Xunlei Limited ("Xunlei" or the "Company") (NASDAQ: XNET), a
leading innovator in shared cloud computing and blockchain
technology in China, today announced its unaudited
financial results for the first quarter ended March 31, 2023.
First Quarter 2023
Financial Highlights:
- Total revenues were US$99.2 million, an
increase of 25.5% year-over-year.
- Cloud computing revenues were US$32.7 million,
an increase of 8.2% year-over-year.
- Subscription revenues were US$29.3 million, an
increase of 15.8% year-over-year.
- Live streaming and other internet value-added services
(“Live streaming and other
IVAS”) revenues
were US$37.2 million, an increase of 58.4% year-over-year.
- Gross profit was US$39.6 million, an increase
of 13.6% year-over-year and gross profit margin was 39.9% in the
first quarter of 2023, compared with 44.1% in the same period of
2022.
- Net income was US$1.2 million in the first
quarter of 2023, compared with US$5.4 million in the same period of
2022.
- Non-GAAP net income was US$5.5 million in the
first quarter of 2023, compared with US$7.2 million in the same
period of 2022.
- Diluted earnings per ADS was approximately
US$0.02 in the first quarter of 2023, compared with US$0.08 per ADS
in the same period of 2022.
Mr. Jinbo Li, Chairman and Chief Executive
Officer of Xunlei, stated that, “We kicked off 2023 with an
all-time record revenue of US$98.9 million in the first quarter,
representing an increase of 25.6% year-over-year. Further, we have
maintained profitable momentum for the fifth consecutive quarter,
which, we believe, demonstrated our strong business resilience
despite volatile macro environment. I want to acknowledge the
invaluable contributions by all our employees whose steadfast
commitment has been pivotal in achieving this outstanding
performance.”
“At Xunlei, we are constantly striving for
leveraging our competitive edge and business synergies that can
fuel both our top and bottom lines across all of our businesses.
Our consecutive growth is a testament to the solidity of our
endeavor and its successful results. Going forward, we will focus
on exploring new growth opportunities and innovative ideas and
improve our existing products and services to drive sustainable
business development. With a healthy balance sheet and solid track
record of our recent performance, we are optimistic about our
corporate development for the foreseeable future.”
First Quarter 2023 Financial
Results
Total Revenues
Total revenues were US$99.2 million,
representing an increase of 25.5% year-over-year. The increase in
total revenues was mainly attributable to increased revenues
generated from our live streaming, subscription and cloud computing
businesses.
Revenues from cloud computing were US$32.7
million, representing an increase of 8.2% year-over-year. The
increase in cloud computing revenues was mainly due to increased
demand for our cloud computing service as well as increased sales
of cloud computing hardware devices.
Revenues from subscription were US$29.3 million, representing an
increase of 15.8% year-over-year. The increase in subscription
revenues was mainly due to higher average revenue per subscriber
and more subscribers as compared with the same period of 2022. The
number of subscribers was 4.84 million as of March 31, 2023,
compared with 4.61 million as of March 31, 2022. The average
revenue per subscriber for the first quarter of 2023 was RMB41.0,
compared with RMB34.9 in the same period of 2022. The higher
average revenue per subscriber was mainly due to a larger
proportion of the users opted for our premium membership.
Revenues from live streaming and other IVAS were
US$37.2 million, an increase of 58.4% year-over-year. The increase
of live streaming and other IVAS revenues was mainly driven by the
higher demand for our live streaming service and our enhanced
monetization capability.
Costs of Revenues
Costs of revenues were US$59.3 million,
representing 59.8% of our total revenues, compared with US$43.9
million or 55.5% of the total revenues in the same period of 2022.
The increased costs of revenues were mainly attributable to
increased sales of our live streaming, subscription and cloud
computing services.
Bandwidth costs, as included in costs of
revenues were US$29.1 million, representing 29.3% of our total
revenues, compared with US$26.9 million or 34.0% of the total
revenues in the same period of 2022. The increase in bandwidth
costs was mainly due to more Xunlei Cloud users and increased
demand for our cloud computing services.
