NetEase.com Reports Third Quarter 2009 Unaudited Financial Results
"Fantasy Westward Journey delivered an outstanding performance highlight for the quarter with record peak concurrent users of 2.5 million on August 2, 2009, which is a clear testament to the ongoing popularity and longevity of this iconic game," stated William Ding, Chief Executive Officer and Director of NetEase. "Our strong and talented research and development team continually provide superior gaming experiences to the growing dynamic user community in China and we believe that this is the key to the long-standing success of Fantasy Westward Journey and our other leading self-developed games. On September 19, 2009, our affiliated company, Shanghai EaseNet, commenced the commercial operation in China of the World of Warcraft(R), a game licensed from Blizzard Entertainment, after receiving necessary approvals from appropriate government authorities, with huge player response. As previously announced, there is some regulatory uncertainty regarding World of Warcraft following an announcement by the PRC General Administration of Press and Publication (GAPP). We are currently seeking clarification from the relevant governmental authorities regarding this statement by GAPP and look forward to a speedy resolution from the government authorities. Separately, in September 2009, we conducted a month- long marketing and sales campaign for the much-anticipated open beta launch of Tianxia II. The open beta results met our targets in terms of both the number of players and paid users, and we are optimistic about the future growth of this game. We plan to release four expansion packs for Legend of Westward Journey, Tianxia II, New Fly for Fun and Transformer Online during the fourth quarter of 2009."
"We are also focusing on developing new high-quality games that will further diversify our user base and enhance the popularity of our game portfolio. We expect to commercialize two new item-based games, Ghost and Heroes of Tang Dynasty in December 2009. Ghost is our new 3D online game based on "Liao-chai chih-I", which are a collection of the classic Chinese ghost stories. With the beautiful music and vivid scene setting as well as rigorous fighting modes in the game, players can experience life and death, love and anger as well as revenge and other emotions in the human world, heaven and hell," Mr. Ding continued.
"With regard to our advertising business, our recent consolidation of the portal business operations in Beijing and other new marketing strategies launched in the beginning of the year began to deliver promising results despite the fact that the overall economy in China remained cautiously optimistic during the third quarter. We achieved sequential quarter-over-quarter gains in terms of both the number of active advertisers and sales revenue during the third quarter of 2009 and remain cautiously optimistic about the course of our advertising business through the remainder of 2009 and into 2010."
"With an eventful game pipeline as well as new service introductions in email, blog and search, we are confident in maintaining our market-leading position in the Chinese MMORPG market and accelerating our position as a portal of choice for the dynamic and growing user community across China," Mr. Ding concluded.
Third Quarter 2009 Financial Results
Revenues
Total revenues for the third quarter of 2009 were RMB879.4 million (US$128.8 million), compared to RMB872.1 million (US$127.8 million) and RMB806.6 million (US$118.2 million) for the preceding quarter and the third quarter of 2008, respectively.
Revenues from online games were RMB775.1 million (US$113.6 million) for the third quarter of 2009, compared to RMB781.5 million (US$114.5 million) and RMB675.1 million (US$98.9 million) for the preceding quarter and the third quarter of 2008, respectively.
Revenues from advertising services were RMB86.0 million (US$12.6 million) for the third quarter of 2009, compared to RMB72.8 million (US$10.7 million) and RMB113.0 million (US$16.6 million) for the preceding quarter and the third quarter of 2008, respectively.
Revenues from wireless value-added services and others, or WVAS and others, were RMB18.3 million (US$2.7 million) for the third quarter of 2009, compared to RMB17.8 million (US$2.6 million) and RMB18.5 million (US$2.7 million) for the preceding quarter and the third quarter of 2008, respectively.
Gross Profit
Gross profit for the third quarter of 2009 was RMB627.0 million (US$91.9 million), compared to RMB691.9 million (US$101.4 million) and RMB631.3 million (US$92.5 million) for the preceding quarter and the third quarter of 2008, respectively. The quarter-over-quarter decrease in gross profit was primarily attributable to the additional cost of revenues incurred for the ramp-up and operation of the licensed game, World of Warcraft, mainly comprising of server depreciation charges, custody fees and royalties, which was partially offset by increased advertising revenues in the third quarter of 2009.
