NetEase Reports First 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 first quarter ended March 31, 2022 .

 

  First Quarter 2022 Financial Highlights  

 
  • Net revenues were RMB23 .6 billion ( US$3 .7 billion), an increase of 14.8% compared with the first quarter of 2021.
  •  

- Online game services net revenues were RMB17 .3 billion ( US$2 .7 billion), an increase of 15.3% compared with the first quarter of 2021.

 

- Youdao net revenues were RMB1 .2 billion ( US$189.4 million ), a decrease of 10.4% compared with the first quarter of 2021. [1]

 

- Cloud Music net revenues were RMB2.1 billion ( US$326.1 million ), an increase of 38.6% compared with the first quarter of 2021.

 

- Innovative businesses and others net revenues were RMB3.0 billion ( US$475.7 million ), an increase of 11.5% compared with the first quarter of 2021.

 
  • Gross profit was RMB12.8 billion ( US$2.0 billion ), an increase of 16.1% compared with the first quarter of 2021.
  •  
  • Total operating expenses were RMB7.3 billion ( US$1.2 billion ), an increase of 8.1% compared with the first quarter of 2021.
  •  
  • Net income attributable to the Company's shareholders was RMB4.4 billion ( US$693 .1 million). Non-GAAP net income attributable to the Company's shareholders was RMB5.1 billion ( US$807 .3 million). [ 2]
  •  
  • Basic net income per share was US$0 .21 ( US$1 .06 per ADS). Non-GAAP basic net income per share was US$0 .25 ( US$1 .23 per ADS). [2]
  •  
 
  
 

   [1]   Youdao ceased offering after-school tutoring services for academic subjects under China's compulsory education system (the "Academic AST Business") at the end of December 2021. The net revenues from such services were included in its net revenues from learning services in 2021 and prior periods.  

 
 

   [2]   As used in this announcement, non-GAAP net income attributable to the Company's shareholders and non-GAAP basic net income per share and per ADS are defined to exclude share-based compensation expenses. See "Unaudited Reconciliation of GAAP and Non-GAAP Results" in this announcement.  

 
 
 

  First Quarter 2022 and Recent Operational Highlights  

 
  • Announced 2022 launch date for Diablo ® Immortal™ , co-developed by NetEase and Blizzard Entertainment, slated for global market release on June 2 and release in China and Southeast Asia on June 23 .
  •  
  • Invigorated Naraka: Bladepoint 's player community with captivating content updates and the first World Championship tournament.
  •  
  • Delivered strong performances from longstanding flagship titles including Fantasy Westward Journey   Online and New Westward Journey Online II , and maintained popularity of other hit titles including LifeAfter and Sky .
  •  
  • Launched new games in Japan in April: Revelation mobile game, The   Lord of the Rings: Rise to War and Dead by Daylight Mobile - NetEase , capturing wide interest from game players.
  •  
  • Propelled pipeline by advancing new games under development including console and mobile versions of Naraka: Bladepoint and Ghost World Chronicle , as well as the roll-out of   Harry Potter : Magic Awakened in international markets.
  •  
  • Continued Youdao's business development through the expansion of its smart devices and learning services portfolio, following its efficient transition to comply with the changing regulatory environment in China .
  •  
  • Advanced NetEase Cloud Music, with healthy growth in net revenues from both membership subscription and social entertainment services, and improved gross margin to 12.2%.
  •  

"Strong contributions from our steady online game services led our healthy growth in the first quarter with total net revenues of RMB23 .6 billion, an increase of 14.8% year-over-year," said Mr. William Ding , CEO and Director of NetEase. "Both our flagship titles and many of our newer games continued to captivate our enthusiastic player community. With the April releases of Revelation mobile game, The Lord of the Rings: Rise to War and Dead by Daylight Mobile    NetEase , we reached more players overseas. With confirmed plans to release Diablo ® Immortal™ in June, we are eager to bring players more amazing titles later this year."

 

"Our other business lines, including Youdao, NetEase Cloud Music and Yanxuan, are also on track. We look forward to creating additional value for our stakeholders and bringing more creative content to our growing global community through the remainder of 2022," Mr. Ding concluded.

 

  First Quarter 2022 Financial Results  

 

  Net   Revenues  

 

Net revenues were RMB23,555.8 million ( US$3,715.8 million ) for the first quarter of 2022, compared with RMB24,373.6 million and RMB20,517.2 million for the preceding quarter and the first quarter of 2021, respectively.

 

Net revenues from online game services were RMB17,272.7 million ( US$2,724.7 million ) for the first quarter of 2022, compared with RMB17,397.5 million and RMB14,981.8 million for the preceding quarter and the first quarter of 2021, respectively. Net revenues from mobile games accounted for approximately 66.9% of net revenues from online game services for the first quarter of 2022, compared with 68.3% and 72.8% for the preceding quarter and the first quarter of 2021, respectively.

 

Net revenues from Youdao were RMB1,200.5 million ( US$189.4 million ) for the first quarter of 2022, compared with RMB1,333.8 million and RMB1,339.9 million for the preceding quarter and the first quarter of 2021, respectively.

 

Net revenues from Cloud Music were RMB2,067.2 million ( US$326 .1 million) for the first quarter of 2022, compared with RMB1,889.3 million and RMB1,491.2 million for the preceding quarter and the first quarter of 2021, respectively.

 

Net revenues from innovative businesses and others were RMB3,015.4 million ( US$475.7 million ) for the first quarter of 2022, compared with RMB3,753.0 million and RMB2,704.4 million for the preceding quarter and the first quarter of 2021, respectively.

