2022-11-16 16:00Financial Performance - Net revenues for Q3 2022 were RMB 24.4 billion (US$ 3.4 billion), a 10.1% increase year-over-year[2] - Net revenues from games and related value-added services were RMB 18.7 billion (US$ 2.6 billion), up 9.1% compared to Q3 2021[2] - Cloud Music net revenues increased by 22.5% year-over-year to RMB 2.4 billion (US$ 331.4 million)[3] - Gross profit for Q3 2022 was RMB 13.7 billion (US$ 1.9 billion), reflecting a 16.4% increase year-over-year[3] - Net income attributable to shareholders was RMB 6.7 billion (US$ 941.8 million), compared to RMB 3.2 billion in Q3 2021[27] - Non-GAAP net income from continuing operations was RMB 7.5 billion (US$ 1.1 billion), up from RMB 3.9 billion in Q3 2021[28] - Basic net income per share was US$ 0.29, an increase from US$ 0.13 in Q3 2021[29] - Operating profit for the three months ended September 30, 2022, was RMB 4,741,776, a decrease of 4.2% compared to RMB 4,946,331 for the three months ended June 30, 2022[55] - Net income attributable to the Company's shareholders for the three months ended September 30, 2022, was RMB 6,699,364, an increase of 26.6% from RMB 5,291,476 in the previous quarter[55] - Basic net income per share for the three months ended September 30, 2022, was RMB 2.05, up from RMB 1.62 in the previous quarter[55] - The company reported a net income from continuing operations of RMB 6,699,364 for the three months ended September 30, 2022, compared to RMB 4,666,612 for the previous quarter[55] - The company’s net income from discontinued operations for the nine months ended September 30, 2022, was RMB 624,864, reflecting a consistent performance in this segment[55] - NetEase reported a net income of RMB 6,621,000 for the three months ended September 30, 2022, representing a 30.0% increase from RMB 5,096,835 in the previous quarter[58] - Non-GAAP net income from continuing operations attributable to the Company's shareholders for the nine months ended September 30, 2022, was RMB 17,997,055, a 36.5% increase from RMB 13,166,332 for the same period in 2021[66] - The net cash provided by operating activities for the three months ended September 30, 2022, was RMB 7,486,309, up from RMB 6,631,159 in the previous quarter, indicating a growth of 12.9%[58] Expenses and Costs - Total operating expenses rose to RMB 9.0 billion (US$ 1.3 billion), a 12.0% increase compared to Q3 2021[5] - Total operating expenses for the three months ended September 30, 2022, were RMB 9,002,116, an increase from RMB 7,995,160 in the previous quarter[55] - Research and development expenses for the three months ended September 30, 2022, amounted to RMB 3,969,156, compared to RMB 3,581,700 for the three months ended June 30, 2022[55] - The total cost of revenues for the three months ended September 30, 2022, was RMB 10,682,868, reflecting a 2.9% increase from RMB 10,379,981 in the same period of 2021[62] - The Company reported a share-based compensation cost of RMB 190,645 included in the cost of revenues for the three months ended September 30, 2022[65] Assets and Liabilities - As of September 30, 2022, total cash and cash equivalents were RMB 94.6 billion (US$ 13.3 billion), up from RMB 85.6 billion at the end of 2021[33] - Total current assets increased from RMB 113.1 billion on December 31, 2021, to RMB 131.6 billion on September 30, 2022[54] - Total assets rose from RMB 153.6 billion on December 31, 2021, to RMB 172.7 billion on September 30, 2022[54] - Total liabilities increased from RMB 54.2 billion on December 31, 2021, to RMB 63.1 billion on September 30, 2022[54] - NetEase's shareholders' equity grew from RMB 95.3 billion on December 31, 2021, to RMB 105.4 billion on September 30, 2022[54] Shareholder Actions - The Company announced a new share repurchase program of up to US$5.0 billion, effective for a period not to exceed 36 months[36] - As of September 30, 2022, approximately 27.0 million ADSs had been repurchased for a total cost of US$2.5 billion under the previous program[35] - NetEase purchased approximately 2.3 million ADSs of Youdao for a total cost of US$20.7 million as of September 30, 2022[37] - The Company also acquired approximately 0.7 million ordinary shares of Cloud Music for a total cost of US$6.9 million during Q3 2022[38] - The company paid dividends totaling RMB 1,617,574 to shareholders during the three months ended September 30, 2022, an increase from RMB 1,403,637 in the previous quarter[60] Market Outlook and Risks - Forward-looking statements indicate potential risks including market growth and regulatory changes that could impact operations and financial results[46] Other Financial Metrics - The company experienced a significant increase in exchange gains, reporting RMB 1,398,045 for the three months ended September 30, 2022, compared to RMB 865,283 in the previous quarter[55] - The total depreciation and amortization expense for the three months ended September 30, 2022, was RMB 713,852, compared to RMB 609,036 in the previous quarter, reflecting increased investment in assets[58] - The fair value changes of equity security investments resulted in a gain of RMB 680,019 for the three months ended September 30, 2022, down from RMB 735,159 in the previous quarter[58] - The company reported an allowance for expected credit losses of RMB 44,126 for the three months ended September 30, 2022, compared to RMB 10,965 in the previous quarter, indicating a rise in credit risk provisions[58] - Net cash used in financing activities for the three months ended September 30, 2022, was RMB 7,184,847, a decrease from RMB 14,894,466 in the previous quarter, showing improved cash management[60] - Net cash provided by investing activities for the three months ended September 30, 2022, was RMB 987,020, a recovery from a cash outflow of RMB 1,183,181 in the previous quarter[60] - The effect of exchange rate changes on cash and cash equivalents was a gain of RMB 3,470 for the three months ended September 30, 2022, compared to RMB 74,898 in the previous quarter[60] Segment Performance - The Company’s innovative businesses and others segment generated net revenues of RMB 1,967,972 for the three months ended September 30, 2022, up 13.5% from RMB 1,733,106 in the same period of 2021[62] - The Company achieved a gross profit margin of 14.2% for Cloud Music in the three months ended September 30, 2022, compared to 2.2% in the same period of 2021[62] - The gross profit margin for games and related value-added services improved to 65.0% for the three months ended September 30, 2022, compared to 61.3% in the same period of 2021[62] - The Company’s total net revenues for the nine months ended September 30, 2022, were RMB 71,141,680, an increase of 12.5% from RMB 63,232,461 for the same period in 2021[62]