Chinese online game developer Perfect World (PWRD) has reported its unaudited financial results for the second quarter ended June 30, 2008, saying total revenues were CNY334.4 million, an increase of 10.3% from the first quarter of 2008.

Net income was CNY164.5 million, an increase of only 3.9%, or CNY6.1 million, from CNY158.4 million in the first quarter of 2008, and an increase of 214.1%, or CNY112.1 million, from CNY52.4 million in the second quarter of 2007.

Online game operation revenues were CNY299.4 million in the quarter, an increase of 13.2%, or CNY34.9 million, from CNY264.5 million in the first quarter of 2008. The cost of revenues was CNY41.1 million in the quarter, an increase of 9.5%, or CNY3.6 million, from CNY37.5 million in the first quarter of 2008. The increase from the first quarter of 2008 was mainly due to an increase in VAT and other related taxes, staff costs and server repair and maintenance expenses.

Gross profit was CNY293.3 million, an increase of 10.4%, or CNY27.7 million, from CNY265.6 million in the first quarter of 2008.

Operating expenses were CNY127.3 million, an increase of 22.4%, or CNY23.3 million, from CNY104.0 million in the first quarter of 2008, and an increase of 157.3%, or CNY77.9 million, from CNY49.5 million in the second quarter of 2007. The sequential increase in operating expenses was mainly attributed to higher research and development expenses, sales and marketing expenses and general and administrative expenses.

Operating profit was CNY166.0 million, an increase of 2.7%, or CNY4.4 million, from CNY161.6 million in the first quarter of 2008.