Q4 2023 Xunlei Ltd Earnings Call
Do you have time.
Thank you and good morning.
Thank you for joining <unk> 2012 fourth quarter earnings conference call on the call with me today.
Jonathan.
Sure.
Okay.
Now to our earnings press release.
Yeah.
Okay.
Would you tended to supplement our prepared remarks during today's call.
Oh, sorry.
Mark.
Our chairman and CEO, Mr <unk> and highlight of our fourth quarter operations then.
Then Mr. Eric <unk>, our Chief Financial Officer will walk you through the details on the financial results and wrap up with our revenue guidance for the first quarter of platelet anymore.
After the management's remarks, we'd like to welcome any questions.
In the Q&A session today's cost reported and you can replay the call from our Investor Relations website at IR <unk> com.
They won't get started I would like to take this opportunity to remind you that discussion today will contain certain forward looking statements made under the safe Harbor provisions of the US Private Securities Litigation Reform Act of 90 to 95, such statements are based on management's current expectations under current market conditions, thus far.
And subject to risks and uncertainties that are difficult to predict.
Which may cause actual results to differ materially from those made in forward looking statements.
Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results.
Chimney I assume no obligations to update any forward looking statements, except as required under applicable law.
On this call, we'll be using both GAAP and non-GAAP financial measures.
Installation of non-GAAP to comparable GAAP measures can be found in our earnings press release.
Please note that all numbers are in U S dollars.
Unless otherwise stated.
Now the following has prepared a statement by Mr. <unk>, <unk>, chairman and CEO of stimulated.
Good morning, everyone and thank you all for joining US today, we concluded 2023 with a solid fourth quarter results as our revenue exceeded the upper end of our guidance range and we sustained profitability for the eighth consecutive quarter.
Over the past year, we maintain a strong focus on enhancing our existing products and services restructured our business operations and exploring new initiatives to seek potential breakthrough in our business development.
Despite more short term impact of our business adjustments. We're encouraged by what we have done so far and I believe that we're talking about.
Chris <unk> future.
I look forward to sharing with you.
And in the future.
Let me provide you with.
Into our fourth quarter operations.
No.
Press release earlier today.
Election of subscription business.
So we can really see.
However, at the end of 2023.
93% of that uptick.
Subscription.
Group revenue for the quarter of which three months.
No.
Brokerage <unk>.
Year over year growth.
Okay.
Okay.
She will be comprehensive marketing initiatives implemented.
For future applications and retention.
Quite a few things.
Incentivize users to stay with us.
So there's a whole bunch of critical data.
And the continuous effort.
Acquiring users to optimize future.
Multi faceted marketing campaign, we expect that the positive momentum will continue in the coming days.
Tony.
Some of these countries.
This group.
Okay.
We'll continue.
We're glad to see that despite the intense competition in the industry. Our cloud computing business has managed to maintain its competitive edge in the fourth quarter of 2023, our cloud computing business generated $30 5 million.
Revenue, reflecting a 44% year over year decline, primarily due to the reduced revenue from certain with your time.
Yeah.
However, we have observed an increase in the sales of our heartworm products, namely Oes OTC and Olivier would you Magee users more cash rewards with sharing idle bandwidth resource at <unk>.
I'll change on launching a wholly owned subsidiary of Chile, and operator of our cloud computing business was ranked number three with a market share of 11, 8% uplift edge cloud services market share.
During the first half of 2022.
According to the study conducted by International Data Corporation.
We maintained optimistic about our market position in edge cloud computing industry and maintain fully committed to consistently delivering highly scalable secure and cost effective services to our valued clients.
Turning to our last training and Internet value added services, we generated $15 million gain revenue, reflecting a significant decrease of 62, 5%.
This sharp year over year decline was mainly due to our strategic downsizing of our domestic audio licensing business since June 2023.
To make up the lost revenue in the domestic market, we are actively expanding our presence in overseas market.
Additionally, our gaming business is experiencing a rebound in terms of revenue.
Primarily attributable to the implementation of refining operational strategies that have resulted in a higher revenue sharing models.
Furthermore, our advertising business is also benefiting from the growth of our subscription services, which incentivize more users to engage with exercise.
Although our gaming and advertising currently make up a relatively small portion of our product portfolio, we're anticipating future growth opportunity in this area.
