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• Web revenues had been RMB24.4 billion ( US$3.4 billion ), a rise of 10.1% in contrast with the third quarter of 2021.

– Video games and associated value-added providers internet revenues had been RMB18.7 billion ( US$2.6 billion ), a rise of 9.1% in contrast with the third quarter of 2021. ^[1]

– Youdao internet revenues had been RMB1.4 billion ( US$197.2 million ), a rise of 1.1% in contrast with the third quarter of 2021.

– Cloud Music internet revenues had been RMB2.4 billion ( US$331.4 million ), a rise of twenty-two.5% in contrast with the third quarter of 2021.

– Revolutionary companies and others internet revenues had been RMB2.0 billion ( US$276.7 million ), a rise of 13.6% in contrast with the third quarter of 2021. ^[1]

• Gross revenue was RMB13.7 billion ( US$1.9 billion ), a rise of 16.4% in contrast with the third quarter of 2021.
• Complete working bills had been RMB9.0 billion ( US$1.3 billion ), a rise of 12.0% in contrast with the third quarter of 2021.
• Web earnings attributable to the Firm’s shareholders was RMB6.7 billion ( US$941.8 million ). Non-GAAP internet earnings from persevering with operations attributable to the Firm’s shareholders was RMB7.5 billion ( US$1.1 billion ). ^[2]
• Fundamental internet earnings per share was US$0.29 ( US$1.44 per ADS). Non-GAAP primary internet earnings from persevering with operations per share was US$0.32 ( US$1.61 per ADS). ^[2]

Third Quarter 2022 and Latest Operational Highlights

• Prolonged the longevity of main franchise titles together with each the Fantasy Westward Journey and Westward Journey On-line sequence, and different hit titles together with Identification V and Infinite Lagrange .
• Delivered thrilling anniversary content material updates for the favored title Naraka: Bladepoint in August, profitable vast acclaim amongst gamers.
• Diablo ^® Immortal™ , co-developed by NetEase and Blizzard Leisure, debuted in Chinese language mainland, topping the iOS obtain chart quickly after its launch.
• Superior pipeline, propelling new video games below growth together with Naraka: Bladepoint cell sport, Justice cell sport and Ghost World Chronicle.
• Continued preparations for the roll-out of Harry Potter : Magic Woke up in worldwide markets, which is now anticipated to be launched globally in 2023.
• Web revenues of Youdao maintained wholesome progress with elevated contributions from gross sales of recent providers and good gadgets.
• Enhanced content material and product innovation for Cloud Music, driving strong progress in internet revenues and continued margin enchancment.

As beforehand disclosed, NetEase has entered into sure licensing agreements overlaying the publication of a number of Blizzard titles in Chinese language mainland . These licenses will expire in January 2023 and won’t be renewed . Web revenues and internet earnings contribution from these licensed Blizzard video games represented low single digits as a share of NetEase’s whole internet revenues and internet earnings in 2021 and within the first 9 months of 2022. The expiration of such licenses can have no materials influence on NetEase’s monetary outcomes. The co-development and publishing of Diablo ^® Immortal™ is roofed by a separate long-term settlement.

Commenting on this quarter’s monetary outcomes, Mr. William Ding , Chief Government Officer and Director of NetEase stated, “Regular progress characterised our third quarter, producing whole internet revenues of RMB24.4 billion , a rise of 10.1% year-over-year. Our video games enterprise continues to see strong positive aspects. Beloved flagship titles equivalent to our Fantasy Westward Journey sagas additional grew within the third quarter, impressing the {industry} with their energy and longevity. The profitable launch of thrilling new video games equivalent to Diablo ^® Immortal™ is an additional testomony to our strong R&D applications and skill to captivate the eye of gamers within the worldwide area.”

“Along with our video games, we maintained our differentiated choices with Youdao, Cloud Music and Yanxuan companies. As we transfer ahead, we are going to proceed to leverage our revolutionary content material and providers to drive sustainable progress throughout every of our fastidiously cultivated companies,” Mr. Ding concluded.

