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, 2020.
Second
Quarter 2020 Financial Highlights:
- Total revenues
were US$44.3 million, representing a decrease of 8.3% from the
previous quarter.
- Cloud computing and other
internet value-added services (“Cloud computing and other IVAS”)
revenues were US$21.0 million, representing a decrease of
0.9% from the previous quarter.
- Subscription
revenues were US$20.7 million, representing a decrease of
11.4% on a sequential basis.
- Online advertising
revenues (consisting primarily of revenues from mobile
advertising) were US$2.7 million, representing a decrease of 30.4%
from the previous quarter.
- Gross profit was
US$20.4 million, representing a decrease of 14.5% on a sequential
basis. Gross margin was 46.0% in the second quarter of 2020,
compared with 49.3% in the previous quarter.
- Net loss was
US$11.8 million in the second quarter of 2020, compared with a net
loss of US$5.5 million in the previous quarter.
- Diluted loss per
ADS was US$0.17 as compared with a diluted loss of US$0.08
in the previous quarter.
Recent developments
- Initiated optimization of organizational structure and
streamlined business operations to improve operating efficiency and
profitability;
- Rolled out Xunlei Cloud on the APP Store as a premium function
for subscribers to enhance user experience;
Mr. Jinbo Li, Chairman and Chief Executive
Officer of Xunlei, stated that,” The second quarter was a quarter
of transition and progress. During the quarter, we reorganized our
corporate structure and cut nonessential expenditure to make our
business nimble and agile. Although this resulted in a significant
amount of one-time expenses and impairment, we expect to fully
recoup them in the coming quarters from anticipated cost savings.
After a strong first quarter, total revenues decreased by
8.3% sequentially in the second quarter, and we have lately seen
encouraging progress in product development and business
operations. Our newly launched Xunlei Cloud demonstrates our
continuous efforts in better serving our customers. Looking
forward, we will focus on selected areas that may generate positive
results with visibility. To weather uncertainties in the fluid
COVID-19 environment, we will closely manage our expenditures and
cash flows while capturing new opportunities.”
Second Quarter 2020
Financial Results
Total Revenues
Total revenues were US$44.3 million,
representing a decrease of 8.3% from the previous quarter.
Revenues from cloud computing and other IVAS
combined were US$21.0 million, representing a decrease of 0.9% from
the previous quarter.
Revenues from subscriptions were US$20.7
million, representing a decrease of 11.4% from the previous
quarter. The number of subscribers was 3.9 million as of June 30,
2020, compared with 4.6 million as of March 31, 2020. The average
revenue per subscriber for the second quarter of 2020 was RMB37.5,
compared with RMB35.9 for the first quarter of 2020. The decrease
in subscription revenues was mainly attributable to decline in
subscriber base compared with that in the first quarter. We had a
higher number of subscribers in the first quarter primarily due to
extended Chinese New Year holiday.
Revenues from online advertising were US$2.7
million, representing a decrease of 30.4% from the previous
quarter. The decrease in the second quarter was mainly due to lower
pricing and decreased demand for our mobile advertising as compared
with the first quarter.
Cost of Revenues
Total cost of revenues was US$23.9 million in
the second quarter of 2020, representing 54.0% of our total
revenues, compared with US$24.4 million, or 50.4% of our total
revenues, in the first quarter. The decrease was mainly due to
decreased bandwidth cost, partly offset by increased cost
associated with a write-down of our inventory for Onething Cloud
hardware products of US$2.5 million based on inventory impairment
assessment.
Bandwidth costs were US$13.9 million,
representing 31.4% of our total revenues, compared with US$18.0
million, or 37.1% of our total revenues in the previous quarter,
primarily due to decreased unit cost as a result of improved
bandwidth procurement and utilization.
The remaining cost of revenues mainly consisted
of revenue-sharing costs for our live streaming products.
Gross Profit and Gross
Margin
Gross profit for the second quarter of 2020 was
US$20.4 million, representing a decrease of 14.5% from the previous
quarter. Gross margin was 46.0% in the second quarter, compared
with 49.3% in the previous quarter. The decreased gross profit was
mainly due to decreased subscription revenue and online advertising
revenue which have higher gross margins as well as increased cost
associated with a write-down of our inventory discussed above.
Research and Development
Expenses
Research and development expenses for the second
quarter of 2020 were US$14.5 million, representing 32.8% of our
total revenues, compared with US$16.8 million or 34.8% of our total
revenues in the previous quarter. The decrease was mainly due to
decreased expenses as a result of continuing optimization of
organizational structure during the quarter.