The year-over-year decrease in gross profit was primarily attributable to the significant increase in cost of revenues incurred for the ramp-up and operation of World of Warcraft as detailed above and decreased advertising revenue, partially offset by increased game revenue in the third quarter of 2009. Lower advertising revenue was reported for the third quarter of 2009 as the 2008 Olympic-effect ceased. Higher game revenue was reported for the third quarter of 2009 mainly due to the continued popularity of the Company's self-developed games during the summer holidays as well as the commercialization of World of Warcraft on September 19, 2009.
Gross Profit (Loss) Margin
Gross profit margin for the online game business for the third quarter of 2009 was 79.9%, compared to 88.3% and 89.7% for the preceding quarter and the third quarter of 2008, respectively. The quarter-over-quarter and year-over-year decreases in gross profit margin were primarily attributable to the additional cost of revenues incurred for the ramp-up and operation of World of Warcraft in the third quarter of 2009.
Gross profit margin for the advertising business for the third quarter of 2009 was 23.1%, compared to 16.6% and 26.9% for the preceding quarter and the third quarter of 2008, respectively. The quarter-over-quarter increase in gross profit margin was mainly attributable to the sequential increase in revenue during the third quarter of 2009. The recently completed consolidation of the Company's portal business operations in Beijing and certain new market development initiatives conducted since the beginning of 2009 have allowed the Company to strengthen its market competitiveness, resulting in a steady growth in both the number of advertisers and sales revenue amid an uncertain economic environment. The year-over- year decrease in gross profit margin was mainly attributable to the decrease in revenue in the third quarter of 2009 as the 2008 Olympic- effect ceased.
Gross loss margin for the WVAS and others business for the third quarter of 2009 was 45.0%, compared to 43.0% and 6.4% for the preceding quarter and the third quarter of 2008, respectively. The quarter-over-quarter and year-over-year increases in gross loss margin were mainly due to increased bandwidth and server custody fees resulting from increased traffic for email and photo blog services, as well as increased staff-related costs resulting from increased headcount in the third quarter of 2009.
Operating Expenses
Total operating expenses for the third quarter of 2009 were RMB218.9 million (US$32.1 million), compared to RMB174.8 million (US$25.6 million) and RMB164.6 million (US$24.1 million) for the preceding quarter and the third quarter of 2008, respectively. The quarter-over-quarter and year-over-year increases in operating expenses were mainly due to the nationwide promotion activities conducted for many of our self-developed games during the summer holiday season and the relaunch of World of Warcraft in September 2009 along with increased advertising media and exhibition costs to promote the Company's portal business during the third quarter of 2009. We also recorded quarter-over-quarter and year-over-year increases in research and development costs during the third quarter of 2009, mainly resulting from increased headcount and increased server custody fee and bandwidth charges related to our research and development activities.
Net Profit
Net profit for the third quarter of 2009 totaled RMB393.8 million (US$57.7 million), compared to RMB468.1 million (US$68.6 million) and RMB313.3 million (US$45.9 million) for the preceding quarter and the third quarter of 2008, respectively. During the current quarter, the Company reported a net foreign exchange gain of RMB25.3 million (US$3.7 million) under Other, net, compared to RMB47.2 million (US$6.9 million) for the preceding quarter and a net foreign exchange loss of RMB68.3 million (US$10.0 million) for the third quarter of 2008. The quarter-over-quarter and year-over-year changes in foreign exchange gains/losses were mainly due to the translation gains/losses arising from the Company's Euro-denominated bank deposit balances as of September 30, 2009 as the exchange rate of the Euro against the RMB fluctuated over the periods. NetEase reported basic and diluted earnings per American depositary share, or ADS of US$0.45 and US$0.44, respectively for the third quarter of 2009. The Company reported basic and diluted earnings per ADS of US$0.53 each for the preceding quarter, and US$0.36 and US$0.35, respectively for the third quarter of 2008.
