Gaming

- 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 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 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: 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 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

GAMING00
East Side Games

The Office: Somehow We Manage Mobile Game Available Now

East Side Games Group (TSX: EAGR) (OTC: EAGRF) (" ESGG " or the " Company "), Canada's leading free-to-play mobile game group, in collaboration with Universal Games and Digital Platforms, announced today the worldwide launch of The Office: Somehow We Manage on iOS and Android. The free-to-play idle game is inspired by NBC's critically acclaimed, Emmy® Award-winning U.S. version of The Office which is now streaming exclusively on Peacock.

Watch the launch trailer here .

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Dubai marked the conclusion of the inaugural Dubai Esports Festival (DEF 2022), held under the patronage of His Highness Sheikh Ahmed bin Mohammed bin Rashid Al Maktoum Chairman of the Dubai Media Council on 20 th November. Held at the Dubai Exhibition Centre in Dubai Expo City between 9 and 20 November, DEF2022 was hosted by Dubai Festivals and Retail Establishment (DFRE) in partnership with VSPN, a global leader in esports activities and solutions, and presenting partner, du.

PGC Final Award Ceremony

Reinforcing Dubai's position as a hub for technology, innovation, events and tourism, the Festival brought together leading gamers, esports thought leaders and fans from across the world. The 12-day Festival's concluding day featured the championship round of the inaugural PUBG Global Championship 2022 Grand Finals, which saw Team Natus Vincere crowned winners and Team 17 coming in second.

DEF 2022 kicked off with the two-day Initiate Summit, a groundbreaking B2B learning and networking platform for esports and gaming industry professionals, developers and creatives. The Summit was held in collaboration with Dubai World Trade Centre (DWTC) and Dubai Media City, a member of TECOM Group, the event's Knowledge Partner. The oversubscribed first edition of the Summit welcomed over a thousand participants and more than 60 industry and esports thought leaders, showcasing Dubai's appetite for growth in the esports sector.

Organised in collaboration with DWTC and Alanza Trading, GameExpo and PopConME kicked off on the second day as two of the Festival's key attractions. GameExpo and PopConME featured some of the biggest Hollywood celebrities, special meet-and-greet sessions, exclusive workshops, movie screenings, international artists and creators, artist alley, cosplay competition offering a prize of Dh75,000 to the winner, gaming competitions and esports tournaments.

During the four-day GameExpo, three grassroots esports tournaments took place in collaboration with global gaming titles, including Minecraft and Honor of Kings, as regional esports competitors and youth gamers took to the stage to show off their skills and win prizes worth up to $25,000 . Rounding off the inaugural Festival, popular Egyptian artist Wegz performed live in concert with an electrifying musical showcase.

DEF 2022 catered to gamers, families, friends, art and music lovers, industry professionals, and esports experts as part of its first edition with the aim of uniting and developing the gaming and esports communities in Dubai and the region.

For more information about DEF 2022 please visit www.dubaiesportsfestival.com

Cision View original content to download multimedia: https://www.prnewswire.com/news-releases/dubai-esports-festival-2022-concludes-on-a-high-note-301686136.html

SOURCE VSPN

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Temasek's Vertex Leads $4M Investment in CARV to Build Gaming Credential and Data Infrastructure

CARV has raised $4M in seed funding led by Vertex, Temasek Holding's venture capital arm with participation from EVOS (ATTN Group), SNACKCLUB (Loud Gaming), Infinity Ventures Crypto YGG SEA, UpHonest Capital, Lyrik Ventures, Lintentry Foundation, PAKADAO, 7UpDAO, Angel Investor Aliaksandr Hadzilin (NEAR's co-founder), among others. Many investors bring infrastructure and gaming ecosystem synergies to CARV, especially across the US, Europe LATAM, and Southeast Asia markets.

The Los Angeles -based company set out with a mission to empower gamers with data sovereignty via gaming credentials. "Gamer activities span across devices, platforms, and into real life. However, their time, effort, and money spent remain data points scattered across isolated ecosystems, with limited value to gamers." Says Victor Yu, CARV's co-founder and COO. "By creating the infrastructure to piece these breadcrumbs together, we are unlocking tremendous opportunities in how gamers interact in the gaming universe." Gamers now own and self-sovereign their data, with which they can achieve their hard-earned achievements and be recognized for community contribution on CARV.IO . Moreover, gamers can explore the semantic discovery of friends & games, and unlock credential-gated gaming premiums and governance privileges based on their past gaming experience.

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Youth Franchise XP League Partners with Parabellum Esports

First and Largest Esports Franchise in North America Partners with Canadian Esports Organization

XP League the first and largest esports franchise in North America has announced a new partnership with Canadian pro team Parabellum Esports . Through this partnership, select XP League teams will be able to play under the Parabellum name and wear their jersey helping to cement XP League as the premier youth esports organization that aligns with professional esports.

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