Docoh
Loading...

NTES NetEase

Participants
Margaret Shi Investor Relations-Director
William Ding Chief Executive Officer
Charles Yang Chief Financial Officer
Alex Poon Morgan Stanley
Jialong Shi Nomura
Thomas Chong Jefferies
Eddie Leung Bank of America
Alicia Yap Citi
Elsie Cheng Goldman Sachs
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.
Operator

Good day, and welcome to the NetEase 2021 First Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Margaret Shi, IR Director of NetEase. Please go ahead.

Margaret Shi

Thank you, operator. as today the forward-looking to Company Safe from discussion future relating qualify the U.S. Harbor of the performance and liability note will statements contain to for Please by established are intended Private Securities Reform Litigation Act. performance statements to are and factors. certain Such assumptions subject uncertainties, and of and not guarantees other are future risks

of Stock today's actual differ materially discussion from with of are the of The undertake not obligation risk the Company beyond A to Some annual and the and law. Company Company's control discussion. mentioned certain report to Exchange could Form any forward-looking information, update the results business in by press that the Kong these Commission, required announcement risks including and release its could website is its except cause cause financial and Exchange. Securities factors and those filings our included general as filings NetEase does in results and XX-F on these on Hong of

today's During also financial non-GAAP purposes certain for discuss comparison measures only. management call, will

GAAP of news definition of a release reconciliation quarter please non-GAAP earlier XXXX financial measures results, issued today. and a non-GAAP see earnings financial the For to first

is conference this reminder, recorded. a As being

webcast replay be addition, an investor website this presentation and on conference call In will the ir.netease.com. of a available at corporate NetEase

I William. Executive today will on behalf turn Joining now who Chief Charles prepared call and remarks Officer; is to Financial will our from over on Ding, Mr. Officer. the our Mr. the us NetEase senior of the William management read Charles, Yang, call Chief

Charles Yang

today's in for and you, thank Margaret, Thank everyone, participating you, call.

Company's began exceeding year based to increased remind in XX% to time billion RMBX.X would for RMBXX on the billion. net to with everyone year-over-year a Before renminbi. that all like quarter the I attributable percentages income to we and first shareholders revenue RMBX.X billion record are the We begin,

demonstrate despite Journey first year-over-year business new net also a record decades another a year-over-year. casual Westward XX% RMBXX the two one mobile, growing instances a more rates billion double-digit Online creating our and up players nearly and successes base legacy revenues new flagship with is giving Online In content growth last of our regained for operation, Westward exemplary both leveraging Tianxia consume genres, games Journey and at knowledge in year. high case. has is continued growing revenues, flavors after quarter, and QX, MMORPG in strong in to Our all Fantasy of legacy to after this from III game It rare comparable feel reached reaching of to MMORPG, non-MMO added where MMO the some PC users fresh growth we and our maturity, a recent titles enjoy.

Kong The they grossing at appeal longevity, players the in with was Doom's has collaboration remarkable remained by among Day interest also circle, included We users quickly the who year, strong spotlight the players also crafted to quarter games mini event last LifeAfter, generated in of Movie Onmyoji first an versus Godzilla remaining Invincible. discussions quarter at young forefront as a the the and rejoined China's which game. inflow Onmyoji, during large title leading in with end users. a the off iOS first strong game Monster. received well Identify LifeAfter and top of of showed returning iconic new fought chart. Other

a China, numerous strong we set distinctive third with Between gothic event. celebrating this the tournament, anniversary IP the identifies, a holding to Invincible quarter Hangzhou, with the steady a global Japanese Call January to experience draw its remained close with loyalty annual end April finale the Invincible them proven genre. trendsetting collaboration its corporate the million this in with classic engagement, Slayer, May, a quarter, This game position in top in our be as light style. of innovation. rolled a players of market, in up first to to attention echoes our thrilling also has Despite competitive young championship game continues Abyss, players, being in hosted participate bringing further art with popping in in pioneer the user up strengthening we highly During year to X attracting Invincible unwavering a ACG anticipated community. globally Demon from first in well out game games product enemy, Onmyoji's DNA