Income Taxes
The Company recorded income tax charge of RMB65.5 million (US$9.6 million), RMB115.4 million (US$16.9 million) and RMB125.7 million (US$18.4 million) for the current quarter, the preceding quarter and the third quarter of 2008, respectively. The effective tax rate for the third quarter of 2009 was 14.3% as compared to 19.8% and 28.6% for the preceding quarter and the third quarter of 2008, respectively. The quarter-over-quarter decrease in tax charge was primarily due to the payment of an extra tax charge of RMB38.5 million (US$5.6 million) recorded in June 2009 related to the tax assessment of 2008 and the first quarter of 2009 by one of the Company's subsidiaries. The year-over-year decrease in tax charge was primarily due to the application of the statutory tax rate of 25% on the income of the Company's subsidiaries in the third quarter of 2008 as approval for the preferred tax status of High and New Technology Enterprises was not received until December 2008.
Other Information
As of September 30, 2009, the Company's cash and time deposits totaled RMB6.4 billion (US$939.1 million), compared to RMB5.6 billion (US$822.3 million) as of December 31, 2008. In addition, the Company had a restricted cash balance of RMB82.0 million (US$12.0 million), representing a security deposit placed with a court in Guangzhou, China during the second quarter of 2009 in connection with certain arbitration proceedings against the property developer of an office building located in Guangzhou, China, which is occupied by the Company.
Cash flows generated from operating activities totaled RMB270.0 million (US$39.5 million) for the third quarter of 2009, compared to RMB544.4 million (US$79.7 million) and RMB495.5 million (US$72.6 million) for the preceding quarter and the third quarter of 2008, respectively.
On September 12, 2008, the Company's Board authorized a share repurchase program of up to US$100 million of the Company's outstanding ADSs for a period not to exceed one year. As of September 11, 2009 when the share repurchase program ended, the Company had spent in aggregate a total purchase consideration of approximately US$13.1 million (including transaction costs).
** The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from RMB into United States dollars for the convenience of the reader were calculated at the noon buying rate of US$1.00 = RMB6.8262 on September 30, 2009 in The City of New York for the cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on September 30, 2009, or at any other certain date. The percentages stated are calculated based on RMB.
Conference Call
NetEase's management team will host a conference call at 8:00 p.m. Eastern Time on Wednesday, November 18, 2009 (Beijing/Hong Kong Time: 9:00 a.m., Thursday, November 19, 2009). NetEase's management will be on the call to discuss the quarterly results and answer questions.
Interested parties may participate in the conference call by dialing 877-941-1427 (international: 480-629-9664), 10-15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 800-406-7325 (international 303-590-3030), and entering passcode 4175189. The replay will be available through December 2, 2009.
This call is being webcast live and the replay will be available for 12 months. Both will be available on NetEase's corporate web site at corp.netease.com , Investor Info: Earnings Call.
About NetEase
NetEase.com, Inc. is a leading China-based Internet technology company that pioneered the development of applications, services and other technologies for the Internet in China. NetEase's online communities and personalized premium services have established a large and stable user base for the NetEase websites which are operated by its affiliates. In particular, NetEase provides online game services to Internet users through the in-house development or licensing of massively multi-player online role-playing games, including Fantasy Westward Journey, Westward Journey Online II, Westward Journey Online III, Tianxia II and Datang, as well as the licensed game, Blizzard Entertainment's World of Warcraft.
NetEase also offers online advertising on its websites which enables advertisers to reach its substantial user base. In addition, NetEase has paid listings on its search engine and web directory and classified advertising services, as well as an online mall, which provides opportunities for e-commerce and traditional businesses to establish their own storefront on the Internet. NetEase also offers wireless value-added services such as news and information content, matchmaking services, music and photos from the Web which are sent over SMS, MMS, WAP, IVR and Color Ring-back Tone technologies.
Other community services which the NetEase websites offer include instant messaging, online personal advertisements, matchmaking, alumni clubs and community forums. NetEase is also the largest provider of free email services in China. Furthermore, the NetEase websites provide various channels of content. NetEase aggregates news content on world events, sports, science and technology, and financial markets, as well as entertainment content such as cartoons, games, astrology and jokes, from over one hundred international and domestic content providers.
