NetEase misses second-quarter profit forecasts; shares slide

Investing.com -- NetEase shares fell more than 5% in U.S. premarket trading Thursday after the Chinese gaming and media company reported second-quarter earnings well below analyst expectations, while revenue topped estimates.

The company reported second-quarter earnings per share of RMB12.02, missing the analyst estimate of RMB15.54. Revenue rose 7.9% year-over-year to RMB30.11 billion, ahead of the RMB29.48 billion consensus estimate.

Games and related value-added services, NetEase’s core business, generated net revenue of RMB25.0 billion, up 9.7% year-over-year. Youdao net revenue rose 3.5% to RMB1.5 billion.

NetEase Cloud Music net revenue was relatively stable at RMB2.0 billion, while revenue from innovative businesses and other operations fell 3.5% to RMB1.6 billion.

Total operating expenses rose to RMB9.1 billion, up from RMB8.6 billion in the prior quarter and RMB9.0 billion a year earlier. The company attributed the sequential increase to higher marketing, staff-related and research and development spending, while the year-over-year rise was driven primarily by increased R&D expenditure.

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