I am pleased to announce today that NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, hereinafter referred to as "NetEase" or the "Company") has released its unaudited financial results for the third quarter ended September 30, 2023.
Highlights of the financial results for the third quarter of 2023
Highlights of the Third Quarter of 2023 and Recent Operational Highlights
The strong performance we achieved in the third quarter was mainly due to our robust and increasingly diversified games portfolio, which generated total net revenues of RMB27 billion.There was an increase of nearly 12% from last year to this year of $2.8 billion," said Mr.. NetEase's Chief Executive Officer and Director, William Ding, discusses his vision for the company. With games like the Fantasy Westward Journey series and other fan favorites, we continue to win the hearts of our players with our flagship games.. Additionally, we have recently released a number of innovative, first-rate games in various genres, such as Racing Master, Justice mobile game and Dunk City Dynasty, which have met with widespread acclaim.. The popularity of our wide range of newest hits is a great example of our exceptional talent in R&D, which is expanding our reach into the casual gaming market while also pushing the limits of traditional online games, bringing players brand new gaming experiences like never before.
The popularity of our wide range of newest hits is a great example of our exceptional talent in R&D, which is expanding our reach into the casual gaming market while also pushing the limits of traditional online games, bringing players brand new gaming experiences like never before.
The NetEase family as a whole, including Cloud Music and Youdao, is doing very well, delivering innovative content offerings in their respective fields. Creating products and content with a passion that inspires the market and shapes resonant experiences will lead to increased value for our customers as well as our company, Mr. Ding concluded.
Financial Results for the Third Quarter of 2023
Revenues as a percentage of net sales
For the third quarter of 2023, the company's net revenues were RMB27,270.4 million (US$3,737.7 million), compared with RMB24,011.3 million and RMB24,426.8 million respectively for the preceding quarter and the third quarter of 2022.
A total of RMB21,779 in net revenues were generated from games and related value-added services.A total of $2.9 million (US$2,985) was raised.There was a decrease of RMB18,798 (RMB2.35 million) for the third quarter of 2023, compared to RMB18,794..A total of RMB18,699 and $6 million.For the preceding quarter and the third quarter of 2022, respectively, there was an increase of $1 million. It is estimated that approximately 93% of the company's revenues came from the operation of online games.There will be 7% of the segment's net revenues for the third quarter of 2023, as opposed to 91% in the third quarter of 2022.There is a 7% and a 92% difference.In the preceding quarter and in the third quarter of 2022, the percentages were respectively 9% and 5%. There was an approximate 77 percent share of net revenues from mobile games in the quarter.As of the third quarter of 2023, 6% of net revenues will come from the operation of online games, compared to 73% last quarter.6% of the population and 68% of the population.6% for the preceding quarter and 6% for the third quarter of 2022, respectively, respectively.
6% for the preceding quarter and 6% for the third quarter of 2022, respectively, respectively.
The net revenues from Youdao were RMB1,538.8 million (US$210.9 million) for the third quarter of 2023, as compared to RMB1,206.6 million and RMB1,402.4 million for the preceding quarter and the third quarter of 2022, respectively.
In terms of net revenues from Cloud Music, they were RMB1,973.1 million (US$270.4 million) for the third quarter of 2023, as compared with RMB1,948.5 million in the preceding quarter and RMB2,357.2 million in the third quarter of 2022, respectively.
The net revenues from innovative businesses and other sources were RMB1,978.7 million (US$271.2 million) in the third quarter of 2023, compared with RMB2,057.5 million and RMB1,968.0 million in the preceding quarter and the third quarter of 2022, respectively.
The gross profit of the company
In the third quarter of 2023, the gross profit for the company was RMB16,966.3 million (US$2,325.4 million), compared to RMB14,375.4 million and RMB13,743.9 million for the preceding quarter and the third quarter of 2022, respectively.
The quarter-over-quarter increase in games and related value-added services' gross profit was primarily due to increased net revenues from newly released games such as Justice mobile game and Racing Master. Among the main reasons for the year-over-year increase were increased net revenues generated by the operation of the online games Eggy Party and those newly launched titles, as well as decreased royalty fees as a result of the termination of certain licensed games. 
As a result of the increase in net revenues from Youdao's learning services, the company was able to increase its gross profit quarter-over-quarter. The year-over-year increase primarily resulted from increased revenue contribution from both its learning services and its online marketing services.