This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. 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 NetEase will not be successful in its product diversification efforts, including its focus on item- and fee-based games and entry into strategic licensing arrangements; the risk that the online game market will not continue to grow or that NetEase will not be able to maintain its leading position in that market, which could occur if, for example, its new online games or expansion packs and other improvements to its existing games do not become as popular as management anticipates; the ability of NetEase to effectively market its games and other services and achieve a positive return on its marketing expenditures; the risk that Shanghai EaseNet will not be able to continue operating World of Warcraft or other games licensed by it for a period of time or permanently due to the position of GAPP or other governmental actions; the risk that Shanghai EaseNet or NetEase will be subject to penalties or operating restrictions imposed by governmental authorities in the PRC resulting from the operations of their online games, including suspension of their Internet service or other penalties; the risk that changes in Chinese government regulation of the online game market may limit future growth of NetEase's revenue or cause revenue to decline; the risk that NetEase may not be able to continuously develop new and creative online services; the risk that NetEase will not be able to control its expenses in future periods; competition in NetEase's existing and potential markets; governmental uncertainties (including possible changes in the effective tax rates applicable to NetEase and its subsidiaries and affiliates and the ability of NetEase to receive and maintain approvals of the preferential tax treatments and general competition and price pressures in the marketplace); the risk that the online advertising industry in China will continue to be adversely affected by the recent global economic slowdown or other factors beyond NetEase's control; the risk that fluctuations in the value of the Renminbi with respect to other currencies could adversely affect NetEase's business and financial results; and other risks outlined in NetEase's filings with the Securities and Exchange Commission. NetEase does not undertake any obligation to update this forward- looking information, except as required under the applicable law.
NETEASE.COM, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
__ December 31,__ September 30,__ September 30,
__ 2008__ 2009__ 2009
__ RMB__ RMB__ USD (Note 1)
Assets
Current assets:
Cash__ 793,407,922__ 1,356,305,421__ 198,691,134
Time deposits__ 4,820,000,100__ 5,054,114,507__ 740,399,418
Accounts receivable, net__ 231,030,576__ 117,489,521__ 17,211,556
Prepayments and other
current assets__ 104,092,051__ 446,902,146__ 65,468,657
Deferred tax assets__ 25,248,842__ 53,526,961__ 7,841,399
Total current assets__ 5,973,779,491__ 7,028,338,556__ 1,029,612,164
Non-current assets:
Non-current rental
deposits__ 3,443,249__ 3,979,450__ 582,967
Property, equipment and
software, net__ 258,787,534__ 531,139,240__ 77,808,919
Land use right, net__ 12,563,485__ 12,369,537__ 1,812,068
License right, net__ 27,463,600__ 230,006,833__ 33,694,711
Deferred tax assets__ 12,444,636__ 10,528,058__ 1,542,301
Restricted cash__ -- 82,000,000__ 12,012,540
Other long-term assets__ 57,411,308__ 48,087,530__ 7,044,553
Total non-current assets__ 372,113,812__ 918,110,648__ 134,498,059
Total assets__ 6,345,893,303__ 7,946,449,204__ 1,164,110,223
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable__ 119,829,878__ 173,018,710__ 25,346,270
Salary and welfare
payables__ 94,922,963__ 63,842,731__ 9,352,602
Taxes payable__ 104,754,356__ 162,096,012__ 23,746,156
Deferred revenue__ 447,725,795__ 566,510,800__ 82,990,654
Accrued liabilities__ 61,815,070__ 122,386,948__ 17,929,001
Total current liabilities__ 829,048,062__ 1,087,855,201__ 159,364,683
Long-term payable:
Other long-term payable__ 200,000__ 200,000__ 29,299
Total long-term payable__ 200,000__ 200,000__ 29,299
Total liabilities__ 829,248,062__ 1,088,055,201__ 159,393,982
Shareholders' equity__ 5,516,645,241__ 6,858,394,003__ 1,004,716,241
Total liabilities and
shareholders' equity__ 6,345,893,303__ 7,946,449,204__ 1,164,110,223
The accompanying notes are an integral part of this press release.