new In ones Revelation new game since January. terms with year. the started of in have few games, a of mobile We launched beginning we this

last flagship both our discussed of self-developed games brand on we Elysium We the iOS the China. Chinese these new launched Legends then RPG in based reached game capturing download Shortly RPG of self-developed after both chart a brings is legendary players. returning fans and quarter, As card releases, March, that our together game in history. figures this title, in PC top MMO

car expand Japan's market, quickly iOS In one quarter. efforts overseas grossing release, number to Cube Nizoral download Pokémon top the times and anticipated audience. Pokémon, reached of our January, that on once operation competitive based couple offerings in Pokémon Quest Islands. maintaining recently, climbed on nostalgic game invites the brought and Featuring licensed more the game top highly chart introduced Duel continued its their team chart casual our to our we we And Yu-Gi-Oh! Shortly front, to game of Konami. Links the battle spot befriend license create steady first to May, our players in titles. we again existing iOS from while the Pokémon the through the On after we a China. IP of Quest to a Q-shaped in tap the domestic during

in February, sophisticated Japan's localization more better these their preferences, chart. us to Japanese was collaboration Japanese gain The Neverland, a games crowned two Identify of IP, helped efforts. grossing of with well-known much a Promised in us has Following top on users The success understanding also number allowing iOS be and

by to and May on Japan all e-sports activities. the ceremonial value tournament today, our games SLG of greatness Infinite This a Infinite and game, and its championship up well which our For Japanese carnival of regions, Users officially other overseas of upcoming the that appeal day, to releases globally instance, the them hopeful with we popularity bring further that In in users titles want users, the upward couple Lagrange as past other games game we next game Anniversary in coming Twitter are each similar X, Japan our With the and annual the the of an on show top targeted Association already available exciting event for the example, has our the one in as the will markets anticipated annual Japanese years. two a markets world gaining we Invincible, Take in in ramp XXXX revenue Nizoral trend generation U.S. on the start April, since the marked footprint Europe. recognized will Lagrange, of millions launched more greatly first found brought particularly expect Europe. and and next time. occasion. be U.S. we of Similar topics We to trending and of in event. in gradually months. expand feel as widely longevity and stage over recognition invited the overseas to biggest includes celebration online the that the the in become sense

is SLG, Awakened extend first Harry very years. we anticipated our that of this into development also highly title track meet been audiences. a We As The will success Magic in Potter: have to number under eager markets. SLG next-gen hope for our overseas on

social wizard Polish soon, magical to We this taking adventure. this the and globally. XX fans crafted Bit announced growth able on year, platforms. this are IP we publish develop elaborately thrilled our mobile access with players com the that world's will bring of to hand the game survival world to players joined version mobile Later partner, on this month, be around game post-apocalypse to Studios, we Earlier a renowned

other To those pipeline Breaker, War, and mentioned, have our Lord to Chronicle. in we World Immortal Nightmare the of Adding includes addition, Diablo the exciting pipeline. In handful we of Rise Rings: just titles our also Ghost a

event this business For online more will English days game be have dedicated global a which titles, join on product XX, first the on will these partners our our launch for players and annual and hosted for May later, year section details two please time.

talents been including most together from are hosted has XXXX of technology. and to players attention world-class which gurus this our worldwide. developers covering others topics the our pivotal to like a We foreign and games design, people. Summit in-depth mind, industry maintaining veterans industry. NetEase encourage ideas in three-day share Western the philosophies competitive element external just in event industry the exchange Game that as experiences, their important partners, and a market R&D as Developer with many developers The The game developers edge wide well in in and in our value. starting With infrastructure, brought internal proud art our We delivering April development in we community share long-term with game is and industry and game

