UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 6-K

 

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the month of May 2025

 

Commission File Number: 000-30666

 

 

 

NETEASE, INC.

 

 

 

NetEase Building, No. 599 Wangshang Road

Binjiang District, Hangzhou, 310052

People’s Republic of China

(Address of principal executive offices)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x      Form 40-F ¨

 

 

 

 

 

 

Exhibit

 

Exhibit 99.1 - NetEase Announces First Quarter 2025 Unaudited Financial Results

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  NETEASE, INC.
   
  By: /s/ William Lei Ding
  Name: William Lei Ding
  Title: Chief Executive Officer

 

Date: May 15, 2025

 

 

 

 

Exhibit 99.1

 

 

Contact for Media and Investors:

Email: ir@service.netease.com

Tel: (+86) 571-8985-3378

 

NetEase Announces First Quarter 2025 Unaudited Financial Results

 

Hangzhou, China, May 15, 2025 - NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, “NetEase” or the “Company”), a leading internet and game services provider, today announced its unaudited financial results for the first quarter ended March 31, 2025.

 

First Quarter 2025 Financial Highlights

 

·Net revenues were RMB28.8 billion (US$4.0 billion), an increase of 7.4% compared with the same quarter of 2024.

 

·Games and related value-added services net revenues were RMB24.0 billion (US$3.3 billion), an increase of 12.1% compared with the same quarter of 2024.

 

·Youdao net revenues were RMB1.3 billion (US$178.9 million), a decrease of 6.7% compared with the same quarter of 2024.

 

·NetEase Cloud Music net revenues were RMB1.9 billion (US$256.1 million), a decrease of 8.4% compared with the same quarter of 2024.

 

·Innovative businesses and others net revenues were RMB1.6 billion (US$223.8 million), a decrease of 17.6% compared with the same quarter of 2024.

 

·Gross profit was RMB18.5 billion (US$2.5 billion), an increase of 8.6% compared with the same quarter of 2024.

 

·Total operating expenses were RMB8.0 billion (US$1.1 billion), a decrease of 14.4% compared with the same quarter of 2024.

 

·Net income attributable to the Company’s shareholders was RMB10.3 billion (US$1.4 billion). Non-GAAP net income attributable to the Company’s shareholders was RMB11.2 billion (US$1.5 billion).[1]

 

·Basic net income per share was US$0.45 (US$2.24 per ADS). Non-GAAP basic net income per share was US$0.49 (US$2.44 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 the unaudited reconciliation of GAAP and non-GAAP results at the end of this announcement. 

 

1

 

 

First Quarter 2025 and Recent Operational Highlights

 

·Success of recently released titles drove increased traction in the global game market and further diversified our portfolio across genres.

 

·Marvel Rivals topped Steam’s global top sellers chart shortly after its Season 2 update in April 2025.

 

·Where Winds Meet has maintained strong popularity since its December 2024 launch, surpassing 30 million registered players as of March 2025.

 

·FragPunk’s March 2025 launch ignited player enthusiasm, ranking No. 6 on Steam’s global top sellers chart and amassing over 110,000 peak concurrent players in three days.

 

·Once Human mobile game quickly claimed the No.1 position on the iOS download charts in more than 160 regions upon its April 2025 launch, garnering significant global attention.

 

·Blizzard titles sustained robust momentum, with World of Warcraft and Hearthstone engaging local communities through customized regional events in China. Additionally, the return of Overwatch pushed its regional peak concurrent players in China to a new record high. With technical testing initiated on April 16, 2025, Diablo 3 is also on track for its return to China.

 

·Increased the popularity of established titles through targeted events and crossover synergies, including Fantasy Westward Journey Online and mobile game, Infinite BordersIdentity V, Eggy Party, Naraka: Bladepoint franchises and Justice franchises, highlighting NetEase’s strength in long-term game operations.

 

·Strengthened global game pipeline with multiple new titles under development, including MARVEL Mystic Mayhem, Destiny: Rising and Ananta.

 

·Youdao remained committed to technology-driven innovation and profitability enhancement, achieving record-high first-quarter operating profit, maintaining the profitability momentum in previous quarters.

