BEIJING, Nov. 14, 2012 /PRNewswire-FirstCall/ -- NetEase,
Inc. (NASDAQ: NTES), one of China's leading Internet and online game
services providers, today announced its unaudited financial results
for the third quarter ended September 30,
2012.
William Ding, Chief Executive
Officer and Director of NetEase, stated, "For the third quarter,
total online game revenues were RMB1.7
billion with increased revenue contribution from our
self-developed games. We advanced our online game business by
introducing new games, launching expansion packs and conducting key
promotional activities. Most recently, we launched unlimited beta
testing for our newest games, Soul of the Fighter and Kung Fu Master, in September and October,
respectively. Both new games have received exceptionally positive
reception among gamers in China,
and we are delighted with the user feedback thus far. As a result
of the promotional activities for our flagship games, Fantasy
Westward Journey and its latest expansion pack, and Westward
Journey Online II, these games achieved record-high PCU levels in
August. We also introduced a new expansion pack for Westward
Journey Online III in August, as well as a new 3DX expansion pack
for Tianxia III in late September."
"The October 2nd release of the
highly anticipated fourth expansion pack of Blizzard
Entertainment's World of Warcraft®: Mists of
Pandaria™ in mainland China was another important milestone during
this period. With elements that appeal to Chinese culture, Mists of
Pandaria has proven to be especially engaging, and we believe that
it is being widely embraced by China's gaming community."
"As we enter the remaining months of 2012 and move into 2013, we
will focus on introducing new games and expansion packs that will
build on the popularity of our existing games, and furthering our
strategy of diversifying our portfolio offering. We plan to launch
Heroes of Tang Dynasty II, a comprehensive update of Heroes of Tang
Dynasty, on November 16, and in the
coming months, we plan to introduce two new games, Heroes of Three
Kingdoms, our 3D action real-time strategy game, and Dragon Sword,
our next generation 3D MMORPG."
"As one of the first and largest Internet companies in
China, the popularity of our
portal continues to drive our advertising services revenues. During
the third quarter, our advertising services revenues grew 10.2%
year-over-year and 19.0% quarter-over-quarter with automobile, fast
moving consumer goods and financial services as the top performing
sectors. Our advertising business benefited from the popularity of
our leading mobile news application as well as our broadcast of the
London Olympics. The coverage of the latter yielded an
unprecedented number of downloads and portal activity that exceeded
our results from the Beijing Olympics in 2008."
"Our e-mail services also continued to grow, and as of
September 30, 2012, we had
approximately 510 million registered e-mail users. The integration
of our traditional and mobile Internet services is continually
being furthered and enhanced. We have more than 60 million
registered mobile e-mail users and 27 million installations for our
Mobile News application."
"We are working to achieve healthy growth that furthers our
leading position in China's
thriving Internet community. Historically, we have developed some
of the most long-lasting and popular online games in China, and our large community of loyal users
is growing across our business segments. Focusing on premium
quality remains our top goal as we further build and diversify our
portfolio of online games and enhance our content and value added
services for our leading portal and burgeoning mobile Internet
businesses. In addition, we have always been committed to creating
value for our shareholders. As our revenue continues to grow,
generating strong free cash flow from operations, we are happy to
announce that our board of directors has approved a special cash
dividend of US$1.00 per ADS, along
with a US$100 million share
repurchase program. We believe that these actions reflect our sound
financial position and will enhance our shareholders' return as we
work to increase the value of our Company," concluded Mr. Ding.
Third Quarter 2012 Financial Results
Revenues
Total revenues for the third quarter of 2012 were RMB2.0 billion (US$325.4
million), compared to RMB2.0
billion for both the preceding quarter and the third quarter
of 2011.
Revenues from online games were RMB1.7
billion (US$276.8 million) for
the third quarter of 2012, compared to RMB1.7 billion and RMB1.8
billion for the preceding quarter and the third quarter of
2011, respectively.
Revenues from advertising services were RMB243.0 million (US$38.7
million) for the third quarter of 2012, compared to
RMB204.2 million and RMB220.5 million for the preceding quarter and
the third quarter of 2011, respectively.
