NetEase Delivered Solid Results in the Second Quarter

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NetEase, Inc., one of China’s leading Internet and online game services providers, announced its unaudited financial results for the second quarter ended June 30, 2016.

NetEase, Inc. (NASDAQ: NTES), one of China’s leading Internet and online game services providers, announced its unaudited financial results for the second quarter ended June 30, 2016.

Net revenues for the second quarter of 2016 were RMB8,952.8 million (US$1,347.1 million), 96.0% higher than the second quarter of 2015. Gross profit for the second quarter was RMB5,280.4 million (US$794.5 million), 85.6% higher than the same quarter last year. Net revenues from online games were RMB6,438.3 million (US$968.8 million) for the second quarter, up 76.0% compare to second quarter of 2015.

Other business segments also delivered significant growth. Advertising revenues were RMB531.1 million (US$79.9 million) in the second quarter of 2016, 24.1% higher than the second quarter of 2015. Net revenues from e-mail and e-commerce operations were RMB1,983.4 million (US$298.4 million) in the second quarter, up 310.6% compared to same quarter last year.

“Our outstanding second quarter results reflect NetEase’s leadership in China’s dynamic online games industry where we continue to introduce premium game content, innovative technology and effective marketing strategies,” said Mr. William Ding, Chief Executive Officer and Director of NetEase. “As we focus on delivering the highest quality games and unmatched user experiences, we also move the industry forward by exploring new technologies such as virtual reality and augmented reality and developing content for a variety of genres.”

In May of this year, NetEase’s virtual reality game Twilight Pioneers was revealed at Google I/O 2016 as one of the first games to commit to Google’s new high quality mobile VR platform built on top of Android, Daydream. Recently, NetEase participated in the $80 million Series B funding for NextVR, a U.S. based leader in live virtual reality broadcast technology, as one of the major investors. “Our strategic investment in NextVR reflects our vision to be at the forefront of virtual reality technologies. We believe in the applications of live virtual reality broadcast, and have confidence in the NextVR team. We look forward to bringing a brand new live experience to consumers, and exploring the potential synergies between online gaming, media and live virtual reality broadcast.” In addition, NetEase has set up four VR/AR labs in Beijing, Hangzhou and Guangzhou. It will be very interesting to see how NetEase will apply these innovative technologies to create even better game and entertainment content ahead.    

Partnership was another engine of growth for online gaming businesses. On May 24, NetEase brought Blizzard Entertainment’s highly anticipated first-person shooter game Overwatch™ to players in China in conjunction with its global launch. Since the release, Overwatch has received unprecedented attention and praise from the online players’ community. It broke the sales record in the category of buy-to-play games in China, with nearly 3 million copies sold by the end of June. In addition, Blizzard Entertainment’s Hearthstone®: Heroes of Warcraft™ has achieved new records of revenues and the number of active users in the second quarter, following the April release of its third expansion pack Whisper of the Old Gods™.

NetEase is also making headway in cooperation with Microsoft and Mojang AB to create the Chinese version of Minecraft. “I am pleased with the progress, which reflects our deep understanding of the Chinese market and ability to successfully launch the most renowned PC-client and mobile games.”

“China is now the world’s largest online game market, providing NetEase an opportunity to further expand its loyal customer base, develop new strategic business partnerships and enhance its industry leadership position. Our progress in the first half of 2016 clearly demonstrates that we have the resources and commitment to continue the exceptional growth and success of each of our business segments,” Mr. Ding concluded.

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Sharon Hu
NetEase Games
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