NetEase's (9999.HK) third-quarter revenue and profit were better than expected. The company achieved revenue of 18.66 billion yuan (+27.5% year-on-year, +2.6% quarter-on-quarter), which exceeded market expectations by 2.7%. All business segments achieved solid results, including:
1) Online game revenue grew steadily, reaching RMB 13.86 billion (+20.2% YoY, +0.2% quarter-on-quarter)
2) Youdao realized RMB 900 million revenue (+159.0% YoY, +43.8% quarter-on-quarter)
3) Innovation and others Business revenue was 3.90 billion yuan (+41.6% YoY, +4.5% quarter-on-quarter).
The company achieved a non-GAAP adjusted net profit of RMB 3.67 billion (-22.4% year-on-year, -29.8% quarter-on-quarter), which exceeded market expectations by 70.3%. The decline was mainly due to the increase and confirmation of operating expense ratios this quarter and net exchange loss of RMB 1.57 billion. The overall operating expense ratio increased from 31.0% in 3Q19 to 37.6% in 3Q2020. The sales expense ratio increased by 7.4 percentage points year-on-year to 18.5%, mainly due to the increase in Youdao and online game service sales expenses....