NetEase Profit Rises as Revenue More Than Doubles

By Maria Armental 

Chinese gaming and Internet giant NetEase Inc.'s third-quarter profit rose sharply as revenue more than doubled, bolstered by game releases.

The company's American Depositary Shares, up 51% this year, rose 3.9% in late trading to $155.90, topping the all-time high of $154.88 set on June 17 during regular trading.

NetEase, which generates the bulk of its revenue from videogames, operates Activision Blizzard Inc.'s gaming platform battle.net along with "World of Warcraft" and other franchises in China.

In February, NetEase set up a base of operations in Redwood Shores, Calif., to focus on mobile games for Western audiences. Its first mobile game, "Speedy Ninja," a sequel to "Ninja Must Die" adapted for Western audiences, was released in late August.

At the same time, the Beijing company has been expanding operations, building on China's thriving mobile and e-commerce markets. It has launched an online payment platform and a cross-border e-commerce platform, Kaola.com.

Over all, NetEase reported a profit of 1.88 billion yuan, or 14.22 yuan an ADR, up from 1.16 billion yuan, or 8.83 yuan an ADR, a year earlier. Excluding stock-based compensation, the profit was 15.49 yuan an ADR, compared with 9.57 yuan a year earlier.

Net revenue more than doubled to 6.67 billion yuan ($1.05 billion).

Gross margin narrowed to 57.7% from 72.5% a year earlier as costs of revenue surged.

Online games, which account for the bulk of the company's revenue, saw a 43% jump in sales to 5.21 billion yuan ($820.2 million).

As of Sept. 30, NetEase had about 20.4 billion yuan ($3.2 billion) in cash, up from 21.2 billion as of Dec. 31.

Dollar conversions were based on the noon buying rates specified by the Federal Reserve on Sept. 30.

Write to Maria Armental at [e-mail]

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(END) Dow Jones Newswires

November 11, 2015 19:44 ET (00:44 GMT)

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