 

“We entered 2025 with solid momentum, fueled by our ongoing innovation and new titles that strengthen our reach across genres and resonate with players around the world,” said Mr. William Ding, Chief Executive Officer and Director of NetEase. “In addition to the strong performance of our latest games, our long-standing franchises continue to thrive, powered by outstanding content updates and continuous gameplay enhancements that bring fresh takes to player experiences. As we reimagine new gaming possibilities, we remain rooted in innovation and long-term operations, partnering with top talent and strategic collaborators to deliver engaging experiences to players everywhere.

 

2

 

 

“Alongside our games, Youdao and our other businesses continued their healthy development in the first quarter, driven by the same commitment to high-quality, technology-driven innovation. We remain focused on deepening engagement and creating lasting value by finding ways to connect, entertain and serve our users both domestically and worldwide,” Mr. Ding concluded.

 

First Quarter 2025 Financial Results

 

Net Revenues

 

Net revenues for the first quarter of 2025 were RMB28.8 billion (US$4.0 billion), compared with RMB26.7 billion and RMB26.9 billion for the preceding quarter and the same quarter of 2024, respectively.

 

Net revenues from games and related value-added services were RMB24.0 billion (US$3.3 billion) for the first quarter of 2025, compared with RMB21.2 billion and RMB21.5 billion for the preceding quarter and the same quarter of 2024, respectively. Net revenues from the operation of online games accounted for approximately 97.5% of the segment’s net revenues for the first quarter of 2025, compared with 96.7% and 95.2% for the preceding quarter and the same quarter of 2024, respectively. The quarter-over-quarter increase was primarily due to increased online games net revenues, such as Identity V and certain newly launched titles including Where Winds Meet and Marvel Rivals. The year-over-year increase was primarily due to increased net revenues from Identity V, several newly launched titles, as well as certain licensed games.

 

Net revenues from Youdao were RMB1.3 billion (US$178.9 million) for the first quarter of 2025, compared with RMB1.3 billion and RMB1.4 billion for the preceding quarter and the same quarter of 2024, respectively. The year-over-year decrease was primarily due to a decrease in net revenues from its learning services as it continued to prioritize core services with strong long-term potential.

 

Net revenues from NetEase Cloud Music were RMB1.9 billion (US$256.1 million) for the first quarter of 2025, compared with RMB1.9 billion and RMB2.0 billion for the preceding quarter and the same quarter of 2024, respectively. The year-over-year decrease was primarily due to decreased net revenues from its social entertainment services.

 

Net revenues from innovative businesses and others were RMB1.6 billion (US$223.8 million) for the first quarter of 2025, compared with RMB2.3 billion and RMB2.0 billion for the preceding quarter and the same quarter of 2024, respectively. The quarter-over-quarter and year-over-year decreases were primarily due to decreased net revenues from Yanxuan, advertising services and certain other businesses in this segment.

 

3

 

 

Gross Profit

 

Gross profit for the first quarter of 2025 was RMB18.5 billion (US$2.5 billion), compared with RMB16.3 billion and RMB17.0 billion for the preceding quarter and the same quarter of 2024, respectively. The quarter-over-quarter and year-over-year increases were primarily due to increased net revenues from online games as mentioned above.

 

Operating Expenses

 

Total operating expenses for the first quarter of 2025 were RMB8.0 billion (US$1.1 billion), compared with RMB8.5 billion and RMB9.4 billion for the preceding quarter and the same quarter of 2024, respectively. The quarter-over-quarter decrease was mainly due to decreased research and development investments related to games and related value-added services and marketing expenditures related to innovative businesses and others. The year-over-year decrease was mainly due to decreased marketing expenditures related to games and related value-added services.

 

Other Income/(Expenses)

 

Other income/(expenses) consisted of investment income/(loss), interest income, net exchange gains and others. The quarter-over-quarter decrease was mainly due to decreased net exchange gains. The year-over-year increase was mainly due to lower investment impairment provisions incurred in the first quarter of 2025.

 

Income Tax

 

The Company recorded a net income tax charge of RMB1.9 billion (US$262.5 million) for the first quarter of 2025, compared with RMB1.4 billion and RMB1.5 billion for the preceding quarter and the same quarter of 2024, respectively. The effective tax rate for the first quarter of 2025 was 15.3%, compared with 13.4% and 16.0% for the preceding quarter and the same quarter of 2024, respectively. The effective tax rate represents certain estimates by the Company as to the tax obligations and benefits applicable to it in each quarter.

