BEIJING, Aug. 12 /PRNewswire-Asia/ -- NetEase.com, Inc. (Nasdaq: NTES),
one of China's leading Internet and online game services providers, today
announced its unaudited financial results for the quarter ended June 30, 2009.
William Ding, Chief Executive Officer and Director of NetEase said, "The
forefront of our online game business strategy has always been the ongoing
in-house development and licensing of high-quality games that will continually
diversify our user base. With respect to our strategic licensing strategy and
the much anticipated relaunch of World of Warcraft which is licensed from
Blizzard Entertainment in mainland China, we have completed technical support
configuration and server rollout on schedule. China's Ministry of Culture has
approved the content of the game and it is now under the approval process with
the General Administration of Press and Publication, or GAPP. We have
commenced the beta testing of the game since July 30, 2009 and are well
prepared to start the commercial launch of the game as soon as we receive
approval from GAPP. Collectively, we increased our technical and customer
service staff by approximately 500 to support Blizzard Entertainment's
Battle.net platform and the World of Warcraft relaunch."
"Meanwhile, we continue to execute on our strategic plan to enhance our
portfolio of in-house developed games. New user statistics were particularly
strong for Westward Journey II, Datang and New Fly for Fun during the second
quarter. Two new item-based games, Buibui and TF Online, were launched
commercially in May and June, respectively. BuiBui, a casual game, offers
players magic gun-firing experiences and TF Online, a 3-D game, offers
star-war heroic role experiences. As of June 30, 2009, we had approximately
1,000 game developers supporting our ongoing game pipeline."
Mr. Ding continued, "Advertising services revenue improved
quarter-over-quarter in terms of both sales by product and number of
advertising customers. We believe this was due to improved advertising
spending as a result of domestic economic stimulus and our efforts to upgrade
our portal channels and add premium content. We launched several new channels
covering education, travel network and real estate in July and August. We also
plan to launch a book search and review channel in September. In addition, we
are expanding our sales force to enhance our industry and customer coverage
which we expect will help us driving further advertising revenue growth during
the next six months."
Mr. Ding concluded, "We believe that China's economy continues its path to
recovery, we are continuing to focus on our core strengths to maintain our
dominance in China's online game market and look forward to a solid second
half of the year as our newest licensed and in-house games come to market."
Second Quarter 2009 Financial Results
Revenues
Total revenues for the second quarter of 2009 were RMB872.1 million
(US$127.7 million), compared to RMB781.7 million (US$114.4 million) and
RMB715.9 million (US$104.8 million) for the preceding quarter and the second
quarter of 2008, respectively.
Revenues from online games were RMB781.5 million (US$114.4 million) for
the second quarter of 2009, compared to RMB724.0 million (US$106.0 million)
and RMB595.0 million (US$87.1 million) for the preceding quarter and the
second quarter of 2008, respectively.
Revenues from advertising services were RMB72.8 million (US$10.7 million)
for the second quarter of 2009, compared to RMB41.0 million (US$6.0 million)
and RMB103.9 million (US$15.2 million) for the preceding quarter and the
second quarter of 2008, respectively.
Revenues from wireless value-added services and others, or WVAS and others,
were RMB17.8 million (US$2.6 million) for the second quarter of 2009, compared
to RMB16.6 million (US$2.4 million) and RMB16.9 million (US$2.5 million) for
the preceding quarter and the second quarter of 2008, respectively.
Gross Profit
Gross profit for the second quarter of 2009 was RMB691.9 million (US$101.3
million), compared to RMB641.7 million (US$93.9 million) and RMB722.8 million
(US$105.8 million) for the preceding quarter and the second quarter of 2008,
respectively. The quarter-over-quarter increase in gross profit was primarily
attributable to the recognition of RMB83.3 million (US$12.2 million) of
revenue from the clean up of dormant accounts of online games in June 2009,
partially offset by the increase in business tax resulting from higher revenue
and increased staff-related costs resulting from increased headcount in the
second quarter of 2009. The recognition of revenue from dormant accounts of
online games resulted from a change in our user agreement with online game
players in May 2009, whereby outstanding points in accounts that remain
dormant for a period of 540 days or more will be removed after 30 days of our
public notice issued on May 20, 2009. Going forward, we expect to recognize
revenue related to the outstanding points removed from dormant accounts of
online games on a quarterly basis.
