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01/09 19:53
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Despite strong revenue growth and positive subscription numbers, the company faces significant challenges. The cloud computing sector is declining, with increased costs and operating losses leading to a net loss. The share repurchase program is a positive, but not enough to offset concerns. The lack of clarity on AI product timelines adds uncertainty. Overall, the financial health and strategic outlook suggest a negative sentiment, likely leading to a stock price decrease of -2% to -8%.
Total Revenue $88.8 million, an increase of 10.5% year-over-year. The increase was mainly attributable to the increased revenues from the subscription business and overseas audio livestreaming.
Subscription Revenue $35.7 million, an increase of 7.7% year-over-year. The growth was driven by an increase in the number of subscribers, which grew to 6.04 million from 5.76 million.
Livestreaming and Other Services Revenue $28.4 million, an increase of 66% year-over-year. This growth was primarily due to increased revenues from the overseas audio livestreaming business.
Cloud Computing Revenue $24.7 million, a decrease of 18% year-over-year. The decline was attributed to reduced sales of cloud computing services and hardware due to heightened competition and pricing pressure.
Cost of Revenues $44.4 million, representing 50% of total revenues, compared to $37.1 million or 46.2% of total revenues in the same period of 2024. The increase was mainly due to higher revenue sharing expenses in overseas audio livestreaming.
Gross Profit $44.1 million, an increase of 2.9% year-over-year. The increase was driven by higher gross profit from overseas livestreaming and subscription businesses, but gross profit margin decreased to 49.7% from 53.3% due to lower margins in cloud computing.
Research and Development Expenses $18.7 million, representing 21.1% of total revenues, compared to $17.6 million or 22% of total revenues in the same period of 2024. The increase was primarily due to higher labor costs.
Sales and Marketing Expenses $15.5 million, representing 17.5% of total revenues, compared to $10.1 million or 12.5% of total revenues in the same period of 2024. The increase was due to more marketing expenses for subscription and overseas audio livestreaming.
G&A Expenses $11.8 million, representing 13.3% of total revenues, compared to $11.1 million or 13.9% of total revenues in the same period of 2024.
Operating Loss $1.9 million, compared to an operating income of $4 million in the same period of 2024. The decrease was primarily due to lower gross profit margin and increased sales and marketing expenses.
Net Loss $0.9 million, compared to net income of $3.6 million in the same period of 2024. The net loss was primarily due to the increase in operating loss.
Non-GAAP Net Income $0.1 million, compared to $4.5 million in the same period of 2024.
Cash, Cash Equivalents and Short-term Investments $274.6 million, compared to $287.5 million as of March 31, 2024. The decrease was mainly due to payments for the acquisition of Hupu, share repurchases, and loan repayments.
Share Buybacks $6.5 million spent under the new share repurchase program, with about $0.09 million spent in Q1 2025.
Subscription Revenue: Subscription revenue increased by 7.7% year-over-year to $35.7 million, with total subscribers growing by 5% to 6.04 million.
Overseas Audio Live Streaming Revenue: Overseas audio live streaming revenue increased by 79.2% year-over-year, contributing to a total revenue growth of 66% in live streaming and other services.
AI-driven Applications: Xunlei is actively developing AI-driven applications leveraging large language models to broaden its product portfolio.
Market Expansion: Xunlei has intensified its focus on expanding its presence in overseas regions, implementing targeted marketing strategies to engage diverse user bases.
Acquisition of Hupu: In January, Xunlei announced the acquisition of Hupu to expand market presence and diversify service offerings.
Operational Efficiency: The company aims to enhance service efficiency and user experience through innovative features and strategic partnerships.
Strategic Priorities: Xunlei's strategic priorities include fostering growth through innovation and exploring business restructuring opportunities.
Cloud Computing Challenges: The cloud computing business has faced significant challenges due to intensified competition and pricing pressures, leading to an 18% year-over-year revenue decline to $24.7 million.
Regulatory Environment: The evolving regulatory environment has contributed to reduced sales of cloud computing services and hardware, impacting overall revenue.
Increased Costs: Costs of revenues increased to $44.4 million, representing 50% of total revenues, primarily due to increased revenue sharing expenses in overseas audio livestreaming operations.
Operating Loss: The company reported an operating loss of $1.9 million, a decline from an operating income of $4 million in the same period of 2024, attributed to decreased gross profit margin and increased sales and marketing expenses.
Net Loss: Xunlei experienced a net loss of $0.9 million compared to a net income of $3.6 million in the same period of 2024, primarily due to increased operating loss.
Cash Decrease: Cash, cash equivalents, and short-term investments decreased to $274.6 million from $287.5 million, mainly due to payments for the acquisition of Hupu and share repurchases.
Quarterly Revenue Growth: Q1 2025 revenue increased by 10.5% year-over-year to $88.8 million.
Subscription Revenue Growth: Subscription revenue increased by 7.7% year-over-year to $35.7 million, with total subscribers growing by 5% to 6.04 million.
Live Streaming Revenue Growth: Live streaming and other services revenue increased by 66% year-over-year, with overseas audio live streaming revenue up by 79.2%.
Cloud Computing Challenges: Cloud computing revenue declined by 18% year-over-year to $24.7 million due to competition and pricing pressures.
Strategic Acquisition: Acquisition of Hupu announced to expand market presence and diversify service offerings.
AI-Driven Applications Development: Actively developing AI-driven applications leveraging large language models.
Q2 2025 Revenue Guidance: Estimated total revenues for Q2 2025 are between $91 million and $96 million, representing a quarter-over-quarter increase of approximately 5.3%.
Long-term Objectives: Focus on fostering growth through innovation and exploring business restructuring opportunities.
Share Repurchase Program: Xunlei's Board of Directors authorized a new plan for the repurchase of up to $20 million of its ADS or shares over a 12-month period. As of March 31, 2025, the company had spent $6.5 million on share buybacks under this program, with approximately $0.09 million spent in the first quarter of 2025.
Despite strong revenue growth and a significant increase in net income, concerns about increased expenses, declining margins, and vague AI plans offset positive earnings. The lack of a dividend plan and unclear management responses in the Q&A further contribute to a neutral sentiment.
The company reported strong revenue growth across its main business segments, particularly in live streaming, with a significant boost from the Hupu acquisition. Despite increased costs, the net income surged due to a substantial other income gain. The guidance suggests continued growth, and analysts' questions revealed optimism about Hupu's future contributions. The lack of guidance on Hupu is a minor concern. Overall, the positive financial performance and strategic acquisitions outweigh the negatives, predicting a positive stock price movement over the next two weeks.
The earnings call presented positive financial growth, with a 10.5% revenue increase and a 7.7% rise in subscription revenue. However, the lack of detailed guidance on AI product timelines and potential regulatory risks introduce uncertainty. The absence of a shareholder return plan and the vague response in the Q&A regarding AI developments temper the positive outlook. Thus, the overall sentiment is neutral, as positive financial metrics are balanced by uncertainties and lack of concrete future plans.
Despite strong revenue growth and positive subscription numbers, the company faces significant challenges. The cloud computing sector is declining, with increased costs and operating losses leading to a net loss. The share repurchase program is a positive, but not enough to offset concerns. The lack of clarity on AI product timelines adds uncertainty. Overall, the financial health and strategic outlook suggest a negative sentiment, likely leading to a stock price decrease of -2% to -8%.
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