NetEase delivers a big earnings beat in Q1

Primarily helped by its gaming and e-commerce segments, NetEase Inc (Nasdaq: NTES) reported its first-quarter revenues of $2.74 billion, up 29.5% year-over-year. The Chinese internet technology company said its earnings for the quarter, adjusted for special items, were $3.48 per ADS.

The results surprised the Wall Street, which was expecting Q1 earnings of $1.86 per ADS on revenues of $2.71 billion.

Revenues at its largest unit, Online game services, improved 35%, while the e-commerce segment saw revenues increase 28% year-over-year.

CEO William Ding said, “Online game services revenues continued to grow steadily with the support of a diversified portfolio and impressive performances from all of our leading titles.”

NTES shares gained 3.45% during aftermarket trading on Wednesday. Following a tumultuous year due to the US-China trade spat, the stock has gained 14% so far this year.

Operating expenses fell 1.3% year-over-year to $697.6 million, mainly due to decreased marketing expenditures related to online game services and e-commerce, as well as decreased shipping and handling costs.

READ: BILIBILI IMPRESSES IN Q1, STOCK GAINS

Separately, the board approved a dividend of $0.69 per ADS for the first quarter of 2019, which is expected to be paid on June 7, 2019 to shareholders as on May 31, 2019.   

The global growth initiatives and expansion to new regions such as Japan, with focus on gaming, is now expected to have a positive effect in the coming quarters.

NetEase and most of its peers in the Chinese technology industry, especially those engaged in the gaming business, are currently getting back on track after a relatively low phase. With the market conditions less encouraging and economy facing challenges, the key to remaining relevant is to focus more on global expansion.

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