NTES(NTES) - 2024 Q3 - Quarterly Results

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 RMB7.8 billion in Q3 2023[25] - Youdao achieved net revenues of RMB1.6 billion (US$224.1 million), an increase of 2.2$2.3 billion), a decrease of 2.9% year-over-year[3] - Net revenues for the three months ended September 30, 2023, were RMB 27,270,406, representing an increase from RMB 25,485,805 in the previous quarter[47] - Gross profit for the three months ended September 30, 2023, was RMB 16,966,300, compared to RMB 16,042,218 for the previous quarter, indicating a growth of 5.8%[47] - Operating profit for the three months ended September 30, 2023, was RMB 7,557,909, up from RMB 6,993,323 in the previous quarter, reflecting an increase of 8.1%[47] - Net income attributable to the Company's shareholders for the three months ended September 30, 2023, was RMB 7,836,888, compared to RMB 6,758,749 in the previous quarter, marking a rise of 15.9%[47] - Total operating expenses for the three months ended September 30, 2023, were RMB 9,408,391, compared to RMB 9,048,895 in the previous quarter, reflecting a rise of 4.0%[47] - Non-GAAP net income attributable to the company's shareholders for the nine months ended September 30, 2024, was RMB 20,931,130 thousand, up from RMB 22,834,289 thousand in the previous year[53] Cash 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 company's cash and cash equivalents were RMB 20.2 billion, down from RMB 21.4 billion at the end of 2023, indicating a decrease of approximately 5.6$0.0870 per share for Q3 2024, payable on December 10, 2024[30] - The company paid dividends totaling RMB 2,423,355 for the three months ended September 30, 2024, compared to RMB 2,264,799 for the same period last year, indicating a year-over-year increase of approximately 7.0%[49] Gaming and Services Performance - The gross profit margin for games and related services was 68.8%, down from 70.0% in the previous quarter[19] - Naraka: Bladepoint mobile game reached No. 4 on the iOS grossing chart following its September update, indicating strong player demand[6] - World of Warcraft saw a 50% increase in daily active players post-relaunch, while Hearthstone achieved over 150% growth[7] - NetEase Cloud Music's net revenues were RMB2.0 billion (US$284.9 million), maintaining the same level as the previous quarter[14] - Youdao's net revenues for the three months ended September 30, 2024, were RMB 1,572,541 thousand, showing a slight increase from RMB 1,321,721 thousand in the previous quarter[50] - NetEase Cloud Music generated net revenues of RMB 1,999,163 thousand for the three months ended September 30, 2024, compared to RMB 2,040,952 thousand in the previous quarter[50] - The company has a significant focus on expanding its gaming and online services, leveraging its in-house R&D capabilities[37] - NetEase's subsidiaries, including Youdao and NetEase Cloud Music, contribute to its diversified service offerings beyond gaming[38] Operational Insights - The company reported non-GAAP net income attributable to shareholders, which excludes share-based compensation expenses, to provide a clearer view of operational performance[41][42] - NetEase emphasizes the importance of non-GAAP financial measures to provide investors with a better understanding of its operational performance[41][42] - The company is actively monitoring market trends and potential risks, including competition and regulatory changes, to maintain its market position[40] Investment and Cash Flow - Operating cash flow for the nine months ended September 30, 2024, was RMB 26,664,613, compared to RMB 23,522,996 for the same period last year, reflecting a growth of approximately 9.1%[49] - The company reported a net cash used in investing activities of RMB 720,861 for the three months ended September 30, 2024, compared to RMB 6,318,756 for the same period last year, indicating a significant reduction in investment outflows[49] - Cash and cash equivalents at the end of the period increased to RMB 23,183,386 from RMB 21,855,316 at the beginning of the period, representing a growth of approximately 6.0%[49] - The company experienced unrealized exchange gains of RMB 1,050,644 for the three months ended September 30, 2024, compared to unrealized exchange losses of RMB 718,121 for the same period last year[49] Depreciation and Amortization - Total depreciation and amortization for the nine months ended September 30, 2024, was RMB 2,395,488, up from RMB 1,720,447 for the same period last year, reflecting an increase of approximately 39.2%[49] Other Financial Metrics - The company recorded a loss on disposal of property, equipment, and software of RMB 2,920 for the three months ended September 30, 2024, compared to a gain of RMB 2,291 for the same period last year[49] - The company’s cash paid for income taxes for the three months ended September 30, 2024, was RMB 1,165,196, compared to RMB 3,864,820 for the same period last year, showing a decrease of approximately 69.8%[49] - The company reported a significant increase in contract liabilities, reaching RMB 1,928,060 for the three months ended September 30, 2024, compared to RMB 2,009,423 for the same period last year[49]