NetEase, Inc. (NASDAQ:NTES) Q1 2020 Earnings Conference Call - Final Transcript

May 20, 2020 • 10:00 am ET

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NetEase, Inc. (NASDAQ:NTES) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, and welcome to the NetEase First Quarter 2020 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Margaret Shi, Investor Relations for NetEase. Please go ahead, ma'am.

Executive
Margaret Shi

Thank you, Operator. Please note, 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 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 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 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 results, please see the 2020 first quarter earnings news release issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on NetEase corporate website at ir.netease.com.

Joining us today on the call from NetEase's senior management is Mr. William Ding, Chief Executive Officer; Mr. Charles Yang, Chief Financial Officer; and Mr. Hilton Hui, Co-President of NetEase Games.

I will now turn the call over to Charles, who will read the prepared remarks on behalf of William.

Executive
Charles Zhaoxuan Yang

Thank you Margaret, and thank you everyone for participating in today's call. Before we begin, I would like to remind everyone that all percentages are based on renminbi.

Like every company around the globe, we started the year with a great deal of uncertainty amidst one of the world's worst health crisis. I am pleased to say that we have worked very hard to address the effects of the pandemic, providing help where we can and making the appropriate adjustments to our businesses to ensure the safety of our NetEase family. We believe many companies inside and outside of China will overcome this pandemic and come out strong.

We had a good quarter, increasing our net revenues by 18% to RMB17.1 billion and our net income from continuing operations attributable to our shareholders was up by 30% to RMB3.6 billion, both on a year-over-year basis. For our online games, net revenues reached RMB13.5 billion in the first quarter on the back of our existing titles stellar performances, growing 14% year-over-year even though 1Q 2019 was itself a very strong quarter for our game services a year ago.

Our legacy PC titles such as the Fantasy Westward Journey and New Westward