Executive Summary

• NetEase, a leading online game service provider in China, reported second-quarter revenues of ¥8.95 billion, up 96% year over year and 6% ahead of the consensus estimate. Non-GAAP earnings per American Depository Share (ADS) was ¥24.41, up 103% year over year and beat the consensus estimate of ¥18.43.
• Online game service revenue increased 76% year over year to ¥6.44 billion and accounted for 72% of total revenues. Email, e-commerce and other services posted a revenue growth of 311%.
• During the earnings call, management guided the company will leverage on virtual reality (VR) and augmented reality (AR), invest in its core gaming platforms, and expand its advertising business and e-commerce platform to drive future growth.