NetEase Announces Second Quarter 2021 Unaudited Financial Results

NetEase, Inc. (NASDAQ:NTES and HKEX: 9999, "NetEase" or the "Company"), one ofChina'sleading internet and online game services providers, today announced its unaudited financial results for the second quarter endedJune 30, 2021.

Second Quarter 2021 Financial Highlights

• Net revenues wereRMB20.5 billion(US$3.2 billion), an increase of 12.9% compared with the second quarter of 2020.
• Online game services net revenues wereRMB14.5 billion(US$2.3 billion), an increase of 5.1% compared with the second quarter of 2020.
• Youdao net revenues wereRMB1.3 billion(US$200.3 million), an increase of 107.5% compared with the second quarter of 2020.
• Innovative businesses and others net revenues wereRMB4.7 billion(US$728.4 million), an increase of 26.0% compared with the second quarter of 2020.
• Gross profit wasRMB11.2 billion(US$1.7 billion), an increase of 14.3% compared with the second quarter of 2020.
• Total operating expenses wereRMB7.4 billion(US$1.2 billion), an increase of 32.2% compared with the second quarter of 2020.
• Net income attributable to the Company's shareholders wasRMB3.5 billion (US$548.5 million). Non-GAAP net income attributable to the Company's shareholders wasRMB4.2 billion(US$654.8 million). [1]
• Basic net income per share wasUS$0.16(US$0.82per ADS). Non-GAAP basic net income per share wasUS$0.20(US$0.98per ADS). [1]

Second Quarter 2021 and Recent Operational Highlights

• Expanded user base and diversified portfolio with new games including:
• Naraka: Bladepoint, which led the top-sellers chart on Steam following its global launch in August.
• Other exciting titles such as Infinite Lagrange,Pokémon Quest,MARVEL Super WarandAce Racerthrilled players.
• Invigorated players with longstanding flagship titles including the Fantasy Westward JourneyandWestward Journey Onlineseries, as well as popular hit games including Life-After,OnmyojiandOnmyoji Arena.
• Announced that the mobile gameHarry Potter: Magic Awakened, co-developed by NetEase and Warner Bros. Interactive Entertainment under the Portkey Games label, will launch on September 9.
• Enriched strong game development pipeline with exciting titles including Nightmare Breaker,The Lord of the Rings: Rise to War,Diablo®Immortal™andGhost World Chronicle.

"Our businesses continued to thrive in the second quarter generating total net revenues ofRMB20.5 billion, growing 12.9% year-over-year," said Mr.William Ding, Chief Executive Officer and Director of NetEase. "Our existing games grew steadily despite a high base last year, and we are excited about our robust pipeline of new titles that builds on our leading game roster. We kicked off our game-release schedule for the second half of the year with several gripping new hits such as Naraka: Bladepoint, capturing wide interest from passionate game players globally. With confirmed plans to release the game Harry Potter: Magic AwakenedonSeptember 9, we are eager to introduce more amazing titles later this year. In addition, we continue to boost our content ecosystem and bring innovative product additions to NetEase Cloud Musicstrengthening its highly engaged music-centric community," Mr. Ding concluded.

NetEase shares rose nearly 2% in premarket trading.