Third Quarter 2022 Monetary Outcomes

Web Revenues

Web revenues for the third quarter of 2022 had been RMB24,426.8 million ( US$3,433 .9 million), in contrast with RMB23,159.1 million and RMB22,190 .7 million for the previous quarter and the third quarter of 2021, respectively.

Web revenues from video games and associated value-added providers, which embody each the operation of on-line video games in addition to different associated or ancillary providers to the video games, had been RMB18,699 .1 million ( US$2,628 .7 million) for the third quarter of 2022, in contrast with RMB18,139 .8 million and RMB17,145 .7 million for the previous quarter and the third quarter of 2021, respectively. Web revenues from the operation of on-line video games, which is the first element of this phase, accounted for roughly 92.9% of the phase for the third quarter of 2022, in contrast with 92.8% and 92.7% for the previous quarter and the third quarter of 2021, respectively. Web revenues from cell video games accounted for roughly 68.6% of internet revenues from the operation of on-line video games for the third quarter of 2022, in contrast with 66.1% and 69.2% for the previous quarter and the third quarter of 2021, respectively.

Web revenues from Youdao had been RMB1,402.4 million ( US$197 .2 million) for the third quarter of 2022, in contrast with RMB956.2 million and RMB1,387 .3 million for the previous quarter and the third quarter of 2021, respectively.

Web revenues from Cloud Music had been RMB2,357.2 million ( US$331 .4 million) for the third quarter of 2022, in contrast with RMB2,191.5 million and RMB1,924.7 million for the previous quarter and the third quarter of 2021, respectively.

Web revenues from revolutionary companies and others had been RMB1,968.0 million ( US$276.7 million ) for the third quarter of 2022, in contrast with RMB1,871.5 million and RMB1,733.1 million for the previous quarter and the third quarter of 2021, respectively.

Gross Revenue

Gross revenue for the third quarter of 2022 was RMB13,743.9 million ( US$1,932 .1 million), in contrast with RMB12,941.5 million and RMB11,810 .8 million for the previous quarter and the third quarter of 2021, respectively.

The quarter-over-quarter and year-over-year will increase in video games and associated value-added providers gross revenue had been primarily on account of elevated internet revenues from on-line video games, together with the Fantasy Westward Journey On-line sequence and Infinite Lagrange , and sure newly launched titles.

The quarter-over-quarter enhance in Youdao gross revenue was primarily attributable to the rise in internet revenues from improved economies of scale for its studying providers in addition to elevated gross sales quantity of its good gadgets.

The quarter-over-quarter and year-over-year will increase in Cloud Music gross revenue had been primarily on account of elevated internet revenues from its social leisure providers, in addition to repeatedly improved value management measures.

The quarter-over-quarter and year-over-year will increase in revolutionary companies and others gross revenue had been primarily on account of elevated gross revenue contribution from Yanxuan.

Gross Revenue Margin

Gross revenue margin for video games and associated value-added providers for the third quarter of 2022 was 65.0%, in contrast with 64.9% and 61.3% for the previous quarter and the third quarter of 2021, respectively. The year-over-year enhance in gross revenue margin was primarily on account of modifications within the income contribution from totally different distribution channels.

Gross revenue margin for Youdao for the third quarter of 2022 was 54.2%, in contrast with 42.8% and 56.6% for the previous quarter and the third quarter of 2021, respectively. The quarter-over-quarter enhance was primarily attributable to the elements enumerated above. The year-over-year lower primarily resulted from a decline in economies of scale as a result of decreased internet revenues from its studying providers.

Gross revenue margin for Cloud Music was 14.2% for the third quarter of 2022, in contrast with 13.0% and a pair of.2% for the previous quarter and the third quarter of 2021, respectively. The quarter-over-quarter and year-over-year enhancements had been primarily as a result of elements enumerated above.