NETEASE.COM, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter Ended
__ September 30,__ June 30,__ September 30,__ September 30,
__ 2008__ 2009__ 2009__ 2009
__ RMB__ RMB__ RMB__ USD (Note 1)
Revenues:
Online game
services__ 675,127,723__ 781,482,693__ 775,141,663__ 113,553,905
Advertising
services__ 113,005,479__ 72,801,803__ 86,049,485__ 12,605,767
Wireless
value-added
services
and others__ 18,477,994__ 17,823,767__ 18,257,187__ 2,674,575
Total revenues__ 806,611,196__ 872,108,263__ 879,448,335__ 128,834,247
Business taxes__ (10,641,607)__ (9,018,646)__ (11,421,825)__ (1,673,233)
Total net
revenues__ 795,969,589__ 863,089,617__ 868,026,510__ 127,161,014
Total cost of
revenues__ (164,696,351)__ (171,209,882)__ (241,003,866)__ (35,305,714)
Gross profit__ 631,273,238__ 691,879,735__ 627,022,644__ 91,855,300
Operating
expenses:
Selling and
marketing
expenses__ (62,505,815)__ (68,323,402)__ (102,694,671)__ (15,044,193)
General and
administrative
expenses__ (48,810,235)__ (52,671,504)__ (53,406,612)__ (7,823,769)
Research and
development
expenses__ (53,322,288)__ (53,812,664)__ (62,783,771)__ (9,197,470)
Total
operating
expenses__ (164,638,338)__ (174,807,570)__ (218,885,054)__ (32,065,432)
Operating
profit__ 466,634,900__ 517,072,165__ 408,137,590__ 59,789,868
Other income
(expenses):
Investment
income__ 1,202,091__ 84,794__ 82,497__ 12,085
Interest
income__ 39,704,670__ 33,086,968__ 29,775,123__ 4,361,888
Other, net__ (68,543,630)__ 33,227,641__ 21,344,811__ 3,126,895
Net income
before tax__ 438,998,031__ 583,471,568__ 459,340,021__ 67,290,736
Income tax__ (125,687,666)__ (115,383,256)__ (65,544,656)__ (9,601,924)
Net income
after tax__ 313,310,365__ 468,088,312__ 393,795,365__ 57,688,812
Add: Net loss
attributable
to non-
controlling
interest__ 2,235__ 30,515__ 34,189__ 5,008
Net income
attributable
to the
Company's
shareholders__ 313,312,600__ 468,118,827__ 393,829,554__ 57,693,820
Earnings per
share, basic__ 0.10__ 0.15__ 0.12__ 0.02
Earnings per
ADS, basic__ 2.45__ 3.64__ 3.04__ 0.45
Earnings per
share,
diluted__ 0.10__ 0.14__ 0.12__ 0.02
Earnings per
ADS, diluted__ 2.42__ 3.60__ 3.02__ 0.44
Weighted average
number of
ordinary shares
outstanding,
basic__ 3,199,978,057__ 3,219,247,705__ 3,236,059,232__ 3,236,059,232
Weighted
average
number of ADS
outstanding,
basic__ 127,999,122__ 128,769,908__ 129,442,369__ 129,442,369
Weighted average
number of
ordinary shares
outstanding,
diluted__ 3,240,451,297__ 3,250,458,685__ 3,260,784,175__ 3,260,784,175
Weighted average
number of ADS
outstanding,
diluted__ 129,618,052__ 130,018,347__ 130,431,367__ 130,431,367
The accompanying notes are an integral part of this press release.
