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NetEase Reports Strong Q4 Financial Results

NetEase.com, Inc., one of China's Internet, online game and wireless value-added services providers, today announced financial results for its fourth quarter and fiscal year ended December 31, 2003.

For the fourth quarter ended December 31, 2003, the Company reported total net revenues of US$19.5 million, a 16.4% and 77.9% increase over total net revenues of US$16.8 million for the preceding quarter. The Company reported net profit of US$11.4 million, or US$0.36 per American Depositary Share (basic), a 11.9% and 118.3% increase over net profit of US$10.2 million for the preceding quarter. For the year ended December 31, 2003, the Company reported total net revenues of US$65.5 million, an increase of 145.4% over total net revenues of US$26.7 million for the fiscal year 2002.

For the fourth quarter ended December 31, 2003, online game services continued to grow steadily to US$8.5 million, a 31.8% and 222.2% increase over US$6.5 million for the preceding quarter. Strong growth in this revenue segment was largely atributed to the continued increase in popularity of the Company's self-developed online game title, Westward Journey Online Version 2.0, which had approximately 1.6 million unique paying users for the month of December 2003.

Revenues from wireless value-added and other e-commerce services for the quarter were US$7.8 million, representing an 8.4% increase over the preceding quarter's US$7.2 million. This increase in revenues from wireless value-added and e-commerce services reflected ongoing demand for value-added services by Chinese mobile phone customers and positive response to new company offerings in this area.

Commenting on the Company's earnings, Ted Sun, Acting Chief Executive Officer of NetEase, said, "In the fourth quarter, our growth was led by our online games division, which we expect will continue to be a major growth driver in 2004. Our first in-house developed game, Westward Journey Online Version 2.0, has met with much success in the Chinese market – it continues to rank among the most popular online games in China and has received numerous awards, including Top 10 Most Popular Domestic Developed Games by 'China Game Industry Report 2003' sponsored by the General Administration of Press and Publication of the People's Republic of China. At the end of the quarter we also launched a new in-house developed game, Fantasy Westward Journey. This game is targeted at a different demographic segment and geographic base than our other titles and initial results have been very encouraging. Our proven in-house online game development capabilitiy is a key strength for the Company and has given us an important early lead in this fast-growing sector."

Users of the NetEase Web sites continued to grow, with 167 million accumulated registered accounts at the end of the fourth quarter, an increase of 16.0% over the 144 million accounts at the end of the previous quarter.

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