2021-11-16 19:24Financial 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]