NetEase reported a 60% increase in net profit. Game revenue accounted for approximately 90%

Today, Netease announced its second quarter 2011 financial report. According to relevant data, Netease Q2 revenue was 1.78 billion yuan, an increase of 32% year-on-year; net profit was 773 million yuan, an increase of 60% year-on-year. NetEase CEO Ding Lei said that online games and advertising business grew strongly in the second quarter.

Netease's game business revenue for the quarter was 1.58 billion yuan (US$244 million), an increase of 13.9% from the previous quarter and a year-on-year increase of 33.6%. The proportion of Netease’s total revenue in the quarter was 88.73%. Advertising business revenue was 170 million yuan (26.20 million US dollars), an increase of 33.8%, an increase of 16.2% year-on-year, and the proportion of Netease's total revenue in the quarter was 9.54%. Wireless value-added services revenue for the quarter was 30.67 million yuan (US$4.7 million), an increase of 19.4% from the previous quarter and an increase of 54% year-on-year, accounting for approximately 1.77% of total revenue.

Operating expenses for the second quarter of 2011 were 366 million yuan ($56.6 million), which was a 25.3% increase from the previous quarter and a 21.1% year-on-year increase. According to the analysis, the increase in NetEase's operating expenses was mainly due to the sales of “Datang Warriors” and “Ghost Story”, the increase in market expenses, and the investment in R&D labor costs.

NetEase CEO Ding Lei focused on the game business mainly for the financial report. He said: "Thanks to independent research and development of games including Fantasy Westward Journey Online, Ghost Story, Journey to the West, Online Journey to the World, and the World of Warcraft. "Datang Warriors" and "World of Warcraft" continued to increase revenue. Online game revenues in the second quarter increased by 33.6% year-on-year. He also stated that Netease will continue to vigorously develop its game business: "In the second half of the year we will also be "Fantasy Westward Journey Online." , “Journey to Westward Journey 3” and “The Legend of Journey to the West”, which was renamed “The War Songs,” launched a new expansion pack. In addition, we plan to make a major upgrade to the “World Underworld” and will continue to optimize the content of The Ghost Story. In the second half of this year, full internal testing will be started."

In addition, Ding Lei also talked about the development of NetEase's mailbox and NetEase Weibo. As of June 30, 2011, the number of E-mail registered users was approximately 410 million, an increase of 13.9% from the end of the previous quarter. The number of Weibo registered users was approximately 52.5 million, an increase of 32.9% from the previous quarter.

The investor market reacted positively to NetEase's earnings report. As of August 18th, Beijing time, the share price of Netease rose 2.15 US dollars, or 4.36%, to close at 51.45 US dollars.