Gross revenue margin for revolutionary companies and others for the third quarter of 2022 was 25.5%, in contrast with 25.8% and 27.2% for the previous quarter and the third quarter of 2021, respectively. The year-over-year fluctuations had been primarily on account of modifications in gross revenue margin from promoting providers.

Working Bills

Complete working bills for the third quarter of 2022 had been RMB9,002.1 million ( US$1,265.5 million ), in contrast with RMB7,995.2 million and RMB8,035.6 million for the previous quarter and the third quarter of 2021, respectively. The quarter-over-quarter and year-over-year will increase had been primarily on account of elevated advertising expenditures associated to video games and associated value-added providers and Youdao, in addition to increased staff-related prices.

Different Earnings/ (Bills)

Different earnings/ (bills) consisted of funding earnings/ (loss), curiosity earnings, trade positive aspects/ (losses) and others. The quarter-over-quarter and year-over-year will increase had been primarily on account of funding earnings arising from the disposal of sure fairness investments and internet unrealized trade positive aspects arising from the Firm’s U.S. dollar-denominated financial institution deposits and loans balances because the trade price of the U.S. greenback in opposition to the RMB fluctuated within the third quarter of 2022.

Earnings Taxes

The Firm recorded a internet earnings tax cost of RMB1,586.7 million ( US$223.1 million ) for the third quarter of 2022, in contrast with RMB1,259.3 million and RMB807.6 million for the previous quarter and the third quarter of 2021, respectively. The efficient tax price for the third quarter of 2022 was 19.3%, in contrast with 22.0% and 19.6% for the previous quarter and the third quarter of 2021, respectively. The efficient tax price represents sure estimates by the Firm as to the tax obligations and advantages relevant to it in every quarter.

Web Earnings and Non-GAAP Web Earnings

Web earnings attributable to the Firm’s shareholders totaled RMB6,699 .4 million ( US$941.8 million ) for the third quarter of 2022, in contrast with RMB5,291.5 million and RMB3,181.8 million for the previous quarter and the third quarter of 2021, respectively. Web earnings attributable to the Firm’s shareholders for the previous quarter additionally included internet earnings from discontinued operations of RMB624.9 million which was associated to the prior disposal of the Kaola enterprise.

Non-GAAP internet earnings from persevering with operations attributable to the Firm’s shareholders totaled RMB7,469.6 million ( US$1,050.1 million ) for the third quarter of 2022, in contrast with RMB5,409.8 million and RMB3,857.8 million for the previous quarter and the third quarter of 2021, respectively.

NetEase reported primary internet earnings of US$0.29 per share ( US$1.44 per ADS) for the third quarter of 2022, in contrast with US$0.23 per share ( US$1.14 per ADS) and US$0.13 per share ( US$0.67 per ADS) for the previous quarter and the third quarter of 2021, respectively.

NetEase reported non-GAAP primary internet earnings from persevering with operations of US$0.32 per share ( US$1.61 per ADS) for the third quarter of 2022, in contrast with US$0.23 per share ( US$1.16 per ADS) and US$0.16 per share ( US$0.82 per ADS) for the previous quarter and the third quarter of 2021, respectively.

Quarterly Dividend

The board of administrators has authorised a dividend of US$0.0870 per share ( US$0.4350 per ADS) for the third quarter of 2022 to holders of extraordinary shares and holders of ADSs as of the shut of enterprise on December 2, 2022 , Beijing / Hong Kong Time and New York Time, respectively, payable in U.S. {dollars}. For holders of extraordinary shares, with a view to qualify for the dividend, all legitimate paperwork for the switch of shares accompanied by the related share certificates have to be lodged for registration with the Firm’s Hong Kong department share registrar, Computershare Hong Kong Investor Providers Restricted, at Outlets 1712-1716, 17 ^th Ground, Hopewell Centre, 183 Queen’s Street East, Wanchai, Hong Kong no later than 4:30 p.m. on December 2, 2022 ( Beijing / Hong Kong Time). The cost date is predicted to be on December 13, 2022 for holders of extraordinary shares and on or round December 16, 2022 for holders of ADSs.