The remaining costs of revenues mainly consisted
of costs related to the revenue-sharing costs for our live
streaming business, payment of handling fees, cloud computing
hardware devices and depreciation of servers and other
equipment.
Gross Profit and Gross Profit
Margin
Gross profit for the first quarter of 2023 was
US$39.6 million, representing a 13.6% increase from the same period
of 2022. Gross profit margin was 39.9% in the first quarter of
2023, compared with 44.1% in the same period of 2022. The increase
in gross profit was mainly driven by the increase in gross profit
of our live streaming, subscription and cloud computing businesses.
The decrease in gross profit margin was mainly due to the increased
proportion of live streaming revenues to total revenues, which has
a relatively lower gross profit margin.
Research and Development
Expenses
Research and development expenses for the first
quarter of 2023 were US$18.0 million, representing 18.2% of our
total revenues, compared with US$16.3 million or 20.6% of our total
revenues in the same period of 2022. The increase was primarily due
to increased labor costs incurred during this quarter.
Sales and Marketing
Expenses
Sales and marketing expenses for the first
quarter of 2023 were US$9.3 million, representing 9.4% of our total
revenues, compared with US$5.3 million or 6.8% of our total
revenues in the same period of 2022. The increase was primarily due
to more marketing activities held for our live streaming and
subscription businesses as a result of our continued user
acquisition efforts.
General and Administrative
Expenses
General and administrative expenses for the
first quarter of 2023 were US$11.7 million, representing 11.8% of
our total revenues, compared with US$9.6 million or 12.2% of our
total revenues in the same period of 2022. The increase was
primarily due to the increase in share-based compensation expenses
and depreciation of Xunlei headquarters building as we finished the
construction and relocated to the new headquarters in December
2022.
Operating Income
Operating income was US$0.7 million, compared
with US$3.9 million in the same period of 2022. The decrease in
operating income was primarily attributable to the increase in
share-based compensation, marketing expenses and labor costs
incurred during this quarter.
Other Income, Net
Other income was US$1.4 million, compared with
US$1.2 million in the same period of 2022. The increase was
primarily due to higher investment income, partially offset by
increased foreign exchange loss as compared with the first quarter
of 2022.
Net Income and Earnings Per
ADS
Net income was US$1.2 million, compared with
US$5.4 million in the same period of 2022. Non-GAAP net income was
US$5.5 million in the first quarter of 2023, compared with US$7.2
million in the same period of 2022. The decrease in net income and
non-GAAP net income was primarily attributable to the decrease in
operating income and increased income tax expense accrued during
this quarter.
Diluted earnings per ADS in the first quarter of
2023 was approximately US$0.02 as compared with US$0.08 in the same
period of 2022.
Cash Balance
As of March 31, 2023, the Company had cash, cash
equivalents and short-term investments of US$258.3 million,
compared with US$260.8 million as of December 31, 2022. The
decrease in cash, cash equivalents and short-term investments was
mainly due to repayment of a bank loan and spending on share
buybacks.
Share Repurchase Program
In March 2022, Xunlei announced that its Board
of Directors authorized the repurchase of up to $20 million of its
shares over the next 12 months. As of March 31, 2023, the Company
had spent approximately US$7.9 million on share buybacks.
Guidance for the Second Quarter of
2023
For the second quarter of 2023, Xunlei estimates
total revenues to be between US$111 million and US$117 million, and
the midpoint of the range represents a quarter-over-quarter
increase of approximately 14.9%. This estimate represents
management's preliminary view as of the date of this press release,
which is subject to change and any change could be material.
Conference Call Information
Participant Online Registration:
https://register.vevent.com/register/BIbe539ac11972471eb0b96d5538e18922
Please register to join the conference using the
link provided above and dial in 10 minutes before the call is
scheduled to begin. Once registered, the participants will receive
an email with personal PIN and dial-in information, and
participants can choose to access either via Dial-In or Call Me. A
kindly reminder that "Call Me" does not work for China number.