The year-over-year decrease in gross profit was primarily attributable to
the receipt of a business tax refund of RMB146.8 million (US$21.5 million) in
June 2008 and increased cost of revenues in the second quarter of 2009 as a
result of increased staff-related costs resulting from increased headcount and
increased business tax due to higher revenues in the second quarter of 2009,
partially offset by increased game revenues in the second quarter of 2009. The
increase in game revenue in the second quarter of 2009 was primarily due to
revenue recognized from dormant accounts in June 2009 as explained above and
increased revenue from Westward Journey II and Tianxia II. Increased revenue
from Westward Journey II was mainly due to enhanced game play introduced in
the expansion pack released in August 2008. We reported a full second quarter
revenue for Tianxia II in 2009 compared to only one month revenue for the
second quarter of 2008 as the game entered unlimited closed beta testing on
June 6, 2008.
Gross Profit (Loss) Margin
Gross profit margin for the online game business for the second quarter of
2009 was 88.3%, compared to 90.0% and 91.2% for the preceding quarter and the
second quarter of 2008, respectively. The quarter-over-quarter and
year-over-year decreases in gross profit margin were primarily due to
increased staff-related costs in the second quarter of 2009.
Gross profit margin for the advertising business for the second quarter of
2009 was 16.6%, compared to gross loss margin of 13.1% and gross profit margin
of 52.6% for the preceding quarter and the second quarter of 2008,
respectively. The quarter-over-quarter improvement in gross profit margin was
primarily due to increased revenue brought about by certain economic stimulus
measures implemented by the Chinese government in the past few months,
especially with respect to the automobile and electrical home appliances
sectors. The year-over-year decrease in gross profit margin was primarily
attributable to significantly reduced advertising revenues in the current
quarter as demand for advertising services remained relatively low with
advertisers remaining cautious and still looking ahead for clear signs of
economic recovery.
Gross loss margin for the WVAS and others business for the second quarter
of 2009 was 43.0%, compared to 22.3% for the preceding quarter and gross
profit margin of 28.8% for the second quarter of 2008. The
quarter-over-quarter increase in gross loss margin was primarily due to
increased staff-related costs and increased bandwidth and custody fees
resulting from increased traffic. The year-over-year increase in gross loss
margin was mainly attributable to the receipt of the business tax refund in
June 2008 and increased staff-related costs resulting from increased headcount
in the second quarter of 2009.
Operating Expenses
Total operating expenses for the second quarter of 2009 were RMB174.8
million (US$25.6 million), compared to RMB150.6 million (US$22.0 million) and
RMB149.7 million (US$21.9 million) for the preceding quarter and the second
quarter of 2008, respectively. The quarter-over-quarter increase in operating
expenses was primarily due to nationwide marketing costs for promoting the
open beta testing of New Fly for Fun in May and June of 2009 and costs
associated with other promotional activities, as well as increased research
and development expenses resulting from increased staff-related costs
resulting from increased headcount.
The year-over-year increase in selling and marketing expenses was mainly
due to increased staff-related costs resulting from increased salaries and
wage levels and new headcount in 2009, and increased marketing costs for
promoting online games and advertising services in the current quarter. The
year-over-year increase in general and administration expenses was mainly
caused by increased provision for bad debts resulting from an increase in
accounts receivable balance aged over six months as of June 30, 2009, and
increased office rental and property management fees resulting from increased
office space in Beijing, China. The year-over-year research and development
expenses remained relatively stable.