Revenues from e-mail, wireless value-added services and others
("E-mail, WVAS and others") were RMB61.9
million (US$9.9 million) for
the third quarter of 2012, compared to RMB51.4 million and RMB31.3 million for the preceding quarter and the
third quarter of 2011, respectively.
Gross Profit
Gross profit for the third quarter of 2012 was RMB1.4 billion (US$216.7
million), compared to RMB1.3
billion for both the preceding quarter and the third quarter
of 2011.
The quarter-over-quarter increase in gross profit was primarily
attributable to increased revenues from advertising services and
NetEase's self-developed online games, which was partially offset
by decreased revenue from Blizzard Entertainment's World of
Warcraft. The quarter-over-quarter increase in gross profit from
advertising services was primarily attributable to seasonality and
our broadcast of the London Olympics. The increase in revenues from
self-developed games was mainly attributable to Fantasy Westward
Journey and Westward Journey Online II, as well as two new games:
Kung Fu Master and Soul of the
Fighter. The performances of Tianxia III and Ghost were steady in
the third quarter of 2012.
The year-over-year increase in gross profit was primarily
attributable to increased revenues from NetEase's self-developed
games, partially offset by the decreased revenue from Blizzard
Entertainment's World of Warcraft and increased advertising costs,
including headcount-related costs and video content costs. The
increase in revenues from NetEase's self-developed games was mainly
from Fantasy Westward Journey, Ghost, Tianxia III, Westward Journey
Online II, as well as Kung Fu Master
and Soul of the Fighter.
Gross Profit (Loss) Margin
Gross profit margin for the online game business for the third
quarter of 2012 was 74.2%, compared to 73.3% and 71.5% for the
preceding quarter and the third quarter of 2011, respectively. The
improvement in gross profit margin was primarily attributable to
the increased revenue contribution from NetEase's self-developed
games as a percentage of NetEase's total online game revenues.
Gross profit margin for the advertising business for the third
quarter of 2012 was 36.2%, compared to 33.0% and 48.4% for the
preceding quarter and the third quarter of 2011, respectively. The
quarter-over-quarter increase in gross profit margin was primarily
due to economies of scale as advertising revenue increased in the
third quarter of 2012. The year-over-year decrease in gross profit
margin was primarily due to increased headcount-related costs and
content costs incurred for the London Olympics.
Gross profit margin for the E-mail, WVAS and others business for
the third quarter of 2012 was 6.0%, compared to gross loss margins
of 11.6% and 13.2% for the preceding quarter and the third quarter
of 2011, respectively. The improvement in gross margin was mainly
due to increased sales of NetEase's game-related accessories, such
as limited edition packages of several online games.
Operating Expenses
Total operating expenses for the third quarter of 2012 were
RMB537.5 million (US$85.5 million), compared to RMB437.7 million and RMB408.2 million for the preceding quarter and
the third quarter of 2011, respectively. The quarter-over-quarter
and year-over-year increases in operating expenses were mainly due
to increased selling and marketing promotional activities, higher
staff-related costs due to increased headcount and increased
investments in the Company's product development pipeline. Major
marketing and promotional activities in the third quarter of 2012
included: the summer vacation promotion of Fantasy Westward
Journey, the 10th anniversary ceremony of Westward Journey Online
II, unlimited beta testing for Soul of the Fighter, and promotions
for Blizzard Entertainment's World of Warcraft: Mists of Pandaria.
Net Profit
Net profit for the third quarter of 2012 totaled RMB811.9 million (US$129.2
million), compared to RMB875.3
million and RMB825.8 million
for the preceding quarter and the third quarter of 2011,
respectively.
During the third quarter of 2012, the Company reported a net
foreign exchange gain of RMB23.7
million (US$3.8 million),
compared to a net foreign exchange loss of RMB36.0 million and RMB65.0 million for the preceding quarter and the
third quarter of 2011, respectively. The quarter-over-quarter and
year-over-year changes in foreign exchange gains or losses were
mainly due to the translation gains or losses arising from the
Company's Euro-denominated bank deposit balances as of the balance
sheet date as the exchange rate of the Euro against the RMB
fluctuated over the periods.