 

Net Income and Non-GAAP Net Income

 

Net income attributable to the Company’s shareholders totaled RMB10.3 billion (US$1.4 billion) for the first quarter of 2025, compared with RMB8.8 billion and RMB7.6 billion for the preceding quarter and the same quarter of 2024, respectively.

 

Basic net income was US$0.45 per share (US$2.24 per ADS) for the first quarter of 2025, compared with US$0.38 per share (US$1.90 per ADS) and US$0.33 per share (US$1.64 per ADS) for the preceding quarter and the same quarter of 2024, respectively.

 

4

 

 

Non-GAAP net income attributable to the Company’s shareholders totaled RMB11.2 billion (US$1.5 billion) for the first quarter of 2025, compared with RMB9.7 billion and RMB8.5 billion for the preceding quarter and the same quarter of 2024, respectively.

 

Non-GAAP basic net income was US$0.49 per share (US$2.44 per ADS) for the first quarter of 2025, compared with US$0.42 per share (US$2.10 per ADS) and US$0.37 per share (US$1.83 per ADS) for the preceding quarter and the same quarter of 2024, respectively.

 

Other Financial Information

 

As of March 31, 2025, the Company’s net cash (total cash and cash equivalents, current and non-current time deposits and restricted cash, as well as short-term investments balance, minus short-term and long-term loans) totaled RMB137.0 billion (US$18.9 billion), compared with RMB131.5 billion as of December 31, 2024. Net cash provided by operating activities was RMB12.1 billion (US$1.7 billion) for the first quarter of 2025, compared with RMB13.0 billion and RMB9.6 billion for the preceding quarter and the first quarter of 2024, respectively.

 

Quarterly Dividend

 

The board of directors approved a dividend of US$0.1350 per share (US$0.6750 per ADS) for the first quarter of 2025 to holders of ordinary shares and holders of ADSs as of the close of business on May 30, 2025, Beijing/Hong Kong Time and New York Time, respectively, payable in U.S. dollars. For holders of ordinary shares, in order to qualify for the dividend, all valid documents for the transfer of shares accompanied by the relevant share certificates must be lodged for registration with the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, no later than 4:30 p.m. on May 30, 2025 (Beijing/Hong Kong Time). The payment date is expected to be June 10, 2025, for holders of ordinary shares and on or around June 13, 2025, for holders of ADSs.

 

NetEase paid a dividend of US$0.24405 per share (US$1.22025 per ADS) for the fourth quarter of 2024 in March 2025.

 

Under the Company’s current dividend policy, the determination to make dividend distributions and the amount of such distribution in any particular quarter will be made at the discretion of its board of directors and will be based upon the Company’s operations and earnings, cash flow, financial condition and other relevant factors.

 

Share Repurchase Program

 

On November 17, 2022, the Company announced that its board of directors had approved a share repurchase program of up to US$5.0 billion of the Company’s ADSs and ordinary shares in open market transactions. This share repurchase program commenced on January 10, 2023 and will be in effect for a period not to exceed 36 months from such date. As of March 31, 2025, approximately 21.6 million ADSs had been repurchased under this program for a total cost of US$1.9 billion.

 

5

 

 

The extent to which NetEase repurchases its ADSs and its ordinary shares depends upon a variety of factors, including market conditions. These programs may be suspended or discontinued at any time.

 

** The United States dollar (US$) amounts disclosed in this announcement are presented solely for the convenience of the reader. The percentages stated are calculated based on RMB.

 

Conference Call

 

NetEase’s management team will host a teleconference call with a simultaneous webcast at 8:00 a.m. New York Time on Thursday, May 15, 2025 (Beijing/Hong Kong Time: 8:00 p.m., Thursday, May 15, 2025). 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 1-914-202-3258 and providing conference ID: 10046898, 15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 1-855-883-1031 and entering PIN: 10046898. The replay will be available through May 22, 2025.

 

This call will be webcast live and the replay will be available for 12 months. Both will be available on NetEase’s Investor Relations website at http://ir.netease.com/.

 

About NetEase, Inc.

 

NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, “NetEase”) is a leading internet and game services provider centered around premium content. With extensive offerings across its expanding gaming ecosystem, the Company develops and operates some of the most popular and longest running mobile and PC games available in China and globally.