 

  Gross Profit  

 

Gross profit was RMB12,836.4 million ( US$2,024.9 million ) for the first quarter of 2022, compared with RMB12,917.8 million and RMB11,052.6 million for the preceding quarter and the first quarter of 2021, respectively.

 

Online game services gross profit was largely stable in the first quarter of 2022 compared with the preceding quarter. The year-over-year increase was mainly due to increased net revenues from newly launched games such as Naraka: Bladepoint and   Harry Potter : Magic Awakened .

 

The quarter-over-quarter and year-over-year decreases in Youdao gross profit were primarily due to the conclusion of its Academic AST Business.

 

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

 

The quarter-over-quarter decrease in innovative businesses and others gross profit was primarily due to a decrease in gross profit from advertising services due to seasonality.

 

  Gross Profit Margin  

 

Gross profit margin for online game services was 65.1% for the first quarter of 2022, compared with 64.1% and 64.6% for the preceding quarter and the first quarter of 2021, respectively. Gross profit margin for online game services was generally stable, fluctuating within a narrow band based on the revenue mix of mobile and PC games, as well as self-developed and licensed games.

 

Gross profit margin for Youdao was 53.1% for the first quarter of 2022, compared with 50.7% and 57.3% for the preceding quarter and the first quarter of 2021, respectively. The quarter-over-quarter increase was mainly due to gross profit margin improvement from its learning services. The year-over-year decrease was mainly due to the conclusion of its Academic AST Business.

 

Gross profit margin for Cloud Music was 12.2% for the first quarter of 2022, compared with 4.1% and a negative gross margin of 3.1% for the preceding quarter and the first 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 was 23.3% for the first quarter of 2022, compared with 26.8% and 24.1% for the preceding quarter and the first quarter of 2021, respectively. The quarter-over-quarter decrease was primarily due to the factors enumerated above.

 

  Operating Expenses  

 

Total operating expenses were RMB7,329.3 million ( US$1,156.2 million ) for the first quarter of 2022, compared with RMB8,309.6 million and RMB6,777.1 million for the preceding quarter and the first quarter of 2021, respectively. The quarter-over-quarter decrease was mainly due to lower marketing, research and development expenditures related to online game services. The year-over-year increase was mainly due to increased marketing expenditures related to online game services, as well as higher research and development staff-related costs, which was partially offset by decreased marketing expenditures related to Youdao.

 

  Other Income/ (Expense   s   )  

 

Other income/ (expenses) consisted of investment income/ (loss), interest income, exchange gains/ (losses) and others. The quarter-over-quarter and year-over-year decreases were mainly due to higher investment loss arising from fair value changes of equity investments with readily determinable fair value.

 

  Income Taxes  

 

The Company recorded a net income tax charge of RMB1,219.3 million ( US$192.3 million ) for the first quarter of 2022, compared with RMB934 .0 million and RMB1,273.4 million for the preceding quarter and the first quarter of 2021, respectively. The effective tax rate for the first quarter of 2022 was 22.0%, compared with 14.2% and 22.0% for the preceding quarter and the first quarter of 2021, respectively. The effective tax rate represents certain estimates by the Company regarding 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 RMB4,394 .0 million ( US$693.1 million ) for the first quarter of 2022, compared with RMB5,694.2 million and RMB4,439.2 million for the preceding quarter and the first quarter of 2021, respectively.

 

Non-GAAP net income attributable to the Company's shareholders for the first quarter of 2022 totaled RMB5,117.6 million ( US$807.3 million ), compared with RMB6,595.6 million and RMB5,080.7 million for the preceding quarter and the first quarter of 2021, respectively.

 

NetEase reported basic net income of US$0.21 per share ( US$1.06 per ADS) for the first quarter of 2022, compared with US$0.27 per share ( US$1.37 per ADS) and US$0.21 per share ( US$1.05 per ADS) for the preceding quarter and the first quarter of 2021, respectively.

 

NetEase reported non-GAAP basic net income of US$0.25 per share ( US$1.23 per ADS) for the first quarter of 2022, compared with US$0.32 per share ( US$1.59 per ADS) and US$0.24 per share ( US$1.20 per ADS) for the preceding quarter and the first quarter of 2021, respectively.   
 
 

 

  Quarterly     Dividend  

 

The board of directors has approved a dividend of US$0.0644 per share ( US$0.3220 per ADS) for the first quarter of 2022, to holders of ordinary shares and holders of ADSs as of the close of business on June 8, 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, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong no later than 4:30 p.m. on June 8, 2022 ( Beijing / Hong Kong Time). The payment date is expected to be on June 20, 2022 for holders of ordinary shares and on or around June 23, 2022 for holders of ADSs.

 

NetEase paid a dividend of US$0.0810 per share ( US$0.4050 per ADS) for the fourth quarter of 2021 in March 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 March 31, 2022 , the Company's total cash and cash equivalents, current and non-current time deposits and short-term investments balance totaled RMB107 .0 billion ( US$16.9 billion ), compared with RMB103.4 billion as of December 31, 2021 . Cash flows generated from operating activities was RMB4,582 .6 million ( US$722.9 million ) for the first quarter of 2022, compared with RMB8,368 .6 million and RMB5,542.7 million for the preceding quarter and the first quarter of 2021, respectively.