NetEase reported basic and diluted earnings per ADS of
US$0.98 each for the third quarter of
2012. The Company reported basic and diluted earnings per ADS of
US$1.06 each for the preceding
quarter and reported basic and diluted earnings per ADS of
US$1.01 and US$1.00, respectively, for the third quarter of
2011. Basic and diluted earnings per ADS for the third quarter of
2012 reflect a one-time accrued withholding tax, as described
below, which has the effect of reducing such earnings per ADS.
Income Taxes
The Company recorded a net income tax charge of RMB194.8 million (US$31.0
million) for the third quarter of 2012, compared to
RMB149.5 million and RMB140.5 million for the preceding quarter and
the third quarter of 2011, respectively. The effective tax rate for
the third quarter of 2012 was 19.9%, compared to 14.8% and 14.7%
for the preceding quarter and the third quarter of 2011,
respectively. The increase in net income tax charge was due to the
occurrence of a one-time accrued withholding tax of RMB40.0 million associated with the offshore
remittance of cash from China in
anticipation of the declaration of a special cash dividend as
described below.
The Company's various principal subsidiaries renewed their
qualifications as High and New Technology Enterprises in 2011 and
receive the preferential enterprise income tax rate of 15% from
2011 to 2013, subject to annual review by the relevant tax
authorities in China.
Other Information
As of September 30, 2012, the
Company's total cash and time deposits balance was RMB14.9 billion (US$2.4
billion), compared to RMB11.9
billion as of December 31,
2011. Cash flow generated from operating activities was
RMB670.1 million (US$106.6 million) for the third quarter of 2012,
compared to RMB880.9 million and
RMB864.9 million for the preceding
quarter and the third quarter of 2011,
respectively.
Special Cash Dividend
The Company today announced that its board of directors declared
a special cash dividend of US$0.04
per ordinary share, which is equivalent to US$1.00 per ADS (each ADS represents 25 ordinary
shares). The special cash dividend is payable to shareholders of
record as of January 15, 2013 and is
expected to be paid on January 18,
2013. The board of directors declared this special cash
dividend in order to give value back to shareholders, as the
Company's revenues continue to grow, generating strong free cash
flow from operations. The total amount of cash distributed is
expected to be approximately US$131
million.
Share Repurchase Program
The Company today announced that its board of directors approved
a new share repurchase program of up to US$100 million of the Company's outstanding ADSs
for a period not to exceed 12 months. Under the terms of the
approved program, NetEase may repurchase its issued and outstanding
ADSs in open-market transactions on the NASDAQ Global Select
Market. The timing and dollar amount of repurchase transactions
will be subject to Securities and Exchange Commission ("SEC") Rule
10b-18 requirements. It is also expected that such repurchases will
be effected pursuant to a plan in conformity with SEC Rule 10b5-1.
NetEase plans to fund repurchases made under this program from
available working capital.
** The United States dollar
(US$) amounts disclosed in this press release are presented solely
for the convenience of the reader. Translations of amounts from RMB
into US$ were calculated at the noon buying rate of US$1.00 = RMB6.2848
on the last trading day of September
2012 (September 28, 2012) as
set forth in the H.10 statistical release of the U.S. Federal
Reserve Board. No representation is made that the RMB amounts could
have been, or could be, converted into US$ at that rate on
September 28, 2012, or at any other
certain date. The percentages stated are calculated based on
RMB.
Conference Call
NetEase's management team will host a conference call at
8:00 p.m. Eastern Time on
Wednesday, November 14, 2012
(Beijing/Hong Kong Time:
9:00 a.m., Thursday, November 15, 2012). 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 1-877-941-1427 (international: 1-480-629-9664), 10-15
minutes prior to the initiation of the call. A replay of the call
will be available by dialing 1-800-406-7325 (international:
1-303-590-3030), and entering passcode 4569784#. The replay will be
available through November 29,
2012.
The conference call will be webcast live and the replay will be
available for 12 months. Both will be available on NetEase's
Investor Relations website at http://ir.netease.com.
About NetEase, Inc.
NetEase, Inc. is a leading China-based Internet technology company that
pioneered the development of applications, services and other
technologies for the Internet in China. NetEase's online communities and
personalized premium services have established a large and stable
user base for the NetEase websites, which are operated by its
affiliates. In particular, NetEase provides online game services to
Internet users, offering in-house developed games such as Fantasy
Westward Journey, Westward Journey Online II, Westward Journey
Online III, Tianxia III, Heroes of Tang Dynasty, Datang, Ghost,
Soul of the Fighter and Kung Fu
Master, as well as the licensed Blizzard Entertainment games
World of Warcraft® and StarCraft® II.
