Online Gaming Helps NetEase Clock 13% Revenue Growth In Q2, Expands Share Buyback

Chinese gaming company NetEase Inc NTES reported second-quarter FY21 revenue growth of 12.9% year-on-year to $3.179 billion, marginally missing the analyst consensus of $3.181 billion.
Tencent Holdings Ltd TCEHY also marginally missed the Q2 consensus of $21.45 billion, reporting a revenue of $21.4 billion.
Segments and margins: Online game services revenues grew 5.1% Y/Y to $2.3 billion. The gross margin expanded 230 bps to 66.1%.
Net revenues from Youdao Inc DAO increased 107.5% Y/Y to $200.3 million. The margin expanded 710 bps to 52.3%.
Innovative businesses revenue rose 26% Y/Y to $728.4 million. The margin expanded 80 bps to 19.3%.
Non-GAAP net income per ADS of $0.97 beat the analyst consensus of $0.94.
NetEase held $16.7 billion in cash and equivalents and generated $731.5 million in operating cash flow.
Dividend: The board approved a dividend of $0.24 per ADS for Q2, down 20% Q/Q.
Share buybacks: The board increased the share buyback program from the previous limit of $2 billion to the new $3 billion. It also approved a share purchase program of up to $50.0 million of Youdao.
The stock took a beating as China axed the online gaming hours for minors.
Price Action: NTES shares traded higher by 2.39% at $91.76 in the premarket session on the last check Tuesday.

Earnings Calendar