Net Profit
Net profit for the second quarter of 2009 totaled RMB468.1 million
(US$68.5 million), compared to RMB416.7 million (US$61.0 million) and RMB438.2
million (US$64.2 million) for the preceding quarter and the second quarter of
2008, respectively. During the current quarter, the Company reported a net
foreign exchange gain of RMB47.2 million (US$6.9 million) under Other, net,
compared to losses of RMB47.5 million (US$7.0 million) and RMB26.4 million
(US$3.9 million) for the preceding quarter and the second quarter of 2008,
respectively. The quarter-over-quarter and year-over-year decrease in foreign
exchange loss was mainly due to the reversal of translation loss with respect
to the Company's Euro-denominated bank deposit balances as of June 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$0.53 each for the second quarter of 2009. The Company reported basic
and diluted earnings per ADS of US$0.48 and US$0.47 and US$0.53 and US$0.50
for the preceding quarter and the second quarter of 2008, respectively.
Income Taxes
The Company recorded income tax charge of RMB115.4 million (US$16.9
million), RMB61.7 million (US$9.0 million) and RMB140.0 million (US$20.5
million) for the current quarter, the preceding quarter, and the second
quarter of 2008, respectively. The quarter-over-quarter increase in tax charge
was primarily due to increased revenue in the second quarter of 2009 and the
payment of an extra tax charge of RMB38.5 million (US$5.6 million) in June
2009 related to the tax assessment of 2008 and the first quarter of 2009 of
one of the Company's subsidiaries as explained below. 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 second
quarter of 2008 as approval for the preferred tax status of HNTEs was not
received until December 2008.
This subsidiary (with both HNTEs and Software Enterprises status) paid its
corporate income tax at a rate of 12.5% for the first three quarters of 2008
while also with the understanding that if it was granted the HNTEs tax status
in 2008, this subsidiary would be entitled to a preferential tax rate of 7.5%
in 2008 based on the interpretation of the grandfather provisions under the
Corporate Income Tax Law and the related implementation guidelines. The
preferential tax rate of 7.5% was calculated by applying the 50% tax rate
reduction for Software Enterprises against 15%, which is the preferred tax
rate applicable to this subsidiary's HNTEs status. When this subsidiary was
granted the HNTEs tax status in December 2008, the relevant local tax
authority refunded the excess corporate income tax paid for the first three
quarters of 2008 when applying the preferential tax rate of 7.5% in these
quarters. Following the issuance of a new tax circular by the State
Administration of Taxation in April 2009, the local tax authority notified
this subsidiary in June 2009 that it should pay its corporate income tax
liability for 2008 and the first quarter of 2009 at the rate of 12.5% instead
of 7.5%. Its decision was based on the interpretation of a new circular issued
by the State Administration of Taxation in April 2009 that the 50% tax rate
reduction for Software Enterprises should be made against the uniform
corporate income tax rate at 25%, not the 15% preferred tax rate applicable to
this subsidiary's HNTEs status.
Other Information
As of June 30, 2009, the Company's cash and time deposits totaled RMB6.2
billion (US$909.4 million), compared to RMB5.6 billion (US$821.9 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 in connection with certain arbitration
proceedings against the property developer of the office building located in
Guangzhou, China, which is occupied by the Company. The Company and Mr. Ding
agreed that Mr. Ding would initiate such arbitration due to the property
developer's failure to complete registration for the transfer of title to the
property to Mr. Ding who has agreed to on-sell the property to NetEase at cost
and the property developer's mortgaging of the property in contravention of
its agreement with Mr. Ding. The arbitration proceedings are currently in the
preliminary stage.
Cash flows generated from operating activities totaled RMB544.4 million
(US$79.7 million) for the second quarter of 2009, compared to RMB567.8 million
(US$83.1 million) and RMB513.3 million (US$75.2 million) for the preceding
quarter and the second 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 June 30, 2009, 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$1.00 = RMB6.8302 on June 30,
2009 in The City of New York for the cable transfers of RMB as certified for
customs purposes by the Federal Reserve Bank of New York. No representation is
made that the RMB amounts could have been, or could be, converted into US$ at
that rate on June 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 9:00 p.m. Eastern
Time on Wednesday, August 12, 2009 (Beijing/Hong Kong Time: 9:00 a.m.,
Thursday, August 13, 2009). Chief Executive Officer William Ding and Acting
Chief Financial Officer Onward Choi will be on the call to discuss the
quarterly results and answer questions.
Interested parties may participate in the conference call by dialing
888-846-5003 (international: 480-629-9856), 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 4118093#. The
replay will be available through August 26, 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
http://corp.163.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.
