NetEase Inc ADR NTES
Q3 2012 Earnings Call Transcript

Transcript Call Date 11/14/2012

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the NetEase Incorporated Third Quarter Fiscal 2012 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation the conference will be opened for questions. This conference is being recorded today.

I would now like to turn the conference over to Brandi Piacente. Please go ahead.

Brandi Piacente - IR: 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 liability as established by the U.S. 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 the 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's 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 this forward-looking information except as required by law.

As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on the NetEase corporate website at

I will now turn the conference call over to Mr. Onward Choi, Acting Chief Financial Officer, who will read the prepared remarks on behalf of Mr. William Ding, Chief Executive Officer of NetEase.

Onward Choi - Acting CFO: Thank you, Brandi. Before I begin please note that for the purposes of this discussions, all percentages are based on renminbi.

For the first quarter of 2012, we reported total revenues of RMB2 billion driven by our online games and increasing advertising revenue contributions.

During the first quarter, we continue to advance our growth strategies for our self-developed games by introducing expansion packs that extend the life cycles of our games and the threat new users and by launching new games that broaden and diversify our portfolio.

Thus we continue to focus on improving game content and quality. The popularity of our self-developed games is escalating coupled with our successful promotional activities to better serve our players.

NetEase brand new games are contributing an increasing amount to our online game revenues mix. Total online game revenues for the third quarter were RMB1.7 billion driven by increased revenue contribution from our self-developed games.

We had standout performances from Fantasy Westward Journey, Westward Journey Online II and our two new games – Kung Fu Master and Soul of the Fighter. Tianxia III and Ghost also had steady performance during the third quarter.

Following the release of expansion packs and new content in the second quarter as well as associated promotional activities, both Fantasy Westward Journey and Westward Journey Online II achieved record-high PCUs in August.

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