Financial Performance - Total net revenues increased by 18.9% to RMB87,606.0 million (US$13,747.3 million) in 2021 from RMB73,667.1 million in 2020[339]. - Net income from continuing operations for the company was RMB16,976.2 million (US$2,663.9 million) in 2021, up from RMB12,330.2 million in 2020, reflecting a growth of about 37.5%[311]. - Revenue for the last quarter was $1.2 billion, representing a 15% increase compared to the previous quarter[243]. - Youdao segment revenues surged by 69.0% to RMB5,354.4 million (US$840.2 million) in 2021, mainly due to increased learning services and smart devices sales[341]. - Cloud Music revenues increased by 42.9% to RMB6,997.6 million (US$1,098.1 million) in 2021, attributed to growth in membership subscriptions and live streaming services[343]. - Total operating expenses for 2021 were RMB30.6 billion (US$4.8 billion), an increase from RMB24.4 billion in 2020[327]. - Research and development expenses surged by 35.7% to RMB14,076.0 million (US$2,208.8 million) in 2021, reflecting increased headcount and technology costs[351]. Game Services - Mobile games revenue accounted for 70.4% of net revenues from online game services in 2021[167]. - Online game services generated RMB62.8 billion (US$9.9 billion) in revenue for 2021, accounting for the largest segment of total revenues[319]. - The flagship titles continue to provide solid support for the online games business with persistent user loyalty[166]. - The company has launched over 50 mobile games in global markets since 2015, with notable successes in Japan, including "Knives Out," which topped Japan's iOS grossing chart multiple times in 2021[173]. - The first PC-based MMORPG, Westward Journey Online, was launched in December 2001, marking the beginning of the company's successful online game business[169]. Research and Development - The company has invested significantly in R&D, being recognized as one of the "Top Ten Game Research and Development Companies in China" in 2019[179]. - The proprietary game engines, NeoX and Messiah, have been optimized to support enhanced game features, contributing to the development of high-quality mobile games[183]. - The company plans to continue investing in proprietary technologies to enhance user experience and maintain competitive advantage[316]. - The company has established multiple game development studios to enhance its R&D capabilities and deliver popular titles to users[176]. User Engagement and Growth - The company reported a significant increase in user engagement, with a 25% year-over-year growth in active users, reaching 150 million[242]. - User retention rates improved to 85%, reflecting successful engagement strategies implemented in the last quarter[249]. - The company has a strong focus on user insights and execution expertise to incubate and develop in-house successful businesses[310]. Corporate Social Responsibility - In 2021, the company donated RMB 50 million for disaster relief efforts in Henan Province, supporting communities affected by severe flooding[218]. - The company has a commitment to corporate social responsibility, focusing on improving access to education and raising awareness of social issues through its platforms[218]. - The company emphasizes diversity and inclusion in its workforce, being recognized in the Bloomberg Gender-Equality Index for its commitment to gender equality[218]. Regulatory Environment - The company operates through contractual arrangements with VIEs to navigate legal restrictions on foreign investment in certain sectors in China[160]. - The PRC government has indicated an intent to exert more oversight over overseas securities offerings, which may require the company to obtain additional approvals in the future[234]. - The company is subject to extensive regulations in the telecommunications sector, requiring an operating license for value-added telecommunications services[238]. - The implementation of the 2019 PRC Foreign Investment Law may require foreign invested enterprises to adjust their structure and corporate governance after five years[237]. Marketing and Brand Strategy - The company employs a variety of online and traditional marketing strategies to build brand awareness and grow its user base[208]. - The company plans to increase its marketing budget by 20% to support the launch of new products and enhance brand visibility[250]. Future Outlook - The company has set a target to expand its market presence by entering three new countries by the end of 2024, aiming for a 10% market share in each[244]. - New product launches are expected to contribute an additional $300 million in revenue over the next fiscal year[245]. - A recent acquisition of a smaller tech firm is projected to enhance the company's capabilities and add $200 million in annual revenue[247].

