NTES(NTES) - 2024 Q3 - Quarterly Report

Financial Performance - Net revenues for Q3 2024 were RMB26.2 billion (US$3.7 billion), a decrease of 3.9$931.7 million), down from RMB6.8 billion in the previous quarter[25] - Non-GAAP net income attributable to shareholders was RMB7.5 billion (US$1.1 billion), a decrease of 13.5$3.0 billion), a decrease of 4.2% compared to Q3 2023[3] - Youdao achieved net revenues of RMB1.6 billion (US$224.1 million), an increase of 2.2$284.9 million), maintaining the same level as the previous quarter[11] - The company reported net revenues of RMB 27,270,406 for the three months ended September 30, 2023, representing an increase from RMB 25,485,805 in the previous quarter[48] - Net income attributable to the Company's shareholders for the three months ended September 30, 2023, was RMB 7,836,888, a decrease from RMB 6,758,749 in the previous quarter[48] - Total net revenues for the three months ended September 30, 2024, were RMB 26,209,879, representing a 3.4% increase from RMB 25,485,805 in the previous quarter[52] - Net income attributable to the Company's shareholders for the three months ended September 30, 2024, was RMB 6,538,435, a decrease of 3.3% from RMB 6,758,749 in the previous quarter[56] Profitability Metrics - Gross profit margin for games and related services was 68.8%, down from 70.0% in the previous quarter[17] - The gross profit for the same period was RMB 16,966,300, with a gross margin of approximately 62.2%[48] - Gross profit for the three months ended September 30, 2024, was RMB 16,476,605, with a gross profit margin of 62.8%[52] - Non-GAAP net income attributable to shareholders was RMB 7,836,888 for the three months ended September 30, 2023, which excludes share-based compensation expenses[44] - Non-GAAP net income attributable to the Company's shareholders for the three months ended September 30, 2024, was RMB 7,499,141, reflecting a 7.5% decrease from RMB 7,818,688 in the previous quarter[56] Cash Flow and Assets - As of September 30, 2024, net cash totaled RMB120.0 billion (US$17.1 billion), an increase from RMB110.9 billion at the end of 2023[29] - The total current assets as of September 30, 2024, were RMB 142,692,585, slightly up from RMB 140,578,661 in the previous quarter[47] - Cash and cash equivalents stood at RMB 21,428,902 as of September 30, 2024, compared to RMB 20,184,013 in the previous quarter[47] - The company generated net cash provided by operating activities of RMB 9,843,920 thousand for the three months ended September 30, 2023, compared to RMB 6,531,832 thousand in the previous quarter[51] - Cash and cash equivalents at the end of the period stood at RMB 18,158,066 thousand, up from RMB 15,679,412 thousand at the beginning of the period[51] Expenses and Liabilities - Total liabilities increased to RMB 57,840,897 as of September 30, 2024, compared to RMB 49,167,949 in the previous quarter, reflecting a rise of approximately 17%[47] - Research and development expenses for the three months ended September 30, 2023, were RMB 4,347,052, showing a slight increase from RMB 4,455,717 in the previous quarter[48] - Depreciation and amortization expenses were RMB 651,856 thousand for the three months ended September 30, 2023, an increase from RMB 520,567 thousand in the same period last year[51] - The company reported cash paid for income taxes of RMB 1,165,196 thousand for the three months ended September 30, 2023[51] Business Segments - The Games and related value-added services segment generated net revenues of RMB 20,864,036 for the three months ended September 30, 2024, accounting for 79.7% of total net revenues[52] - Youdao's net revenues for the three months ended September 30, 2024, were RMB 1,572,541, showing a 19.0% increase compared to RMB 1,321,721 in the previous quarter[52] - NetEase Cloud Music reported net revenues of RMB 1,999,163 for the three months ended September 30, 2024, with a gross profit margin of 32.8%[52] - Innovative businesses and others segment achieved net revenues of RMB 1,774,139 for the three months ended September 30, 2024, with a gross profit margin of 37.8%[52] Future Outlook - The company expects continued growth in its online services and gaming segments, despite potential market risks and uncertainties[41] - The Company expects continued growth in net revenues and profitability driven by new product launches and market expansion initiatives[56] - The company launched new titles like Naraka: Bladepoint and Racing Master, expanding its market presence[6]