NetEase paid a dividend of US$0.0720 per share ( US$0.3600 per ADS) for the second quarter of 2022 in September 2022 .

Beneath the Firm’s present dividend coverage, the willpower to make dividend distributions and the quantity of such distribution in any explicit quarter shall be made on the discretion of its board of administrators and shall be based mostly upon the Firm’s operations and earnings, money circulate, monetary situation and different related elements.

Different Info

As of September 30, 2022 , the Firm’s whole money and money equivalents, present and non-current time deposits and restricted money, in addition to short-term investments steadiness, minus short-term and long-term loans totaled RMB94.6 billion ( US$13 .3 billion), in contrast with RMB85.6 billion as of December 31, 2021 . Money circulate generated from working actions was RMB7 .5 billion ( US$1.1 billion ) for the third quarter of 2022, in contrast with RMB6 .6 billion and RMB6 .3 billion for the previous quarter and the third quarter of 2021, respectively.

Change in Phase Reporting

Efficient as of the second quarter of 2022, the Firm carried out sure modifications to align its phase monetary reporting extra intently with the style through which the Firm’s administration at the moment receives and makes use of monetary info to allocate sources and consider the efficiency of reporting segments. The Firm renamed its “on-line sport providers” phase as “video games and associated value-added providers,” and transferred sure enterprise strains which might be associated or ancillary to its video games from “revolutionary companies and others” to “video games and associated value-added providers,” together with the NetEase CC dwell streaming service (a platform providing varied dwell streaming content material with a major give attention to sport broadcasting) and different value-added providers. The Firm retrospectively recast prior durations’ phase info to adapt to present interval presentation. These modifications had no influence on NetEase’s beforehand reported consolidated internet revenues, internet earnings or internet earnings per share.

Share Repurchase/ P urchase Program

On February 25, 2021 , the Firm introduced that its board of administrators had authorised a brand new share repurchase program of as much as US$2.0 billion of the Firm’s excellent ADSs and extraordinary shares in open market transactions for a interval to not exceed 24 months starting on March 2, 2021 . On August 31, 2021 , the Firm introduced that its board of administrators had authorised an modification to such program to extend the full approved repurchase quantity to US$3.0 billion . As of September 30, 2022 , roughly 27.0 million ADSs had been repurchased below this program for a complete value of US$2.5 billion .

The Firm additionally introduced at this time that its board of administrators has authorised a brand new share repurchase program of as much as US$5.0 billion of the Firm’s ADSs and extraordinary shares in open market transactions. This new share repurchase program shall be in impact for a interval to not exceed 36 months, commencing upon the expiration of the Firm’s current share repurchase program or, if earlier, the date on which the Firm has repurchased the utmost quantity approved below the prevailing program.

On August 31, 2021 , the Firm introduced that its board of administrators had authorised a share buy program of as much as US$50.0 million of Youdao’s excellent ADSs for a interval to not exceed 36 months starting on September 2, 2021 . Beneath the phrases of this program, NetEase could buy Youdao’s ADSs in open-market transactions on the New York Inventory Change. As of September 30, 2022 , roughly 2.3 million ADSs had been bought below this program for a complete value of US$20.7 million .

NetEase additionally bought roughly 0.7 million extraordinary shares of Cloud Music in open market transactions on the Hong Kong Inventory Change for a complete value of US$6.9 million throughout the third quarter of 2022.

The extent to which NetEase repurchases its ADSs and its extraordinary shares or purchases Youdao’s ADSs and Cloud Music’s extraordinary shares will depend on a wide range of elements, together with market situations. These applications could also be suspended or discontinued at any time.

** The US greenback (US$) quantities disclosed on this announcement are offered solely for the comfort of the reader. The odds said are calculated based mostly on RMB.