NETEASE.COM, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Quarter Ended
__ September 30,__ June 30,__ September 30,__ September 30,
__ 2008__ 2009__ 2009__ 2009
__ RMB__ RMB__ RMB__ USD (Note 1)
Cash flows
from operating
activities:
Net income__ 313,310,365__ 468,088,312__ 393,795,365__ 57,688,812
Adjustments
to reconcile
net profit
to net cash
provided by
operating
activities:
Depreciation
and
amortization__ 22,478,837__ 20,464,224__ 42,479,635__ 6,223,028
Share-based
compensation
cost__ 16,117,448__ 8,787,730__ 6,008,286__ 880,180
Allowance for
provision
for doubtful
debts__ 9,458,347__ 4,190,088__ 4,148,839__ 607,782
Loss on
disposal of
property,
equipment
and software__ 581,041__ 2,858,440__ 446,393__ 65,394
Unrealized
exchange
losses
(gains)__ 68,605,629__ (47,200,756)__ (25,338,559)__ (3,711,957)
Net equity
share of
loss from
associated
companies__ 1,268,384__ 1,934,915__ 1,285,489__ 188,317
Others__ (7,292)__ -- 13,371__ 1,959
Changes in
operating
assets and
liabilities:
Accounts
receivable__ (33,769,360)__ (24,854,994)__ 12,044,441__ 1,764,443
Prepayments
and other
current
assets__ (6,234,669)__ (56,041,033)__ (248,662,365)__ (36,427,642)
Deferred
tax assets__ 24,151,981__ 1,131,023__ (12,249,742)__ (1,794,518)
Deferred
tax assets -
non-current__ 347,875__ 593,254__ 1,512,981__ 221,643
Accounts
payable__ 57,055,571__ 123,575,583__ (51,039,399)__ (7,476,986)
Salary and
welfare
payables__ (12,943,811)__ 22,036,053__ (15,600,191)__ (2,285,340)
Taxes
payable__ (1,129,914)__ 36,606,707__ (8,467,595)__ (1,240,455)
Deferred
revenue__ 37,929,704__ (29,402,088)__ 141,140,067__ 20,676,228
Accrued
liabilities__ (1,709,862)__ 11,612,178__ 28,448,084__ 4,167,485
Net cash
provided by
operating
activities__ 495,510,274__ 544,379,636__ 269,965,100__ 39,548,373
Cash flows from
investing
activities:
Purchase of
property,
equipment
and
software__ (49,664,942)__ (239,465,882)__ (91,139,494)__ (13,351,425)
Proceeds from
sale of
property,
equipment
and software__ 150,070__ 5,373__ 89,019__ 13,041
Purchase of
license
right__ (27,463,600)__ (204,819,000)__ -- --
Investment
in an
associated
company__ (31,000,000)__ -- (4,207,050)__ (616,309)
Net change
in time
deposits
with terms
of three
months__ (932,958,372)__ 327,669,991__ (95,918,953)__ (14,051,588)
Placement/
rollover
of matured
time
deposits__ (1,290,712,014)__ (149,337,445)__ (1,511,411,788)__ (221,413,347)
Uplift of
matured
time
deposits__ 445,500,062__ 171,181,813__ 1,494,799,368__ 218,979,720
Net change
in other
assets__ 668,111__ (1,421,647)__ (824,101)__ (120,726)
Net cash
used in
investing
active-
ties__ (1,885,480,685)__ (96,186,797)__ (208,612,999)__ (30,560,634)
Cash flows
from
financing
activities:
Capital
contribution
from non-
controlling
interest__ 2,710__ -- 2,602__ 381
Proceeds from
employees
exercising
stock
options__ 16,009,885__ 35,022,839__ 944__ 138
Repurchase of
company
shares__ (424,438)__ -- -- --
Payment of
other
long-term
payable__ (10,000,000)__ -- -- --
Net cash
provided
by financing
activities__ 5,588,157__ 35,022,839__ 3,546__ 519
Effect of
exchange
rate changes
on cash held
in foreign
currencies__ (29,719,910)__ 6,686,473__ 12,850,834__ 1,882,575
Net increase
(decrease)
in cash__ (1,414,102,164)__ 489,902,151__ 74,206,481__ 10,870,833
Cash,
beginning of
the quarter__ 2,399,140,819__ 792,196,789__ 1,282,098,940__ 187,820,301
Cash, end of
the quarter__ 985,038,655__ 1,282,098,940__ 1,356,305,421__ 198,691,134
Supplemental
disclosures
of cash flow
information:
Cash paid
for income
tax, net
of tax
refund__ 83,231,216__ 114,558,434__ 54,590,335__ 7,997,178
Supplemental
schedule of
non-cash
investing
and financing
activities:
Fixed asset
purchases
financed by
accounts
payable and
accrued
liabilities__ 24,305,244__ 33,393,585__ 36,812,035__ 5,392,757
Conversion of
convertible
notes to
ordinary
shares__ 433,664,691__ -- -- --
The accompanying notes are an integral part of this press release.
NETEASE.COM, INC.