 

Powered by one of the largest in-house game R&D teams focused on mobile, PC and console, NetEase creates superior gaming experiences, inspires players, and passionately delivers value for its thriving community worldwide. By infusing play with culture, and education with technology, NetEase transforms gaming into a meaningful vehicle to build a more entertaining and enlightened world.

 

Beyond games, NetEase service offerings include its majority-controlled subsidiaries Youdao (NYSE: DAO), an intelligent learning and advertising solutions provider, and NetEase Cloud Music (HKEX: 9899), a well-known online music platform featuring a vibrant content community, as well as Yanxuan, NetEase’s private label consumer lifestyle brand.

 

For more information, please visit: http://ir.netease.com/.

 

6

 

 

Forward Looking Statements

 

This announcement 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 expressions. In addition, statements that are not historical facts, including statements about NetEase’s strategies and business plans, its expectations regarding the growth of its business and its revenue and the quotations from management in this announcement are or contain forward-looking statements. NetEase may also make forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in announcements made on the website of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. 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 the online games market will not continue to grow or that NetEase will not be able to maintain its position in that market in China or globally; risks associated with NetEase’s business and operating strategies and its ability to implement such strategies; NetEase’s ability to develop and manage its operations and business; competition for, among other things, capital, technology and skilled personnel; potential changes in regulation environment in the markets where NetEase operates; the risk that NetEase may not be able to continuously develop new and creative online services or that NetEase will not be able to set, or follow in a timely manner, trends in the market; risks related to evolving economic cycles and geopolitical tensions, including the direct or indirect impacts of national trade, investment, protectionist, tax or other laws or policies as well as export controls and economic or trade sanctions; risks related to the expansion of NetEase’s businesses and operations internationally; risks associated with cybersecurity threats or incidents; and fluctuations in foreign currency exchange rates that could adversely affect NetEase's business and financial results. Further information regarding these and other risks is included in NetEase’s filings with the SEC and announcements on the website of the Hong Kong Stock Exchange. NetEase does not undertake any obligation to update this forward-looking information, except as required under applicable law.

 

7

 

 

Non-GAAP Financial Measures

 

NetEase considers and uses non-GAAP financial measures, such as non-GAAP net income attributable to the Company’s shareholders and non-GAAP basic and diluted net income per ADS and per share, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

NetEase defines non-GAAP net income attributable to the Company’s shareholders as net income attributable to the Company’s shareholders excluding share-based compensation expenses. Non-GAAP net income attributable to the Company’s shareholders enables NetEase’s management to assess its operating results without considering the impact of share-based compensation expenses. NetEase believes that this non-GAAP financial measure provides useful information to investors in understanding and evaluating the Company’s current operating performance and prospects in the same manner as management does, if they so choose. NetEase also believes that the use of this non-GAAP financial measure facilitates investors’ assessment of its operating performance.

 

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP net income attributable to the Company’s shareholders is that it does not reflect all items of expense/ income that affect our operations. Share-based compensation expenses have been and may continue to be incurred in NetEase’s business and are not reflected in the presentation of non-GAAP net income attributable to the Company’s shareholders. In addition, the non-GAAP financial measures NetEase uses may differ from the non-GAAP measures used by other companies, including peer companies, and therefore their comparability may be limited.

 

NetEase compensates for these limitations by reconciling non-GAAP net income attributable to the Company’s shareholders to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company’s performance. See the unaudited reconciliation of GAAP and non-GAAP results at the end of this announcement. NetEase encourages you to review its financial information in its entirety and not rely on a single financial measure.

 

8

 

 

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

   December 31,   March 31,   March 31, 
   2024   2025   2025 
    RMB    RMB    USD (Note 1) 
Assets               
Current assets:               
Cash and cash equivalents   51,383,310    41,748,614    5,753,113 
Time deposits   75,441,355    81,008,298    11,163,242 
Restricted cash   3,086,405    3,641,643    501,832 
Accounts receivable, net   5,669,027    6,742,202    929,100 
Inventories   571,548    517,787    71,353 
Prepayments and other current assets, net   6,416,868    6,654,459    917,009 
Short-term investments   10,756,143    17,357,707    2,391,956 
Total current assets   153,324,656    157,670,710    21,727,605 
                