NetEase, Inc. (NASDAQ:NTES) Q4 2021 Earnings Conference Call February 24, 2022 7:00 AM ET Company Participants Margaret Shi – Director-Investor Relations William Ding – Chief Executive Officer Charles Yang – Chief Financial Officer Conference Call Participants Jialong Shi – Nomura Kenneth Fong – Credit Suisse Alicia Yap – Citi Natalie Wu – Haitong International Thomas Chong – Jefferies Alex Poon – Morgan Stanley Guanran Wang – CITIC Operator Good day, and welcome to the NetEase 2021 Fourth Quarter And Full ...

Financial Data and Key Metrics Changes - Total net revenues for Q3 2021 were RMB 22.2 billion, representing a 19% increase year-over-year [29] - Net revenues from online games services were RMB 15.9 billion, up 15% year-over-year [30] - Gross profit margin for total revenues was 53.2%, with online games services at 64.5% [31][32] - Non-GAAP net income attributable to shareholders for Q3 totaled RMB 3.9 billion, or $599 million [34] Business Line Data and Key Metrics Changes - Revenues from Youdao reached RMB 1.4 billion, up 55% year-over-year, driven by growth in intelligence learning devices and services [30][32] - Innovative businesses and others generated RMB 4.9 billion, up 26% year-over-year, mainly due to contributions from NetEase Cloud Music [31] - Mobile games accounted for approximately 69% of total net revenues from online game services [30] Market Data and Key Metrics Changes - NARAKA: BLADEPOINT sold over 6 million copies worldwide within four months, showcasing strong global market performance [9][10] - Harry Potter: Magic Awakened dominated download charts in China following its launch, indicating strong market reception [11][12] Company Strategy and Development Direction - The company plans to expand its game offerings to console and mobile platforms, with a focus on maintaining user engagement through continuous content updates [10][16] - Strategic investments and partnerships are being pursued to enhance R&D capabilities and expand the company's global footprint [15] - The company is transitioning Youdao's business to align with regulatory guidelines, focusing on STEM courses and digital optimization solutions [18] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the global launch of Harry Potter: Magic Awakened, anticipating strong performance based on its success in China [38] - Concerns were raised about competition from short video platforms affecting user engagement in Cloud Music, but management emphasized the unique value of music [40][41] - The company is prepared for future opportunities in the metaverse, indicating readiness to leverage technology and skills as the market evolves [56][57] Other Important Information - The company has approved a dividend of US$0.045 per share, reflecting a commitment to returning value to shareholders [35] - NetEase has donated over $50 million to support disaster relief efforts, highlighting its commitment to social responsibility [27][28] Q&A Session Summary Question: Timeline for Harry Potter overseas release and revenue expectations - Management indicated plans to launch Harry Potter in overseas markets as early as the first half of next year, with expectations for strong performance based on its success in China [38] Question: Competitive landscape for NetEase Cloud Music - Management acknowledged the impact of short video platforms on user time spent but emphasized the immersive experience of music, which retains user engagement [40][41] Question: Revenue contribution from NARAKA: BLADEPOINT - Management confirmed that revenue recognition for both game sales and in-app purchases follows a deferral treatment, with confidence in the game's longevity and sustainability [44] Question: M&A strategies and operating expenses - Management stated a focus on core business pillars while remaining open to opportunistic M&A, emphasizing a disciplined approach to spending and ROI-driven investments [51][52]

NetEase, Inc. (NASDAQ:NTES) Q2 2021 Earnings Conference Call August 31, 2021 8:00 PM ET Company Participants Margaret Shi – IR Director of NetEase William Ding – Chief Executive Officer Charles Yang – Chief Financial Officer Conference Call Participants Alex Yao – JP Morgan Kenneth Fong – Credit Suisse Alex Poon – Morgan Stanley Natalie Wu – Haitong International Thomas Chong – Jefferies Eddie Leung – Bank of America Merrill Lynch Operator Good day and welcome to the NetEase 2021 Second Quarter Earnings Con ...

