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 second quarter ended June 30, 2019.
Second Quarter 2019
Financial Highlights:
- Total revenues were US$47.8 million,
representing an increase of 15.7% from the previous quarter.
- Cloud computing and other internet value-added services
revenues (“Cloud computing and other IVAS”) were US$22.5
million, representing an increase of 40.6% from the previous
quarter. The revenues from cloud computing and other IVAS mainly
consist of StellarCloud’s IaaS revenues, cloud product revenues and
live streaming revenues. The increase was mainly due to increased
demand for our shared cloud computing products and services, and
enhanced seasonal marketing activities for our live streaming
platform during the quarter.
- Subscription revenues were US$21.4 million,
representing an increase of 0.9% from the previous quarter.
- Online advertising revenues (consisting
primarily of revenues from mobile advertising) were US$3.9 million,
representing a decrease of 5.4% from the previous quarter.
- Gross profit was US$22.3 million, representing
an increase of 5.5% from the previous quarter. Gross margin was
46.7% in the second quarter of 2019, compared with 51.2% in the
previous quarter.
- Net loss was US$2.0 million in the second
quarter of 2019, compared with a net loss of US$8.6 million in the
previous quarter.
- Diluted loss per ADS was US$0.03 as compared
with a diluted loss of US$0.13 in the previous quarter.
Recent
Developments:
- Expanded StellarCloud’s IaaS client base, including new clients
such as Baidu Inc., NetEase Games and Qutoutiao Inc.;
- Made an equity investment in an emerging IT products and
services provider to aggregate idle computing resources from
business-class networking devices for our shared cloud computing
business;
- Released the source code of the WebAssembly virtual machine
module of ThunderChain, with accompanying protocols and
documentations, for application developers to experiment and
develop large-scale and practical blockchain
applications;
- Established a Joint Laboratory on Blockchain Technology with
The Hong Kong University of Science and Technology (“HKUST”);
and
- Won a Thailand academic institution’s blockchain project to
build a blockchain infrastructure for its affiliated healthcare
systems.
Mr. Lei Chen, the Chief Executive Officer of Xunlei, stated:
“For the second quarter, we exceeded the top end of our earnings
guidance as a result of revenue growth from our cloud computing and
other internet value-added services. We believe the increased
demand for our shared cloud computing products and services, and
expanded IaaS customer base, validated the potential of our shared
cloud computing business. We will continue growing our network
capacity and maintain the momentum going forward. In addition, we
have accumulated extensive blockchain-related experience in both
academic and industrial practice, and applied for additional
blockchain patents based on our recent blockchain initiatives. As
2019 unfolds, we expect to continue to strengthen our competitive
positions in shared cloud computing and blockchain and to lay a
firm foundation for long-term sustainable growth.”
Second Quarter
2019 Financial
Results
Total Revenues
Total revenues were US$47.8 million,
representing an increase of 15.7% from the previous quarter.
Revenues from cloud computing and other IVAS
combined were US$22.5 million, representing an increase of 40.6%
from the previous quarter. The revenues from cloud computing and
other IVAS mainly consist of StellarCloud’s IaaS revenues, cloud
product revenues and live streaming revenues. The increase was
mainly due to increased demand for our shared cloud computing
products and services, and enhanced seasonal marketing activities
for our live streaming platform during the quarter.
Revenues from subscriptions were US$21.4
million, representing an increase of 0.9% from the previous
quarter. The number of subscribers was approximately 4.30 million
as of June 30, 2019, compared with 4.57 million as of March 31,
2019. The average revenue per subscriber for the second quarter of
2019 was RMB33.9, compared with RMB31.1 as of March 31, 2019.
Revenues from online advertising were US$3.9
million, representing a decrease of 5.4% from the previous
quarter.
Cost of Revenues
Total cost of revenues was US$25.3 million,
representing 52.9% of our total revenues.
Bandwidth costs were US$12.7 million,
representing 26.6% of our total revenues, compared with US$10.8
million or 26.0% of our total revenues in the previous quarter.
The remaining cost of revenues mainly consisted
of revenue-sharing costs for our live streaming product and cloud
product costs.
Gross Profit and Gross
Margin
Gross profit for the second quarter was US$22.3
million, representing an increase of 5.5% primarily attributable to
the improved cloud computing and live streaming business. Gross
margin was 46.7% in the second quarter, compared with 51.2% in the
previous quarter. The decrease in gross margin was mainly due to
the lower margin associated with revenues from a seasonal campaign
on our live streaming platform, as well as the rapid expansion of
our cloud computing network capacity.