 

  Share Repurchase/Purchase     Program  

 

On February 25, 2021 , the Company announced that its board of directors had approved a share repurchase program of up to US$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 March 31, 2022 , approximately 20.1 million ADSs had been repurchased under this program for a total cost of US$1.9 billion .

 

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 March 31, 2022 , approximately 1.2 million ADSs had been purchased under this program for a total cost of US$14.1 million .

 

The extent to which NetEase repurchases its ADSs and its ordinary shares or purchases Youdao's ADSs will depend upon a variety of factors, including market conditions. These programs may be suspended or discontinued at any time.

 

** The United States dollar (US$) amounts disclosed in this announcement are presented solely for the convenience of the reader. The percentages stated are calculated based on RMB.

 

  Conference Call  

 

NetEase's management team will host a teleconference call with simultaneous webcast at 8:00 a.m. New York Time on May 24, 2022 ( Beijing /Hong Kong Time: 8:00 p.m. , May 24, 2022 ). NetEase's management will be on the call to discuss the quarterly results and answer questions.

 

Interested parties may participate in the conference call by dialing 1-323-701-0160 and providing conference ID: 2366082, 15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 1-719-457-0820 and entering passcode 2366082#. The replay will be available through June 6, 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 innovative and diverse content, community, communication and commerce. NetEase develops and operates some of China's most popular mobile and PC games. In more recent years, NetEase has expanded into international markets including Japan and North America . In addition to its self-developed game content, NetEase partners with other leading game developers, such as Blizzard Entertainment and Mojang AB (a Microsoft subsidiary), to operate globally renowned games in China . NetEase's other innovative service offerings include the majority-controlled subsidiaries Youdao (NYSE: DAO), China's leading technology-focused intelligent learning company, and Cloud Village (HKEX: 9899), also known as NetEase Cloud Music , China's leading online music content community, as well as Yanxuan , NetEase's private label e-commerce platform. For more information, please visit:   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 attributable to the Company's shareholders and non-GAAP basic and diluted net income per share and per ADS, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

 

NetEase defines non-GAAP net income attributable to the Company's shareholders as net income attributable to the Company's shareholders excluding share-based compensation expenses. Non-GAAP net income attributable to the Company's shareholders enables NetEase's management to assess its operating results without considering the impact of share-based compensation expenses. NetEase believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating the Company's current operating performance and prospects in the same manner as management does, if they so choose. NetEase also believes that the use of this non-GAAP financial measure facilitates investors' assessment of its operating performance.

 

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP net income attributable to the Company's shareholders is that it does not reflect all items of income / expense that affect our operations. Share-based compensation expenses have been and may continue to be incurred in NetEase's business and are not reflected in the presentation of non-GAAP net income attributable to the Company's shareholders. In addition, the non-GAAP financial measures NetEase uses may differ from the non-GAAP measures used by other companies, including peer companies, and therefore their comparability may be limited.

 

NetEase compensates for these limitations by reconciling non-GAAP net income attributable to the Company's shareholders to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company's performance. See "Unaudited Reconciliation of GAAP and Non-GAAP Results" at the end of this announcement. NetEase encourages you to review its financial information in its entirety and not rely on a single financial measure.

 

  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,   

 
 
 

   March 31,   

 
 
 

   March 31,   

 
 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 

   Assets   

 
 
 
 
 
 
 
 

  Current assets:  

 
 
 
 
 
 
 
 

  Cash and cash equivalents  

 
 
 

  14,498,157  

 
 
 

  9,851,996  

 
 
 

  1,554,114  

 
 

  Time deposits  

 
 
 

  70,754,846  

 
 
 

  81,302,719  

 
 
 

  12,825,189  

 
 

  Restricted cash  

 
 
 

  2,876,628  

 
 
 

  3,335,627  

 
 
 

  526,182  

 
 

  Accounts receivable, net  

 
 
 

  5,507,988  

 
 
 

  5,277,364  

 
 
 

  832,484  

 
 

  Inventories, net  

 
 
 

  964,733  

 
 
 

  861,312  

 
 
 

  135,869  

 
 

  Prepayments and other current assets, net  

 
 
 

  6,235,857  

 
 
 

  7,097,923  

 
 
 

  1,119,671  

 
 

  Short-term investments  

 
 
 

  12,281,548  

 
 
 

  11,346,649  

 
 
 

  1,789,890  

 
 

  Assets held for sale  

 
 
 

  497  

 
 
 

  -  

 
 
 

  -  

 
 

  Total current assets  

 
 
 

  113,120,254  

 
 
 

  119,073,590  

 
 
 

  18,783,399  

 
 
 
 
 
 
 
 
 

  Non-current assets:  

 
 
 
 
 
 
 
 

  Property, equipment and software, net  

 
 
 

  5,433,858  

 
 
 

  5,842,168  

 
 
 

  921,579  

 
 

  Land use right, net  

 
 
 

  4,108,090  

 
 
 

  4,149,942  

 
 
 

  654,637  

 
 

  Deferred tax assets  

 
 
 

  1,297,954  

 
 
 

  1,127,257  

 
 
 

  177,820  

 
 

  Time deposits  

 
 
 

  5,823,840  

 
 
 

  4,473,840  

 
 
 

  705,731  

 
 

  Restricted cash  

 
 
 

  1,330  

 
 
 

  1,079  

 
 
 

  170  

 
 

  Other long-term assets, net  

 
 
 

  23,857,510  

 
 
 

  24,580,233  

 
 
 

  3,877,436  

 
 

  Assets held for sale  

 
 
 

