3Q Investor Presentation

Transcription

1 3Q 2017 Investor Presentation 1

2 SAFE HARBOR STATEMENT This presentation contains statements of a forward-looking nature. These statements are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends, "plans," "believes," "estimates" and similar statements. These forward-looking statements are based on the current assumptions, expectations and projections of the Company's management about future events. Although the assumptions, expectations and projections reflected in these forward-looking statements represent management's best judgment at the time of this presentation, the Company can give no assurance that they will prove to be correct. Numerous factors, including those related to market conditions and those detailed from time-to-time in the Company s filings with the Securities Exchange Commission, may cause results of the Company to differ materially from those anticipated in these forward-looking statements. Many of the factors that will determine the Company s future results are beyond the ability of the Company to control or predict. These forwardlooking statements are subject to risks and uncertainties and, therefore, actual results may differ materially. The Company cautions you not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. All references to Company and NetEase as used throughout this presentation refer to NetEase, Inc. and its subsidiaries. 2

3 COMPANY OVERVIEW Founded in 1997 and listed in NASDAQ since 2000, NetEase, Inc. is a leading China-based internet technology company that develops and operates some of China's most popular online PC and mobile games; and provides advertising services, services and e-commerce platforms. 3

4 MARKET SNAPSHOT In USD $39.19 billion million $2.86 Market Cap (11/14/17) ADS Outstanding, diluted (3Q17) Earnings per ADS, diluted (3Q17) $1,875 million $380 million $6.1 billion $46.13 Net Revenue (3Q17) Net Profit (3Q17) Cash, time deposits and short-term investment (09/30/17) Cash, time deposits and short-term investments per ADS, diluted (09/30/17) 4

5 BUSINESS SEGMENTS PC & Mobile Games Leading provider of self-developed online PC-client games to internet users in China; licensee of leading games by Blizzard Entertainment and Mojang AB (a Microsoft subsidiary); developer & publisher of quality mobile games. Internet Media Operating a broad and growing network of leading mobile applications, services and popular social communication platforms, as well as internet portals with enriched content, enabling advertisers to reach one of the largest user bases in China. Services The largest provider of free services in China, giving great marketing value for advertisers who wish to reach our audience of consumers. E-Commerce & Others Diverse portfolio of services available to Chinese consumers on both desktop and mobile including Kaola.com and Yanxuan, NetEase s cross-border and private label e-commerce businesses; online video broadcasting services and insurance products. 5

6 ONLINE GAMES - PC GAMES Flagship Self-Developed PC titles Flagship Licensed PC titles 6

7 ONLINE GAMES - MOBILE GAMES Over 100 titles in portfolio Launching NetEase mobile games in China Diversified portfolio and strong pipeline Publishing overseas mobile games in China Licensed games from Blizzard, Konami, Netmarble, SQUARE-ENIX, etc. Launching mobile games in overseas markets Offices in United States, Korea and Japan 7

8 ONLINE GAMES - MOBILE GAMES Mobile Games as a Percentage of NetEase s Total Online Games Net Revenue 57% 64% 73% 72% 68% 3Q16 4Q16 1Q17 2Q17 3Q17 8

9 ONLINE GAMES RMB million Online Games Net Revenue and Gross Margin Gross Margin 67% 67% 66% 65% Mobile Game Net Revenue 61% PC Game Net Revenue 64% 63% 63% 10,736 8,959 9,430 8,112 5,503 6,015 6,438 6,568 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 9

10 INTERNET MEDIA Information Entertainment and Education Social Tools 10

11 INTERNET MEDIA RMB million Advertising Services Net Revenue and Gross Margin Gross Margin Net Revenue 68% 62% 66% 65% 65% 57% 68% 68% Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 11

12 SERVICES 12

13 E-COMMERCE AND OTHER SERVICES E-Commerce Virtual Products Entertainment Finance 13

14 , E-COMMERCE AND OTHERS BUSINESS , E-commerce and Others Net Revenue and Gross Margin Gross Margin Net Revenue 6% 20% 34% 34% 23% 15% 11% 12% 3,735 3,350 2,475 2,460 1,791 1,507 1,983 2,080 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 14

15 FINANCIAL HIGHLIGHTS Net Revenue Net Income RMB billion RMB billion Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 RMB billion Operating Cash Flow Value Returned to Shareholders 15.5 US$ 2016FY 4Q16 1Q17 2Q17 3Q Dividend per ADS $3.30 $1.01 $1.08 $0.83 $ Share Buyback $172.7m - $23.7m $76.5m $149.4m Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 15

16 BALANCE SHEET SUMMARY in millions Dec 31, RMB Sept 30, RMB (Unaudited) Sept 30, USD (Unaudited) ASSETS Current assets: Cash and cash equivalents 5,439 2, Time deposits 19,361 30,141 4,530 Other current assets 25,120 26,110 3,925 Total current assets 49,920 58,827 8,842 Property, equipment and software 2,420 3, Other non-current assets 5,692 4, Total assets 58,032 66,500 9,995 LIABILITIES, REDEEMABLE NONCONTROLING INTERESTS & SHAREHOLDERS EQUITY Current liabilities: Deferred revenue 7,531 6, Other current liabilities 12,004 13,930 2,093 Total current liabilities 19,535 20,096 3,020 Total liabilities 19,569 20,216 3,039 Redeemable Noncontrolling Interests Total shareholders equity 38,463 45,717 6,871 Total liabilities and shareholders equity 58,032 66,500 9,995 16

17 INCOME STATEMENT SUMMARY FY 16 RMB FY 16 USD 3Q16 RMB 1Q17 RMB (Unaudited) 2Q17 RMB (Unaudited) 3Q17 RMB (Unaudited) 3Q17 USD (Unaudited) QoQ Change (Unaudited) YoY Change (Unaudited) Total net revenues: 38,179 5,499 9,212 13,641 13,376 12,478 1, % 35.5% Online game services 27,980 4,030 6,568 10,736 9,430 8,112 1, % 23.5% Advertising services 2, % 12.1% , e-commerce and others 8,047 1,159 2,081 2,460 3,350 3, % 79.5% Gross profit 21,664 3,120 5,334 7,484 6,737 5, % 11.5% Gross profit margin 56.7% 56.7% 57.9% 54.9% 50.4% 47.7% 47.7% - - Operating profit 12,629 1,819 2,847 4,772 3,405 2, % -10.4% Operating profit margin 33.1% 33.1% 30.9% 35.0% 25.5% 20.4% 20.4% - - Net profit attributable to the Company's shareholders 11,605 1,671 2,740 3,923 2,972 2, % -7.8% Diluted earnings per ADS $ $ % -8.1% 17

18 CONTACT US Juliet Yang NetEase, Inc. Tel: (+86) Brandi Piacente The Piacente Group, Inc. Tel: (+1)

19 THANK YOU