Sales and Marketing
Expenses
Sales and marketing expenses for the second
quarter of 2020 were US$4.4 million, representing 9.9% of our total
revenues, compared with US$6.7 million or 13.9% of our total
revenues in the previous quarter. The decrease was mainly due to
less marketing and promotion activities we conducted during the
quarter.
General and Administrative
Expenses
General and administrative expenses for the
second quarter of 2020 were US$10.1 million, representing 22.8% of
our total revenues, compared with US$8.4 million or 17.5% of our
total revenues in the previous quarter. The increase was mainly due
to increased employee severance compensation as result of
organizational optimization and one-time expense associated with
terminating several office leases.
Impairment of Assets, Net of
Recoveries
Impairment of assets, net for the second quarter
was approximately US$5.1 million, representing 11.4% of total
revenues. The amount represented a one-time written-off of certain
receivables and prepayments in connection with our cloud computing
business as we believe those receivables and prepayments are not
recoverable.
Operating Loss
Operating loss was US$13.7 million, compared
with US$8.1 million in the previous quarter. The increase was
mainly due to lower gross profit and assets impairment loss accrued
this quarter as discussed above.
Net Loss
and Loss Per ADS
Net loss was US$11.8 million in the second
quarter of 2020, compared with a net loss of US$5.5 million in the
previous quarter. Non-GAAP net loss was US$11.2 million in the
second quarter of 2020, compared with a Non-GAAP net loss of US$4.5
million in the previous quarter.
Diluted loss per ADS in the second quarter of
2020 was US$0.17, compared with a diluted loss per ADS of US$0.08
in the previous quarter.
Cash Balance and
Short-Term Investments
As of June 30, 2020, the Company had net working
capital of approximately US$197.4 million. With cash, cash
equivalents and short-term investments of US$257.1 million,
compared with US$255.7 million as of March 31, 2020. The Company
anticipates adequate liquidity to meet its current obligations.
Share Repurchase Program
The Company approved a share repurchase program
to repurchase up to US$20 million of its outstanding shares before
June 30, 2021. There were no shares repurchased as of June 30,
2020. Since the announcement of the share repurchase program, the
Company has repurchased 1,191,392 ADSs using cash of US$4.47
million.
Guidance for Third
Quarter 2020
For the third quarter of 2020, Xunlei estimates
total revenues to be between US$42 million and US$46 million, and
the midpoint of the range represents a quarter-over-quarter
decrease of approximately 1.0%. 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 25, 2020 (8:00 p.m.
Beijing/Hong Kong Time), to discuss its quarterly results and
recent business activities.
Conference Call
Preregistration
Due to the outbreak of COVID-19, operator
assisted conference calls are not available at the moment. All
participants wishing to attend the call must preregister online
before they can receive the dial-in numbers. Preregistration may
require a few minutes to complete. The Company would like to
apologize for any inconvenience caused by not having an operator as
a result of COVID-19.
Please register in advance to join the
conference using the link provided below and dial in 10 minutes
before the call is scheduled to begin. Conference access
information will be provided upon registration.
Participant Online
Registration: http://apac.directeventreg.com/registration/event/4165106.
Once preregistration has been completed,
participants will receive dial-in numbers, an event passcode, and a
unique registrant ID.
To join the conference, please dial the number
you receive, enter the event passcode followed by your unique
registrant ID, and you will be joined to the conference
instantly.
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 (Mandarin): |
400-602-2065 |
Hong Kong: |
800-963-117 |
United States: |
1-855-452-5696 |
International: |
61-2-8199-0299 |
Replay Passcode: |
4165106 |
Replay End Date: |
September 2,
2020 |
|
|
|
|
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: (i)
the Company's ability to continue to innovate and provide
attractive products and services to retain and grow its user base;
(ii) the Company's ability to keep up with technological
developments and users' changing demands in the internet industry;
(iii) the Company's ability to convert its users into subscribers
of its premium services; (iv) the Company's ability to deal with
existing and potential copyright infringement claims and other
related claims; (v) the risk that Covid-19 or other health risks in
China or globally could adversely affect the Company's operations
or financial results; (vi) 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. Additionally,
these forward‑looking statements, particularly our guidance,
involve risk, uncertainties and assumptions, including those
related to the impacts of COVID‑19 on our business and global
economic conditions. Many of these assumptions relate to matters
that are beyond our control and changing rapidly, including, but
not limited to, the timeframes for and severity of social
distancing and other mitigation requirements, the impact of
COVID‑19 on our customers’ purchasing decisions and the length of
our sales cycles, particularly for customers in certain industries
highly affected by COVID‑19. Significant variation from the
assumptions underlying our forward‑looking statements could cause
our actual results to vary, and the impact could be significant.
