Chinese video game and entertainment company NetEase beat analyst expectations for its first quarter revenues as the company increased its online games revenue with new game launches and further monetized its music streaming app.
The company’s net revenues for the first quarter of 2020 were $2.4 billion, increasing 18.3% year on year, the company said in a statement on Tuesday. The revenue numbers exceeded the average estimate of $2.21 billion from 13 analysts compiled by Yahoo Finance. NetEase shares rose 3.1% in after-hours trading on Nasdaq after the results were announced.
Online game services continued to contribute the bulk of NetEase’s revenues in the first quarter, accounting for 79.2% of the company’s revenue for the period and marking a 14.1% year on year increase. Net revenues for mobile games comprised 70.3% of all gaming revenues for the quarter.
The company attributed the steady increase in online game revenues to the strong performance of legacy flagship PC titles such as the Fantasy Westward Journey 3D, Fantasy Westward Journey mobile game, Fantasy Westward Journey Onlineand New Westward Journey Online II.
“Our online game services net revenues reached RMB13.5 billion during the quarter with both our flagship titles and many of our newer titles performing well. Encouraged by our success in overseas markets such as Japan, we are more confident and committed than ever to extending our reach internationally,” CEO William Ding said in the statement.
Revenues from the company’s online learning subsidiary Youdao rocketed 139.8% year on year to $76.5 million. Youdao listed on the New York Stock Exchange in October 2019, raising more than $100 million.
Revenues from innovative businesses and others also grew 28% year on year to $424.1 million, primarily attributable to the seasonality of the company’s advertising services and increased revenues from NetEase Cloud Music, one of the most widely used music streaming apps in China.
NetEase also saw its gross profit increase by 21.2% year on year in the first quarter to $1.3 billion compared to the same period last year, with margins for all of its businesses improving year on year.
Net income attributable to shareholders in the first quarter rose 30% compared to the same period last, reaching $501.5 million.
In September 2019, NetEase sold its cross-border e-commerce unit Kaola to Alibaba for around $2 billion.