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 third quarter ended September 30, 2022.
Third Quarter 2022 Financial
Highlights:
- Total revenues
were US$88.3 million, representing an increase of 12.8% from the
previous quarter.
- Cloud computing
revenues were US$29.1 million, representing an increase of
2.7% from the previous quarter.
- Subscription
revenues were US$25.0 million, representing a decrease of
1.7% from the previous quarter.
- Live streaming and other
internet value added services (“Live streaming and other IVAS”)
revenues (including online advertising revenue) were
US$34.2 million, representing an increase of 39.4% from the
previous quarter.
- Gross profit was
US$35.2 million, representing an increase of 4.4% from the previous
quarter, and gross profit margin was 39.9% in the third quarter,
compared with 43.1% in the previous quarter.
- Net income was
US$8.3 million in the third quarter, compared with US$6.0 million
in the previous quarter.
- Non-GAAP net
income was US$9.0 million in the third quarter, compared
with US$9.8 million in the previous quarter.
- Diluted earnings per
ADS was approximately US$0.12 as compared with US$0.09 per
ADS in the previous quarter.
"Amid the profound challenges posted by the
Covid-19 resurgence and economic headwinds, we delivered solid
third quarter results as our business demonstrated continued
resilience during a period of uncertainty and volatility,” said
Jinbo Li, Chairman and Chief Executive Officer of Xunlei. “Our
total revenue exceeded the high end of our guidance range, driven
by balanced performance of our synergetic product portfolio,
especially the significant growth of our live streaming
products.”
“We anticipate further growth for the fourth
quarter of 2022 sequentially and year-over-year and that expect to
be on course to achieve full-year profitability,” continued Jinbo
Li. “However, we will stay vigilant about the current macro
dynamics which could significantly impact our operations. To ensure
sustainable development, we are steadily entering selected
international markets to strengthen our product portfolio and
address geographic market risks. We have seen incipient but
encouraging progress in this regard. With a healthy balance sheet,
clear strategic focus and effective execution and an improved
product portfolio, we believe we are well positioned to navigate
this volatile macroeconomic and geopolitical environment and
capture long-term opportunities,” concluded Mr. Jinbo Li.
Third Quarter 2022 Financial
Results
Total Revenues
Total revenues were US$88.3 million,
representing an increase of 12.8% from the previous quarter. The
increase in total revenues was mainly attributable to increased
revenue generated from our live streaming business.
Revenues from cloud computing were US$29.1
million, representing an increase of 2.7% from the previous
quarter. The increase of cloud computing revenues was mainly due to
the increased demand from our major clients for our cloud computing
service, partially offset by devaluation of exchange rate of RMB
against US Dollar.
Revenues from subscription were US$25.0 million,
representing a decrease of 1.7% from the previous quarter. The
number of subscribers was 4.37 million as of September 30, 2022,
compared with 4.46 million as of June 30, 2022. The average revenue
per subscriber for the third quarter was RMB39.1, compared with
RMB37.8 in the previous quarter. The higher average revenue per
subscriber was due to a larger percentage of users opted for our
premium membership.
Revenues from live streaming and other IVAS were
US$34.2 million, representing an increase of 39.4% from the
previous quarter. The increase of live streaming and other IVAS
revenues was mainly driven by the rise in the number of paying
users of our live streaming products, which were launched in 2021,
and our enhanced monetization capability.
Costs of Revenues
Costs of revenues were US$52.8 million,
representing 59.9% of our total revenues, compared with US$44.3
million or 56.6% of the total revenues in the previous quarter.
Bandwidth costs as included in costs of revenues
were US$25.3 million, representing 28.6% of our total revenues,
compared with US$25.5 million or 32.6% of the total revenues in the
previous quarter.
The remaining costs of revenues mainly consisted
of costs related to the revenue-sharing costs for our live
streaming business and depreciation of servers and other
equipment.
Gross Profit and Gross Profit
Margin
Gross profit for the third quarter was US$35.2
million, representing an increase of 4.4% from the previous
quarter. Gross profit margin was 39.9% in the third quarter,
compared with 43.1% in the previous quarter. The increase in gross
profit was mainly driven by the increase in gross profit of live
streaming business. The decrease in gross profit margin was mainly
due to the increased portion of live streaming revenue to total
revenues, which has lower gross profit margin.
