ("MCTO") effective May 8, 2025.

As previously announced on April 29, 2025, the Company applied for the MCTO due to a delay in filing its annual audited financial statements, management's discussion and analysis and related certifications for the financial year ended December 31, 2024 (the "Annual Filings") which were required to be filed by April 30, 2025.

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NorthStar Gaming Announces Delay of Annual Filings

NorthStar Gaming Announces Delay of Annual Filings

NorthStar Gaming Holdings Inc. (TSXV: BET) (OTCQB: NSBBF) ("NorthStar" or the "Company") today announces an anticipated delay in the filing of its annual audited financial statements, management's discussion and analysis and related certifications for the financial year ended December 31, 2024 (collectively, the "Annual Filings"). The Company does not expect to file its Annual Filings by the regular filing deadline of April 30, 2025, as required, due to an unanticipated delay relating to the audit of the Annual Filings. The Company is working diligently with its auditor to finalize the Annual Filings and expects to file the Annual Filings no later than May 15, 2025.

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