NetEase Inc (ADR)(NASDAQ: NTES) reported a strong number for its fourth quarter ended December 2016 with revenues rising by 42.8% compared to the year-ago quarter to $1.74 billion. Adjusted net income soared by approx. two-thirds to $569.9 million or adjusted earning per share of $4.30. The strong numbers were supported by more than 60% growth in online games segment. Online games’ revenues were at $1.29 billion. Mobile and licensed games contribution were higher. The email, e-commerce, and other revenue segment were up 38% while advertising revenues were up by just 9%.
The grow margins were down more than six percentage points to 60.7%. Lower margin sales of Mobile and license game had trimmed down the margin. The segmental margin for email, e-commerce, and other revenues were higher but for advertising segment, it reported a fall. Gross profit margin for the advertising services business was 66.5% compared to 68.1%. Gross margin for email, e-commerce, and other business was at 23.4% compared with 6% in the corresponding period.
For the full year, the company reported revenues of 45.5 billion. Revenues from online games were at $4 billion while that of advertising segment was at $310 million while that from email, e-commerce, and other segment was at $1.2 billion. The gross profit for the full year was at $3.1 billion. The effective tax rate was at 15.1% lower than 15.7% in FY15. Net income was at $1.9 billion. The company has reported foreign exchange gains of $21.1 million. Net diluted earnings per ADS were at $12.63. The operating expenses were at $1.3 billion. The rise in operating expenses was due to increased selling and marketing expenses, higher research and development and higher staff expenses.
Total cash and cash equivalent at the end of fiscal year was at $5.3 billion. On November 16, the company has announced a new share repurchase program of up to $1 billion of company’s outstanding ADS.
Going forward, the management said as the company moving through 2017, it is looking towards the future, designing products and services that address fluid market dynamics, enabling continued growth and value creation.
Backed by strong performance, NetEase rewarded shareholders with a dividend of $1.01 per share. The results were well accepted by the market and as a result the stock surged over 10.7% this morning (As of 10:24AM EST; Feb 16th, 2017; Source: Google finance)