NetEase, Inc. (NASDAQ:NTES) Q1 2016 Earnings Conference Call - Preliminary Transcript

May 12, 2016 • 10:00 am ET

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NetEase, Inc. (NASDAQ:NTES) Q1 2016 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the NetEase First Quarter 2016 Earnings Conference Call. Today's call is being recorded.

At this time, I would like to turn the conference over to Brandi Piacente. Please go ahead.

Executive
Brandi Piacente

Thank you, operator. Please note that the discussion today will contain forward-looking statements relating to future performance of the Company and are intended to qualify for the Safe Harbor from liability as established by the US Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the Company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion.

A general discussion of the risk factors that could affect NetEase's business and financial results is included in certain filings of the Company with the Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update this forward-looking information except as required by law.

During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial measures and results, please see the first quarter 2016 financial results news release issued earlier today.

As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on the NetEase corporate website at ir.netease.com.

I will now turn the call over to Mr. Onward Choi, Acting Chief Financial Officer, who will read the prepared remarks on behalf of Mr. William Ding, Chief Executive Officer at NetEase.

Executive
Onward Choi

Thank you, Brandi. Before I begin, please note that, for the purposes of these discussions, all percentages are based on renminbi.

We are very pleased with our first quarter performance and how it positions NetEase for a successful 2016. All areas of our business demonstrated strong growth, which reflects our continued leadership in China's online games industry, and the continued growth of our overall audience across our mobile and online PC client games, as well as our appetizing e-commerce and other internet services businesses.

Our total first quarter net revenues grew 116.3%, compared with the first quarter of 2015. Our new games are resonating well with players and our classic titles continue to be popular. We have a strong portfolio of mobile and online PC client games [Indecipherable] an increase in net revenues of 104.5% year over year for our online game services segment in the first quarter.

Our advertising services business also remained strong despite the usual first quarter seasonality and we grew this segment by 32%.

Additionally, our email, e-commerce and others business is robust and rapidly expanding, and we grew net revenues in this division by 257.8%.

Mobile games remained the primary growth driver for our business in the first quarter. Our classic titles continue to lead the market, and recently introduced games have