The 10-second takeaway
For the quarter ended March 31 (Q1), NetEase beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share improved significantly.
Gross margins expanded, operating margins improved, net margins shrank.
NetEase chalked up revenue of $318.2 million. The 14 analysts polled by S&P Capital IQ expected to see a top line of $310.8 million on the same basis. GAAP reported sales were 36% higher than the prior-year quarter's $229.1 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $1.14. The nine earnings estimates compiled by S&P Capital IQ anticipated $1.02 per share. GAAP EPS of $1.14 for Q1 were 33% higher than the prior-year quarter's $0.86 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 67.7%, 200 basis points better than the prior-year quarter. Operating margin was 49.6%, 340 basis points better than the prior-year quarter. Net margin was 47.9%, 130 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $334.6 million. On the bottom line, the average EPS estimate is $1.09.
Next year's average estimate for revenue is $1.39 billion. The average EPS estimate is $4.66.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,125 members rating the stock outperform and 41 members rating it underperform. Among 315 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 301 give NetEase a green thumbs-up, and 14 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on NetEase is outperform, with an average price target of $61.52.
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