Why NetEase Shares Are Rising Today

  • NetEase, Inc NTES reported first-quarter FY23 revenue growth of 6.3% year-on-year to $3.65 billion, beating the consensus of $3.56 billion.
  • Segments and margins: Games and related value-added services revenues grew 7.6% Y/Y to $2.92 billion. The corresponding gross margin increased by 450 bps to 66.7%, attributable to changes in the revenue mix.
  • Youdao, Inc's DAO revenue declined by 3.1% Y/Y to $169.4 million, and the corresponding gross margin decreased by 140 bps to 51.7% due to reduced net revenues from learning services.
  • Also Read: What's Going On With Alibaba Stock Wednesday
  • Cloud Music's revenues were $285.4 million, down by 5.2% Y/Y, and its gross margin expanded by 1,020 bps to 22.4% due to improved cost control measures.
  • Innovative businesses and other revenue rose 12.8% Y/Y to $270.5 million, and the gross margin increased by 370 bps to 25.4%.
  • Non-GAAP EPADS of $1.69 beat the consensus of $1.25.
  • NetEase held $13.9 billion in cash and equivalents and generated $873.8 million in operating cash flow.
  • Dividend: The board approved a dividend of $0.4650 per ADS for Q1 versus $0.2700 per ADS for Q4 FY22 ($0.3220 per ADS for Q1 FY22).
  • CEO William Ding shared plans to unleash several highly anticipated games spanning various genres and geographies, primarily focusing on developing games that resonate with diverse demographics. Ding also disclosed efforts to raise the bar with dynamic, premium content.
  • Price Action: NTES shares traded higher by 1.81% at $85.00 premarket on the last check Thursday.
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