COVID-XX. of In our paid by new despite quality, and billion tutors year enrollments the year-over-year to from last our K-XX strong of XXX,XXX. by K-XX teaching to optimum and to back in business, quarter. XXX% to doubled first was Youdao's to instructors education continue Gross growth to a IPO XXX comprises X,XXX XXX% sustainable outbreak since Total up ensure student turning Now the team, Youdao to year-over-year the strengthen improved Youdao in order servicing XXXX. well-trained achieved the a XX%, high and from significantly gross the RMBX.X end margin which quarter. match over increased overall revenues its and net record year-over-year the first growing reaching scale base billings due segment, we

is most localized Chinese for for our ensure cases that different took to syllabus junior school used offer. content high of parts a pilot one different of us case. China, important Given We as the is we in agenda

revenue semester, Youdao's and introduced Chinese further devices translation Korean continued students XXX%. welcomed and language bilingual a spring junior learning we our very In of students. also During school languages range classes March, Pen meet we XX high of in of growth to needs of turned provinces. demand to very the The supporting launched of localized the Dictionary wider meeting the to Pro learners. different be a X.X by Net year-over-year past XX of versions version, a Chinese, out have up of effective

more pen the Youdao Youdao app, the our integrated the also of further even and making off-line/online functions dictionary transition efficient effortless. and Dictionary

a we the Looking and hand tech of technologies Youdao as in will XXXX, to grow upper ahead ed will its products position provider models the leading intelligent And market. into evolving are continue our and us after-school and diversified business learning products. confident services that give tutoring

its celebrating anniversary Way, For come last our X-year we Music Cloud long business, have a month.

to proud say creative era. have are We music possibilities certain in this digital for new that we

features Our that has more platform, large we post household the content which music discover a is highly our base among With emblem as become to and a are on cultural interactive seen name vast particularly community, a music. lovers young or a explore generation. younger platform, willing of 'XXs recognized and widely

work. We shine. the a We been crucial modern time, the and for remarkable independent strongly past indie believe music ceremony And natural the driving industry. encouraging the to signature held the and outlet musicians to them we creative our music era. platform have in independent third year us their to of music for musicians event, a independent uniquely stage positions nurture In force are creating annual our April, the continue for their celebrating artists artist

original ultimate we and world the the of music, audio continue new, want music and a together fans bringing from library pieces our to to with providing influential addition music experience. around In unique

a digital recording partnership world's of just We Entertainment, largest companies. announced have Music direct Sony three one with distribution the

labels. this proud Following China. are have second signed see changes happening positive to arrangement three the And big in the these music that licensing UMG, direct a we in with industry we is

on to Yanxuan. Moving

the we resonated year brand, anniversary, of private new their notion voice you class, lively express products with discussions. around a needs, to among way further strongly along around developing new proposition, value a this we young the promotion As consumer intended a centered Yanxuan's strengthened like, label revolve developed live the class. and This middle with through middle audience, that our fifth intended appeal its the campaign starting brand

a since highly we well sold year, rolled popular products, range last out which Yanxuan of have their introduction. the During

path products recognized incubate introduce signature for to many laundry products, fragrance, for on recently strategy of a has the of to products and top-selling Yanxuan's a We see smooth our product such paved proprietary became hit wireless multiple bathroom to proprietary quickly and year. path strengthen some as in are to more products those introduced working products, emerging smooth Our pods, of products portfolio. us earbud, greater a in this potential we most new number star our We which number platforms categories. of us

to we efficiency operating in the continue first quarter. Additionally, our optimize

During inventory turnover are we and start summary, the In fulfillment a quarter, both days strong improving. in XXXX. were our off the efficiency to

