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NetEase.com Reports Third Quarter 2009 Unaudited Financial Results
BEIJING, Nov 18, 2009 /PRNewswire-Asia via COMTEX/ --
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 September 30,
2009.
"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
http://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.
http://corp.netease.com
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