NetEase also offers online advertising on its websites, which
enables advertisers to reach its substantial user base. In
addition, NetEase has paid listings on its search engine and web
directory and classified advertising services, as well as an online
mall, which provides opportunities for e-commerce and traditional
businesses to establish their own storefront on the Internet.
NetEase also offers wireless value-added services such as news and
information content, matchmaking services, music and photos from
the web that are sent over SMS, MMS, WAP, IVR and Color Ring-back
Tone technologies.
Other community services that the NetEase websites offer include
instant messaging, online personal advertisements, matchmaking,
alumni clubs and community forums. The Company believes that it is
also the largest provider of free e-mail services in China. Furthermore, the NetEase websites as
well as its micro-blogging services provide various channels of
content. NetEase aggregates news content on world events, sports,
science and technology, and financial markets, as well as
entertainment content such as cartoons, games, astrology and jokes,
from over one hundred international and domestic content
providers.
Forward Looking Statements
This press release 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.
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
leading position in that market, which could occur if, for example,
its new online games such as Ghost, Tianxia III, Kung Fu Master and Soul of the Fighter or
expansion packs and other improvements to its existing games,
including its current and planned expansion packs for Heroes of
Tang Dynasty, Warsong of Westward Journey, Westward Journey Online
II and other games, do not become as popular as management
anticipates; the ability of NetEase to effectively market its games
and other services and achieve a positive return on its marketing
expenditures; the risk that Shanghai EaseNet will not be able to
continue operating World of Warcraft, StarCraft II or other games
licensed by it for a period of time or permanently due to possible
governmental actions or the risk that such games will not be
popular with game players in China; the risk that changes in Chinese
government regulation of the online game market may limit future
growth of NetEase's revenue or cause revenue to decline;
competition in the online advertising business and the risk that
investments by NetEase in its content and services may not increase
the appeal of the NetEase websites among Internet users or result
in increased advertising revenue; the risk that NetEase may not be
able to continuously develop new and creative online services,
including its ability to maintain and enhance the popularity of its
micro-blogging, e-mail and mobile services; the risk that NetEase
will not be able to control its expenses in future periods;
competition in NetEase's existing and potential markets;
governmental uncertainties (including possible changes in the
effective tax rates applicable to NetEase and its subsidiaries and
affiliates and the ability of NetEase to receive and maintain
approvals of the preferential tax treatments and general
competition and price pressures in the marketplace); the risk that
fluctuations in the value of the Renminbi with respect to other
currencies could adversely affect NetEase's business and financial
results; and other risks outlined in NetEase's filings with the
Securities and Exchange Commission. NetEase does not undertake any
obligation to update this forward-looking information, except as
required under the applicable law.
Contact for Media and Investors:
Brandi Piacente
Investor Relations
brandi@corp.netease.com
Tel: (+1) 212-481-2050
Cassia Curran
NetEase, Inc.
cassia@corp.netease.com
Tel: (+86) 571-8985-2076
NETEASE,
INC.