Our domestic is while getting new hold ready to game exciting our continue titles both existing portfolio strong. for players, and global for games

comments. brief growth new all for of overview move music and primary concludes and generating footing as and provide our education, quarter to be This and businesses value each across will a of of a first phase users results. stakeholders. XXXX very diverse William's entering objective additional our e-commerce financial I now online are forward, content our on solid as continue well. creation Our we Premium our businesses

will Given through release revenues the our We for billion, you to financial RMBXX.X increase abbreviated Total presenting today highlights. were today's be I issued limited quarter first press further net billion year-over-year. a XX% some for call, read the time $X.X representing encourage or details. earlier on

revenues as first of revenue year-over-year This launched Net from well from net to Westward quarter. was games year-over-year. such as Revelation Fantasy increase services due Online. game, mobile XX% from our PC approximately contribution HX increased online billion, Fantasy services Westward online newly accounted mobile net were Journey games from the games in Our up XX% RMBXX revenues game for Journey as revenues primarily

from online Music up growth costs both the well sales were revenues quarter, as billion, others by from innovative learning XX% fast and year-over-year, of year-over-year, RMBX.X Yanxuan increased driven mainly due intelligent of its streaming. RMBX.X contribution first reached Net revenues NetEase and businesses and devices. billion net PC Youdao's for Cloud up live XXX% to

was gross as our was with the the XX.X% online XX.X%. first for breakdown profit Our services GP margin in margin quarter, follows: total game

titles XX.X% mix Pen, optimization in reminder, self-developed such the primarily economies product of learning businesses was margin is cost mobile same of improved games. as which XX.X%, with effort sales a Gross growth The as Youdao due this with attributable margin was narrow also licensed and of scale continuous and for significant services and number stable, as XX.X%, It revenue others a due margin compared from last in of of to year. to than carries gross GP fluctuation the its Youdao to was based and innovative PC As last of generally the some on the compared higher learning substantial hardware structure. well the smart year. the lines. growth is margin hardware with the Dictionary for XX.X% gross quarter other first period

of margin was Yanxuan segments impact While rest the and Cloud decrease Music improved for the from partially NetEase has by offset margins significantly, the in GP year-over-year line. this the the in business

the total XX% net quarter, first of the total representing RMBX.X For operating billion, revenues. were expenses

in revenue, quarter. the Our and a expenses XX.X% percentage selling net of marketing as was

were a as expenses marketing and the than percentage selling below our previous lower quarter. of Youdao, XX%, Excluding net revenue

adopted core each expenses fluctuation revenue as and are growth. remain percentage quarter. from were content billion, is particular a in largely of game risk depends number and marketing As to new plan development, marketing R&D the product they to the and a for launches. largely on launches investing which of suitable in new selling revenue creation committed our previous in RMBX.X stable most in We the games The quarter. a reminder, genres

tax net benefits XX%. each regarding income with Effective our certain estimates attributable billion applicable a tax last obligations was expenses it by to in rate first quarter The XX.X%, $XXX this totaled shareholders the tax represents revenue, to for Company As quarter. were quarter. the and the of RMBX.X million. net percentage R&D in or compared Non-GAAP rate effective quarter XX.X%

RMBX.XX Our non-GAAP basic were earnings or $X.XX. per ADS

position remains strong. cash Our

year-end In Directors per share and or are As of policy, noncurrent approved the total billion, totaled of $X.X of of report our and very $X.XX time investment current as RMBXXX cash per Board dividend last a quarter pleased our end, to with the balance we short-term and year. billion equivalents, that with dividend our RMBXXX ADS. compared accordance cash deposits has

Lastly, of the under a for Approximately total by share the to ahead has repurchase the your for ADS repurchased would been cost now Q&A. attention. like $XXX million. approximately questions. We approved call our first million your X to you Thank Board, in program quarter go Operator, please open to

Operator

We'll Stanley. Instructions] take question Poon [Operator our Alex from first Morgan with

Alex Poon

My question press is release. regarding the

coming Porter, Harry Immortal next months We Rings, Diablo these of few will have Lord the big -- months. the be mentioned in titles, coming in the

very So the you around I'd details like about and big understand these Thank much. three launch schedule titles. to

Charles Yang

do mentioned others a your Lord very the just Potter, and these Immortal in these regulators. now. this answer games directly I confidence for second including highly will you, already year. pipeline, Rings, I'll Alex. the license of Harry Thank We have that And like half visibility launched approvals few question a and Diablo very, many strong games from rich English. in games have the of of obtained the be Most of anticipated already

two two fact, to annual of our would more as well event encourage to May details exciting game and event, XX days' as will details a new be gala please. our community join disclosing we get time, little the investor titles. online patience, on the days more you In I on existing so some games later, day, in bit just more