Cloud Music's gross profit increased both sequentially and year-over-year in the third quarter and the first half of the year due primarily to an increase in net revenues from membership subscription sales, as well as the continual improvement in cost control measures over the period.
Accordingly, the quarter-over-quarter decrease in innovative businesses and other businesses' gross profits was primarily caused by Yanxuan's decreased e-commerce gross profit. As a result of Yanxuan's increased gross profit as well as several other businesses that comprised the segment, there was a significant increase year-over-year.
Margin of Gross Profit
The gross profit margin for games and related value-added services for the third quarter of 2023 was 69.4 percent.An increase of 0%, compared to a decrease of 67%.A percentage of 4 % and a percentage of 65 %.0% for the preceding quarter and 0% for the third quarter of 2022, respectively,. According to the company, the quarter-over-quarter increase was mainly due to changes in the revenue mix of NetEase's self-developed, co-developed, and licensed games, as well as the relative contribution of each of these channels to NetEase's revenue over the period.. Generally, the increase in net revenue from NetEase's self-developed games was attributed to a higher proportion of those revenues contributed by NetEase as compared with last year.
Generally, the increase in net revenue from NetEase's self-developed games was attributed to a higher proportion of those revenues contributed by NetEase as compared with last year.
It is estimated that Youdao's gross profit margin for the third quarter of 2023 was 55.9%, compared to 47.0% and 54.2% respectively for the preceding quarter and the third quarter of 2022. It was the factors enumerated above that contributed primarily to the quarter-over-quarter and year-over-year increases.
The gross profit margin for Cloud Music for the third quarter of 2023 was 27.2%, which is a significant increase from the 27.0% and 14.2% gross margins for the preceding and third quarters of 2022, respectively. The quarter-over-quarter and year-over-year improvements were mainly due to the factors listed above.
As of the third quarter of 2023, the gross profit margin for innovative businesses and others was 27.3%, compared to 29.5% for the previous quarter and 25.5% for the third quarter of 2022, respectively. There has been a significant change in the product mix within the segment that has led to quarter-over-quarter and year-over-year fluctuations. 
Expenses incurred as a result of operations
In the third quarter of 2023, total operating expenses were RMB9,408.5 million (US$1,289.5 million), as compared to RMB8,312.8 million for the preceding quarter and RMB9,002.1 million for the third quarter of 2022, respectively. In addition to an increase in marketing expenditures and staff-related costs associated with games and related value-added services, the quarter-over-quarter increase was mainly attributed to the increased marketing expenditures. Research and development investments accounted for the major increase in revenue year-over-year.
Income from other sources (expenses)
As part of other income (expenses), there were investments, interest income, exchange gains/losses, and other items. As the exchange rate of the U.S. dollar against the RMB fluctuated in the third quarter of 2023, the decreases over the third quarter and over the year were mainly caused by the unrealized exchange losses resulting from the Company's U.S. dollar-denominated bank deposits and loan balances.
Taxes on income
A net income tax charge of RMB1,290 was recorded by the Company as a result of its operations.176 million dollars (US$4 million).In the third quarter of 2023, RMB712.90 million (about $9 million) was generated, compared to RMB712.70 million.A total of 1 million and 1,586 RMB.There was a difference of $7 million between the preceding quarter and the third quarter of 2022. For the third quarter of 2023, the effective tax rate was 14 percent.There was a decrease of 2% compared with an increase of 8%.A percentage of 0% and a percentage of 19%.3% for the preceding quarter and 3% for the third quarter of 2022, respectively. For the preceding quarter, the lower effective tax rate was primarily due to the fact that tax benefits had been recognized in that quarter.. Each quarter, the effective tax rate of the Company represents an estimate of the amount that the Company has to pay in taxes and the benefits that it gets from taxes.
Each quarter, the effective tax rate of the Company represents an estimate of the amount that the Company has to pay in taxes and the benefits that it gets from taxes.
There are two types of net income: GAAP net income and non-GAAP net income
As a result, the net income attributable to the Company's shareholders for the third quarter of 2023 totaled RMB7,836.9 million (US$1,074.1 million), which was lower than the RMB8,242.8 million and RMB6,699.4 million for the previous quarter and the third quarter of 2022, respectively.
