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Segment Information

12 Months Ended

Dec. 31, 2021

Segment Information

Segment Information

28. Segment Information

(a) Description of segments

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and in assessing performance. The Group’s CODM is the Chief Executive Officer.

The Group’s organizational structure is based on a number of factors that the CODM uses to evaluate, view and run its business operations which include, but are not limited to, customer base, homogeneity of products and technology. The Group’s operating segments are based on this organizational structure and information reviewed by the Group’s CODM to evaluate the operating segment results.

Effective in the fourth quarter of 2021, the Group changed its segment disclosure to separately report the results of Cloud Music. As a result, the Group now reports segments as online game services, Youdao, Cloud Music and innovative businesses and others. This change in segment reporting aligns with the manner in which the Group’s CODM currently receives and uses financial information to allocate resources and evaluate the performance of reporting segments. This change in segment presentation does not affect consolidated balance sheets, consolidated statements of operations and comprehensive income or consolidated statements of cash flows. The Group retrospectively revised prior year segment information, to conform to current year presentation.

(b) Segment data

The table below provides a summary of the Group’s operating segment results for the years ended December 31, 2019, 2020 and 2021. The Group does not allocate any operating costs or assets to its business segments as the Group’s CODM does not use this information to measure the performance of the operating segments. There was no significant transaction between reportable segments for the years ended December 31, 2019, 2020 and 2021 (in thousands).

​

​	​	​	​	​	​	​
​	​	For the year ended December 31,
​		2019		2020		2021
​	​	RMB	​	RMB	​	RMB
Net revenues:	​	​	​	​	​	​
Online game services		46,422,640		54,608,717		62,806,453
Youdao		1,304,883		3,167,515		5,354,357
Cloud Music	​	2,318,390	​	4,895,731	​	6,997,622
Innovative businesses and others		9,195,232		10,995,170		12,447,594
Total net revenues		59,241,145		73,667,133		87,606,026
​	​	​	​	​	​	​
Cost of revenues:	​	​	​	​	​	​
Online game services		(16,974,234)		(19,847,846)		(22,101,116)
Youdao		(934,261)		(1,713,229)		(2,448,146)
Cloud Music	​	(3,375,104)	​	(5,491,066)	​	(6,854,948)
Innovative businesses and others		(6,402,246)		(7,631,590)		(9,231,015)
Total cost of revenues		(27,685,845)		(34,683,731)		(40,635,225)
​	​	​	​	​	​	​
Gross profit:	​	​	​	​	​	​
Online game services		29,448,406		34,760,871		40,705,337
Youdao		370,622		1,454,286		2,906,211
Cloud Music	​	(1,056,714)	​	(595,335)	​	142,674
Innovative businesses and others		2,792,986		3,363,580		3,216,579
Total gross profit		31,555,300		38,983,402		46,970,801

​

The following table set forth the disaggregation of net revenues by timing of revenue recognition for the years ended December 31, 2019, 2020 and 2021:

​

​	​	​	​	​	​	​
​	​	For the year ended December 31,
​		2019		2020		2021
​	​	RMB	​	RMB	​	RMB
A point in time	​	12,162,904	​	15,911,575	​	19,581,668
Over time	​	47,078,241	​	57,755,558	​	68,024,358
Total Net revenue		59,241,145		73,667,133		87,606,026

​

The following table presents the total depreciation expenses of property and equipment by segment for the years ended December 31, 2019, 2020 and 2021:

​

​	​	​	​	​	​	​
​	​	For the year ended December 31,
​		2019		2020		2021
​	​	RMB	​	RMB	​	RMB
Online game services		256,181		258,357		251,526
Youdao		6,076		7,239		9,330
Cloud Music	​	7,393	​	6,878	​	3,827
Innovative businesses and others		211,457		201,636		141,696
Total depreciation expenses of property and equipment		481,107		474,110		406,379

​

As substantially all of the Group’s long-lived assets are located in the PRC and substantially all of the Group’s revenue of reportable segments are derived from China based on the geographical locations where services and products are provided to customers, no geographical information is presented.

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- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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