|
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(RMB and USD in
thousands)
|
|
|
December
31,
|
|
September
30,
|
|
September
30,
|
|
|
2011
|
|
2012
|
|
2012
|
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
2,214,618
|
|
1,184,546
|
|
188,478
|
Time
deposits
|
|
9,704,777
|
|
13,129,774
|
|
2,089,132
|
Restricted
cash
|
|
318,684
|
|
469,185
|
|
74,654
|
Accounts
receivable, net
|
|
230,047
|
|
305,510
|
|
48,611
|
Prepayments
and other current assets
|
|
900,464
|
|
1,145,438
|
|
182,255
|
Short-term
investments
|
|
993,606
|
|
621,563
|
|
98,899
|
Deferred
tax assets
|
|
111,990
|
|
137,008
|
|
21,800
|
Total current
assets
|
|
14,474,186
|
|
16,993,024
|
|
2,703,829
|
|
|
|
|
|
|
|
Non-current
assets:
|
|
|
|
|
|
|
Property,
equipment and software, net
|
|
848,469
|
|
806,665
|
|
128,352
|
Land use
right, net
|
|
11,788
|
|
11,594
|
|
1,845
|
License
right, net
|
|
48,962
|
|
-
|
|
-
|
Deferred
tax assets
|
|
2,586
|
|
2,468
|
|
393
|
Time
deposits
|
|
-
|
|
540,000
|
|
85,922
|
Other
long-term assets
|
|
58,940
|
|
87,660
|
|
13,948
|
Total non-current
assets
|
|
970,745
|
|
1,448,387
|
|
230,460
|
Total
assets
|
|
15,444,931
|
|
18,441,411
|
|
2,934,289
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
134,217
|
|
124,223
|
|
19,766
|
Salary and
welfare payables
|
|
244,398
|
|
178,399
|
|
28,386
|
Taxes
payable
|
|
391,769
|
|
385,433
|
|
61,328
|
Deferred
revenue
|
|
1,014,073
|
|
1,156,554
|
|
184,024
|
Accrued
liabilities and other payables
|
|
498,120
|
|
693,305
|
|
110,315
|
Total current
liabilities
|
|
2,282,577
|
|
2,537,914
|
|
403,819
|
|
|
|
|
|
|
|
Long-term
payable:
|
|
|
|
|
|
|
Other
long-term payable
|
|
63,890
|
|
92,411
|
|
14,704
|
Total
liabilities
|
|
2,346,467
|
|
2,630,325
|
|
418,523
|
|
|
|
|
|
|
|
Total NetEase, Inc.'s
equity
|
|
13,126,701
|
|
15,894,736
|
|
2,529,076
|
Noncontrolling
interests
|
|
(28,237)
|
|
(83,650)
|
|
(13,310)
|
Total shareholders'
equity
|
|
13,098,464
|
|
15,811,086
|
|
2,515,766
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
15,444,931
|
|
18,441,411
|
|
2,934,289
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of this press release.
|
|
|
|
|
NETEASE,
INC.
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(RMB and USD in
thousands, except per share data)
|
|
|
Quarter
Ended
|
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
September 30,
|
|
|
2011
|
|
2012
|
|
2012
|
|
2012
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Revenues:
|
|
|
|
|
|
|
|
|
Online game
services
|
|
1,755,709
|
|
1,748,695
|
|
1,739,922
|
|
276,846
|
Advertising
services
|
|
220,476
|
|
204,179
|
|
243,027
|
|
38,669
|
E-mail, WVAS and
others
|
|
31,300
|
|
51,396
|
|
61,916
|
|
9,852
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
2,007,485
|
|
2,004,270
|
|
2,044,865
|
|
325,367
|
Sales taxes
|
|
(49,583)
|
|
(41,781)
|
|
(42,901)
|
|
(6,826)
|
|
|
|
|
|
|
|
|
|
Total net
revenues
|
|
1,957,902
|
|
1,962,489
|
|
2,001,964
|
|
318,541
|
|
|
|
|
|
|
|
|
|
Total cost of
revenues
|
|
(630,456)
|
|
(641,011)
|
|
(640,049)
|
|
(101,841)
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
1,327,446
|
|
1,321,478
|
|
1,361,915
|
|
216,700
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling and marketing
expenses
|
|
(225,282)
|
|
(194,679)
|
|
(259,947)
|
|
(41,361)
|
General and
