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01/09 19:53
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Total Revenue $104 million, representing an increase of 30.6% year-over-year. The increase was mainly attributable to the increased revenues generated from major business operations.
Subscription Revenue $36.4 million, reflecting a 10.5% increase year-over-year. This growth was driven by an increase in the number of subscribers (6.4 million compared to 5.71 million in 2024) and higher average revenue per subscriber due to a higher proportion of premium subscribers.
Live Streaming and Other Services Revenue $37.6 million, representing an increase of 85.5% year-over-year. This growth was fueled by the expansion of the overseas audio live streaming business and advertising revenue from the acquisition of Hupu.
Cloud Computing Revenue $30 million, marking a 13.6% increase year-over-year. This growth was due to recovery from previous setbacks and rising demand from major clients.
Cost of Revenues $52.3 million, representing 50.3% of total revenues compared to $38.6 million or 48.5% in 2024. The increase was mainly due to higher bandwidth costs and revenue sharing expenses in overseas audio live streaming operations.
Gross Profit $51.2 million, representing an increase of 25.9% year-over-year. Gross profit margin was 49.3% compared to 51.1% in 2024. The increase in gross profit was driven by growth in overseas audio live streaming, subscription, and advertising businesses, while the decrease in margin was due to lower margins in the cloud computing business.
R&D Expenses $18.4 million, representing 17.7% of total revenues compared to $17.5 million or 21.9% in 2024. The increase was primarily due to higher labor costs.
Sales and Marketing Expenses $21.6 million, representing 20.8% of total revenues compared to $10.9 million or 13.7% in 2024. The increase was due to higher marketing expenses for subscription and overseas audio live streaming businesses.
G&A Expenses $9.8 million, representing 9.4% of total revenues compared to $11.2 million or 10.41% in 2024. The decrease was due to lower litigation provisions, depreciation expenses, and labor costs.
Operating Income $1.1 million compared to $1 million in 2024, showing a slight increase.
Other Income, Net $721.8 million compared to $2.5 million in 2024. The significant increase was due to fair value changes in the long-term investment in Arashi Vision Inc., which completed its IPO in June 2025.
Net Income $727.4 million compared to $2.5 million in 2024. The increase was primarily due to the rise in other income.
Non-GAAP Net Income $8.3 million compared to $3.2 million in 2024. The increase was due to higher operating income and income tax benefits.
Diluted Income per ADS $11.48 compared to $0.04 in 2024. The increase was due to higher net income.
Non-GAAP Diluted Earnings per ADS $0.13 compared to $0.05 in 2024, reflecting higher non-GAAP net income.
Cash, Cash Equivalents, and Short-term Investments $275.6 million as of June 30, 2025, compared to $274.6 million as of March 31, 2025. The increase was due to proceeds from bank borrowings and net cash inflow from operating activities, partially offset by acquisition payments for Hupu.
Subscription Business Revenue: Generated $36.4 million in Q2 2025, a 10.5% increase YoY, with 6.4 million subscribers, up from 5.71 million in Q2 2024. Premium subscriptions rose to 81% of total subscriptions.
Live Streaming and Other Services Revenue: Achieved $37.6 million in Q2 2025, an 85.5% YoY growth, driven by overseas audio live streaming and advertising revenue from the Hupu acquisition.
Cloud Computing Revenue: Generated $30 million in Q2 2025, a 13.6% YoY increase, due to recovery from setbacks and rising demand from major clients.
Hupu Acquisition: Acquired Hupu, a leading online sports community, expanding into new user segments and content domains.
Overseas Market Expansion: Focused on improving user engagement and enhancing features in international markets, particularly in audio live streaming.
Revenue Growth: Reported a 30.6% YoY increase in total revenue, reaching $104 million in Q2 2025.
Cost Management: Cost of revenues increased to $52.3 million, representing 50.3% of total revenues, mainly due to bandwidth and revenue-sharing expenses.
R&D and Marketing Expenses: R&D expenses were $18.4 million (17.7% of total revenue), while marketing expenses rose to $21.6 million (20.8% of total revenue).
Arashi Vision IPO: Highlighted strategic investment capabilities with $720 million in unrealized pretax capital gains from Arashi Vision Inc.'s IPO.
Share Repurchase Program: Authorized a $20 million stock repurchase plan, with $6.5 million spent as of June 2025.
Market Competition: The company faces ongoing challenges from competition and market uncertainties, which could impact its ability to maintain or grow its market position.
Cost of Revenues: The increase in cost of revenues, particularly due to higher bandwidth costs and revenue sharing expenses in overseas audio live streaming operations, could pressure profit margins.
Gross Profit Margin: The gross profit margin decreased to 49.3% from 51.1% year-over-year, primarily due to lower margins in the cloud computing business, which could affect overall profitability.
Sales and Marketing Expenses: Sales and marketing expenses increased significantly to 20.8% of total revenues, up from 13.7% in the previous year, driven by higher marketing costs for subscription and overseas audio live streaming businesses. This could strain financial resources if not managed effectively.
Integration of Hupu: The integration of the newly acquired Hupu platform presents potential challenges in achieving synergies and aligning operations, which could delay expected benefits or increase costs.
Cloud Computing Business: The cloud computing segment, while growing, has a decreased gross profit margin, which could limit its contribution to overall profitability.
Revenue Guidance for Q3 2025: Xunlei estimates total revenues to be between $116 million and $124 million, representing a quarter-over-quarter increase of approximately 15.4% at the midpoint of the range.
Share Repurchase Program: On June 4, 2024, Xunlei announced that its Board of Directors authorized a new plan for the purchase of up to $20 million of its stock over the 12 months that followed. As of June 4, 2025, the company had spent $6.5 million on share buybacks under the new share repurchase program, no shares were purchased during the second 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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