2024-05-23 08:44Financial Performance - NetEase reported a net income attributable to shareholders of RMB7.6 billion (US$1.1 billion) for Q1 2024, an increase from RMB6.6 billion in the previous quarter and RMB6.8 billion in Q1 2023[14]. - Non-GAAP net income attributable to shareholders was RMB8.5 billion (US$1.2 billion) for Q1 2024, compared to RMB7.4 billion in the previous quarter and RMB7.6 billion in Q1 2023[14]. - Basic net income per share for Q1 2024 was US$0.33 (US$1.65 per ADS), compared to US$0.28 (US$1.42 per ADS) in the previous quarter and US$0.29 (US$1.45 per ADS) in Q1 2023[14]. - Net income attributable to shareholders was RMB 7.6 billion (US$ 1.1 billion), with non-GAAP net income at RMB 8.5 billion (US$ 1.2 billion)[21]. - The non-GAAP net income attributable to shareholders for the current period was RMB 8,510,844, reflecting a year-over-year growth of 12.5% from RMB 7,566,234[49]. - Basic non-GAAP net income per share increased to RMB 2.65, up from RMB 2.35 in the previous year, representing a growth of 12.8%[49]. - Diluted non-GAAP net income per ADS rose to RMB 13.25, compared to RMB 11.74 in the same quarter last year, marking a 12.9% increase[49]. Revenue and Profitability - Net revenues for Q1 2024 were RMB 26.9 billion (US$ 3.7 billion), a 7.2% increase year-over-year[21]. - Gross profit for Q1 2024 was RMB 17.0 billion (US$ 2.4 billion), reflecting a 14.2% increase from the previous year[21]. - The gross profit margin for games and related services was 69.5% in Q1 2024, consistent with the previous quarter and up from 66.7% in Q1 2023[3]. - The gross profit margin for Cloud Music improved to 38.0% in Q1 2024, up from 30.3% in the previous quarter and 22.4% in Q1 2023[3]. - Mobile games accounted for approximately 78.6% of net revenues from online games in Q1 2024, up from 72.3% in Q1 2023[22]. Operating Expenses and Cash Flow - Total operating expenses for Q1 2024 were RMB9.4 billion (US$1.3 billion), down from RMB10.0 billion in the previous quarter and up from RMB7.7 billion in Q1 2023[13]. - Cash flows from operating activities were RMB9.6 billion (US$1.3 billion) for Q1 2024, compared to RMB11.8 billion in the previous quarter and RMB6.0 billion in Q1 2023[14]. - The company incurred share-based compensation costs of RMB 894,300 for the three months ended March 31, 2024, compared to RMB 812,987 in the previous quarter[37]. - Net cash provided by operating activities was RMB 9,557,169 for the three months ended March 31, 2024[37]. - Net cash used in investing activities amounted to RMB 12,859,889 for the same period, a significant increase compared to RMB 10,724,675 in the previous quarter[37]. - Net cash provided by financing activities was RMB 572,429 for the three months ended March 31, 2024, compared to RMB 5,139,264 in the previous quarter[37]. Strategic Focus and Market Position - The company remains focused on innovation and market expansion, particularly through its subsidiaries Cloud Music and Youdao, aiming to enhance user experiences and create value[2]. - The company anticipates continued growth in the online games market, although it acknowledges potential risks that could impact its market position[44]. - NetEase is focused on developing new online services and maintaining its competitive edge in the industry[44]. - The company is also exploring international expansion opportunities to enhance its business operations[44]. - Management highlighted the importance of addressing cybersecurity threats as part of their operational strategy[44]. Other Financial Metrics - The effective tax rate for Q1 2024 was 16.0%, compared to 13.8% in the previous quarter and 19.5% in Q1 2023[4]. - As of March 31, 2024, NetEase's net cash totaled RMB113.4 billion (US$15.7 billion), an increase from RMB110.9 billion as of December 31, 2023[14]. - The board of directors approved a dividend of US$0.0990 per share for the first quarter of 2024, payable on or around June 21, 2024[43]. - NetEase's cash, cash equivalents, and restricted cash at the end of the period were RMB 46,085,520[37]. - The company experienced an unrealized exchange loss of RMB (17,509) for the three months ended March 31, 2024[37]. - Fluctuations in the value of the Renminbi against other currencies may pose risks to NetEase's financial results[44].