The Company will also broadcast a live audio
webcast of the conference call. The webcast will be available at
http://ir.xunlei.com. Following the earnings conference call, an
archive of the call will be available at
https://edge.media-server.com/mmc/p/q4m3mdy6
About Xunlei
Founded in 2003, Xunlei
Limited (NASDAQ: XNET) is a leading innovator in shared
cloud computing and blockchain technology
in China. Xunlei provides a wide range of products
and services across cloud acceleration, blockchain, shared cloud
computing and digital entertainment to deliver an efficient, smart
and safe internet experience.
Safe Harbor Statement
This press release contains statements of a
forward-looking nature. These statements are made under the "safe
harbor" provisions of the U.S. Private Securities Litigation Reform
Act of 1995. You can identify these forward-looking statements by
terminology such as "will," "expects," "believes," "anticipates,"
"future," "intends," "plans," "estimates" and similar statements.
Among other things, the management's quotations, the "Outlook" and
"Guidance" sections in this press release, as well as the Company's
strategic, operational and acquisition plans, contain
forward-looking statements. These forward-looking statements
involve known and unknown risks and uncertainties and are based on
current expectations, assumptions, estimates and projections about
the Company and the industry. Forward-looking statements involve
inherent risks and uncertainties, including but not limited to: the
Company's ability to continue to innovate and provide attractive
products and services to retain and grow its user base; the
Company's ability to keep up with technological developments and
users' changing demands in the internet industry; the Company's
ability to convert its users into subscribers of its premium
services; the Company's ability to deal with existing and potential
copyright infringement claims and other related claims; the risk
that Covid-19 or other health risks in China or globally could
adversely affect the Company's operations or financial results; the
Company’s ability to react to the governmental actions for its
scrutiny of internet content in China and the Company's ability to
compete effectively. Although the Company believes that the
expectations expressed in these forward-looking statements are
reasonable, it cannot assure you that its expectations will turn
out to be correct, and investors are cautioned that actual results
may differ materially from the anticipated results. Further
information regarding risks and uncertainties faced by the Company
is included in the Company's filings with the U.S. Securities and
Exchange Commission. All information provided in this press release
is as of the date of the press release, and the Company undertakes
no obligation to update any forward-looking statements to reflect
subsequent occurring events or circumstances, or changes in its
expectations, except as may be required by law.
About Non-GAAP Financial
Measures
To supplement Xunlei's consolidated financial
results presented in accordance with United States Generally
Accepted Accounting Principles ("GAAP"), Xunlei uses the following
measures defined as non-GAAP financial measures by the United
States Securities and Exchange Commission: (1) non-GAAP operating
income, (2) non-GAAP net income, (3) non-GAAP basic and diluted
earnings per share for common shares, and (4) non-GAAP basic and
diluted earnings per ADS. The presentation of the non-GAAP
financial information is not intended to be considered in isolation
or as a substitute for the financial information prepared and
presented in accordance with GAAP.
Xunlei believes that these non-GAAP financial
measures provide meaningful supplemental information to investors
regarding the Company's operating performance by excluding
share-based compensation expenses, which is not expected to result
in future cash payments. These non-GAAP financial measures also
facilitate management's internal comparisons to Xunlei's historical
performance and assist the Company's financial and operational
decision making. A limitation of using these non-GAAP financial
measures is that these non-GAAP measures exclude share-based
compensation charge that has been and will continue to be for the
foreseeable future a recurring expense in Xunlei's results of
operations. Management compensates for these limitations by
providing specific information regarding the GAAP amounts excluded
from each non-GAAP measure. The accompanying reconciliation tables
at the end of this release include details on the reconciliations
between GAAP financial measures that are most directly comparable
to the non-GAAP financial measures the Company has presented.