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 the relaunch of
World of Warcraft may not be successful due to failure to obtain government
approval and other factors beyond NetEase's control; 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
applicable law.
NETEASE.COM, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, June 30, June 30,
2008 2009 2009
RMB RMB USD (Note 1)
Assets
Current assets:
Cash 793,407,922 1,282,098,940 187,710,307
Time deposits 4,820,000,100 4,929,100,734 721,662,723
Accounts receivable, net 231,030,576 133,682,801 19,572,311
Prepayments and other
current assets 104,092,051 195,913,131 28,683,365
Deferred tax assets 25,248,842 41,277,219 6,043,340
Total current assets 5,973,779,491 6,582,072,825 963,672,046
Non-current assets:
Non-current rental
deposits 3,443,249 3,979,450 582,626
Property, equipment and
software, net 258,787,534 475,261,632 69,582,389
Land use right, net 12,563,485 12,434,187 1,820,472
Prepayment for license
right 27,463,600 232,282,600 34,008,170
Deferred tax assets 12,444,636 12,041,039 1,762,912
Restricted cash -- 82,000,000 12,005,505
Other long-term assets 57,411,308 48,675,856 7,126,564
Total non-current assets 372,113,812 866,674,764 126,888,638
Total assets 6,345,893,303 7,448,747,589 1,090,560,684
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable 119,829,878 224,254,641 32,832,807
Salary and welfare
payables 94,922,963 79,442,922 11,631,127
Taxes payable 104,754,356 170,563,607 24,971,978
Deferred revenue 447,725,795 425,370,733 62,277,932
Accrued liabilities 61,815,070 90,328,881 13,224,925
Total current liabilities 829,048,062 989,960,784 144,938,769
Long-term payable:
Other long-term payable 200,000 200,000 29,282
Total long-term payable 200,000 200,000 29,282
Total liabilities 829,248,062 990,160,784 144,968,051
Shareholders' equity 5,516,645,241 6,458,586,805 945,592,633
Total liabilities and
shareholders' equity 6,345,893,303 7,448,747,589 1,090,560,684
The accompanying notes are an integral part of this press release.
NETEASE.COM, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter Ended
June 30, March 31, June 30, June 30,
2008 2009 2009 2009
RMB RMB RMB USD (Note 1)
Revenues:
Online game
services 595,039,049 724,023,597 781,482,693 114,415,785
Advertising
services 103,937,354 41,030,255 72,801,803 10,658, 810
Wireless
value-added
services and
others 16,897,198 16,640,705 17,823,767 2,609,553
Total revenues 715,873,601 781,694,557 872,108,263 127,684,148
Business taxes 137,081,472 (5,772,131) (9,018,646) (1,320,408)
Total net
revenues 852,955,073 775,922,426 863,089,617 126,363,740
Total cost of
revenues (130,164,922) (134,228,461) (171,209,882) (25,066, 599)
Gross profit 722,790,151 641,693,965 691,879,735 101,297,141
Operating expenses:
Selling and
marketing
expenses (53,403,127) (47,510,899) (68,323,402) (10,003,133)
General and
administrative
expenses (44,127,629) (52,295,550) (52,671,504) (7,711,561)
Research and
development
expenses (52,208,647) (50,789,431) (53,812,664) (7,878,637)
Total operating
expenses (149,739,403) (150,595,880) (174,807,570) (25,593, 331)
Operating profit 573,050,748 491,098,085 517,072,165 75,703,810
Other income
(expenses):
Investment income 123,534 102,922 84,794 12,415
Interest income 31,439,986 35,560,102 33,086,968 4,844,217
Other, net (26,439,269) (48,319,337) 33,227,641 4,864,812
Net income
before tax 578,174,999 478,441,772 583,471,568 85,425, 254
Income tax (140,003,786) (61,739,147) (115,383,256) (16,893,101)
Net income
after tax 438,171,213 416,702,625 468,088,312 68,532, 153
Add: Net loss
attributable to
noncontrolling
interest 117 18,217 30,515 4,468
Net income
attributable to
the Company's
shareholders 438,171,330 416,720,842 468,118,827 68,536,621
Earnings per
share, basic 0.14 0.13 0.15 0.02
Earnings per
ADS, basic 3.62 3.25 3.64 0.53
Earnings per
share, diluted 0.14 0.13 0.14 0.02
Earnings per ADS,
diluted 3.39 3.23 3.60 0.53
Weighted average
number of
ordinary shares
outstanding,
basic 3,027,874,505 3,207,759,573 3,219,247,705 3,219,247,705
Weighted average
number of ADS
outstanding,
basic 121,114,980 128,310,383 128,769,908 128,769,908
Weighted average
number of
ordinary shares
outstanding,
diluted 3,233,701,752 3,224,599,184 3,250,458,685 3,250,458,685
Weighted average
number of ADS
outstanding,
diluted 129,348,070 128,983,967 130,018,347 130,018,347
The accompanying notes are an integral part of this press release.