administrative expenses
|
|
(61,263)
|
|
(70,636)
|
|
(75,851)
|
|
(12,069)
|
Research and development
expenses
|
|
(121,662)
|
|
(172,348)
|
|
(201,661)
|
|
(32,087)
|
Total operating
expenses
|
|
(408,207)
|
|
(437,663)
|
|
(537,459)
|
|
(85,517)
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
919,239
|
|
883,815
|
|
824,456
|
|
131,183
|
Other income:
|
|
|
|
|
|
|
|
|
Investment
income
|
|
3,693
|
|
12,968
|
|
9,353
|
|
1,488
|
Interest
income
|
|
68,647
|
|
106,155
|
|
115,459
|
|
18,371
|
Exchange (losses)
gains
|
|
(64,977)
|
|
(36,028)
|
|
23,659
|
|
3,764
|
Other, net
|
|
28,155
|
|
41,194
|
|
5,087
|
|
809
|
|
|
|
|
|
|
|
|
|
Net income before
tax
|
|
954,757
|
|
1,008,104
|
|
978,014
|
|
155,615
|
Income tax
|
|
(140,499)
|
|
(149,544)
|
|
(194,797)
|
|
(30,995)
|
|
|
|
|
|
|
|
|
|
Net income after
tax
|
|
814,258
|
|
858,560
|
|
783,217
|
|
124,620
|
Net loss attributable to
noncontrolling interests
|
|
11,498
|
|
16,742
|
|
28,718
|
|
4,569
|
Net income
attributable to the Company's shareholders
|
|
825,756
|
|
875,302
|
|
811,935
|
|
129,189
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
814,258
|
|
858,560
|
|
783,217
|
|
124,620
|
Comprehensive loss attributable to noncontrolling interests
|
|
11,498
|
|
16,742
|
|
28,718
|
|
4,569
|
Comprehensive income
attributable to the
Company's shareholders
|
|
825,756
|
|
875,302
|
|
811,935
|
|
129,189
|
|
|
|
|
|
|
|
|
|
Earnings per share,
basic
|
|
0.25
|
|
0.27
|
|
0.25
|
|
0.04
|
Earnings per ADS,
basic
|
|
6.32
|
|
6.66
|
|
6.17
|
|
0.98
|
Earnings per share,
diluted
|
|
0.25
|
|
0.27
|
|
0.25
|
|
0.04
|
Earnings per ADS,
diluted
|
|
6.30
|
|
6.65
|
|
6.17
|
|
0.98
|
|
|
|
|
|
|
|
|
|
Weighted average number
of ordinary shares outstanding, basic
|
|
3,268,673
|
|
3,286,239
|
|
3,287,370
|
|
3,287,370
|
Weighted average number
of ADS outstanding, basic
|
|
130,747
|
|
131,450
|
|
131,495
|
|
131,495
|
Weighted average number
of ordinary shares outstanding, diluted
|
|
3,277,636
|
|
3,292,518
|
|
3,292,462
|
|
3,292,462
|
Weighted average number
of ADS outstanding, diluted
|
|
131,105
|
|
131,701
|
|
131,698
|
|
131,698
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of this press release.
|
|
NETEASE,
INC.
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(RMB and USD in
thousands)
|
|
|
Quarter
Ended
|
|
|
September 30,
|
|
March 31,
|
|
June
30,
|
|
September 30,
|
September 30,
|
|
|
2011
|
|
2012
|
|
2012
|
|
2012
|
2012
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
RMB
|
USD (Note
1)
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
814,258
|
|
931,728
|
|
858,560
|
|
783,217
|
124,620
|
Adjustments to reconcile
net profit to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
75,315
|
|
71,677
|
|
71,875
|
|
52,310
|
8,323
|
Share-based compensation
cost
|
|
22,941
|
|
68,273
|
|
57,907
|
|
47,969
|
7,633
|
Allowance for (reversal
of) provision for doubtful debts
|
|
6,206
|
|
921
|
|
3,823
|
|
(593)
|
(94)
|
Loss (gain) on disposal
of property, equipment and software
|
|
6
|
|
(122)
|
|
1
|
|
90
|
14
|
Unrealized exchange
losses (gains)
|
|
67,314
|
|
(18,719)
|
|
35,893
|
|
(27,330)
|
(4,349)
|
Deferred income
taxes
|
|
(22,665)
|
|
(16,170)
|
|
(16,624)
|
|
7,894
|
1,256
|
Net equity share of loss
(gain) from associated companies
|
|
633
|
|
256
|
|
(622)
|