  1,088  

 
 
 

  -  

 
 
 

  -  

 
 

  Total non-current assets  

 
 
 

  40,523,670  

 
 
 

  40,174,519  

 
 
 

  6,337,373  

 
 

  Total assets  

 
 
 

  153,643,924  

 
 
 

  159,248,109  

 
 
 

  25,120,772  

 
 
 
 
 
 
 
 
 

   Liabilities, Redeemable Noncontrolling Interests
and Shareholders' Equity
 
 
 

 
 
 
 
 
 
 
 

  Current liabilities:  

 
 
 
 
 
 
 
 

  Accounts payable  

 
 
 

  985,059  

 
 
 

  924,572  

 
 
 

  145,848  

 
 

  Salary and welfare payables  

 
 
 

  4,133,254  

 
 
 

  2,401,213  

 
 
 

  378,782  

 
 

  Taxes payable  

 
 
 

  4,537,050  

 
 
 

  4,614,865  

 
 
 

  727,977  

 
 

  Short-term loans  

 
 
 

  19,352,313  

 
 
 

  22,679,519  

 
 
 

  3,577,606  

 
 

  Contract liabilities  

 
 
 

  12,132,743  

 
 
 

  12,050,962  

 
 
 

  1,900,992  

 
 

  Accrued liabilities and other payables  

 
 
 

  9,360,907  

 
 
 

  9,093,256  

 
 
 

  1,434,426  

 
 

  Total current liabilities  

 
 
 

  50,501,326  

 
 
 

  51,764,387  

 
 
 

  8,165,631  

 
 
 
 
 
 
 
 
 

  Non-current liabilities:  

 
 
 
 
 
 
 
 

  Deferred tax liabilities  

 
 
 

  1,345,874  

 
 
 

  1,490,406  

 
 
 

  235,106  

 
 

  Long-term loans  

 
 
 

  1,275,140  

 
 
 

  3,174,100  

 
 
 

  500,702  

 
 

  Other long-term payable  

 
 
 

  1,097,708  

 
 
 

  1,044,882  

 
 
 

  164,826  

 
 

  Total non-current liabilities  

 
 
 

  3,718,722  

 
 
 

  5,709,388  

 
 
 

  900,634  

 
 

  Total liabilities  

 
 
 

  54,220,048  

 
 
 

  57,473,775  

 
 
 

  9,066,265  

 
 
 
 
 
 
 
 
 

  Redeemable noncontrolling interests  

 
 
 

  145,238  

 
 
 

  146,754  

 
 
 

  23,150  

 
 
 
 
 
 
 
 
 

  NetEase, Inc.'s shareholders' equity  

 
 
 

  95,328,080  

 
 
 

  97,671,521  

 
 
 

  15,407,304  

 
 

  Noncontrolling interests  

 
 
 

  3,950,558  

 
 
 

  3,956,059  

 
 
 

  624,053  

 
 

  Total shareholders' equity  

 
 
 

  99,278,638  

 
 
 

  101,627,580  

 
 
 

  16,031,357  

 
 
 
 
 
 
 
 
 

  Total liabilities, redeemable noncontrolling
interests and shareholders' equity
 

 
 
 

  153,643,924  

 
 
 

  159,248,109  

 
 
 

  25,120,772  

 
 
 
 
 
 
 
 
 

  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   

 
 
 
 
 

   March 31,   

 
 
 

   December 31,   

 
 
 

   March 31,   

 
 
 

   March 31,   

 
 
 
 
 

   2021   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 
 
 
 
 
 
 
 
 
 
 

   Net revenues   

 
 
 
 

  20,517,211  

 
 
 

  24,373,565  

 
 
 

  23,555,842  

 
 
 

  3,715,843  

 
 

   Cost of revenues   

 
 
 
 

  (9,464,572)  

 
 
 

  (11,455,785)  

 
 
 

  (10,719,463)  

 
 
 

  (1,690,954)  

 
 

   Gross profit   

 
 
 
 

  11,052,639  

 
 
 

  12,917,780  

 
 
 

  12,836,379  

 
 
 

  2,024,889  

 
 
 
 
 
 
 
 
 
 
 
 

   Operating expenses:   

 
 
 
 
 
 
 
 
 
 
 

  Selling and marketing expenses  

 
 
 
 

  (2,766,682)  

 
 
 

  (3,300,032)  

 
 
 

  (2,915,489)  

 
 
 

  (459,907)  

 
 

  General and administrative expenses  

 
 
 
 

  (950,194)  

 
 
 

  (1,161,876)  

 
 
 

  (1,015,769)  

 
 
 

  (160,234)  

 
 

  Research and development expenses  

 
 
 
 

  (3,060,189)  

 
 
 

  (3,847,704)  

 
 
 

  (3,398,082)  

 
 
 

  (536,034)  

 
 

  Total operating expenses  

 
 
 
 

  (6,777,065)  

 
 
 

  (8,309,612)  

 
 
 

  (7,329,340)  

 
 
 

  (1,156,175)  

 
 

   Operating profit   

 
 
 
 

  4,275,574  

 
 
 

  4,608,168  

 
 
 

  5,507,039  

 
 
 

  868,714  

 
 
 
 
 
 
 
 
 
 
 
 

   Other income/ (expenses):   

 
 
 
 
 
 
 
 
 
 
 

  Investment income/ (loss), net  

 
 
 
 

  695,298  

 
 
 

  1,627,642  

 
 
 

  (548,702)  

 
 
 

  (86,556)  

