NetEase.com Announces Third Quarter Revenue Increase of 539%
Registered users increase 482% to 9.26 million. Gross Margin increases to 38.7%.
BEIJING, October 31, 2000
2000/11/13 17:19:55
NetEase.com, Inc. (Nasdaq: NTES), a leading Internet technology company supporting China’s top ranked-web sites, today announced its results for the quarter ended September 30, 2000.
The company reported third quarter 2000 revenues of US$ 2.55 million, representing a 538.7 percent increase over revenues of US$ 0.4 million in the third quarter of 1999, and a 47.4 percent increase over second quarter 2000 revenues of US$ 1.73 million. Net loss was US$ 5.02 million or US$0.168 pro forma per ADS, for the third quarter of 2000. Excluding stock compensation cost, net loss was US$ 4.65 million or U$0.156 pro forma per ADS.
As of the end of the third quarter of 2000, registered users were 9.26 million. This represents a 482 percent increase over the 1.59 million users at the end of the third quarter of 1999 and a 56.9 percent increase over the 5.9 million users at the end of the second quarter of 2000. Average daily page views for the month of September were 50 million, representing an increase of 123.7 percent over the average daily page views of June 2000.
Advertising services revenue for the quarter ended September 30, 2000 was US$ 2.21 million, representing a 666.7 percent increase over the comparable period a year ago of US$ 0.28 million and a 47.5 percent increase over second quarter advertising services revenue of US$ 1.50 million. The growth in advertising services revenue was driven by a continued increase in the average advertising expenditure per customer.
Revenue from e-commerce related services for the quarter ended September 30, 2000 was US$0.33 million, an increase of 46.1 percent over second quarter e-commerce services revenue of US$0.22 million. There was no e-commerce revenue for the same period last year.
King Lai, Chief Executive Officer of NetEase commented, “Our results this quarter establish NetEase’s as a leader in the mainland China Internet market. Advertising revenue growth continued to be strong this quarter and our results illustrated the benefits of a well-diversified customer base. We expect our advertising services revenue to continue to grow into the fourth quarter and year 2001. We remain focused on further monetizing our online properties to drive our revenue growth going forward.”
Gross profit for the third quarter was US$ 0.99 million, representing a gross margin of 38.7 percent, compared to a gross margin of 23.9 percent in the second quarter. This improvement in gross margin was largely driven by economies of scale as revenues continued to increase at a faster rate than costs. Marketing expenses for the third quarter of 2000 were US$ 4.59 million versus US$ 1.6 million in the third quarter of 1999. This equates to US$ 1.36 in acquisition cost per new registered user.
Helen He, Chief Financial Officer of NetEase, commented, “Consistent with our long term business strategy, we have invested in marketing efforts to further enhance our brand leadership and drive user growth. In the third quarter, we launched a full scale branding campaign that caused a portion of our marketing expenses to be shifted to the second half of 2000. Even with the new branding campaign, for the full year 2000 we expect our marketing costs will be less than we had originally planned. Additionally, we expect our gross margin to continue to increase into the fourth quarter and full year 2001 as we further recognize economies of scale.”
Average net cash used per month for the third quarter of 2000 was US$ 1.7 million. As of September 30, 2000, NetEase’s total cash balance was US$ 94.6 million.
** Note: All financials in this release are expressed in US dollars, and are based on the exchange rate of US$1 = 8.2798 RMB**
Back