|
(389)
|
(62)
|
Others
|
|
(3,308)
|
|
2,894
|
|
5,532
|
|
18,739
|
2,982
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(51,205)
|
|
20,720
|
|
(79,010)
|
|
(31,834)
|
(5,065)
|
Prepayments
and other current assets
|
|
(343,763)
|
|
180,825
|
|
(8,557)
|
|
(253,134)
|
(40,277)
|
Accounts
payable
|
|
29,222
|
|
14,857
|
|
(40,641)
|
|
26,755
|
4,257
|
Salary and
welfare payables
|
|
38,150
|
|
(64,930)
|
|
28,478
|
|
(29,563)
|
(4,704)
|
Taxes
payable
|
|
62,553
|
|
(19,620)
|
|
(49,830)
|
|
18,096
|
2,879
|
Deferred
revenue
|
|
92,822
|
|
71,378
|
|
53,862
|
|
17,241
|
2,743
|
Accrued
liabilities and other payables
|
|
76,458
|
|
92,897
|
|
(39,741)
|
|
40,631
|
6,466
|
Net cash provided by operating activities
|
|
864,937
|
|
1,336,865
|
|
880,906
|
|
670,099
|
106,622
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
Purchase of property, equipment and software
|
|
(61,411)
|
|
(23,280)
|
|
(48,915)
|
|
(65,430)
|
(10,411)
|
Proceeds from sale of property, equipment and
software
|
170
|
|
182
|
|
6
|
|
546
|
87
|
Net change in short-term investments with
terms
|
|
|
|
|
|
|
|
|
|
of three months or less
|
|
-
|
|
(500,000)
|
|
(200,000)
|
|
150,000
|
23,867
|
Purchase of short-term investments
|
|
(423,163)
|
|
(154,277)
|
|
-
|
|
(70,845)
|
(11,273)
|
Proceeds from maturities of short-term investments
|
|
-
|
|
430,000
|
|
360,000
|
|
330,000
|
52,508
|
Investment in an associated company
|
|
-
|
|
-
|
|
-
|
|
(7,915)
|
(1,259)
|
Transfer (to) from restricted cash
|
|
(98,200)
|
|
79,346
|
|
(281,745)
|
|
51,899
|
8,258
|
Net change in time deposits with terms
|
|
|
|
|
|
|
|
|
|
of three months
|
|
(438,342)
|
|
117,997
|
|
(86,538)
|
|
(178,954)
|
(28,474)
|
Placement/rollover of matured time deposits
|
|
(2,702,844)
|
|
(4,429,917)
|
|
(2,989,388)
|
|
(3,971,447)
|
(631,913)
|
Proceeds from maturities of time deposits
|
|
2,941,207
|
|
2,933,775
|
|
1,437,523
|
|
3,209,753
|
510,717
|
Net change in other assets
|
|
(1,673)
|
|
(14,158)
|
|
(5,565)
|
|
(11,094)
|
(1,765)
|
Net cash used in investing activities
|
|
(784,256)
|
|
(1,560,332)
|
|
(1,814,622)
|
|
(563,487)
|
(89,658)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds
from employees exercising stock options
|
|
22,480
|
|
21,033
|
|
3,679
|
|
-
|
-
|
Net cash provided by financing activities
|
|
22,480
|
|
21,033
|
|
3,679
|
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash held in
|
|
|
|
|
|
|
|
|
|
foreign currencies
|
|
(4,124)
|
|
265
|
|
(6,678)
|
|
2,200
|
350
|
Net increase (decrease) in cash and cash equivalents
|
99,037
|
|
(202,169)
|
|
(936,715)
|
|
108,812
|
17,314
|
Cash and cash
equivalents, beginning of the period
|
|
1,844,492
|
|
2,214,618
|
|
2,012,449
|
|
1,075,734
|
171,164
|
Cash and cash
equivalents, end of the period
|
|
1,943,529
|
|
2,012,449
|
|
1,075,734
|
|
1,184,546
|
188,478
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid for income tax, net of tax refund
|
|
71,301
|
|
145,625
|
|
194,080
|
|
148,758
|
23,669
|
Supplemental schedule
of non-cash investing and
|
|
|
|
|
|
|
|
|
|
financing activities:
|
|
|
|
|
|
|
|
|
|
Fixed asset purchases financed by accounts payable
and
accrued liabilities
|
|
63,254
|
|
35,393
|
|
17,920
|
|
14,096
|
2,243
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of this press release.
|
|
NETEASE,
INC.