Non-current assets:               
Property, equipment and software, net   8,520,101    8,454,460    1,165,056 
Land use rights, net   4,172,465    4,140,969    570,641 
Deferred tax assets   1,113,435    1,283,673    176,895 
Time deposits   3,025,000    3,025,000    416,856 
Restricted cash   5,208    5,226    720 
Other long-term assets   25,830,685    26,278,094    3,621,218 
Total non-current assets   42,666,894    43,187,422    5,951,386 
Total assets   195,991,550    200,858,132    27,678,991 
                
Liabilities, Redeemable Noncontrolling Interests and Shareholders’ Equity               
Current liabilities:               
Accounts payable   720,549    565,140    77,878 
Salary and welfare payables   4,683,009    2,614,923    360,346 
Taxes payable   2,759,185    4,557,696    628,067 
Short-term loans   11,805,051    9,824,016    1,353,786 
Contract liabilities   15,299,222    17,748,602    2,445,823 
Accrued liabilities and other payables   14,400,641    13,827,806    1,905,523 
Total current liabilities   49,667,657    49,138,183    6,771,423 
                
Non-current liabilities:               
Deferred tax liabilities   2,173,117    2,671,570    368,152 
Long-term loans   427,997    -    - 
Other long-term liabilities   1,228,641    1,179,135    162,489 
Total non-current liabilities   3,829,755    3,850,705    530,641 
Total liabilities   53,497,412    52,988,888    7,302,064 
                
Redeemable noncontrolling interests   84,272    86,005    11,852 
                
NetEase, Inc.’s shareholders’ equity   138,685,606    143,834,194    19,820,882 
Noncontrolling interests   3,724,260    3,949,045    544,193 
Total equity   142,409,866    147,783,239    20,365,075 
                
Total liabilities, redeemable noncontrolling interests and shareholders’ equity   195,991,550    200,858,132    27,678,991 

 

The accompanying notes are an integral part of this announcement.

 

9

 

 

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data or per ADS data)

 

   Three Months Ended 
   March 31,   December 31,   March 31,   March 31, 
   2024   2024   2025   2025 
   RMB   RMB   RMB   USD (Note 1) 
Net revenues   26,851,741    26,747,811    28,828,545    3,972,680 
Cost of revenues   (9,835,821)   (10,475,470)   (10,349,139)   (1,426,149)
Gross profit   17,015,920    16,272,341    18,479,406    2,546,531 
                     
Operating expenses:                    
Selling and marketing expenses   (4,022,204)   (2,818,645)   (2,695,597)   (371,463)
General and administrative expenses   (1,196,475)   (1,162,381)   (956,337)   (131,787)
Research and development expenses   (4,174,758)   (4,469,868)   (4,386,313)   (604,450)
Total operating expenses   (9,393,437)   (8,450,894)   (8,038,247)   (1,107,700)
Operating profit   7,622,483    7,821,447    10,441,159    1,438,831 
                     
Other income/(expenses):                    
Investment income/(loss), net   179,291    (506,077)   692,751    95,464 
Interest income, net   1,277,597    1,174,333    1,060,886    146,194 
Exchange gains, net   15,011    1,535,312    1,803    248 
Other, net   193,888    278,952    255,315    35,183 
Income before tax   9,288,270    10,303,967    12,451,914    1,715,920 
Income tax   (1,485,910)   (1,385,014)   (1,905,143)   (262,536)
Net income   7,802,360    8,918,953    10,546,771    1,453,384 
                     
Accretion of redeemable noncontrolling interests   (958)   (1,039)   (1,049)   (145)
Net income attributable to noncontrolling interests and redeemable noncontrolling interests   (167,456)   (151,435)   (244,565)   (33,702)
Net income attributable to the Company’s shareholders   7,633,946    8,766,479    10,301,157    1,419,537 
                     
Net income per share *                    
Basic   2.38    2.76    3.25    0.45 
Diluted   2.35    2.73    3.21    0.44 
                     
Net income per ADS *                    
Basic   11.88    13.81    16.23    2.24 
Diluted   11.75    13.67    16.06    2.21 
                     
Weighted average number of ordinary shares used  in calculating net income per share *                    
Basic   3,211,665    3,174,113    3,173,899    3,173,899 
Diluted   3,249,452    3,206,100    3,206,362    3,206,362 

 

*  Each ADS represents five ordinary shares.

The accompanying notes are an integral part of this announcement.