Research and Development
Expenses
Research and development expenses for the second
quarter of 2019 were US$17.8 million, representing 37.3% of our
total revenues, compared with US$18.8 million or 45.6% of our total
revenues in the previous quarter. The decrease was mainly due to
reduced employee compensation costs.
Sales and Marketing
Expenses
Sales and marketing expenses for the second
quarter of 2019 were US$6.8 million, representing 14.3% of our
total revenues, compared with US$7.6 million or 18.4% of our total
revenues in the previous quarter. The decrease was mainly due to
less one-time marketing expenses incurred this quarter.
General and Administrative
Expenses
General and administrative expenses for the
second quarter of 2019 were US$10.2 million, representing 21.4% of
our total revenues, compared with US$9.4 million or 22.6% of our
total revenues in the previous quarter.
Impairment of Assets, Net
Impairment of assets, net for the second quarter
of 2019 was a credit of US$0.7 million, representing a net recovery
of previously impaired assets, compared with a credit balance of
US$0.9 million in the previous quarter.
Operating Loss
Operating loss was US$11.8 million, compared
with an operating loss of US$13.7 million in the previous quarter.
The decrease was mainly due to increased revenue from cloud
computing sales and live streaming income and less operating
expenses incurred during the quarter.
Net Loss
and Loss Per Share
Net loss was US$2.0 million in the second
quarter of 2019, compared with a net loss of US$8.6 million in the
previous quarter. Non-GAAP net loss was US$0.7 million in the
second quarter of 2019, compared with Non-GAAP net loss of US$7.2
million in the previous quarter. The decreased net loss and
non-GAAP net loss were primarily due to an approximately US$6.7
million gain on disposal of LinkToken operations and its related
assets and liabilities.
Diluted loss per ADS in the second quarter of
2019 was US$0.03, compared with a diluted loss per ADS of US$0.13
in the previous quarter.
Cash Balance and
Short-Term Investments
As of June 30, 2019, the Company had cash, cash
equivalents and short-term investments of US$284.8 million,
compared with US$298.7 million as of March 31, 2019.
Guidance for Third
Quarter 2019
For the third quarter of 2019, Xunlei estimates
total revenues to be between US$45 million and US$51 million, and
the midpoint of the range represents a quarter-over-quarter
increase of approximately 0.4%. This estimate represents
management’s preliminary view as of the date of this release, which
is subject to change and any changes could be material.
Conference Call Details
Xunlei's management will host a conference call
at 8:00 a.m. U.S. Eastern Time on August 14, 2019 (8:00 p.m.
Beijing/Hong Kong Time), to discuss its quarterly results and
recent business activities.
To participate in the conference call, please
dial the following number five to ten minutes prior to the
scheduled conference call time:
|
China: |
400-620-8038 |
|
Hong Kong: |
852 3018 6771 |
|
United States: |
1-845-675-0437 |
|
International: |
65 6713-5090 |
|
Passcode: |
3978586 |
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 by dialing:
|
China: |
400-602-2065 |
|
Hong Kong: |
800-963-117 |
|
United States: |
1-855-452-5696 |
|
International: |
61-2-8199-0299 |
|
Replay Passcode: |
3978586 |
|
Replay End Date: |
August 22, 2019 |
|
|
|
