NetEase eyes mobile games growth after mixed third-quarter results
Net profit increases 46pc to 2.74bn yuan, ahead of expectation, but revenue falls shy of target, rising 38pc to 9.21bn yuan
NetEase, mainland China’s second-largest online video game service provider, plans to step up expansion of its mobile games business after posting steady earnings growth in the quarter to September 30.
The Nasdaq-listed company reported on Wednesday, after the close of trading in the United States, that third-quarter net profit increased 46 per cent to 2.74 billion yuan, up from 1.88 billion yuan in the same period last year, on the back of strong online games service growth.
The result was higher than market estimates of 2.59 billion yuan as of Tuesday.
Total revenue rose 38 per cent to 9.21 billion yuan from 6.67 billion yuan a year earlier, which fell short of the consensus estimate of 9.65 billion yuan for the quarter.
“We maintained steady growth across each of our primary business lines in the third quarter with a continued focus on providing first-rate games,” NetEase chief executive William Ding Lei said in a conference call with analysts early on Thursday.
The missed revenue estimate, however, sliced nearly 5 per cent from the company’s share price in after-hours trading. In the regular session on Wednesday in the US, the company’s shares were up 1.16 per cent to close at US$251.86.
“Mobile game revenue came in 13 per cent below our estimate at 3.9 billion yuan, which was up 35.5 per cent year on year but down 4.5 per cent quarter on quarter,” Jefferies equity analyst Karen Chan said in a report on Thursday.