NetEase -4.1% as forex losses spur miss on earnings

In first-quarter earnings, NetEase (NASDAQ:NTES) fell well short of profit expectations while revenues came in at the high side thanks to heavy gains outside its core gaming business.

Shares are down 4.1% in after-hours trade.

Net revenues of 14.2B yuan (about $2.3B) were up 3.9% Y/Y.

Non-GAAP net income, meanwhile, fell to 1.3B yuan (about $213.2M) from last quarter"s 1.9B yuan and the prior year"s 4.3B yuan; NetEase took a heavier foreign exchange loss of 375.1M yuan (vs. last quarter"s 159.1M yuan and last year"s 48.5M yuan) due mainly to unrealized exchange losses from dollar-denominated bank deposits and short-term loan balances.

Adjusted earnings per ADR were $1.61, below expectations for $2.15.

Revenue by segment: Online game services, 8.8B yuan (about $1.4B, down 18.4% in yuan terms); E-commerce, 3.7B yuan (about $595M, up 101%); Advertising services, 462M yuan (about $73.7M, up 3.8%); E-mail and others, 1.2B yuan ($194.1M, up 102%).

Liquidity came to 43.5B yuan (about $6.9B), up slightly from 43.2B yuan as of Dec. 31. Cash flow from operations was 1.9B yuan, down from last quarter"s 3.9B yuan and last year"s 4B yuan.

Conference call to come at 9 p.m. ET.

Press release