HANGZHOU, China - NetEase, Inc. (NASDAQ: NASDAQ:NTES), a prominent internet and game services provider, disclosed its financial outcomes for the first quarter of 2024, revealing a shortfall in earnings per share (EPS) and a slight revenue miss compared to analyst expectations.
The company reported a non-GAAP EPS of RMB10.37, falling short of the consensus estimate of RMB12.59. Revenue for the quarter was RMB26.85 billion, just below the analyst forecast of RMB26.97 billion.
The market response was decidedly negative, with NetEase shares dropping 4% following the announcement. This decline indicates investor disappointment as the company's financial performance did not meet the market's expectations.
In the first quarter, NetEase saw its net revenues increase by 7.2% to RMB26.9 billion (US$3.7 billion) compared to the same period last year, driven by growth across its key business segments.
The company's games and related value-added services net revenues grew by 7.0%, reaching RMB21.5 billion (US$3.0 billion).
Youdao (NYSE:DAO), the company's intelligent learning subsidiary, experienced a significant revenue increase of 19.7%, while Cloud Music's net revenues rose by 3.6%.
Despite the revenue growth, NetEase's total operating expenses surged by 22.4% to RMB9.4 billion (US$1.3 billion), impacting the company's profitability. The increase in expenses was attributed to higher marketing expenditures and staff-related costs.
Mr. William Ding, Chief Executive Officer and Director of NetEase, commented on the results, highlighting the sustained success of the company's established game franchises and its expansion into new genres. "
With a portfolio featuring premium-quality games and more diversification across genres, we are well-positioned to extend our exciting gaming experiences to audiences around the globe," said Mr. Ding.
He also emphasized the strong performance of Cloud Music and Youdao, stating, "Our focus in 2024 remains on crafting products and content that ignite the market with passion and deliver vibrant experiences, ultimately creating value for both our users and our Company."
NetEase's financial report also included details on its share repurchase program, with approximately 8.9 million ADSs repurchased for a total cost of US$811.0 million as of March 31, 2024.
Investors will be closely monitoring the company's strategic moves and operational efficiency in the coming quarters as NetEase navigates through the competitive landscape and strives to meet market expectations.
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