 
 

  Interest income, net  

 
 
 
 

  388,928  

 
 
 

  395,029  

 
 
 

  458,244  

 
 
 

  72,286  

 
 

  Exchange gains/ (losses), net  

 
 
 
 

  279,319  

 
 
 

  (331,390)  

 
 
 

  (97,880)  

 
 
 

  (15,440)  

 
 

  Other, net  

 
 
 
 

  147,967  

 
 
 

  297,244  

 
 
 

  216,330  

 
 
 

  34,125  

 
 

   Income before tax   

 
 
 
 

  5,787,086  

 
 
 

  6,596,693  

 
 
 

  5,535,031  

 
 
 

  873,129  

 
 

  Income tax  

 
 
 
 

  (1,273,408)  

 
 
 

  (933,985)  

 
 
 

  (1,219,271)  

 
 
 

  (192,335)  

 
 

   Net income   

 
 
 
 

  4,513,678  

 
 
 

  5,662,708  

 
 
 

  4,315,760  

 
 
 

  680,794  

 
 
 
 
 
 
 
 
 
 
 
 

  Accretion of redeemable noncontrolling
interests
 

 
 
 
 

  (143,827)  

 
 
 

  (99,914)  

 
 
 

  (733)  

 
 
 

  (116)  

 
 

  Net loss attributable to noncontrolling
interests
 

 
 
 
 

  69,301  

 
 
 

  131,360  

 
 
 

  78,996  

 
 
 

  12,461  

 
 

   Net income attributable to the
Company's shareholders
 
 

 
 
 
 

  4,439,152  

 
 
 

  5,694,154  

 
 
 

  4,394,023  

 
 
 

  693,139  

 
 
 
 
 
 
 
 
 
 
 
 

   Net income per share *   

 
 
 
 
 
 
 
 
 
 
 

  Basic  

 
 
 
 

  1.33  

 
 
 

  1.74  

 
 
 

  1.34  

 
 
 

  0.21  

 
 

  Diluted  

 
 
 
 

  1.31  

 
 
 

  1.71  

 
 
 

  1.33  

 
 
 

  0.21  

 
 
 
 
 
 
 
 
 
 
 
 

   Net income per ADS *   

 
 
 
 
 
 
 
 
 
 
 

  Basic  

 
 
 
 

  6.63  

 
 
 

  8.68  

 
 
 

  6.70  

 
 
 

  1.06  

 
 

  Diluted  

 
 
 
 

  6.53  

 
 
 

  8.57  

 
 
 

  6.63  

 
 
 

  1.05  

 
 
 
 
 
 
 
 
 
 
 
 

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

 
 
 
 
 
 
 
 
 
 
 

  Basic  

 
 
 
 

  3,349,638  

 
 
 

  3,281,172  

 
 
 

  3,277,280  

 
 
 

  3,277,280  

 
 

  Diluted  

 
 
 
 

  3,399,981  

 
 
 

  3,323,004  

 
 
 

  3,316,129  

 
 
 

  3,316,129  

 
 
 
 
 
 
 
 
 
 
 
 

  *  Each ADS represents five ordinary shares.  

 
 

  The accompanying notes are an integral part of this announcement.  

 
 
 

 

 

 

 
 
                                                                                                                                                                                                                                                                                                                                                                                                         
 

   NETEASE, INC.   

 
 

   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS   

 
 

   (in thousands)   

 
 
 
 

   Three Months Ended   

 
 
 
 

   March 31,   

 
 
 

   December 31,   

 
 
 

   March 31,   

 
 
 

   March 31,   

 
 
 
 

   2021   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 

   Cash flows from operating activities:   

 
 
 
 
 
 
 
 
 
 

  Net income  

 
 
 

  4,513,678  

 
 
 

  5,662,708  

 
 
 

  4,315,760  

 
 
 

  680,794  

 
 

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

 
 
 
 
 
 
 
 
 
 

  Depreciation and amortization  

 
 
 

  819,830  

 
 
 

  836,042  

 
 
 

  766,180  

 
 
 

  120,862  

 
 

  Fair value changes of equity security investments  

 
 
 

  (477,597)  

 
 
 

  (984,901)  

 
 
 

  1,541,002  

 
 
 

  243,087  

 
 

  Impairment losses of investments and other long-term assets  

 
 
 

  -  

 
 
 

  69,572  

 
 
 

  5,000  

 
 
 

  789  

 
 

  Fair value changes of short-term investments  

 
 
 

  (118,004)  

 
 
 

  (166,513)  

 
 
 

  (79,776)  

 
 
 

  (12,584)  

 
 

  Share-based compensation cost  

 
 
 

  650,253  

 
 
 

  1,002,899  

 
 
 

  746,154  

 
 
 

  117,703  

 
 

  Allowance for/ (reversal of) expected credit losses  

 
 
 

  13,604  

 
 
 

  12,932  

 
 
 

  (313)  

 
 
 

  (49)  

 
 

  (Gains)/ losses on disposal of property, equipment and software  

 
 
 

  (159)  

 
 
 

  48,779  

 
 
 

  1,445  

 
 
 

  228  

 
 

  Unrealized exchange (gains)/ losses  

 
 
 

  (274,047)  

 
 
 

  347,235  

 
 
 

  98,034  

 
 
 

  15,464  

 
 

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

 
 
 

  (7,323)  

 
 
 

  (13,091)  

 
 
 

  (4,000)  

 
 
 

  (631)  

 
 