 

10

 

NETEASE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

   Three Months Ended 
   March 31,   December 31,   March 31,   March 31, 
   2024   2024   2025   2025 
   RMB   RMB   RMB   USD (Note 1) 
Cash flows from operating activities:                    
Net income   7,802,360    8,918,953    10,546,771    1,453,384 
Adjustments to reconcile net income to net cash provided by operating activities:                    
Depreciation and amortization   567,923    697,447    480,761    66,251 
Fair value changes of equity security and other investments   (368,258)   358,852    (558,499)   (76,963)
Impairment losses on investments   128,417    422,801    89,071    12,274 
Fair value changes of short-term investments   (60,810)   (241,431)   (201,609)   (27,782)
Share-based compensation cost   894,300    931,444    951,872    131,170 
Allowance for expected credit losses   11,600    12,031    16,771    2,311 
Losses/(gains) on disposal of property, equipment and software   2,132    (3,644)   20,293    2,797 
Unrealized exchange gains   (17,509)   (1,542,986)   (28,453)   (3,921)
(Gains)/losses on disposal of long-term investments, business and subsidiaries   (13,487)   232    11,675    1,609 
Deferred income taxes   485,054    404,109    328,272    45,237 
Share of results on equity method investees and revaluation results from previously held equity interest   164,271    (19,437)   (18,668)   (2,572)
Changes in operating assets and liabilities:                    
Accounts receivable   (1,358,711)   517,850    (1,088,960)   (150,063)
Inventories   91,378    42,135    53,773    7,410 
Prepayments and other assets   326,140    (432,196)   (295,178)   (40,676)
Accounts payable   (7,001)   218,689    (148,076)   (20,405)
Salary and welfare payables   (2,178,608)   1,759,382    (2,085,111)   (287,336)
Taxes payable   1,271,822    154,651    1,796,123    247,512 
Contract liabilities   1,574,086    (209,626)   2,526,198    348,119 
Accrued liabilities and other payables   242,070    1,022,944    (290,374)   (40,015)
Net cash provided by operating activities   9,557,169    13,012,200    12,106,652    1,668,341 
                     
Cash flows from investing activities:                    
Purchase of property, equipment and software   (415,018)   (311,982)   (454,071)   (62,573)
Proceeds from sale of property, equipment and software   3,506    9,295    1,336    184 
Purchase of intangible assets, content and licensed copyrights   (188,821)   (120,387)   (298,771)   (41,172)
Net changes of short-term investments with terms of three months or less   2,401,649    3,798,989    (6,138,556)   (845,916)
Purchase of short-term investments with terms over three months   -    (4,560,000)   (2,970,000)   (409,277)
Proceeds from maturities of short-term investments with terms over three months   -    2,853,778    2,708,601    373,255 
Investment in long-term investments and acquisition of subsidiaries   (481,804)   (201,686)   (90,966)   (12,535)
Proceeds from disposal of long-term investments, businesses, subsidiaries and other financial instruments   85,456    355,142    77,428    10,670 
Placement/rollover of matured time deposits   (34,558,836)   (21,691,769)   (49,601,807)   (6,835,312)
Proceeds from maturities of time deposits   46,048,382    40,570,700    43,926,482    6,053,231 
Change in other long-term assets   (34,625)   (73,553)   (678)   (93)
Net cash provided by/(used in) investing activities   12,859,889    20,628,527    (12,841,002)   (1,769,538)
                     
Cash flows from financing activities:                    
Net changes from loans with terms of three months or less   (399,726)   606,092    (2,254,415)   (310,667)
Proceeds of loans with terms over three months   6,998,250    457,000    2,747,550    378,623 
Payment of loans with terms over three months   (957,000)   -    (2,935,677)   (404,547)
Net amounts received related to capital contribution from or repurchase of  noncontrolling interests shareholders   42,214    51,614    42,517    5,859 
Cash paid for repurchase of NetEase’s ADSs/purchase of subsidiaries’ ADSs and shares   (1,233,780)   (1,595,093)   (303,601)   (41,837)
Dividends paid to NetEase’s shareholders   (4,945,016)   (1,982,595)   (5,584,532)   (769,569)
Net cash used in by financing activities   (495,058)   (2,462,982)   (8,288,158)   (1,142,138)
                     
Effect of exchange rate changes on cash, cash equivalents and restricted cash held in foreign currencies   (43,138)   113,792    (56,932)   (7,845)
Net increase/(decrease) in cash, cash equivalents and restricted cash   21,878,862    31,291,537    (9,079,440)   (1,251,180)
Cash, cash equivalents and restricted cash, at the beginning of the period   24,206,658    23,183,386    54,474,923    7,506,845 
Cash, cash equivalents and restricted cash, at end of the period   46,085,520    54,474,923    45,395,483    6,255,665 
                     
Supplemental disclosures of cash flow information:                    
Cash paid for income taxes, net   1,182,711    603,514    1,206,555    166,268 
Cash paid for interest expenses   146,455    24,343    97,424    13,425 

 

The accompanying notes are an integral part of this announcement.

