Hot Tech stock to watch: NetEase Inc (NASDAQ: NTES)

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NetEase Inc (NASDAQ: NTES) stock rose over 2.6% in the pre-market session of May 20th, 2020 (as of  7:59 pm GMT-4; Source: Google finance) after the company reported the Non-GAAP net income from continuing operations attributable to the Company’s shareholders for the first quarter of 2020 of RMB4,212.9 million (US$595.0 million), compared to RMB3,662.3 million and RMB3,353.3 million for the preceding quarter and the first quarter of 2019, respectively. At the end of March, 2020, the Company’s total cash and cash equivalents, current and non-current time deposits and short-term investments balance were of total RMB79,331.3 million (US$11,203.7 million), compared to RMB74,406.0 million as of December 31, 2019.

The company had reported the adjusted revenue growth of 18.3 percent to Rmb 17.1 Billion in the first quarter of FY 20, beating the analysts’ estimates for revenue of Rmb 15.55 Billion, according to Refinitiv Ibes Estimate. Gross profit for the first quarter of 2020 had increased to RMB9,377.6 million (US$1,324.4 million), compared to RMB8,210.4 million and RMB7,737.7 million for the preceding quarter and the first quarter of 2019, respectively.

Moreover, the net revenues from online game services had risen to RMB13,518.2 million (US$1,909.1 million) for the first quarter of 2020, from RMB11,604.3 million and RMB11,850.2 million for the preceding quarter and the first quarter of 2019, respectively. The quarter-over-quarter and year-over-year increases in online game services gross profit were on  the back of increased net revenues from self-developed games including Fantasy Westward Journey 3D, Fantasy Westward Journey mobile game, Fantasy Westward Journey Online and New Westward Journey Online II, as well as certain licensed games.

Net revenues from Youdao had increased to RMB541.4 million (US$76.5 million) for the first quarter of 2020, compared to RMB410.4 million and RMB225.7 million for the preceding quarter and the first quarter of 2019, respectively. The quarter-over-quarter and year-over-year increases in Youdao gross profit were on the back of the significant increase in net revenues, improved economies of scale and faculty compensation structure optimization for its learning services and products.

Additionally, NTES has declared a dividend of US$1.16 per ADS for the first quarter of 2020, which is payable on June 23, 2020 to shareholders of record as of the close of business on June 12, 2020. In February, 2020, the Company had approved a share repurchase program of up to US$1.0 billion of the Company’s outstanding ADSs for a period not to exceed 12 months beginning on March 2, 2020. At the end of March, 2020, about 1.1 million ADSs had been repurchased under this program for a total cost of US$341.9 million.

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