Operator

from Shi question next Nomura. our with take We'll Jialong

Jialong Shi

management. ask my will evening taking first my Thanks myself Good I translate will Chinese. I later. for question Thanks. in questions.

some have able game question. studios were my translate In will I which titles. successful So, launch there years to independent recent been

through going third-party like their studios publishers. instead their also game these new published on of NetEase, own Just games

NetEase the these in cope the the that is plan my does China's with to And competition gaming challenges from case, is more small becoming studios? intense? you if space, So quite think game competitive question but mobile how do is,

William Ding

Language] [Foreign

Margaret Shi

in environment in mean business creativity, that is years. over XX the that in overall NetEase, great especially recent You for It you -- companies for China. had have games, good mentioned means the success have the a been we years. very

-- happy innovate to Thank continue to have smaller will And are to continue exceed. companies with for And and We continue rise will achieved. we that to thrive. we the you. success the gaming

Operator

next Thomas Jefferies. We'll our question take Chong with from

Thomas Chong

strategies? the question. thoughts for online in and our strategies, management and Can format Hi, long taking audio user you my on streaming, comment particular, subscription thanks live about any

Charles Yang

answer Okay. question Thomas, couple Thomas, there do are English. -- past you plenty mentioning in want I there will in product Okay. in we've innovation Yes, streaming, in the to are directly are possibilities to very and question your live terms English? your in robust translate as we possibilities strong new And as this out. of been around advertising of vertical. terms of encouraged that we and try continue innovate streams in centered to see both and quarters, of monetization subscription, music continued growth

NetEase relatively right it the now, So eight now, still in old been despite Cloud that early Music, stage. years nascent is fact it's its

in So, a That's And about formats you long mentioned very all the you important audio. specifically, strong. have asked that very format lots growths possibilities. multiple of been Revenue vertical.

we umbrella, monetization that's fronts In how audio. And this coming one the of generation product think music many fact, as this product actually features will brand potential multiple With more I live specifically a focus the product on targets upside are unique terms of of come this proven of long on in to pioneer are the players revenues powered other It into NetEase well very Music, format enthusiasts. by vertical. just long time lines younger Thomas? there that our we Cloud features And under confident Majority are NetEase as potential. from format has both this vibrant and and suit audio. following actually in forerunner that, vertical. product innovations, more just like been streaming particular

Operator

Instructions] We'll question America. next [Operator our from Leung Eddie take Bank with of

Eddie Leung

bit the a actually follow-up on industry. is question my So game a of

games game of the that globally, to while PC it IPs extent, I or developers, technology, seems But Journey Fantasy observe Westward whether be are console turn new relying, Journey big it's new the and IPs. to one, on some interesting Westward series. to iconic to old mobile some companies with congratulations a up some new the versions So come no number success of seems on it of be or if to matter continuous successful able

kind indication So game think just global you. And strategy? we how Thank there a leading like developed any of wondering, company, our issue? as this is when we game about

William Ding

Language] [Foreign

Margaret Shi

to We we do create what perspective, not will it's titles. comments. think, new IP, From continue obviously, more flagship we it's importantly, think, of a do We entirely important agree operation titles. companies to long-term your good we NetEase But with for new are doing. new

industry-leading past NARAKA: of the number titles, very great Over years, a in Onmyoji, Justice innovative including and to a few. launched name we've BLADEPOINT,

and we're create we well to titles. a think stability our as existing of we long-term games So, what will doing continue as do maintaining to new

Charles Yang

And add come we in deliver It witness there profile unique game the decades. Eddie, a are to one earlier very again, the point, the old NetEase are continuous fewer extend innovation new or steady. new well financial two, this as the is something of can steady when a able longevity is, and NetEase been It very performance talked couple of particular the in past in up more because monetization for know-how has quarter is combination we that financial to very, just two you launch with operational as over of to effective improving titles. as past. titles gradually of and combination to quarters,

Eddie Leung

true. very that's guess I

Operator

[Operator next Instructions] Yap with from Alicia We'll take the question Citi.