|
XUNLEI
LIMITED |
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS |
|
(Amounts expressed
in thousands of USD, except for share, per share (or ADS)
data) |
|
|
March 31, |
December 31, |
|
2023 |
2022 |
|
US$ |
US$ |
Assets |
|
|
|
|
|
Current assets: |
|
|
Cash and
cash equivalents |
133,611 |
177,154 |
Short-term
investments |
124,723 |
83,626 |
Accounts
receivable, net |
44,213 |
29,763 |
Inventories |
1,697 |
457 |
Due from
related parties |
33,273 |
32,917 |
Prepayments
and other current assets |
7,971 |
8,267 |
Total current assets |
345,488 |
332,184 |
|
|
|
Non-current assets: |
|
|
|
|
|
Restricted
cash |
7,757 |
7,654 |
Long-term
investments |
30,884 |
30,811 |
Deferred tax
assets |
265 |
213 |
Property and
equipment, net |
61,896 |
61,734 |
Intangible
assets, net |
6,370 |
6,546 |
Goodwill |
21,466 |
21,179 |
Long-term
prepayments and other assets |
2,201 |
2,137 |
Right-of-use
assets |
932 |
865 |
Total assets |
477,259 |
463,323 |
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities: |
|
|
Accounts
payable |
26,913 |
25,432 |
Due to
related parties |
- |
1,560 |
Contract
liabilities and deferred income, current portion |
40,692 |
38,967 |
Lease
liabilities |
293 |
283 |
Income tax
payable |
5,620 |
5,586 |
Accrued
liabilities and other payables |
55,235 |
49,438 |
Bank
borrowings |
7,119 |
7,024 |
Total current liabilities |
135,872 |
128,290 |
|
|
|
Non-current liabilities: |
|
|
Contract
liabilities and deferred income, non-current portion |
871 |
876 |
Lease
liabilities, non-current portion |
435 |
299 |
Deferred tax
liabilities |
654 |
687 |
Bank
borrowings, non-current portion |
23,955 |
24,750 |
Total liabilities |
161,787 |
154,902 |
|
|
|
Equity |
|
|
Common
shares (US$0.00025 par value, 1,000,000,000 shares authorized,
375,001,940 shares issued and 325,047,736 shares outstanding as at
December 31, 2022; 375,001,940 issued and 323,775,666 shares
outstanding as at March 31, 2023) |
81 |
81 |
|
|
|
Additional
paid-in-capital |
480,695 |
477,495 |
Accumulated
other comprehensive loss |
(12,008) |
(14,668) |
Statutory
reserves |
7,036 |
7,036 |
|
|
|
Treasury
shares (49,954,204 shares and 51,226,274 shares as at December 31,
2022 and March 31, 2023, respectively) |
13 |
12 |
|
|
|
Accumulated
deficits |
(158,937) |
(160,063) |
Total Xunlei Limited's shareholders' equity |
316,880 |
309,893 |
Non-controlling interests |
(1,408) |
(1,472) |
Total liabilities and shareholders' equity |
477,259 |
463,323 |
|
|
|
XUNLEI LIMITED |
|
Unaudited Condensed Consolidated Statements of
Income |
|
(Amounts expressed in thousands of USD, except for share, per share
(or ADS) data) |
|
Three months ended |
|
|
|
|
|
Mar 31, |
Dec 31, |
Mar 31, |
|
|
2023 |
|
2022 |
|
2022 |
|
|
|
US$ |
US$ |
US$ |
|
Revenues, net of rebates and
discounts |
99,226 |
|
96,963 |
|
79,047 |
|
|
Business taxes and
surcharges |
(314 |
) |
(319 |
) |
(280 |
) |
|
Net revenues |
98,912 |
|
96,644 |
|
78,767 |
|
|
Costs of revenues |
(59,315 |
) |
(59,027 |
) |
(43,900 |
) |
|
Gross
profit |
39,597 |
|
37,617 |
|
34,867 |
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
Research and development
expenses |
(18,046 |
) |
(19,234 |
) |