|
UNAUDITED SEGMENT
INFORMATION
|
(RMB and USD in
thousands, except percentages)
|
|
|
Quarter
Ended
|
|
|
September 30,
|
|
June
30,
|
|
September 30,
|
|
September 30,
|
|
|
2011
|
|
2012
|
|
2012
|
|
2012
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Revenues:
|
|
|
|
|
|
|
|
|
Online game services
|
|
1,755,709
|
|
1,748,695
|
|
1,739,922
|
|
276,846
|
Advertising
services
|
|
220,476
|
|
204,179
|
|
243,027
|
|
38,669
|
E-mail, WVAS and
others
|
|
31,300
|
|
51,396
|
|
61,916
|
|
9,852
|
Total
revenues
|
|
2,007,485
|
|
2,004,270
|
|
2,044,865
|
|
325,367
|
|
|
|
|
|
|
|
|
|
Sales
taxes:
|
|
|
|
|
|
|
|
|
Online game
services
|
|
(27,704)
|
|
(20,689)
|
|
(17,053)
|
|
(2,713)
|
Advertising
services
|
|
(21,040)
|
|
(19,869)
|
|
(24,562)
|
|
(3,908)
|
E-mail, WVAS and
others
|
|
(839)
|
|
(1,223)
|
|
(1,286)
|
|
(205)
|
Total sales
taxes
|
|
(49,583)
|
|
(41,781)
|
|
(42,901)
|
|
(6,826)
|
|
|
|
|
|
|
|
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
Online game
services
|
|
1,728,005
|
|
1,728,006
|
|
1,722,869
|
|
274,133
|
Advertising
services
|
|
199,436
|
|
184,310
|
|
218,465
|
|
34,761
|
E-mail, WVAS and
others
|
|
30,461
|
|
50,173
|
|
60,630
|
|
9,647
|
Total net
revenues
|
|
1,957,902
|
|
1,962,489
|
|
2,001,964
|
|
318,541
|
|
|
|
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
Online game
services
|
|
(493,025)
|
|
(461,538)
|
|
(443,789)
|
|
(70,613)
|
Advertising
services
|
|
(102,958)
|
|
(123,487)
|
|
(139,296)
|
|
(22,164)
|
E-mail, WVAS and
others
|
|
(34,473)
|
|
(55,986)
|
|
(56,964)
|
|
(9,064)
|
Total cost of
revenues
|
|
(630,456)
|
|
(641,011)
|
|
(640,049)
|
|
(101,841)
|
|
|
|
|
|
|
|
|
|
Gross profit
(loss):
|
|
|
|
|
|
|
|
|
Online game
services
|
|
1,234,980
|
|
1,266,468
|
|
1,279,080
|
|
203,520
|
Advertising
services
|
|
96,478
|
|
60,823
|
|
79,169
|
|
12,597
|
E-mail, WVAS and
others
|
|
(4,012)
|
|
(5,813)
|
|
3,666
|
|
583
|
Total gross
profit
|
|
1,327,446
|
|
1,321,478
|
|
1,361,915
|
|
216,700
|
|
|
|
|
|
|
|
|
|
Gross profit (loss)
margin:
|
|
|
|
|
|
|
|
|
Online game
services
|
|
71.5%
|
|
73.3%
|
|
74.2%
|
|
74.2%
|
Advertising
services
|
|
48.4%
|
|
33.0%
|
|
36.2%
|
|
36.2%
|
E-mail, WVAS and
others
|
|
(13.2%)
|
|
(11.6%)
|
|
6.0%
|
|
6.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of this press release.
|
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 =
RMB6.2848 on the last trading day of
September 2012 (September 28, 2012) as set forth in the H.10
statistical release of the U.S. Federal Reserve Board.
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):
|
|
Quarter
Ended
|
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
September 30,
|
|
|
2011
|
|
2012
|
|
2012
|
|
2012
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
USD (Note
1)
|
Share-based compensation
cost included in:
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
11,121
|
|
29,305
|
|
25,063
|
|
3,988
|
Operating
expenses
|
|
|
|
|
|
|
|
|
- Selling and marketing
expenses
|
|
1,989
|
|
3,356
|
|
2,933
|
|
467
|
- General and
administrative expenses
|
|
3,514
|
|
9,359
|
|
7,830
|
|
1,246
|
- Research and
development expenses
|
|
6,317
|
|
15,887
|
|
12,143
|
|
1,932
|
SOURCE NetEase.com, Inc.