NETEASE.COM, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Quarter Ended
June 30, March 31, June 30, June 30,
2008 2009 2009 2009
RMB RMB RMB USD (Note 1)
Cash flows from
operating
activities:
Net income 438,171,213 416,702,625 468,088,312 68,532,153
Adjustments to
reconcile net
profit to net
cash
provided by
operating
activities:
Depreciation
and
amortization 23,183,012 21,979,596 20,464,224 2,996,138
Share-based
compensation
cost 20,836,332 10,814,590 8,787,730 1,286,599
Allowance/
(reversal) of
provision for
doubtful debts (1,419,319) 6,134,584 4,190,088 613,465
(Gain)/Loss on
disposal of
property,
equipment
and software (17,798) 16,800 2,858,440 418,500
Unrealized
exchange
losses (gains) 26,574,778 47,547,400 (47,200,756) (6,910,596)
Net equity
share of loss
from
associated
companies 487,300 1,051,010 1,934,915 283,288
Others -- (25) -- --
Changes in
operating
assets and
liabilities:
Accounts
receivable (77,960,545) 111,878,097 (24,854,994) (3,638,985)
Prepayments
and other
current
assets (3,312,399) (31,374,284) (56,041,033) (8,204,891)
Deferred tax
assets 18,685,274 (17,159,400) 1,131,023 165,591
Deferred tax
assets -
non-current (11,697) (189,657) 593,254 86,857
Accounts
payable 16,206,953 (18,372,015) 123,575,583 18,092,528
Salary and
welfare
payables 15,394,921 (37,516,094) 22,036,053 3,226,268
Taxes
payable 18,745,532 29,202,544 36,606,707 5,359,537
Deferred
revenue 10,391,562 7,047,026 (29,402,088) (4,304,718)
Accrued
liabilities 7,367,340 20,021,583 11,612,178 1,700,123
Net cash
provided by
operating
activities 513,322,459 567,784,380 544,379,636 79,701,857
Cash flows from
investing
activities:
Purchase of
property,
equipment
and
software (20,258,398) (23,031,133) (239,465,882) (35,059,864)
Proceeds
from sale
of property,
equipment
and
software 62,501 15,755 5,373 787
Incentive
received on
land use right 15,000,000 -- -- --
Purchase of
license
right -- -- (204,819,000) (29,987,262)
Transfer to
restricted
cash -- (82,000,000) -- --
Net change in
time deposits
with terms
of three
months (309,877,981) 913,788,700 327,669,991 47,973,704
Placement/
rollover of
matured time
deposits (201,856,509)(2,099,024,248) (149,337,445) (21,864,286)
Uplift of
matured
time
deposits 180,542,729 718,163,495 171,181,813 25,062,489
Net change
in other
assets 81,783 (634,380) (1,421,647) (208,141)
Net cash used
in investing
activities (336,305,875) (572,721,811) (96,186,797) (14,082,573)
Cash flows from
financing activities:
Capital
contribution from
noncontrolling
interest -- 640 -- --
Proceeds from
employees
exercising
stock options 328,603 2,524,853 35,022,839 5,127,645
Net cash
provided by
financing
activities 328,603 2,525,493 35,022,839 5,127,645
Effect of
exchange rate
changes on
cash held in
foreign
currencies (39,668,730) 1,200,805 6,686,473 978,957
Net increase
(decrease)
in cash 137,676,457 (1,211,133) 489,902,151 71,725,886
Cash, beginning
of the quarter 2,261,464,362 793,407,922 792,196,789 115,984,421
Cash, end of
the quarter 2,399,140,819 792,196,789 1,282,098,940 187,710,307
Supplemental
disclosures
of cash flow
information:
Cash paid
for income
tax, net
of tax
refund 117,313,562 45,079,890 114,558,434 16,772,340
Supplemental
schedule of
non-cash
investing and
financing
activities:
Treasury
stock
cancell-
ation 76,433,652 -- -- --
Fixed asset
purchases
financed by
accounts
payable and
accrued
liabilities 10,529,644 35,955,208 33,393,585 4,889,108
Conversion of
convertible
notes to
ordinary
shares 168,377,187 -- -- --
The accompanying notes are an integral part of this press release.