11

 

 

NETEASE, INC.

UNAUDITED SEGMENT INFORMATION

(in thousands)

 

   Three Months Ended 
   March 31,   December 31,   March 31,   March 31, 
   2024   2024   2025   2025 
   RMB   RMB   RMB   USD (Note 1) 
Net revenues:                    
Games and related value-added services   21,460,378    21,242,410    24,048,007    3,313,904 
Youdao   1,391,859    1,339,798    1,298,262    178,905 
NetEase Cloud Music   2,029,541    1,880,490    1,858,388    256,093 
Innovative businesses and others   1,969,963    2,285,113    1,623,888    223,778 
Total net revenues   26,851,741    26,747,811    28,828,545    3,972,680 
                     
Cost of revenues:                    
Games and related value-added services   (6,555,311)   (7,075,562)   (7,495,262)   (1,032,875)
Youdao   (710,356)   (699,045)   (684,035)   (94,263)
NetEase Cloud Music   (1,259,006)   (1,279,951)   (1,175,777)   (162,026)
Innovative businesses and others   (1,311,148)   (1,420,912)   (994,065)   (136,985)
Total cost of revenues   (9,835,821)   (10,475,470)   (10,349,139)   (1,426,149)
                     
Gross profit:                    
Games and related value-added services   14,905,067    14,166,848    16,552,745    2,281,029 
Youdao   681,503    640,753    614,227    84,642 
NetEase Cloud Music   770,535    600,539    682,611    94,067 
Innovative businesses and others   658,815    864,201    629,823    86,793 
Total gross profit   17,015,920    16,272,341    18,479,406    2,546,531 

 

The accompanying notes are an integral part of this announcement.

 

12

 

 

NETEASE, 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 = RMB7.2567 on the last trading day of March 2025 (March 31, 2025) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on March 31, 2025, or at any other certain date.

 

Note 2: Share-based compensation cost reported in the Company’s unaudited condensed consolidated statements of comprehensive income is set out as follows in RMB and USD (in thousands):

 

   Three Months Ended 
   March 31,   December 31,   March 31,   March 31, 
   2024   2024   2025   2025 
   RMB   RMB   RMB   USD (Note 1) 
Share-based compensation cost included in:                    
Cost of revenues   254,935    304,687    233,711    32,206 
Operating expenses                    
Selling and marketing expenses   17,869    7,435    32,578    4,489 
General and administrative expenses   289,636    246,424    261,259    36,002 
Research and development expenses   331,860    372,898    424,324    58,473 

 

The accompanying notes are an integral part of this announcement.

 

Note 3: The financial information prepared and presented in this announcement might be different from those published and to be published by NetEase’s listed subsidiary to meet the disclosure requirements under different accounting standards requirements.

 

Note 4: The unaudited reconciliation of GAAP and non-GAAP results is set out as follows in RMB and USD (in thousands, except per share data or per ADS data):

 

   Three Months Ended 
   March 31,   December 31,   March 31,   March 31, 
   2024   2024   2025   2025 
   RMB   RMB   RMB   USD (Note 1) 
Net income  attributable to the Company’s shareholders   7,633,946    8,766,479    10,301,157    1,419,537 
Add: Share-based compensation   876,898    915,489    935,570    128,925 
Non-GAAP net income attributable to the Company’s shareholders   8,510,844    9,681,968    11,236,727    1,548,462 
                     
Non-GAAP net income per share *                    
Basic   2.65    3.05    3.54    0.49 
Diluted   2.62    3.02    3.50    0.48 
                     
Non-GAAP net income per ADS *                    
Basic   13.25    15.25    17.70    2.44 
Diluted   13.10    15.09    17.51    2.41 

 

*  Each ADS represents five ordinary shares.

 

The accompanying notes are an integral part of this announcement.

 

13