It has been reported by NetEase that basic net income in the third quarter of 2023 was US$0.33 per share (US$1.67 per ADS), compared to US$0.35 per share (US$1.75 per ADS) and US$0.28 per share (US$1.41 per ADS) for the preceding quarter and third quarter of 2022, respectively.
It is estimated that non-GAAP net income from continuing operations attributable to the Company's shareholders for the third quarter of 2023 totaled RMB8,645.2 million (US$1,184.9 million), compared with RMB9,017.5 million and RMB7,469.6 million in the previous quarter and the third quarter of 2022, respectively.
During the third quarter of 2023, NetEase reported a net income from continuing operations of US$0.37 per share (US$1.84 per ADS). This compares to a net income of US$0.38 per share (US$1.92 per ADS) and a net income of US$0.31 per share (US$1.57 per ADS) for the preceding quarter and the third quarter of 2022, respectively.
Information about other financial matters
On September 30, 2023, the Company's total cash and cash equivalents, short-term investments, current and non-current time deposits, as well as restricted cash balance, minus short-term and long-term loans, amounted to RMB 104 million..It is estimated to be worth $14 billion (US$14 billion).There were 95 billion RMB in revenues in 2017, compared to 95 billion RMB in 2016.As of December 31, 2022, the global economy will be worth $66 billion. In terms of net cash provided by operating activities, RMB9 million was generated.A total of $8 billion (US$1 billion).This represents an increase of RMB3.2 billion compared to RMB7.1 billion for the third quarter of 2023.A total of $7.7 billion and RMB7.7 billion.Amounts of $2.5 billion for the preceding quarter and $2.2 billion for the third quarter of 2022, respectively,
Amounts of $2.5 billion for the preceding quarter and $2.2 billion for the third quarter of 2022, respectively,
Dividends paid on a quarterly basis
It has been approved by the board of directors of the company that a dividend of US$0 will be paid.There is a share price of $0.0990 per share (US$0).For the third quarter of 2023, payment will be made to holders of ordinary shares and holders of American depositary shares (ADSs) as of the close of business on December 1, 2023, Beijing/Hong Kong Time and New York Time, respectively, payable in U.S. dollars.. The dollar. If a shareholder holds ordinary shares, he or she is eligible for the dividend if all the valid documents for the transfer of shares, together with the relevant share certificates, are submitted for registration to Computershare Hong Kong Investor Services Limited, the Company's Hong Kong branch share registrar, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong by 4:30 pm on the day of registration.. During the period of December 1, 2023 (Beijing/Hong Kong Time),. For holders of ordinary shares, the payment date is expected to be December 12, 2023, while for holders of American depositary shares, the payment date is expected to be December 15, 2023,
For holders of ordinary shares, the payment date is expected to be December 12, 2023, while for holders of American depositary shares, the payment date is expected to be December 15, 2023,
In September of 2023, NetEase paid a dividend to its shareholders of US$0.1050 per share (US$0.5250 per ADS) for the second quarter of 2023.
According to the current dividend policy of the Company, the decision on whether to distribute dividends and how much will be distributed for any given quarter will be determined at the discretion of its board of directors. The decision will be influenced by the company's operations, earnings, cash flow, financial condition, and other relevant factors.
Program for the repurchase of shares
As of November 17, 2022, the Company announced that its board of directors had approved a new share repurchase program of up to US$5 billion to be carried out by the Company.ADSs and ordinary shares of the Company were sold on the open market for $0 billion. Following the completion of the previous share repurchase program on January 9, 2023, this share repurchase program commenced on January 10, 2023, and will last for a period not to exceed 36 months from the date of its commencement.. There are approximately 6 million people in the world as of September 30, 2023.As a result of this program, 6 million ADSs had been repurchased for a total cost of $587 million.More than nine million people in the world
More than nine million people in the world
The amount to which NetEase repurchases its ADSs and ordinary shares depends upon a variety of factors, including market conditions. These programs may be suspended or discontinued at any time as a result of any of the above factors.
It should be noted that the United States dollar (US$) amounts that are disclosed in this announcement are presented solely for the convenience of the reader. The percentages stated in this announcement were derived using RMB figures as a basis.