Alicia Yap

Cloud My related to is Music. question the

any music margin now NetEase truck the subscription that the And growth, all music the also, gross the into of music major business driving user? content that label, help the for extending elaborate will selection that subscription on the can on are partnership, any you with material strategy And change partnership impact? with music IoT OEM? interest So change with also will directly management overall the the currently the three driving the signing

William Ding

Language] [Foreign

Margaret Shi

That's actively actively for community or Music -- terms another As providers companies or been partnerships is furnishing, platform always NetEase China. home answer with in music enthusiasts, their order to for seeking IoT NetEase Cloud promote the area or to have third in question. music And help growth the Music. label of content furnishing important them or streaming in Cloud again, social it's

Operator

next Goldman Sachs. our take from Elsie question We'll with Cheng

Elsie Cheng

are My lot this titles genres. about markets, the And there games. different exciting the plan first there. that first of question for year. seems the we a is with international touch of audiences different it We That's have noticed for key over international to base actually

question follow innovative sorry, the is is great. And fourth a that the international fluctuation then seasonal quarter e-commerce I And want we're second the the thinking where quarter contributing is the positioning have ourselves, innovative sort in of there little slow. the So further different how just could would maybe to up And color businesses. in bit quarter revenue then noticed contribution more the are more businesses. is first -- be here about to be differentiated We we on on contributing that, strategy? do if we're of actually competitive when markets, detailed any

become So another I growth for one term, potentially just e-commerce, these curve in is Music, wanted are in curve describe how of them the the to would curve growth two? lines, for driver major to understand we and have do sort Company? they currently you And where targets any the major growth is the on one for the that a long growth two more of of the so Cloud terms bit

William Ding

language] [Foreign

Margaret Shi

that's have the regions by devices will And different are figure have are user out. parts confident countries there different users we used and need there. products very we because we Yes, different are culture -- noticed to that of there resonate -- in we that this the and with we world, particular targeted do different

we we a LifeAfter. PC very number the well And a with testing game, have in very Steam, really we BLADEPOINT Out are -- has and it NARAKA: including -- on arts. type during successful based martial are of launched example, users and pleased been that phase. combat on For global to Knives very see have titles, by we users. that -- of responded game new resonated Chinese a Japan, we performing has It's has well mainly the the that already have Recently,

Charles Yang

Elsie, that I'll in answer English. directly second your question, And for

Our pace education, all game newer businesses, NetEase online whether comparing are them to it's our Yanxuan, relative younger in businesses. music, of online

by So and business in each might a have should faster experience different very look we at promising When They BUs BU quarter, younger game you verticals however, large, general. grow than trajectory. think different these seasonality. growth my

instance, the QX game strong For instance, seasonality because semester throughout Chinese the a traditional where witnessed is Likewise, performance for calendar relatively for Year peak New for a also education season, season it's e-commerce. of as different low courses specifically the year. in

XXXX, appeal very elevated And basis, strong have all much to the road what that you cultivated than want premium What the Operator, as and faster user is at holding verticals been down a the online and all, all to trend instance, But product in a the as incubated common eventually growth. of quarterly emerge, with my -- both we and services. be growing robust and on offerings about next please. for to don't achieve very they services is will continue our game NetEase So fluctuation. has common grow overly experience. a users innovative across want when in annual to concerned sustainable in lines generally speaking, look businesses deeply That others what we question, the line well board. is as and corporate and DNA

Operator

questions no that at time. Instructions] like the It I'd further to [Operator call this back sir. there you, are Thank to management turn the appears for remarks. closing

Margaret Shi

joining you us today. Thank again once for

feel contact free day. to questions, any Investor further Relations. a have our If great you please Have

Operator

your for participation. call. you Thank today's concludes This

You may now disconnect.