NETEASE.COM, INC.
UNAUDITED SEGMENT INFORMATION
Quarter Ended
June 30, March 31, June 30, June 30,
2008 2009 2009 2009
RMB RMB RMB USD (Note 1)
Revenues:
Online game
services 595,039,049 724,023,597 781,482,693 114,415,785
Advertising
services 103,937,354 41,030,255 72,801,803 10,658,810
Wireless value-
added services and
others 16,897,198 16,640,705 17,823,767 2,609,553
Total revenues 715,873,601 781,694,557 872,108,263 127,684,148
Business taxes:
Online game
services 133,155,985 (1,456,904) (1,547,733) (226,601)
Advertising
services (8,834,675) (4,161,980) (7,253,512) (1,061,977)
Wireless value-
added services and
others 12,760,162 (153,247) (217,401) (31,830)
Total business
taxes 137,081,472 (5,772,131) (9,018,646) (1,320,408)
Net revenues:
Online game
services 728,195,034 722,566,693 779,934,960 114,189,184
Advertising
services 95,102,679 36,868,275 65,548,291 9,596,833
Wireless value-
added services and
others 29,657,360 16,487,458 17,606,366 2,577,723
Total net revenues 852,955,073 775,922,426 863,089,617 126,363,740
Cost of revenues:
Online game
services (63,985,689) (72,363,943) (91,342,290) (13,373,297)
Advertising
services (45,063,123) (41,707,441) (54,687,506) (8,006,721)
Wireless value-
added services and
others (21,116,110) (20,157,077) (25,180,086) (3,686,581)
Total cost of
revenues (130,164,922) (134,228,461) (171,209,882) (25,066,599)
Gross profit
(loss):
Online game
services 664,209,345 650,202,750 688,592,670 100,815,887
Advertising
services 50,039,556 (4,839,166) 10,860,785 1,590,112
Wireless value-
added services and
others 8,541,250 (3,669,619) (7,573,720) (1,108,858)
Total gross profit 722,790,151 641,693,965 691,879,735 101,297,141
Gross profit (loss)
margin:
Online game
services 91.2% 90.0% 88.3% 88.3%
Advertising
services 52.6% (13.1%) 16.6% 16.6%
Wireless value-
added services and
others 28.8% (22.3%) (43.0%) (43.0%)
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 = RMB6.8302 on June 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
June 30, March 31, June 30, June 30,
2008 2009 2009 2009
RMB RMB RMB USD
Share-based compensation cost (Note 1)
included in:
Cost of revenue 3,396,419 2,871,354 2,485,431 363,889
Operating expenses
- Selling and marketing expenses 2,675,811 952,155 679,054 99,419
- General and administrative
expenses 7,538,343 3,809,875 2,803,979 410,526
- Research and development
expenses 7,225,759 3,181,206 2,819,266 412,765
Contact for Media and Investors:
Brandi Piacente
Investor Relations
Tel: +1-212-481-2050
Email: brandi@corp.netease.com
Li Jia
NetEase.com, Inc.
Tel: +86-10-8255-8208
Email: liddyli@corp.netease.com