  Deferred income taxes  

 
 
 

  328,075  

 
 
 

  (431,015)  

 
 
 

  315,228  

 
 
 

  49,726  

 
 

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

 
 
 

  (51,892)  

 
 
 

  (448,053)  

 
 
 

  (911,498)  

 
 
 

  (143,785)  

 
 

  Changes in operating assets and liabilities:  

 
 
 
 
 
 
 
 
 
 

  Accounts receivable  

 
 
 

  (484,343)  

 
 
 

  (97,064)  

 
 
 

  212,075  

 
 
 

  33,454  

 
 

  Inventories  

 
 
 

  (253,495)  

 
 
 

  73,588  

 
 
 

  103,591  

 
 
 

  16,341  

 
 

  Prepayments and other assets  

 
 
 

  (785,224)  

 
 
 

  870,684  

 
 
 

  (569,843)  

 
 
 

  (89,891)  

 
 

  Accounts payable  

 
 
 

  (60,654)  

 
 
 

  (89,207)  

 
 
 

  (92,373)  

 
 
 

  (14,571)  

 
 

  Salary and welfare payables  

 
 
 

  (1,226,155)  

 
 
 

  1,521,743  

 
 
 

  (1,756,224)  

 
 
 

  (277,038)  

 
 

  Taxes payable  

 
 
 

  1,558,618  

 
 
 

  528,725  

 
 
 

  73,446  

 
 
 

  11,586  

 
 

  Contract liabilities  

 
 
 

  740,938  

 
 
 

  (1,162,982)  

 
 
 

  (78,200)  

 
 
 

  (12,336)  

 
 

  Accrued liabilities and other payables  

 
 
 

  656,564  

 
 
 

  786,517  

 
 
 

  (103,136)  

 
 
 

  (16,269)  

 
 

  Net cash provided by operating activities  

 
 
 

  5,542,667  

 
 
 

  8,368,598  

 
 
 

  4,582,552  

 
 
 

  722,880  

 
 
 
 
 
 
 
 
 
 
 

   Cash flows from investing activities:   

 
 
 
 
 
 
 
 
 
 

  Purchase of property, equipment and software  

 
 
 

  (329,746)  

 
 
 

  (442,524)  

 
 
 

  (749,361)  

 
 
 

  (118,209)  

 
 

  Proceeds from sale of property, equipment and software  

 
 
 

  1,519  

 
 
 

  56,517  

 
 
 

  12,565  

 
 
 

  1,982  

 
 

  Purchase of intangible assets, content and licensed copyrights  

 
 
 

  (426,133)  

 
 
 

  (297,142)  

 
 
 

  (143,836)  

 
 
 

  (22,690)  

 
 

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

 
 
 

  3,332,610  

 
 
 

  (1,474,371)  

 
 
 

  1,710,845  

 
 
 

  269,879  

 
 

  Purchase of short-term investments with terms over three
months
 

 
 
 

  (7,905,000)  

 
 
 

  (4,300,000)  

 
 
 

  (1,250,000)  

 
 
 

  (197,183)  

 
 

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

 
 
 

  2,857,341  

 
 
 

  3,313,543  

 
 
 

  553,831  

 
 
 

  87,365  

 
 

  Investment in long-term investments and acquisition of
subsidiaries
 

 
 
 

  (558,441)  

 
 
 

  (2,020,029)  

 
 
 

  (1,690,271)  

 
 
 

  (266,634)  

 
 

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

 
 
 

  198,900  

 
 
 

  616,542  

 
 
 

  34,237  

 
 
 

  5,401  

 
 

  Placement/rollover of matured time deposits  

 
 
 

  (15,722,749)  

 
 
 

  (26,628,133)  

 
 
 

  (24,045,997)  

 
 
 

  (3,793,163)  

 
 

  Proceeds from maturities of time deposits  

 
 
 

  11,481,135  

 
 
 

  15,707,821  

 
 
 

  14,699,795  

 
 
 

  2,318,836  

 
 

  Change in other long-term assets  

 
 
 

  (54,653)  

 
 
 

  (99,692)  

 
 
 

  (169,545)  

 
 
 

  (26,745)  

 
 

  Net cash used in investing activities  

 
 
 

  (7,125,217)  

 
 
 

  (15,567,468)  

 
 
 

  (11,037,737)  

 
 
 

  (1,741,161)  

 
 
 
 
 
 
 
 
 
 
 

  The accompanying notes are an integral part of this announcement.  

 
 
 
 
 
 
 
 
 
 
 

 

 

 

 
 
                                                                                                                                                                                                                               
 

   NETEASE, INC.   

 
 

   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)   

 
 

   (in thousands)   

 
 
 
 
 

   Three Months Ended   

 
 
 
 

   March 31,   

 
 
 

   December 31,   

 
 
 

   March 31,   

 
 
 

   March 31,   

 
 
 
 

   2021   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 

   Cash flows from financing activities:   

 
 
 
 
 
 
 
 
 
 

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

 
 
 

  2,122,041  

 
 
 

  425,020  

 
 
 

  3,403,195  

 
 
 

  536,841  

 
 

  Proceed of bank loans with terms over three months  

 
 
 

  236,916  

 
 
 

  2,277,171  

 
 
 

  1,915,210  

 
 
 

  302,117  

 
 

  Payment of bank loans with terms over three months  

 
 
 

  (167,700)  

 
 
 

  (1,311,823)  

 
 
 

  -  

 
 
 

  -  

 
 

  Amounts paid for 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
 

 
 
