NetEase Stock Jumps 7% on Tripled Profits

First quarter results sent the shares of China's gaming giant 7 percent higher intraday Thursday, to $280.01 apiece.

Author: Belinda Zhou   

NetEase Inc. (Nasdaq: NTES) said its income in the first quarter has more than tripled from the previous year, seeing its stock rise nearly 7 percent intraday, to $280.01 per American depositary share.

The Chinese online game services provider reported that its revenue reached $2.7 billion for the first three months through March, up 30 percent year-over-year. Net income was at $354.9 million, or $2.75 per ADS, with a significant increase of 217 percent that topped Wall Street estimates.

"We are pleased to begin the year with a strong quarter," William Ding, the chief executive officer and director of NetEase, said in a statement after markets closed Wednesday. "Our heightened emphasis on online games, e-commerce, advertising, online education and music allows us to sharpen our focus on areas where we see the most potential for sustainable, long-term growth," he added.

The company said its online game services, increasing 35 percent year-over-year, contributed the most by segment, making up about 65 percent of total revenue for the quarter. Revenue from mobile games accounted for approximately 72 percent of revenues from online game services.

NetEase, China's massively multiplayer online role-playing game provider, has recently expanded its global business with products including Night Falls: Survival, Knives Out, Identity V, Justice, and others. 

"After a few years of hard work, the NetEase brand is now widely recognized in not only MMORPG, but also in a broad range of non-MMORPG categories, both in China and internationally," Ding commented.

The company has extended its partnership with Blizzard Entertainment in January and bought a minority stake in French video studio Quantic Dream S.A. in the same month. "We also made further progress on international fronts, with Night Falls: Survival and Cyber Hunter making strong debuts in Japan," Ding said.

Key players in China's gaming industry like NetEase and Tencent Holdings Ltd. (HKEX: 0700) recently faced challenges with getting approvals for video game releases, issued by China's State Administration of Press, Publication, Radio, Film, and Television. Regulators in China tightened their grip as a response to the country's worsening rates of myopia, or near-sightedness in 2018, but resumed the approval process in April, viewed as a green light to game developers.

NetEase said it plans to pay a dividend of 69 cents per ADS for the first quarter of 2019, to be paid on June 7 to shareholders of record as of May 31. The preceding dividend payout of 48 cents per share occurred on March 15.

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NetEase Team of Online Gaming, Source: NetEase