Futu Dian丨The internationalization strategy continues to advance, and NetEase will give back another 2 billion dollars to shareholders

Although NetEase's earnings report showed good results, interest rates on 10-year US Treasury bonds rose rapidly, leading to a decline in risk appetite in the overall market, and most stocks were affected.

After NetEase released its pre-market earnings report yesterday, the stock price fell by more than 7%, and also fell 3.37% after the market.

However, in terms of the company's overall financial report, according to NetEase's 2021 layout, considering that it has been ranked second in China's game industry all year round and has laid out innovative businesses such as online education and cloud music in recent years, investors should try to ignore short-term fluctuations and look at the company's long-term development.

1. Steady growth in performance and continuous feedback to shareholders

NetEase's net revenue for the quarter was 19.8 billion yuan, up 25.6% year on year. Among them, game revenue was 13.4 billion yuan, up 15.5% year on year, online education brand Youdao's net revenue was 1.1 billion yuan, up 169.7% year on year, and net revenue from innovation and other businesses was 5.3 billion yuan, up 41.3% year on year;

Gross profit remained stable, reaching 9.9 billion yuan, up 20.9% year on year; final net profit was 976 million yuan. Moreover, the company continues to implement measures to give back to shareholders, and the board of directors approved a new $2 billion repurchase plan, which began on March 2 this year.

In 2020, due to the global pandemic, games and other online businesses developed rapidly. NetEase's layout here has been proven through this year's performance growth. As the space in the future game market continues to grow, and the further development of online education and cloud music, NetEase focuses on creating high-quality products and providing high-quality content, and long-term development can be expected.

2. The reserves of new tours are sufficient, and the internationalization strategy is progressing steadily

In terms of games, NetEase began to clearly advance its internationalization strategy last year. After “Operation Wilderness” was successfully favored by the Japanese market, the company has recently stocked up a number of global IP titles, “Harry Potter,” “Pokémon,” “Dark,” and “Lord of the Rings,” all of which combine well-known overseas IPs with NetEase's own research and development, and have been distributed globally. At the same time, the company is also actively engaged in overseas mergers and acquisitions to jointly develop overseas markets through cooperation.

Of course, the domestic market has maintained steady development, and the traditional earner “Dream West Journey” is still full of vitality. The leading MMO position in China and the world is difficult to shake, and the mobile game version revenue is growing steadily, and the App Store is ranking high; the new “Master of Onmyoji” documentary continues to be well received, “Lead Tsuchinohama” for the 5th anniversary, and “Operation Wilderness” and “Fifth Personality” have also garnered word of mouth in overseas markets.

In terms of new tours, titles such as “Tianyu”, “The Painted Traveller in Time and Space”, “Above the Dark Tide”, “Book of Revelations”, and “Yu-Gi-Oh!” were launched this quarter. Various categories and gameplay settings have further enriched the product line and continued to expand the number of users. In App Annie's 2020 list of the top 52 global publishers, NetEase ranked second.

In terms of reserves, in addition to major global IPs, the works that will be launched this year also include “Fangchuan Fenghua Record”, “Endless Lagrange”, and “Qian Nu no Ghost”, etc., which guarantee a steady increase in performance in 2021.

3. Online education and innovative businesses are developing rapidly, and future growth space can be expected

In terms of online education, Youdao Learning Service Q4 increased 198.8% year on year, revenue from learning products increased 253.8% year on year, and net operating cash flow was about 129 million yuan. Meanwhile, online course tuition revenue increased more than doubled this quarter, reaching a year-on-year growth rate of 223%, reaching 1.1 billion yuan. Among them, K12 course tuition revenue increased 355% year over year, reaching a record 767 million yuan, and the number of registered students exceeded 659,000.

On the other hand, the number of registered online cloud music users has exceeded 800 million, and 90% are mainly young people from the post-90s. The number of independent musicians also exceeded 200,000. The platform was further upgraded in November of last year, adding features, content, and distribution capabilities that various users like.

epilogue

2020 is a year of rapid development of games and online businesses. In the future, games, online education, online music and entertainment will further develop, and NetEase successfully transformed from one of the earliest Internet portals to a veteran company in the mobile internet era, and has been recognized by many users for its pursuit of product compatibility.

As the company begins to advance its internationalization strategy in 2021 and maintains the rapid development of its education and innovation business, its growth is expected to continue and is worthy of investors' attention.

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