Convention Name

NetEase’s administration crew will host a teleconference name with simultaneous webcast at 7:00 a.m. New York Time on Thursday, November 17, 2022 ( Beijing / Hong Kong Time: 8:00 p.m. , Thursday, November 17, 2022 ). NetEase’s administration shall be on the decision to debate the quarterly outcomes and reply questions.

events could take part within the convention name by dialing 1-914-202-3258 and offering convention ID: 10026570, quarter-hour previous to the initiation of the decision. A replay of the decision shall be out there by dialing 1-855-883-1031 and coming into PIN: 10026570. The replay shall be out there via November 24 , 2022.

This name shall be webcast dwell and the replay shall be out there for 12 months. Each shall be out there on NetEase’s Investor Relations web site at http://ir.netease.com/ .

About NetEase, Inc.

As a number one web expertise firm based mostly in China , NetEase, Inc. (NASDAQ: NTES and HKEX:9999, “NetEase”) offers premium on-line providers centered round content material creation. With intensive choices throughout its increasing gaming ecosystem, the Firm develops and operates a few of China’s hottest and longest working cell and PC video games. Powered by industry-leading in-house R&D capabilities in China and globally, NetEase creates superior gaming experiences, conjures up gamers, and passionately delivers worth for its thriving neighborhood worldwide. By infusing play with tradition and schooling with expertise, NetEase transforms gaming right into a significant automobile to construct a extra entertaining and enlightened world.

Past video games, NetEase service choices embody its majority-controlled subsidiaries Youdao (NYSE: DAO), China’s main technology-focused clever studying firm, and Cloud Music (HKEX: 9899), China’s main on-line music content material neighborhood, in addition to Yanxuan , NetEase’s non-public label shopper way of life model.

NetEase’s ESG initiatives are among the many greatest within the world media and leisure {industry}, incomes it a distinction as one of many S&P International Business Movers and an “A” score from MSCI. For extra info, please go to: http://ir.netease.com/ .

Ahead Wanting Statements

This announcement comprises statements of a forward-looking nature. These statements are made below the “protected harbor” provisions of the U.S. Non-public Securities Litigation Reform Act of 1995. You’ll be able to determine these forward-looking statements by terminology equivalent to “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and related statements. As well as, statements that aren’t historic info, together with statements about NetEase’s methods and enterprise plans, its expectations concerning the expansion of its enterprise and its income and the quotations from administration on this announcement are or comprise forward-looking statements. NetEase can also make forward-looking statements in its periodic stories to the U.S. Securities and Change Fee (the “SEC”), in bulletins made on the web site of The Inventory Change of Hong Kong Restricted (the “Hong Kong Inventory Change”), in press releases and different written supplies and in oral statements made by its officers, administrators or staff to 3rd events. The accuracy of those statements could also be impacted by quite a few enterprise dangers and uncertainties that might trigger precise outcomes to vary materially from these projected or anticipated, together with dangers associated to: the chance that the web sport market won’t proceed to develop or that NetEase will be unable to take care of its place in that market in China or globally; the chance that COVID-19 or different well being dangers in China or globally might adversely have an effect on the Firm’s operations or monetary outcomes; dangers related to NetEase’s enterprise and working methods and its potential to implement such methods; NetEase’s potential to develop and handle its operations and enterprise; competitors for, amongst different issues, capital, expertise and expert personnel; potential modifications in authorities regulation that might adversely have an effect on the {industry} and geographical markets through which NetEase operates, together with, amongst others, initiatives to reinforce supervision of firms listed on an abroad inventory trade and tighten scrutiny over information privateness and information safety, in addition to the chance that NetEase’s ADSs could possibly be barred from buying and selling in the USA on account of the Holding Overseas Corporations Accountable Act and the principles promulgated thereunder; the chance that NetEase could not have the ability to repeatedly develop new and artistic on-line providers or that NetEase will be unable to set, or comply with in a well timed method, developments available in the market; competitors in NetEase’s current and potential markets; and the chance that fluctuations within the worth of the Renminbi with respect to different currencies might adversely have an effect on NetEase’s enterprise and monetary outcomes. Additional info concerning these and different dangers is included in NetEase’s filings with the SEC and bulletins on the web site of the Hong Kong Inventory Change. NetEase doesn’t undertake any obligation to replace this forward-looking info, besides as required below the relevant regulation.