(16,307 |
) |
|
Sales and marketing
expenses |
(9,280 |
) |
(8,676 |
) |
(5,349 |
) |
|
General and administrative
expenses |
(11,722 |
) |
(9,799 |
) |
(9,646 |
) |
|
Credit loss write-back |
181 |
|
496 |
|
300 |
|
|
Total operating
expenses |
(38,867 |
) |
(37,213 |
) |
(31,002 |
) |
|
|
|
|
|
|
Operating
income |
730 |
|
404 |
|
3,865 |
|
|
Interest income |
1,049 |
|
735 |
|
410 |
|
|
Interest expense |
(430 |
) |
(23 |
) |
(23 |
) |
|
Other income, net |
1,353 |
|
703 |
|
1,194 |
|
|
Income before income
taxes |
2,702 |
|
1,819 |
|
5,446 |
|
|
Income tax expenses |
(1,484 |
) |
(247 |
) |
(16 |
) |
|
Net
income |
1,218 |
|
1,572 |
|
5,430 |
|
|
Less: net income/(loss)
attributable to non-controlling interest |
92 |
|
(58 |
) |
(36 |
) |
|
Net income
attributable to common shareholders |
1,126 |
|
1,630 |
|
5,466 |
|
|
Earnings per share for
common shares |
|
|
|
|
Basic |
0.0035 |
|
0.0049 |
|
0.0162 |
|
|
Diluted |
0.0035 |
|
0.0049 |
|
0.0162 |
|
|
|
|
|
|
|
Earnings per
ADS |
|
|
|
|
Basic |
0.0175 |
|
0.0245 |
|
0.0810 |
|
|
Diluted |
0.0175 |
|
0.0245 |
|
0.0810 |
|
|
|
|
|
|
|
Weighted average
number of common shares used in calculating: |
|
|
|
|
Basic |
325,070,439 |
|
330,049,995 |
|
337,259,835 |
|
|
Diluted |
325,635,649 |
|
330,277,252 |
|
337,259,835 |
|
|
|
|
|
|
|
Weighted average
number of ADSs used in calculating: |
|
|
|
|
Basic |
65,014,088 |
|
66,009,999 |
|
67,451,967 |
|
|
Diluted |
65,127,130 |
|
66,055,450 |
|
67,451,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
XUNLEI LIMITED |
|
Reconciliation of GAAP and Non-GAAP Results |
|
(Amounts expressed in thousands of USD, except for share, per share
(or ADS) data) |
|
|
Three months ended |
|
|
|
Mar 31, |
Dec 31, |
Mar 31, |
|
2023 |
|
2022 |
|
2022 |
|
US$ |
US$ |
US$ |
|
|
|
|
GAAP operating income |
730 |
|
404 |
|
3,865 |
Share-based compensation
expenses |
4,303 |
|
1,879 |
|
1,785 |
Non-GAAP operating
income |
5,033 |
|
2,283 |
|
5,650 |
|
|
|
|
GAAP net income |
1,218 |
|
1,572 |
|
5,430 |
Share-based compensation
expenses |
4,303 |
|
1,879 |
|
1,785 |
Non-GAAP net
income |
5,521 |
|
3,451 |
|
7,215 |
|
|
|
|
GAAP earnings per
share for common shares: |
|
|
|
Basic |
0.0035 |
|
0.0049 |
|
0.0162 |
Diluted |
0.0035 |
|
0.0049 |
|
0.0162 |
|
|
|
|
GAAP earnings per
ADS: |
|
|
|
Basic |
0.0175 |
|
0.0245 |
|
0.0810 |
Diluted |
0.0175 |
|
0.0245 |
|
0.0810 |
|
|
|
|
Non-GAAP earnings per
share for common shares: |
|
|
|
Basic |
0.0167 |
|
0.0106 |
|
0.0215 |
Diluted |
0.0167 |
|
0.0106 |
|
0.0215 |
|
|
|
|
Non-GAAP earnings per
ADS: |
|
|
|
Basic |
0.0835 |
|
0.0530 |
|
0.1075 |
Diluted |
0.0835 |
|
0.0530 |
|
0.1075 |
|
|
|
|
Weighted average
number of common shares used in calculating: |
|
|
|
Basic |
325,070,439 |
|
330,049,995 |
|
337,259,835 |
Diluted |
325,635,649 |
|
330,277,252 |
|
337,259,835 |
|
|
|
|
Weighted average
number of ADSs used in calculating: |
|
|
|
Basic |
65,014,088 |
|
66,009,999 |
|
67,451,967 |
Diluted |
65,127,130 |
|
66,055,450 |
|
67,451,967 |
|
|
|
|
|
|
CONTACT: Investor RelationsXunlei LimitedEmail:
ir@xunlei.comTel: +86 755 6111 1571Website:
http://ir.xunlei.com
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