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," "believes," "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
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/(loss), (2) non-GAAP net income/(loss), (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 significant 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) |
| |
June
30, |
December
31, |
|
|
2019 |
|
2018 |
|
| |
|
|
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
| Cash and
cash equivalents |
182,973 |
|
122,930 |
|
| Short-term
investments |
101,812 |
|
196,538 |
|
| Accounts
receivable, net |
27,003 |
|
19,391 |
|
|
Inventories |
9,549 |
|
12,667 |
|
| Due from
related parties |
482 |
|
1,137 |
|
| Prepayments
and other current assets |
18,877 |
|
10,236 |
|
|
Total current assets |
340,696 |
|
362,899 |
|
|
|
|
|
|
Non-current assets: |
|
|
| Restricted
cash |
421 |
|
- |
|
| Long-term
investments |
35,731 |
|
33,638 |
|
| Deferred tax
assets |
6,011 |
|
5,690 |
|
| Property and
equipment, net |
32,270 |
|
21,903 |
|
| Intangible
assets, net |
9,699 |
|
9,991 |
|
|
Goodwill |
20,682 |
|
20,717 |
|
| Other
long-term prepayments and receivables |
365 |
|
593 |
|
| Right-of-use
assets |
7,531 |
|
- |
|
|
Total assets |
453,406 |
|
455,431 |
|
|
|
|
|
|
Liabilities |
|
|
|
Current liabilities: |
|
|
| Accounts
payable |
23,870 |
|
22,629 |
|
| Due to
related parties |
5,003 |
|
5,234 |
|
| Contract
liabilities and deferred income, current portion |
32,330 |
|
30,295 |
|
| Lease
liabilities |
4,137 |
|
- |
|
| Income tax
payable |
2,540 |
|
2,503 |
|
| Accrued
liabilities and other payables |
33,102 |
|
44,065 |
|
|
Held-for-sale liabilities |
- |
|
3,309 |
|
|
Total current liabilities |
100,982 |
|
108,035 |
|
| |
|
|
|
Non-current liabilities: |
|
|
| Contract
liabilities and deferred income, non-current portion |
1,345 |
|
1,850 |
|
| Lease
liabilities, non-current portion |
3,253 |
|
- |
|
| Deferred tax
liabilities, non-current portion |
1,280 |
|
1,366 |
|
|
Interest-bearing bank borrowing |
10,182 |
|
- |
|
|
Total liabilities |
117,042 |
|
111,251 |
|
| |
|
|
|
Equity |
|
|
| Common
shares (US$0.00025 par value, 1,000,000,000 shares authorized,
368,877,209 shares issued and 336,522,780 shares outstanding as at
December 31, 2018; 368,877,205 issued and 338,149,766 shares
outstanding as at June 30, 2019) |
85 |
|
84 |
|
| Additional
paid-in-capital |
469,401 |
|
466,624 |
|
| Accumulated
other comprehensive loss |
(12,684 |
) |
(12,748 |
) |
| Statutory
reserves |
5,132 |
|
5,132 |
|
| Treasury
shares (32,354,429 shares and 30,727,439 shares as at December 31,
2018 and June 30, 2019, respectively) |
8 |
|
8 |
|
| Accumulated
deficits |
(124,322 |
) |
(113,804 |
) |
|
Total Xunlei Limited's shareholders' equity |
337,620 |
|
345,296 |
|
|
Non-controlling interests |
(1,256 |
) |
(1,116 |
) |
|
Total liabilities and shareholders' equity |
453,406 |
|
455,431 |
|
| 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 |
| |
Jun
30, |
|
Mar
31, |
|
Jun
30, |
|
|
|
2019 |
|
2019 |
|
2018 |
|
| |
|
|
|
| Revenues,
net of rebates and discounts |
47,806 |
|
41,329 |
|
65,776 |
|
| Business
taxes and surcharges |
(157 |
) |
(285 |
) |
(385 |
) |
| Net
revenues |
47,649 |
|
41,044 |
|
65,391 |
|
| Cost of
revenues |
(25,302 |
) |
(19,863 |
) |
(30,705 |
) |
|
Gross profit |
22,347 |
|
21,181 |
|
34,686 |
|
|
|
|
|
|
|
Operating expenses |
|
|
|
| Research and
development expenses |
(17,824 |
) |
(18,849 |
) |
(19,198 |
) |
| Sales and
marketing expenses |
(6,844 |
