Perfect World Co.'s (PWRD) third-quarter profit dropped 26% on weakness in its online game operations. Still, its American depositary shares rose 1.7% after-hours, to $32.01, as the Chinese online-game developer's results topped expectations. The ADSs were down 20% this year as of the close. Chairman and Chief Executive Michael Chi said revenue topped guidance because of the contribution from its television and movie business, while the online-gaming business was "slightly softer" than expected.

Perfect World's results declined in the previous quarter as expenses increased more than revenue. The company has been expanding to other countries, such as Japan and Singapore, through acquisitions and adding new games. China's online game industry has been growing rapidly, but that growth rate slowed in June as the government announced new online gaming regulations that require a certain look and feel for games and game players now must register under real names.

For the latest quarter, Perfect World reported a profit of CNY213.7 million ($31.9 million), or CNY4.05 per ADS, down from CNY288.3 million, or CNY5.50 per ADS, a year earlier. Excluding items such as stock-based compensation, earnings per ADS fell to CNY4.53 (68 cents) from CNY5.88. Analysts estimated 53 cents, according to Thomson Reuters. Revenue grew 12%, to CNY658.2 million, above the company's forecast of CNY594 million to CNY624 million.

The conversion to U.S. dollars is based on exchange rates in New York as of Sept. 30. Gross margin fell to 77.3% from 83.9% on higher costs. At Perfect World's domestic business, the average number of users on Web games at the same time rose 2.8%, while the number of customers fell 23%. Average revenue per customer climbed 21%. Overseas licensing revenue fell 17% from a year earlier, while revenue from film, TV and other sources jumped 82%.