UNAUDITED SEGMENT INFORMATION
Quarter Ended
__ September 30,__ June 30,__ September 30, September 30,
__ 2008__ 2009__ 2009__ 2009
__ RMB__ RMB__ RMB__ USD (Note 1)
Revenues:
Online game
services__ 675,127,723__ 781,482,693__ 775,141,663__ 113,553,905
Advertising
services__ 113,005,479__ 72,801,803__ 86,049,485__ 12,605,767
Wireless value-
added services and
others__ 18,477,994__ 17,823,767__ 18,257,187__ 2,674,575
Total revenues__ 806,611,196__ 872,108,263__ 879,448,335__ 128,834,247
Business taxes:
Online game
services__ (849,228)__ (1,547,733)__ (3,287,201)__ (481,557)
Advertising
services__ (9,605,466)__ (7,253,512)__ (7,886,109)__ (1,155,270)
Wireless value-
added services and
others__ (186,913)__ (217,401)__ (248,515)__ (36,406)
Total business
taxes__ (10,641,607)__ (9,018,646)__ (11,421,825)__ (1,673,233)
Net revenues:
Online game
services__ 674,278,495__ 779,934,960__ 771,854,462__ 113,072,348
Advertising
services__ 103,400,013__ 65,548,291__ 78,163,376__ 11,450,497
Wireless value-
added services and
others__ 18,291,081__ 17,606,366__ 18,008,672__ 2,638,169
Total net revenues__ 795,969,589__ 863,089,617__ 868,026,510__ 127,161,014
Cost of revenues:
Online game
services__ (69,658,107)__ (91,342,290)__ (154,810,194)__ (22,678,825)
Advertising
services__ (75,569,816)__ (54,687,506)__ (60,088,698)__ (8,802,657)
Wireless value-
added services and
others__ (19,468,428)__ (25,180,086)__ (26,104,974)__ (3,824,232)
Total cost of
revenues__ (164,696,351)__ (171,209,882)__ (241,003,866)__ (35,305,714)
Gross profit
(loss):
Online game
services__ 604,620,388__ 688,592,670__ 617,044,268__ 90,393,523
Advertising
services__ 27,830,197__ 10,860,785__ 18,074,678__ 2,647,840
Wireless value-
added services and
others__ (1,177,347)__ (7,573,720)__ (8,096,302)__ (1,186,063)
Total gross profit__ 631,273,238__ 691,879,735__ 627,022,644__ 91,855,300
Gross profit (loss)
margin:
Online game
services__ 89.7%__ 88.3%__ 79.9%__ 79.9%
Advertising
services__ 26.9%__ 16.6%__ 23.1%__ 23.1%
Wireless value-
added services and
others__ (6.4%)__ (43.0%)__ (45.0%)__ (45.0%)
The accompanying notes are an integral part of this press release.
NETEASE.COM, INC.
NOTES TO UNAUDITED FINANCIAL INFORMATION
Note 1: The conversion of Renminbi (RMB) into United States dollars (USD)
is based on the noon buying rate of USD1.00 = RMB6.8262 on
September 30, 2009 in The City of New York for cable transfers of
Renminbi as certified for customs purposes by the Federal Reserve
Bank of New York.
Note 2: Share-based compensation cost reported in the Company's unaudited
condensed consolidated statements of operations is set out as
follows:
Quarter Ended
__ September__ June__ September__ September
__ 30, 2008__ 30, 2009__ 30, 2009__ 30, 2009
__ RMB__ RMB__ RMB__ USD
Share-based compensation cost__ (Note 1)
included in:
Cost of revenue__ 3,840,525__ 2,485,431__ 1,852,934__ 271,444
Operating expenses
- Selling and marketing
expenses__ 2,010,771__ 679,054__ 350,137__ 51,293
- General and administrative
expenses__ 5,498,972__ 2,803,979__ 1,640,203__ 240,281
- Research and development
expenses__ 4,767,180__ 2,819,266__ 2,165,012__ 317,162
For more information, please contact:
Contact for Media and Investors:
Brandi Piacente
Investor Relations
Email: brandi@corp.netease.com
Tel: +1-212-481-2050
Li Jia
NetEase.com, Inc.
Email: liddyli@corp.netease.com
Tel: +86-10-8255-8208
SOURCE: NetEase.com, Inc.
Originally published by NetEase.com, Inc..
(c) 2009 PRNewswire. Provided by ProQuest LLC. All rights Reserved.
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