) |
(7,595 |
) |
(9,515 |
) |
| General and
administrative expenses |
(10,231 |
) |
(9,357 |
) |
(9,707 |
) |
| Assets
impairment loss, net |
732 |
|
894 |
|
- |
|
|
Total operating expenses |
(34,167 |
) |
(34,907 |
) |
(38,420 |
) |
|
|
|
|
|
|
Operating loss |
(11,820 |
) |
(13,726 |
) |
(3,734 |
) |
| Interest
income |
430 |
|
175 |
|
327 |
|
| Interest
expense |
(15 |
) |
(60 |
) |
(60 |
) |
| Other
income/(loss), net |
8,916 |
|
5,277 |
|
3,818 |
|
| Share of
loss from equity investee |
- |
|
- |
|
(44 |
) |
|
Income/(loss)
before income taxes |
(2,489 |
) |
(8,334 |
) |
307 |
|
| Income tax
(expenses)/benefits |
445 |
|
(290 |
) |
392 |
|
|
Net
income/(loss) |
(2,044 |
) |
(8,624 |
) |
699 |
|
| Less: net
profit/(loss) attributable to non-controlling interest |
(86 |
) |
(64 |
) |
3 |
|
|
Net
income/(loss)
attributable to common shareholders |
(1,958 |
) |
(8,560 |
) |
696 |
|
| |
|
|
|
|
|
Three months ended |
| |
Jun
30, |
|
Mar
31, |
|
Jun
30, |
|
| |
2019 |
|
2019 |
|
2018 |
|
| |
|
|
|
|
Earnings/(loss)
per share for common shares |
|
|
|
| Basic |
(0.0058 |
) |
(0.0254 |
) |
0.0021 |
|
| Diluted |
(0.0058 |
) |
(0.0254 |
) |
0.0021 |
|
| |
|
|
|
|
Earnings/(loss)
per ADS |
|
|
|
| Basic |
(0.0290 |
) |
(0.1270 |
) |
0.0105 |
|
| Diluted |
(0.0290 |
) |
(0.1270 |
) |
0.0105 |
|
| |
|
|
|
|
Weighted average number of common shares used in
calculating: |
|
|
|
| Basic |
337,232,099 |
|
336,530,201 |
|
334,454,484 |
|
| Diluted |
337,232,099 |
|
336,530,201 |
|
338,706,744 |
|
| |
|
|
|
|
Weighted average number of ADSs used in
calculating: |
|
|
|
| Basic |
67,446,420 |
|
67,306,040 |
|
66,890,897 |
|
| Diluted |
67,446,420 |
|
67,306,040 |
|
67,741,349 |
|
|
|
|
|
|
| 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 |
| |
Jun
30, |
|
Mar
31, |
|
Jun
30, |
|
| |
2019 |
|
2019 |
|
2018 |
|
| |
|
|
|
| |
|
|
|
| GAAP
operating loss |
(11,820 |
) |
(13,726 |
) |
(3,734 |
) |
| Share-based
compensation expenses |
1,349 |
|
1,428 |
|
1,281 |
|
|
Non-GAAP operating loss |
(10,471 |
) |
(12,298 |
) |
(2,453 |
) |
| |
|
|
|
| GAAP net
income/(loss) |
(2,044 |
) |
(8,624 |
) |
699 |
|
| Share-based
compensation expenses |
1,349 |
|
1,428 |
|
1,281 |
|
|
Non-GAAP net
income/(loss) |
(695 |
) |
(7,196 |
) |
1,980 |
|
| |
|
|
|
|
GAAP
earnings/(loss)
per share for common shares: |
|
|
|
| Basic |
(0.0058 |
) |
(0.0254 |
) |
0.0021 |
|
| Diluted |
(0.0058 |
) |
(0.0254 |
) |
0.0021 |
|
| |
|
|
|
|
GAAP
earnings/(loss)
per ADS: |
|
|
|
| Basic |
(0.0290 |
) |
(0.1270 |
) |
0.0105 |
|
| Diluted |
(0.0290 |
) |
(0.1270 |
) |
0.0105 |
|
| |
|
|
|
|
Non-GAAP
earnings/(loss)
per share for common shares: |
|
|
|
| Basic |
(0.0018 |
) |
(0.0212 |
) |
0.0059 |
|
| Diluted |
(0.0018 |
) |
(0.0212 |
) |
0.0058 |
|
| |
|
|
|
|
Non-GAAP
earnings/(loss)
per ADS: |
|
|
|
| Basic |
(0.0090 |
) |
(0.1060 |
) |
0.0295 |
|
| Diluted |
(0.0090 |
) |
(0.1060 |
) |
0.0290 |
|
| |
|
|
|
|
Weighted average number of common shares used in
calculating: |
|
|
|
| Basic |
337,232,099 |
|
336,530,201 |
|
334,454,484 |
|
| Diluted |
337,232,099 |
|
336,530,201 |
|
338,706,744 |
|
| |
|
|
|
|
Weighted average number of ADSs used in
calculating: |
|
|
|
| Basic |
67,446,420 |
|
67,306,040 |
|
66,890,897 |
|
| Diluted |
67,446,420 |
|
67,306,040 |
|
67,741,349 |
|
CONTACT: Investor RelationsXunlei LimitedEmail:
ir@xunlei.comTel: +86 755 86338443Website:
http://ir.xunlei.com
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