Research and Development
Expenses
Research and development expenses for the third
quarter were US$16.2 million, representing 18.3% of our total
revenues, compared with US$16.0 million or 20.4% of our total
revenues in the previous quarter.
Sales and Marketing
Expenses
Sales and marketing expenses for the third
quarter were US$5.8 million, representing 6.6% of our total
revenues, compared with US$5.0 million or 6.4% of our total
revenues in the previous quarter. The increase was primarily due to
higher market promotion expense during this quarter as a result of
our continued user acquisition efforts.
General and Administrative
Expenses
General and administrative expenses for the
third quarter were US$8.2 million, representing 9.3% of our total
revenues, compared with US$12.0 million or 15.4% of our total
revenues in the previous quarter. The decrease was primarily due to
the decreased share-based compensation expenses for fewer
restricted share units vested during this quarter.
Operating Income
Operating income was US$5.1 million, compared
with US$0.7 million in the previous quarter. The increase in
operating income was primarily attributable to the increase in
gross profit of live streaming business and less share-based
compensation expenses during the third quarter.
Other Income, Net
Other income was US$4.7 million, compared with
other income of US$7.0 million in the previous quarter. The
decrease was primarily due to reversal of certain payables due over
three years with low payment probability recognized in the second
quarter but no similar item in current quarter.
Net Income and Earnings Per
ADS
Net income was US$8.3 million, compared with
US$6.0 million in the previous quarter. Non-GAAP net income was
US$9.0 million in the third quarter of 2022, compared with US$9.8
million in the previous quarter. The increase in net income was
primarily driven by the increase in operating income as discussed
above.
Diluted earnings per ADS in the third quarter of
2022 was approximately US$0.12 as compared to US$0.09 in the second
quarter of 2022.
Cash Balance
As of September 30, 2022, the Company had cash,
cash equivalents and short-term investments of US$251.7 million,
compared with US$259.9 million as of June 30, 2022. The
decrease in cash and cash equivalents was mainly due to the impact
of devaluation of exchange rate of RMB against US Dollar,
expenditure on Xunlei R&D and headquarters building under
construction and spending on share buyback.
Share Repurchase Program
In March 2022, Xunlei announced that its Board
of Directors authorized the repurchase of up to $20 million of its
outstanding common stocks over the next 12 months. As of September
30, 2022, the aggregate value of repurchased shares was
approximately US$4.3 million.
Xunlei R&D and Headquarters Building
Under Construction
We are finishing the final interior decoration
and inspection and expect to relocate to the new building in the
near future.
Guidance for fourth Quarter of
2022
For the fourth quarter of 2022, Xunlei estimates
total revenues to be between US$90 million and US$95 million, and
the midpoint of the range represents a quarter-over-quarter
increase of approximately 4.8%. 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
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.
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.
