Chinese Gaming Player NetEase Stock Slips After Mixed Q3, CFO Departure

NetEase, Inc NTES reported third-quarter FY23 revenue growth of 11.6% year-on-year to $3.74 billion, missing the consensus of $3.8 billion.

China's second-largest gaming player's adjusted EPADS of $1.82 beat the consensus of $1.46.

Segments and margins: Games and related value-added services revenues grew 16.5% Y/Y to $2.99 billion. The corresponding gross margin increased by 400 bps to 69%, attributable to changes in the revenue mix.

Youdao, Inc DAO revenue climbed by 9.7% Y/Y to $210.9 million, and the corresponding gross margin rose by 170 bps to 55.9%.

Cloud Music's revenues were $270.4 million, down by 16.3% Y/Y, and its gross margin expanded by 1,300 bps to 27.2%.

Innovative businesses and other revenue was $271.2 million, and the gross margin increased by 180 bps to 27.3%.

NetEase held $14.3 billion in cash and equivalents and generated $1.3 billion in operating cash flow.

Dividend: The board approved a dividend of $0.4950 per ADS for Q3 versus $0.5250 per ADS for Q2.

CFO Transition: Charles Zhaoxuan Yang resigned as CFO effective November 30, 2023, for personal reasons and to pursue other career interests. Yang will remain with the Company as a consultant until June 30, 2024.

Price Action: NTES shares traded lower by 4.85% at $109.50 premarket on the last check Thursday.