Benzinga | Feb 25, 2021 06:31AM EST

NetEase Clocks Robust Q4 Gaming Revenue, Approves $2B Share Buyback

* China's NetEase Inc (NASDAQ: NTES) reported fourth-quarter FY20 revenue growth of 25.6% year-on-year to $3 billion (RMB19.8 billion), missing the consensus estimate $3.06 billion.

* Online game services net revenues rose 15.5% to S$2.1 billion (RMB13.4 billion). Youdao's net revenues increased 169.7% to $169.6 million (RMB1.1 billion). Innovative businesses and others net revenues rose 41.3% to $805.3 million (RMB5.3 billion). Net revenues from mobile games accounted for 72.4% of net revenues from online game services.

* Gross profit rose 20.9% to $1.5 billion (RMB9.9 billion) stemming from increased revenues from mobile games like Fantasy Westward Journey H5, Sky, Life-After, and Invincible, PC games such as Fantasy Westward Journey Online, increased revenues from Youdao's learning services and products, partially offset by net revenue decrease from certain mobile games.

* Gross margin stood flat at 63.1% following stable margins from online game services and fluctuations based on the revenue mix of mobile and PC games, self-developed and licensed games further supported by a boost from Youdao and NetEase CC live streaming platform.

* EPS stood at $0.36, missing the analyst estimate of $0.45.

* "Our online games business continued its strong performance during 2020, propelled by the sustained and growing popularity of our diversified titles. At the beginning of 2021, we launched Revelation mobile game, which gave us a wonderful start to the first quarter. We are also very excited to introduce a number of other new titles later this year, paving the way for our solid growth in 2021," said NetEase CEO William Ding.

* The board approved a dividend of $0.06 per share for the fourth quarter of 2020 and approved a new share buyback program of up to $2 billion over 24 months beginning on March 2, 2021.

* Cash and cash equivalents stood at $15.3 billion (RMB100.1 billion). The company generated an operating cash flow of $3.8 billion (RMB24.9 billion).

* Michael Tong resigned from the board for personal reasons, effective immediately.

* Price action: NTES shares were up 0.09% at $117.61 in the pre-market session on the last check Thursday.