An announcement regarding the change of management has been made
Additionally, today, the Company announced that Mr. Charles Zhaoxuan Yang has resigned from the position of Chief Financial Officer effective November 30, 2023 for personal reasons and will be pursuing other career objectives in the future. As long as the Company undertakes a search to find a successor, Mr. Yang will remain with the Company as a consultant until June 30, 2024 in order to ensure a smooth transition.  
I would like to express my sincere gratitude to Charles for his contributions to NetEase over the past six years, as he has been an integral part of leading some of NetEase's largest capital market transactions, which have been major milestones in the company's history. "On behalf of the Board and management team, I wish him the best of luck in his future endeavors," Mr. Ding said.
It has been a great pleasure for me to be able to work together with William, the board of directors, and the management team to help NetEase progress to where it is today," Yang said. Despite my lack of confidence in NetEase's prospects for sustained growth and value creation, I am committed to ensuring a smooth transition."
Call for a conference call
On Thursday, November 16, 2023, at 7:00 a.m. New York Time, NetEase's management team will conduct a teleconference call and a simultaneous webcast (Beijing/Hong Kong Time: 8:00 p.m., Thursday, November 16, 2023). The management of NetEase will be on the call to discuss the quarterly results and answer any questions you may have.
Those interested in participating in the conference call may call 1-914-620-3258 and provide conference ID 10034483, at least 15 minutes before the conference call begins. You will be able to listen to the replay of the conference call by dialing 1-855-883-1031 and entering PIN: 10034483. The replay will be available until November 23, 2023.
The conference call will be webcast live and the replay will be available for 12 months after the call. Both will be available on NetEase's Investor Relations website, located at http://ir.netease.com/.
A brief overview of NetEase, Inc.
With a focus on premium content, NetEase, Inc. (NASDAQ: NTES and HKEX: 9999) is one of the most prominent internet and game services providers in the world. As part of its growing gaming ecosystem, the Company develops and operates some of the most popular and longest running mobile and PC games in China and around the world, with extensive offerings across the entire gaming ecosystem.
A leading game development company with an extensive in-house game development team that focuses on mobile, PC and console, NetEase is renowned for creating superior gaming experiences, inspiring players, and passionately delivering value to its thriving community around the world. By infused play with culture, and education with technology, NetEase transforms gaming into a meaningful vehicle to build a more entertaining and enlightened world by infusing play with culture, and education with technology.
Besides games, NetEase's services include its majority-controlled subsidiaries Youdao (NYSE: DAO), a company that offers intelligent learning solutions with industry-leading technology, Cloud Music (HKEX: 9899), an online music platform renowned for its vibrant community of artists and musicians, as well as Yanxuan, NetEase's private label consumer lifestyle company.
Among the most well-recognized ESG initiatives in the global media and entertainment industry is NetEase's market-leading ESG initiatives. The company has been included in the Dow Jones Sustainability World Index, the Dow Jones Sustainability Emerging Markets Index, and the Bloomberg Gender-Equality Index for 2022, and has also been rated by MSCI as "A" by the company. For more information, please visit: http://ir.netease.com/.
Statements that are forward-looking
It should be noted that this announcement contains forward-looking statements. The statements in this document are made in accordance with the "safe harbor" provisions of the U.S.. In 1995, the Private Securities Litigation Reform Act was passed.. In order to identify forward-looking statements, you should use terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," and similar statements.. A number of statements included in this announcement that are not historical facts, such as statements about NetEase's strategies and business plans, statements regarding NetEase's expectations regarding the growth of its business and revenue, and quotations from management, are or contain forward-looking statements.. In addition, NetEase may also make forward-looking statements in its periodic reports to the Securities and Exchange Commission. A number of announcements can be found on the website of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"), in press releases, other written materials and oral statements made by its officers, directors, and employees to third parties, as well as on the Securities and Exchange Commission (the "SEC").. 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 games market will not continue to grow or that NetEase will not be able to maintain its position in that market in China or globally; 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; 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; the risk related to economic uncertainty and capital market disruption; the risk related to the expansion of NetEase's businesses and operations internationally; the risk associated with cybersecurity threats or incidents; 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. There is more information regarding these and other risks in NetEase's filings with the Securities and Exchange Commission (SEC) and announcements on the website of the Hong Kong Stock Exchange concerning NetEase.. As a result, NetEase does not undertake any obligation to update this forward-looking information, except as required by applicable laws