 

  1,507,049  

 
 
 

  1,320,122  

 
 
 

  (102,042)  

 
 
 

  (16,097)  

 
 

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

 
 
 

  (2,018,467)  

 
 
 

  (2,112,256)  

 
 
 

  (1,243,917)  

 
 
 

  (196,223)  

 
 

  Dividends paid to noncontrolling interest shareholders  

 
 
 

  -  

 
 
 

  (731,250)  

 
 
 

  -  

 
 
 

  -  

 
 

  Dividends paid to NetEase's shareholders  

 
 
 

  (260,842)  

 
 
 

  (940,540)  

 
 
 

  (1,683,472)  

 
 
 

  (265,561)  

 
 

  Net cash provided by/ (used in) financing activities  

 
 
 

  1,405,197  

 
 
 

  (1,073,556)  

 
 
 

  2,288,974  

 
 
 

  361,077  

 
 
 
 
 
 
 
 
 
 
 

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

 
 
 

  35,993  

 
 
 

  (80,670)  

 
 
 

  (21,202)  

 
 
 

  (3,345)  

 
 

  Net decrease in cash, cash equivalents and restricted cash  

 
 
 

  (141,360)  

 
 
 

  (8,353,096)  

 
 
 

  (4,187,413)  

 
 
 

  (660,549)  

 
 

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

 
 
 

  12,168,605  

 
 
 

  25,729,211  

 
 
 

  17,376,115  

 
 
 

  2,741,015  

 
 

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

 
 
 

  12,027,245  

 
 
 

  17,376,115  

 
 
 

  13,188,702  

 
 
 

  2,080,466  

 
 
 
 
 
 
 
 
 
 
 

   Supplemental disclosures of cash flow information:   

 
 
 
 
 
 
 
 
 
 

  Cash paid for income tax, net  

 
 
 

  550,191  

 
 
 

  858,304  

 
 
 

  1,515,330  

 
 
 

  239,037  

 
 

  Cash paid for interest expense  

 
 
 

  43,902  

 
 
 

  42,879  

 
 
 

  37,741  

 
 
 

  5,953  

 
 
 
 
 
 
 
 
 
 
 

  The accompanying notes are an integral part of this announcement.  

 
 
 
 
 
 
 
 
 
 
 

 

 

 

 
 
                                                                                                                                                                                                                                                                                                                            
 

   NETEASE, INC.   

 
 

   UNAUDITED SEGMENT INFORMATION   

 
 

   (in thousands, except percentages)   

 
 
 
 
 
 
 
 
 
 
 
 
 

   Three Months Ended   

 
 
 
 
 

   March 31,   

 
 
 

   December 31,   

 
 
 

   March 31,   

 
 
 

   March 31,   

 
 
 
 
 

   2021   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 

   Net revenues:   

 
 
 
 
 
 
 
 
 
 
 

  Online game services  

 
 
 
 

  14,981,784  

 
 
 

  17,397,517  

 
 
 

  17,272,650  

 
 
 

  2,724,694  

 
 

  Youdao  

 
 
 
 

  1,339,867  

 
 
 

  1,333,791  

 
 
 

  1,200,541  

 
 
 

  189,381  

 
 

  Cloud Music  

 
 
 
 

  1,491,167  

 
 
 

  1,889,265  

 
 
 

  2,067,206  

 
 
 

  326,094  

 
 

  Innovative businesses and others  

 
 
 
 

  2,704,393  

 
 
 

  3,752,992  

 
 
 

  3,015,445  

 
 
 

  475,674  

 
 

  Total net revenues  

 
 
 
 

  20,517,211  

 
 
 

  24,373,565  

 
 
 

  23,555,842  

 
 
 

  3,715,843  

 
 
 
 
 
 
 
 
 
 
 
 

   Cost of revenues:   

 
 
 
 
 
 
 
 
 
 
 

  Online game services  

 
 
 
 

  (5,302,713)  

 
 
 

  (6,239,410)  

 
 
 

  (6,027,519)  

 
 
 

  (950,818)  

 
 

  Youdao  

 
 
 
 

  (572,415)  

 
 
 

  (657,329)  

 
 
 

  (562,691)  

 
 
 

  (88,762)  

 
 

  Cloud Music  

 
 
 
 

  (1,537,726)  

 
 
 

  (1,812,036)  

 
 
 

  (1,815,649)  

 
 
 

  (286,412)  

 
 

  Innovative businesses and others  

 
 
 
 

  (2,051,718)  

 
 
 

  (2,747,010)  

 
 
 

  (2,313,604)  

 
 
 

  (364,962)  

 
 

  Total cost of revenues  

 
 
 
 

  (9,464,572)  

 
 
 

  (11,455,785)  

 
 
 

  (10,719,463)  

 
 
 

  (1,690,954)  

 
 
 
 
 
 
 
 
 
 
 
 

   Gross profit:   

 
 
 
 
 
 
 
 
 
 
 

  Online game services  

 
 
 
 

  9,679,071  

 
 
 

  11,158,107  

 
 
 

  11,245,131  

 
 
 

  1,773,876  

 
 

  Youdao  

 
 
 
 

  767,452  

 
 
 

  676,462  

 
 
 

  637,850  

 
 
 

  100,619  

 
 

  Cloud Music  

 
 
 
 

  (46,559)  

 
 
 

  77,229  

 
 
 

  251,557  

 
 
 

  39,682  

 
 

  Innovative businesses and others  

 
 
 
 