Non-GAAP Monetary Measures

NetEase considers and makes use of non-GAAP monetary measures, equivalent to non-GAAP internet earnings from persevering with operations attributable to the Firm’s shareholders and non-GAAP primary and diluted internet earnings from persevering with operations per ADS and per share, as supplemental metrics in reviewing and assessing its working efficiency and formulating its marketing strategy. The presentation of non-GAAP monetary measures just isn’t meant to be thought of in isolation or as an alternative to the monetary info ready and offered in accordance with accounting rules typically accepted in the USA of America (“U.S. GAAP”).

NetEase defines non-GAAP internet earnings from persevering with operations attributable to the Firm’s shareholders as internet earnings from persevering with operations attributable to the Firm’s shareholders excluding share-based compensation bills. Non-GAAP internet earnings from persevering with operations attributable to the Firm’s shareholders allows NetEase’s administration to evaluate its working outcomes with out contemplating the influence of share-based compensation bills. NetEase believes that these non-GAAP monetary measures present helpful info to buyers in understanding and evaluating the Firm’s present working efficiency and prospects in the identical method as administration does, in the event that they so select. NetEase additionally believes that using this non-GAAP monetary measure facilitates buyers’ evaluation of its working efficiency.

Non-GAAP monetary measures should not outlined below U.S. GAAP and should not offered in accordance with U.S. GAAP. Non-GAAP monetary measures have limitations as analytical instruments. One of many key limitations of utilizing non-GAAP internet earnings from persevering with operations attributable to the Firm’s shareholders is that it doesn’t replicate all objects of expense/ earnings that have an effect on our operations. Share-based compensation bills have been and should proceed to be incurred in NetEase’s enterprise and should not mirrored within the presentation of non-GAAP internet earnings from persevering with operations attributable to the Firm’s shareholders. As well as, the non-GAAP monetary measures NetEase makes use of could differ from the non-GAAP measures utilized by different firms, together with peer firms, and subsequently their comparability could also be restricted.

NetEase compensates for these limitations by reconciling non-GAAP internet earnings from persevering with operations attributable to the Firm’s shareholders to the closest U.S. GAAP efficiency measure, all of which must be thought of when evaluating the Firm’s efficiency. See “Unaudited Reconciliation of GAAP and Non-GAAP Outcomes” on the finish of this announcement. NetEase encourages you to evaluate its monetary info in its entirety and never depend on a single monetary measure.

Contact for Media and Buyers:
Margaret Shi
E mail: ir@service.netease.com
Tel: (+86) 571-8985-3378
Twitter: https://twitter.com/NetEase_Global

NETEASE, INC.

NOTES TO UNAUDITED FINANCIAL INFORMATION

Notice 1: The conversion of Renminbi (RMB) into United States {dollars} (USD) relies on the midday shopping for price of USD1.00 = RMB7.1135 on the final buying and selling day of September 2022 ( September 30, 2022 ) as set forth within the H.10 statistical launch of the U.S. Federal Reserve Board. No illustration is made that the RMB quantities might have been, or could possibly be, transformed into US$ at that price on September 30, 2022 , or at another sure date.

Notice 2: Share-based compensation value reported within the Firm’s unaudited condensed consolidated statements of complete earnings is ready out as follows in RMB and USD (in 1000’s):

Notice 3: The monetary info ready and offered on this announcement is perhaps totally different from these revealed and to be revealed by NetEase’s listed subsidiaries to fulfill the disclosure necessities below U.S. GAAP or totally different accounting requirements requirement.

Notice 4: The unaudited reconciliation on GAAP and non-GAAP outcomes is ready out as follows in RMB and USD (in 1000’s, besides per share information or per ADS information):

View authentic content material: https://www.prnewswire.com/news-releases/netease-announces-third-quarter-2022-unaudited-financial-results-301681177.html

SOURCE NetEase, Inc.