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) from continuing
operations, (3) non-GAAP basic and diluted earnings per share for
common shares attributable to continuing operations, and (4)
non-GAAP basic and diluted earnings per ADS attributable to
continuing operations. 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, |
|
2020 |
2019 |
|
|
|
Assets |
|
|
|
|
|
Current assets: |
|
|
Cash and cash equivalents |
131,378 |
162,465 |
Short-term investments |
125,759 |
102,847 |
Accounts receivable, net |
16,802 |
27,533 |
Inventories |
1,940 |
5,537 |
Due from related parties |
2,323 |
1,658 |
Prepayments and other current assets |
12,291 |
16,543 |
Total current assets |
290,493 |
316,583 |
|
|
|
Non-current assets: |
|
|
Restricted cash |
2,939 |
2,983 |
Long-term investments |
26,287 |
26,365 |
Deferred tax assets |
666 |
1,118 |
Property and equipment, net |
37,647 |
38,770 |
Intangible assets, net |
8,720 |
9,426 |
Goodwill |
20,084 |
20,382 |
Other long-term prepayments and receivables |
214 |
313 |
Right-of-use assets |
2,713 |
8,747 |
Total assets |
389,763 |
424,687 |
|
|
|
Liabilities |
|
|
Current liabilities: |
|
|
Accounts payable |
21,596 |
24,213 |
Due to related parties |
5,002 |
5,002 |
Contract liabilities and deferred income, current portion |
31,552 |
31,988 |
Lease liabilities |
2,330 |
4,693 |
Income tax payable |
2,673 |
2,550 |
Accrued liabilities and other payables |
29,917 |
42,840 |
Total current liabilities |
93,070 |
111,286 |
|
|
|
Non-current liabilities: |
|
|
Contract liabilities and deferred income, non-current portion |
1,032 |
1,223 |
Lease liabilities, non-current portion |
439 |
4,132 |
Deferred tax liabilities, non-current portion |
1,081 |
1,179 |
Interest-bearing bank borrowing |
16,809 |
11,324 |
Total liabilities |
112,431 |
129,144 |
|
|
|
Equity |
|
|
Common shares (US$0.00025 par value, 1,000,000,000 shares
authorized, 368,877,205 shares issued and 339,165,241 shares
outstanding as at December 31, 2019; 368,877,205 issued and
339,820,941 shares outstanding as at June 30, 2020) |
85 |
85 |
Additional paid-in-capital |
473,614 |
472,052 |
Accumulated other comprehensive loss |
(15,919) |
(13,425) |
Statutory reserves |
5,132 |
5,132 |
Treasury shares (29,711,964 shares and 29,056,264 shares as at
December 31, 2019 and June 30, 2020, respectively) |
7 |
7 |
Accumulated deficits |
(184,000) |
(166,973) |
Total Xunlei Limited's shareholders' equity |
278,919 |
296,878 |
Non-controlling interests |
(1,587) |
(1,335) |
Total liabilities and shareholders' equity |
389,763 |
424,687 |
|
|
|
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, |
|
2020 |
|
2020 |
|
2019 |
|
|
|
|
|
Revenues,
net of rebates and discounts |
44,328 |
|
48,348 |
|
47,806 |
|
Business
taxes and surcharges |
(8 |
) |
(133 |
) |
(157 |
) |
Net
revenues |
44,320 |
|
48,215 |
|
47,649 |
|
Cost of
revenues |
(23,931 |
) |
(24,380 |
) |
(25,302 |
) |
Gross profit |
20,389 |
|
23,835 |
|
22,347 |
|
|
|
|
|
Operating expenses |
|
|
|
Research and
development expenses |
(14,548 |
) |
(16,823 |
) |
(17,824 |
) |
Sales and
marketing expenses |
(4,382 |
) |
(6,704 |
) |
(6,844 |
) |
General and
administrative expenses |
(10,100 |
) |
(8,449 |
) |
(10,231 |
) |
Assets
impairment loss, net of recoveries |