Going forward, we will be facing both challenges and opportunities in the evolving industry by leveraging our solid cash reserves and a strong balance sheet. We will continue to execute a disciplined approach optimized capital allocation efficiency and prioritize investments in key business areas that made.
Greenhouse best value.
We remain committed to creating sustainable and long term value for our shareholders with that our China call over to Eric.
We'll cover our financial results in detail and provide our revenue guidance for the first quarter of 2024.
Thank you.
Thank you for joining <unk> fourth quarter and fiscal year earnings Conference call.
Oh and revealed the details so I wish you know.
Our revenue guidance for the first quarter of 'twenty two before.
In the fourth quarter with total revenues were $77 $1 million.
A decrease of 24% year over year.
The decrease in total revenues was mainly attributable to decreased revenues generated from our last few periods as we downsized some of our domestic live streaming operations to the June 2023.
Revenues from <unk> were fully for the $5 million a decrease of 4%.
Year over year.
The decrease in cloud computing revenues was mainly due to the decreased revenues from certain of our major customers of outcome.
Services.
Revenues from subscription.
Subscriptions were $41 6 million loans, representing a decrease of 26, 8%.
Year over year.
The increase in subscription revenues was mainly due to the increase.
The number of subscribers and higher average revenue per subscriber for the quarter.
Number of subscribers was possible and annuity as of December 31st tenders industry compared with $4 nine <unk> as of December 31.
The average revenue per subscriber for the fourth quarter was RMB $36.
Compared with RMB 30, apart from the fall in the same period of 2022.
The higher average revenue per subscriber was due to the continued to increase as a proportion of the users opting for our premium membership.
Revenues from large <unk> and other <unk> as well.
$15 million, representing a decrease of $62 option year olds.
The decrease of last release and deposit obvious revenues was mainly due to the oncology of Autodesk last G operations due to the year.
Cost of revenues were $36 8 million.
Representing 47, 7% of our total revenues compared with $89 million or <unk> 65, or $6 19. After those revenues in the same period of 2022.
The decrease in cost of revenues was mainly attributable to decreased revenue sharing cost for our last kidney disease, which was consistent with the decrease in lodge fee revenues.
Bandwidth cost is included in the cost of revenues were $26 $4 million.
Representing 34, 2% of our total revenues.
<unk> was $26 9 million or 27, 7% of the total revenues in the same period of 2000 to retool.
The remaining cost of revenues mainly consisted of costs related to the revenue sharing cost for our last pillar business payment handling charges cost of inventories sold and depreciation of servers and other equipment.
Gross profit for the fourth quarter of 2000, <unk> industry was $14 1 million, representing an increase of six 5% year over year.
Gross profit margin was 51, 9% in the fourth quarter compared with 38, 8% in the same period of 2022.
The decreases in gross bookings was mainly driven by the increase in cost.
Subscription business.
The increase in gross profit margin was mainly attributable to the increased portion of subscription revenues to total revenues, which has a high profit margin.
The decreased portion of lost fee revenues to total revenues, which has a relatively lower cost much.
Research and development expenses for the fourth quarter was $19 $5 million, representing 25, 3% of our total revenues compared with $19 2 million.
Over 90%, 80% of our total revenues in the same period of 2022.
The decrease was primarily due to increased labor costs incurred during the quarter.
Sales and marketing expenses for the fourth quarter were $9 3 million, representing 12, 1% of our total revenues compared with $8 7 million.
Or 84, 9% of our total revenues in the same period of 2022.
The increase was primarily due to the increase in cost and customer service costs and a more marketing activities held for subscription business.
Our ongoing efforts on user acquisition, partially offset by the decreased employee bonuses accrued during the quarter.
G&A G&A expenses for the fourth quarter was $11 $6 million, representing 51 off to offset with revenues compared with $9 8 million or 10, 1% Opex with revenues in the same period of 2024.
The increase was primarily due to the increase in labor costs and depreciation accumulate headquarters buildings during the quarter, partially offset by the decrease in share based compensation accrued during the quarter.
Operating loss was <unk> 7 million compared with an operating income of $44 million.
In the same period of 2022.
The decrease in operating income was primarily attributable to the increase in operating expenses during the quarter.
Other income was $3 five.
Meaning <unk>.
Compared with other income of $7 million in the same period of 2022.
