Though NetEase (NTES) soundly beat Q3 revenue estimates thanks to the solid performance of several games, the company's aggressive spending - opex rose 23% Y/Y - took a toll on EPS. Rival Perfect World can sympathize.
R&D spend (41% of opex) rose 28% Y/Y as NetEase invests heavily in developing upcoming titles such as first-person shooter Crisis 2015 and fantasy MMORPG Revelation. G&A spend (15% of opex) rose 25%, while sles/marketing spend (45% of opex) rose a moderate 9%, in spite of major promotional spend for new titles Heroes of Three Kingdoms and Dragon Sword.
Online gaming revenue (89% of total revenue) rose 21% Y/Y, thanks in part to strong activity for both the PC and mobile versions of Fantasy Westward Journey II, and a new version of Westward Journey Online II.