(5,060 |
) |
- |
|
732 |
|
Total operating expenses |
(34,090 |
) |
(31,976 |
) |
(34,167 |
) |
|
|
|
|
Operating loss |
(13,701 |
) |
(8,141 |
) |
(11,820 |
) |
Interest
income |
408 |
|
497 |
|
430 |
|
Interest
expense |
- |
|
- |
|
(15 |
) |
Other
income, net |
1,772 |
|
2,722 |
|
8,916 |
|
Loss before income taxes |
(11,521 |
) |
(4,922 |
) |
(2,489 |
) |
Income tax
expenses |
(254 |
) |
(614 |
) |
445 |
|
Net
loss |
(11,775 |
) |
(5,536 |
) |
(2,044 |
) |
Less: net
loss attributable to non-controlling interest |
(247 |
) |
(37 |
) |
(86 |
) |
Net
loss attributable to common shareholders |
(11,528 |
) |
(5,499 |
) |
(1,958 |
) |
|
|
|
|
|
Three months ended |
|
Jun
30, |
Mar
31, |
Jun
30, |
|
2020 |
|
2020 |
|
2019 |
|
|
|
|
|
Loss per share for common
shares |
|
|
|
Basic |
(0.0339 |
) |
(0.0162 |
) |
(0.0058 |
) |
Diluted |
(0.0339 |
) |
(0.0162 |
) |
(0.0058 |
) |
|
|
|
|
Loss per ADS |
|
|
|
Basic |
(0.1695 |
) |
(0.0810 |
) |
(0.0290 |
) |
Diluted |
(0.1695 |
) |
(0.0810 |
) |
(0.0290 |
) |
|
|
|
|
Weighted average number of common shares used in
calculating : |
|
|
|
Basic |
339,816,984 |
|
339,172,380 |
|
337,232,099 |
|
Diluted |
339,816,984 |
|
339,172,380 |
|
337,232,099 |
|
|
|
|
|
Weighted average number of ADSs used in calculating
: |
|
|
|
Basic |
67,963,397 |
|
67,834,476 |
|
67,446,420 |
|
Diluted |
67,963,397 |
|
67,834,476 |
|
67,446,420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
XUNLEI
LIMITED |
Reconciliation of
GAAP and Non-GAAP Results (Excluding discontinued operations) |
(Amounts expressed
in thousands of USD, except for share, per share (or ADS)
data) |
|
Three months
ended |
|
Jun
30, |
Mar
31, |
Jun
30, |
|
2020 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
GAAP
operating loss |
(13,701 |
) |
(8,141 |
) |
(11,820 |
) |
Share-based
compensation expenses |
547 |
|
1,015 |
|
1,349 |
|
Non-GAAP operating loss |
(13,154 |
) |
(7,126 |
) |
(10,471 |
) |
|
|
|
|
GAAP net
loss from continuing operations |
(11,775 |
) |
(5,536 |
) |
(2,044 |
) |
Share-based
compensation expenses |
547 |
|
1,015 |
|
1,349 |
|
Non-GAAP net loss |
(11,228 |
) |
(4,521 |
) |
(695 |
) |
|
|
|
|
GAAP
loss per share for common shares: |
|
|
|
Basic |
(0.0339 |
) |
(0.0162 |
) |
(0.0058 |
) |
Diluted |
(0.0339 |
) |
(0.0162 |
) |
(0.0058 |
) |
|
|
|
|
GAAP
loss per ADS: |
|
|
|
Basic |
(0.1695 |
) |
(0.0810 |
) |
(0.0290 |
) |
Diluted |
(0.1695 |
) |
(0.0810 |
) |
(0.0290 |
) |
|
|
|
|
Non-GAAP loss per share for common shares: |
|
|
|
Basic |
(0.0323 |
) |
(0.0132 |
) |
(0.0018 |
) |
Diluted |
(0.0323 |
) |
(0.0132 |
) |
(0.0018 |
) |
|
|
|
|
Non-GAAP loss per ADS: |
|
|
|
Basic |
(0.1615 |
) |
(0.0660 |
) |
(0.0090 |
) |
Diluted |
(0.1615 |
) |
(0.0660 |
) |
(0.0090 |
) |
|
|
|
|
Weighted average number of common shares used in
calculating: |
|
|
|
Basic |
339,816,984 |
|
339,172,380 |
|
337,232,099 |
|
Diluted |
339,816,984 |
|
339,172,380 |
|
337,232,099 |
|
|
|
|
|
Weighted average number of ADSs used in
calculating: |
|
|
|
Basic |
67,963,397 |
|
67,834,476 |
|
67,446,420 |
|
Diluted |
67,963,397 |
|
67,834,476 |
|
67,446,420 |
|
CONTACT: Investor RelationsXunlei LimitedEmail:
ir@xunlei.comTel: +86 755 86338443Website: http://ir.xunlei.com
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