As a result, NetEase does not undertake any obligation to update this forward-looking information, except as required by applicable laws
Measures of financial performance that are not based on GAAP
As part of its business plan, NetEase considers and uses a variety of non-GAAP financial measures, such as non-GAAP net income from continuing operations attributable to the Company's shareholders and non-GAAP basic and diluted net income from continuing operations per ADS and per share, as supplemental metrics for reviewing and evaluating its operating performance and formulating its business plan.. It should be noted that the presentation of non-GAAP financial measures should not be regarded as a substitute or to be viewed in isolation from the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). According to GAAP"
According to GAAP"
Non-GAAP net income from continuing operations attributable to the Company's shareholders is defined by NetEase as net income from continuing operations attributable to the Company's shareholders excluding share-based compensation expenses.. The non-GAAP net income attributable to NetEase's shareholders enables NetEase's management to assess its operating results without having to take into account the impact of share-based compensation costs on NetEase's results. As a result, NetEase believes that these non-GAAP financial measures provide investors with useful information in understanding and evaluating the Company's current operating performance and prospects in the same manner that management does, if they choose to do so.. Additionally, NetEase believes that the use of this non-GAAP financial measure facilitates the assessment of its operating performance by investors
Additionally, NetEase believes that the use of this non-GAAP financial measure facilitates the assessment of its operating performance by investors
In accordance with U.S. GAAP, non-GAAP financial measures are not defined. In addition, these figures are not based on GAAP and are not presented in accordance with U.S.. According to GAAP,. There are limitations to the use of non-GAAP financial measures as analytical tools. A key limitation of using non-GAAP net income from continuing operations attributable to the Company's shareholders as a measure of the profitability of the Company is the fact that it does not reflect all expenses and incomes that are associated with the company's operations.. It should be noted that share-based compensation expenses have been and may continue to be incurred in NetEase's business and are not reflected in NetEase's presentation of non-GAAP net income from continuing operations attributable to its shareholders that is derived from continuing operations.. It is also important to note that NetEase uses non-GAAP financial measures that may be different from the non-GAAP financial measures used by other companies, including peers, and as such their comparability may be limited.
It is also important to note that NetEase uses non-GAAP financial measures that may be different from the non-GAAP financial measures used by other companies, including peers, and as such their comparability may be limited.
Consequently, NetEase compensates for these limitations by reconciling its non-GAAP net income from continuing operations attributable to its shareholders with the closest U.S. GAAP performance measure, all of which must be taken into consideration when evaluating the performance of the Company. Please see the "Unaudited Reconciliation of GAAP and Non-GAAP Results" at the end of this announcement. NetEase encourages you to examine NetEase's financial information in its entirety rather than relying on a single financial measure. 
For media inquiries and investor inquiries, please contact the following person:
Margaret Shi E-mail address: [email protected] Telephone number: (+86) 571-8985-3378 Twitter: https://twitter.com/NetEase_Global
There is a company named Netease, Inc.
UNAUDITED FINANCIAL INFORMATION: NOTES TO THE FINANCIAL INFORMATION
As noted in the H.10 statistical release from the U.S. Federal Reserve Board, the conversion of Renminbi (RMB) into United States dollars (USD) was based on the noon buying rate of USD1.00 = RMB7.2960 as of the last trading day of September 2023 (September 29, 2023) as of the last trading day of September 2023. There is no representation made that the RMB amounts could have been converted into US dollars at that rate on September 29, 2023, or at any other specific date.
The share-based compensation costs that are reported in the Company's unaudited condensed consolidated statements of comprehensive income are presented in the following format in both RMB and USD (in thousands):
It is important to note that the financial information prepared and presented in this announcement may differ from those published and to be published by NetEase's listed subsidiaries to comply with the disclosure requirements under U.S. GAAP or different accounting standards.
Please note that the unaudited reconciliation of the GAAP results and the non-GAAP results is presented as follows in RMB and USD (in thousands, except for data per share or per ADS):
The source of this information is NetEase, Inc.
It was announced today that NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, hereinafter referred to as "NetEase" or the "Company"), one of the world's leading providers of internet and gaming services,...
The Internet and game services provider NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, hereinafter referred to as "NetEase" or the "Company") has announced its unaudited financial results for the quarter ended December 31, 2010. ...
Get PRN's top stories and curated news delivered to your inbox each week by signing up for our newsletter.

Source prnewswire