Participant Online Registration:
https://register.vevent.com/register/BIf54dc6626f14406a980eb3f8aca750e9
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/f2zis9sy
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 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/(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 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) |
|
September 30, |
December 31, |
|
2022 |
2021 |
|
US$ |
US$ |
Assets |
|
|
|
|
|
Current
assets: |
|
|
Cash and cash equivalents |
111,245 |
|
123,358 |
|
Short-term investments |
140,486 |
|
115,652 |
|
Accounts receivable, net |
29,065 |
|
26,135 |
|
Inventories |
540 |
|
1,363 |
|
Due from related parties |
31,283 |
|
15,578 |
|
Prepayments and other current
assets |
6,746 |
|
11,842 |
|
Total current
assets |
319,365 |
|
293,928 |
|
|
|
|
Non-current
assets: |
|
|
Restricted cash |
3,662 |
|
4,078 |
|
Long-term investments |
30,710 |
|
31,495 |
|
Property and equipment,
net |
57,647 |
|
57,657 |
|
Intangible assets, net |
6,680 |
|
8,299 |
|
Goodwill |
20,776 |
|
23,136 |
|
Due from a related party,
non-current portion |
- |
|
19,311 |
|
Long-term prepayments and
other assets |
2,586 |
|
2,787 |
|
Right-of-use assets |
- |
|
27 |
|
Total
assets |
441,426 |
|
440,718 |
|
|
|
|
Liabilities |
|
|
Current
liabilities: |
|
|
Accounts payable |
25,510 |
|
26,407 |
|
Due to related parties |
1,607 |
|
1,597 |
|
Contract liabilities and
deferred income, current portion |
35,357 |
|
36,892 |
|
Lease liabilities |
- |
|
18 |
|
Income tax payable |
5,826 |
|
2,531 |
|
Accrued liabilities and other
payables |
35,945 |
|
49,557 |
|
Bank borrowings |
8,100 |
|
2,876 |
|
Total current
liabilities |
112,345 |
|
119,878 |
|
|
|
|
Non-current
liabilities: |
|
|
Contract liabilities and
deferred income, non-current portion |
739 |
|
845 |
|
Lease liabilities, non-current
portion |
- |
|
7 |
|
Deferred tax liabilities |
714 |
|
930 |
|
Bank borrowings, non-current
portion |
24,162 |
|
17,291 |
|
Total
liabilities |
137,960 |
|
138,951 |
|
|
|
|
Equity |
|
|
Common shares (US$0.00025 par
value, 1,000,000,000 shares authorized, 368,877,205 shares issued
and 337,257,946 shares outstanding as at December 31, 2021;
368,877,205 issued and 332,480,081 shares outstanding as at
September 30, 2022) |
83 |
|
84 |
|
Additional
paid-in-capital |
478,026 |
|
476,057 |
|
Accumulated other
comprehensive (loss)/income |
(18,626 |
) |
1,988 |
|
Statutory reserves |
6,155 |
|
6,155 |
|
Treasury shares (31,619,259
shares and 36,397,124 shares as at December 31, 2021 and September
30, 2022, respectively) |
9 |
|
8 |
|
Accumulated deficits |
(160,812 |
) |
(180,645 |
) |
Total Xunlei Limited's
shareholders' equity |
304,835 |
|
303,647 |
|
Non-controlling
interests |
(1,369 |
) |
(1,880 |
) |
Total liabilities and
shareholders' equity |
441,426 |
|
440,718 |
|
|
|
|
|
|
XUNLEI LIMITEDUnaudited Condensed Consolidated Statements
of Income/(Loss)(Amounts expressed in thousands of USD,
except for share, per share (or ADS) data) |
|
|
Three months ended |
|
|
|
Sep 30, |
Jun 30, |
Sep 30, |
|
2022 |
2022 |
2021 |
|
US$ |
US$ |
US$ |
Revenues, net of rebates and discounts |
88,283 |
|
78,271 |
|
60,009 |
|
Business taxes and
surcharges |
(217 |
) |
(251 |
) |
(227 |
) |
Net revenues |
88,066 |
|
78,020 |
|
59,782 |
|
Costs of revenues |
(52,845 |
) |
(44,282 |
) |
(30,437 |
) |
Gross
