NetEase Announces First Quarter 2023 Unaudited Financial Results.

HANGZHOU, China: NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, "NetEase" or the "Company"), one of China's leading internet and online game services providers, today announced its unaudited financial results for the first quarter ended March 31, 2023.

First Quarter 2023 Financial Highlights

Net revenues were RMB25.0 billion (US$3.6 billion), an increase of 6.3% compared with the first quarter of 2022.

Games and related value-added services net revenues were RMB20.1 billion (US$2.9 billion), an increase of 7.6% compared with the first quarter of 2022.

Youdao net revenues were RMB1.2 billion (US$169.4 million), a decrease of 3.1% compared with the first quarter of 2022.

Cloud Music net revenues were RMB2.0 billion (US$285.4 million), a decrease of 5.2% compared with the first quarter of 2022.

Innovative businesses and others net revenues were RMB1.9 billion (US$270.5 million), an increase of 12.8% compared with the first quarter of 2022.

Gross profit was RMB14.9 billion (US$2.2 billion), an increase of 16.0% compared with the first quarter of 2022.

Total operating expenses were RMB7.7 billion (US$1.1 billion), an increase of 4.7% compared with the first quarter of 2022.

Net income attributable to the Company's shareholders was RMB6.8 billion (US$983.6 million). Non-GAAP net income attributable to the Company's shareholders was RMB7.6 billion (US$1.1 billion).[1]

Basic net income per share was US$0.31 (US$1.53 per ADS). Non-GAAP basic net income per share was US$0.34 (US$1.71 per ADS).[1]

[1] As used in this announcement, non-GAAP net income attributable to the Company's shareholders and non-GAAP basic and diluted net income per share and per ADS are defined to exclude share-based compensation expenses. See "Unaudited Reconciliation of GAAP and Non-GAAP Results" at the end of this announcement.

First Quarter 2023 and Recent Operational Highlights

Extended the popularity of leading franchise titles including both the Fantasy Westward Journey and Westward Journey Online series, as well as other hit titles such as Identity V, Justice and the mobile version of New Ghost.

Boosted user growth while further consolidating the ecosystem of Eggy Party, which topped China's iOS games download chart in the first quarter.

Announced release dates for exciting new titles, including Justice mobile game slated for release on June 30, as well as plans to bring Harry Potter: Magic Awakened to international markets this summer.

Strengthened robust game pipeline through the development of multiple upcoming titles including Badlanders, Racing Master and Naraka: Bladepoint mobile game, as well as Eggy Party for the international markets.

Continued to enrich the Cloud Music ecosystem and expand its unique content offerings, while enlarging its thriving community with high user engagement, improving its gross margin and fortifying its foundation for future development.

Resumed growth trajectory of STEAM courses and other key business lines of Youdao despite a challenging macro environment in January, positioning it for future development.

"We are off to a good start in 2023 with a stellar performance from our games portfolio, which drove our total net revenues to RMB25.0 billion in the first quarter, up more than 6% year-over-year," said Mr. William Ding, Chief Executive Officer and Director of...