  652,675  

 
 
 

  1,005,982  

 
 
 

  701,841  

 
 
 

  110,712  

 
 

  Total gross profit  

 
 
 
 

  11,052,639  

 
 
 

  12,917,780  

 
 
 

  12,836,379  

 
 
 

  2,024,889  

 
 
 
 
 
 
 
 
 
 
 
 

   Gross profit margin:   

 
 
 
 
 
 
 
 
 
 
 

  Online game services  

 
 
 
 

  64.6%  

 
 
 

  64.1%  

 
 
 

  65.1%  

 
 
 

  65.1%  

 
 

  Youdao  

 
 
 
 

  57.3%  

 
 
 

  50.7%  

 
 
 

  53.1%  

 
 
 

  53.1%  

 
 

  Cloud Music  

 
 
 
 

  (3.1%)  

 
 
 

  4.1%  

 
 
 

  12.2%  

 
 
 

  12.2%  

 
 

  Innovative businesses and others  

 
 
 
 

  24.1%  

 
 
 

  26.8%  

 
 
 

  23.3%  

 
 
 

  23.3%  

 
 
 
 
 
 
 
 
 
 
 
 

  The accompanying notes are an integral part of this announcement.  

 
 
 

  NETEASE, INC.  

 

  NOTES TO   UNAUDITED   FINANCIAL   INFORMATION  

 

Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00 = RMB6 .3393 on the last trading day of March 2022 (March 31, 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 March 31, 2022 , or at any other certain date.

 

Note 2: Share-based compensation cost reported in the Company's unaudited condensed consolidated statements of income is set out as follows in RMB and USD (in thousands):

 
 
                                                                                              
 
 
 

   Three Months Ended   

 
 
 
 

   March 31,   

 
 
 

   December 31,   

 
 
 

   March 31,   

 
 
 

   March 31,   

 
 
 
 

   2021   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 

  Share-based compensation cost included in:  

 
 
 
 
 
 
 
 
 
 

  Cost of revenues  

 
 
 

  187,926  

 
 
 

  267,424  

 
 
 

  198,135  

 
 
 

  31,255  

 
 

  Operating expenses  

 
 
 
 
 
 
 
 
 
 

  Selling and marketing expenses  

 
 
 

  24,231  

 
 
 

  38,657  

 
 
 

  30,373  

 
 
 

  4,791  

 
 

  General and administrative expenses  

 
 
 

  229,603  

 
 
 

  358,595  

 
 
 

  279,062  

 
 
 

  44,021  

 
 

  Research and development expenses  

 
 
 

  208,493  

 
 
 

  338,223  

 
 
 

  238,584  

 
 
 

  37,636  

 
 
 
 
 
 
 
 
 
 
 

  The accompanying notes are an integral part of this announcement.  

 
 
 

Note 3: The financial information prepared and presented in this announcement might be different from those published and to be published by 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   

 
 
 
 

   March 31,   

 
 
 

   December 31,   

 
 
 

   March 31,   

 
 
 

   March 31,   

 
 
 
 

   2021   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2022   

 
 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  RMB  

 
 
 

  USD (Note 1)  

 
 

  Net income attributable to the Company's shareholders  

 
 
 

  4,439,152  

 
 
 

  5,694,154  

 
 
 

  4,394,023  

 
 
 

  693,139  

 
 

  Add: Share-based compensation  

 
 
 

  641,534  

 
 
 

  901,421  

 
 
 

  723,603  

 
 
 

  114,146  

 
 

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

 
 
 

  5,080,686  

 
 
 

  6,595,575  

 
 
 

  5,117,626  

 
 
 

  807,285  

 
 
 
 
 
 
 
 
 
 
 

   Non-GAAP net income per share *   

 
 
 
 
 
 
 
 
 
 

  Basic  

 
 
 

  1.52  

 
 
 

  2.01  

 
 
 

  1.56  

 
 
 

  0.25  

 
 

  Diluted  

 
 
 

  1.49  

 
 
 

  1.98  

 
 
 

  1.54  

 
 
 

  0.24  

 
 
 
 
 
 
 
 
 
 
 

   Non-GAAP net income per ADS *   

 
 
 
 
 
 
 
 
 
 

  Basic  

 
 
 

  7.58  

 
 
 

  10.05  

 
 
 

  7.81  

 
 
 

  1.23  

 
 

  Diluted  

 
 
 

  7.47  

 
 
 

  9.92  

 
 
 

  7.72  

 
 
 

  1.22  

 
 
 
 
 
 
 
 
 
 
 

  *  Each ADS represents five ordinary shares.  

 
 
 
 
 
 
 
 
 
 

  The accompanying notes are an integral part of this announcement.  

 
 
 
 
 
 
 
 
 
 
 

 

 

 

 

 Cision View original content: https://www.prnewswire.com/news-releases/netease-reports-first-quarter-2022-unaudited-financial-results-301553555.html  

 

SOURCE NetEase, Inc.

 
 

News Provided by PR Newswire via QuoteMedia

GAMING00
The Conversation (0)
Person holding virtual game icons over a smartphone screen.

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.

Keep reading...Show less
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.

News Provided by Newsfile via QuoteMedia

Keep reading...Show less
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

 
 

News Provided by Newsfile via QuoteMedia

Keep reading...Show less
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.

News Provided by Newsfile via QuoteMedia

Keep reading...Show less
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.

News Provided by Newsfile via QuoteMedia

Keep reading...Show less

Latest Press Releases

Related News

×