profit |
35,221 |
|
33,738 |
|
29,345 |
|
|
|
|
|
Operating
expenses |
|
|
|
Research and development
expenses |
(16,161 |
) |
(15,978 |
) |
(16,830 |
) |
Sales and marketing
expenses |
(5,784 |
) |
(5,032 |
) |
(6,809 |
) |
General and administrative
expenses |
(8,238 |
) |
(12,018 |
) |
(11,412 |
) |
Credit loss expenses, net of
recoveries |
22 |
|
26 |
|
2 |
|
Total operating
expenses |
(30,161 |
) |
(33,002 |
) |
(35,049 |
) |
|
|
|
|
Operating
income/(loss) |
5,060 |
|
736 |
|
(5,704 |
) |
Interest income |
445 |
|
308 |
|
186 |
|
Interest expense |
(24 |
) |
(23 |
) |
(23 |
) |
Other income, net |
4,669 |
|
6,979 |
|
537 |
|
Income/(loss) before
income taxes |
10,150 |
|
8,000 |
|
(5,004 |
) |
Income tax expenses |
(1,803 |
) |
(2,002 |
) |
(122 |
) |
Net
income/(loss) |
8,347 |
|
5,998 |
|
(5,126 |
) |
Less: net loss attributable to
non-controlling interest |
(3 |
) |
(19 |
) |
(26 |
) |
Net income/(loss)
attributable to common shareholders |
8,350 |
|
6,017 |
|
(5,100 |
) |
Earnings/(loss) per
share for common shares |
|
|
|
Basic |
0.0247 |
|
0.0177 |
|
(0.0152 |
) |
Diluted |
0.0247 |
|
0.0177 |
|
(0.0152 |
) |
|
|
|
|
Earnings/(loss) per
ADS |
|
|
|
Basic |
0.1235 |
|
0.0885 |
|
(0.0760 |
) |
Diluted |
0.1235 |
|
0.0885 |
|
(0.0760 |
) |
|
|
|
|
Weighted average
number of common shares used in calculating: |
|
|
|
Basic |
337,401,763 |
|
339,514,188 |
|
334,779,959 |
|
Diluted |
337,481,567 |
|
339,624,412 |
|
334,779,959 |
|
|
|
|
|
Weighted average
number of ADSs used in calculating: |
|
|
|
Basic |
67,480,353 |
|
67,902,838 |
|
66,955,992 |
|
Diluted |
67,496,313 |
|
67,924,882 |
|
66,955,992 |
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
Sep 30, |
|
Jun 30, |
|
Sep 30, |
|
|
2022 |
|
2022 |
|
2021 |
|
|
US$ |
|
US$ |
|
US$ |
|
|
|
|
|
|
|
|
GAAP operating
income/(loss) |
5,060 |
|
736 |
|
(5,704 |
) |
Share-based compensation
expenses |
693 |
|
3,828 |
|
2,070 |
|
Non-GAAP operating
income/(loss) |
5,753 |
|
4,564 |
|
(3,634 |
) |
|
|
|
|
|
|
|
GAAP net income/(loss) |
8,347 |
|
5,998 |
|
(5,126 |
) |
Share-based compensation
expenses |
693 |
|
3,828 |
|
2,070 |
|
Non-GAAP net
income/(loss) |
9,040 |
|
9,826 |
|
(3,056 |
) |
|
|
|
|
|
|
|
GAAP earnings/(loss)
per share for common shares: |
|
|
|
|
|
|
Basic |
0.0247 |
|
0.0177 |
|
(0.0152 |
) |
Diluted |
0.0247 |
|
0.0177 |
|
(0.0152 |
) |
|
|
|
|
|
|
|
GAAP earnings/(loss)
per ADS: |
|
|
|
|
|
|
Basic |
0.1235 |
|
0.0885 |
|
(0.0760 |
) |
Diluted |
0.1235 |
|
0.0885 |
|
(0.0760 |
) |
|
|
|
|
|
|
|
Non-GAAP
earnings/(loss) per share for common shares: |
|
|
|
|
|
|
Basic |
0.0268 |
|
0.0290 |
|
(0.0090 |
) |
Diluted |
0.0268 |
|
0.0290 |
|
(0.0090 |
) |
|
|
|
|
|
|
|
Non-GAAP
earnings/(loss) per ADS: |
|
|
|
|
|
|
Basic |
0.1340 |
|
0.1450 |
|
(0.0450 |
) |
Diluted |
0.1340 |
|
0.1450 |
|
(0.0450 |
) |
|
|
|
|
|
|
|
Weighted average
number of common shares used in calculating: |
|
|
|
|
|
|
Basic |
337,401,763 |
|
339,514,188 |
|
334,779,959 |
|
Diluted |
337,481,567 |
|
339,624,412 |
|
334,779,959 |
|
|
|
|
|
|
|
|
Weighted average
number of ADSs used in calculating: |
|
|
|
|
|
|
Basic |
67,480,353 |
|
67,902,838 |
|
66,955,992 |
|
Diluted |
67,496,313 |
|
67,924,882 |
|
66,955,992 |
|
CONTACT: Investor RelationsXunlei LimitedEmail:
ir@xunlei.comTel: +86 755 8633 8443Website:
http://ir.xunlei.com
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