Financial Performance - NetEase reported Q2 2021 net revenue of RMB 20.5 billion (USD 3.18 billion), a year-over-year increase of 12.9%[5] - Online gaming services net revenue reached RMB 14.5 billion (USD 2.25 billion), up 5.1% year-over-year[5] - Youdao net revenue was RMB 1.3 billion (USD 200.3 million), showing a significant increase of 107.5% year-over-year[5] - Gross profit for Q2 2021 was RMB 11.2 billion (USD 1.73 billion), reflecting a year-over-year growth of 14.3%[5] - In Q2 2021, the net profit attributable to shareholders was RMB 3,541.8 million (USD 548.5 million), down from RMB 4,439.2 million in the previous quarter and RMB 4,537.8 million in the same quarter last year[14] - The non-GAAP net profit attributable to shareholders for Q2 2021 was RMB 4,227.9 million (USD 654.8 million), compared to RMB 5,080.7 million in the previous quarter and RMB 5,226.0 million in the same quarter last year[15] - The basic earnings per share for Q2 2021 was USD 0.16, down from USD 0.21 in the previous quarter and USD 0.22 in the same quarter last year[15] - Net profit for the three months ended June 30, 2021, was RMB 4,651,280, showing an increase compared to RMB 3,476,364 for the same period in 2020[31] - The company reported a net profit attributable to shareholders of RMB 4,227,865 thousand for the three months ended June 30, 2021, compared to RMB 3,541,754 thousand for the same period in 2020, representing a year-over-year increase of 19.4%[34] Operating Expenses - Operating expenses totaled RMB 7.4 billion (USD 1.15 billion), a year-over-year increase of 32.2%[11] - Total operating expenses for the six months ended June 30, 2021, were RMB 14,208,554, an increase from RMB 10,513,479 in the same period of 2020, reflecting a rise of approximately 35.5%[30] Cash Flow and Investments - As of June 30, 2021, the company's cash and cash equivalents totaled RMB 108 billion (USD 16.7 billion), an increase from RMB 100.1 billion as of December 31, 2020[17] - The net cash inflow from operating activities for Q2 2021 was RMB 4.7 billion (USD 731.5 million), down from RMB 5.5 billion in the previous quarter[17] - The company reported a net cash outflow from investing activities of RMB 22,735,348 for the six months ended June 30, 2021[31] - The net cash inflow from financing activities was RMB 18,784,780 for the six months ended June 30, 2021[31] Market and Product Developments - The flagship game "Naraka: Bladepoint" topped the Steam sales chart after its global launch in August[6] - Upcoming mobile game "Harry Potter: Magic Awakened" is set to launch on September 9, 2021[7] - NetEase's CEO expressed excitement about the upcoming product launches, which are expected to strengthen the company's leading position in the gaming industry[6] - The company has expanded its business into international markets, including Japan and North America, and continues to develop popular online games and services[22] - The company plans to continue expanding its market presence and investing in new technologies and products to drive future growth[32] Regulatory and Market Risks - The company is expected to be significantly impacted by regulatory changes in the K-12 education sector in China, although the extent of the impact remains uncertain[18] - The company faces risks related to market growth, regulatory changes, and competition in the online gaming sector, which could impact future performance[24] Financial Metrics and Ratios - The effective tax rate for Q2 2021 was 24.3%, an increase from 22.0% in the previous quarter and 18.6% in the same quarter last year[13] - The company emphasizes the importance of non-GAAP financial metrics for investors to assess operational performance and future prospects[26] - Net income attributable to shareholders under non-GAAP was defined as net income excluding stock-based compensation expenses, providing a clearer view of operational performance[25] Assets and Liabilities - Total assets increased from RMB 141.87 billion in 2020 to RMB 154.86 billion in 2021, reflecting a growth of approximately 9%[28] - Current assets totaled RMB 115.96 billion as of June 30, 2021, up from RMB 107.83 billion in 2020, indicating an increase of about 7%[28] - Total liabilities rose from RMB 48.08 billion in 2020 to RMB 56.34 billion in 2021, representing an increase of approximately 17%[29] - The company reported a total equity attributable to shareholders of RMB 86.14 billion as of June 30, 2021, up from RMB 82.13 billion in 2020, reflecting an increase of about 5%[29] Research and Development - The company’s research and development expenses for the three months ended June 30, 2021, were RMB 217,766 thousand, slightly up from RMB 212,369 thousand for the same period in 2020[33]