The increase was primarily due to the increase in foreign exchange gains and investment income for short term investments during the quarter.
Net income was $3 7 million.
Compared with $1 6 million.
In the same period of 2022.
non-GAAP net income was $4 5 million.
In the fourth quarter of 2008, compared with $3 5 million.
In the same period of 2023.
The increase of net income on expenses non-GAAP income was primarily attributable to the increase in other income partially offset by the decrease in operating income as discussed above.
Diluted earnings per ads in the fourth quarter of 2000 industry was approximately 36% as compared with two tons in the same period of 2022.
Yes.
As of December 31st 2000 industry, the comprehensive cash cash equivalents and short term investments of 270, 190 loans compared with $264 $7 million.
As of September 30th.
The increase in cash cash equivalents and short term investments was mainly due to net cash inflow from operating activities and as the release of certain restricted cash.
Partially offset by repayment of bank loans and the spending on share buybacks during the quarter.
Now, let me share with you our fiscal year 2000 to the street furniture.
In <unk> history, we generated $364 9 million in total revenues.
Representing an increase of six 5% on a year over year basis.
The increase in total revenues was mainly attributable to increased revenues from our subscription and cloud computing capabilities.
Revenues from the platform up from <unk> $193 4 million.
Rob mentioned, an increase of three 4% on a year over year basis.
The increase in cost computing was mainly attributable to increased sales.
Our cloud computing hardware the vouchers.
Revenues from subscription $119 3 billion.
<unk> mentioned, a decrease of 18, 7% on a year over year basis.
The increase was mainly due to the growing number of subscribers, which increased from four nanometers as of December 31st Party to the tool to work with the National meeting as of December 31st service industry.
Revenues from large streaming and other rvs.
994 2 million representing.
Representing a decrease of <unk>, 4% on a year over year basis.
Cost of revenues were $206 million.
Representing 85% of our total revenues compared with $201 million.
Our 58 points.
4% of total revenues in 2022.
Finally, as cost escalation conclude of cost of revenues were $112 5 million.
The plant is 38% of revenues compared with $104 6 million.
Or early part of the total revenues in the previous year.
This increased spend waste costs were mainly due to the increased demand for subscription and cloud computing services, which was consistent with the increase in subscription and the cloud computing revenues.
The remaining cost of revenues mainly consisted of the cost related to the revenue sharing cost for last kidney disease payment handling charges cost of inventory sold and in depreciation approvals and other equivalent.
Gross profit for the year was 160 $463 1 million.
As I mentioned, an increase of $18 six and on a year over year basis.
Gross profit margin was 44, 7% compared with 41, 6% in the previous year.
The increase in cost of pockets of growth.
Gross profit margin was mainly driven by the increase in core deposits.
Our subscription business and increase the portion of subscription revenue to total revenues, which has a higher gross margin.
Research and development expenses for the year were $74 2 million representing.
Substantive 26% of our total revenues compared with $67 7 million.
2019, 80% of total.
Thanks Christy.
The decrease.
Due to legal costs.
Okay.
Okay.
Sarah.
Yes.
No.
<unk>.
Our total revenues.
Okay.
Or.
Revenues in the previous year.
Yes.
<unk>.
The increase in R&D expense.
Paul.
In the past.
G&A expenses for the year were $29.
Thank you.
Revenues.
Okay.
No.
Right.
Okay.
G&A expenses for.
For the year were $46 9 million ounces, representing a 12, 8% of total revenues compared to $39 7 million or 11, 6% of total revenues in the previous year.
The increase was primarily due to the increase in share based compensation expenses depreciation of acuity headquarter building and of impairment of servers networks equivalents incurred during the year.
Operating loss was $1 6 million compared with an operating income of $10 1 million in the previous year. The decrease in operating income was primarily attributable to the increase in operating expenses during the year, partially offset by an increase in cost projects all subscription business as mentioned.
Above.
Other income was $16 9 million compared with $35 million in the previous year.
The increase was primarily due to an increase in investment income and the reversal of certain payables related to our previously posted basis with low team is of a decade during the year.
Net income was $14 $3 million in service industry compared with net income of 31 considered a million dollars.
In the previous year.
non-GAAP net income was $23 $9 million in 2023, compared with $69 5 million in the previous year.
The decrease in net income and our non-GAAP net income was primarily driven by the decrease in operating income as discussed above.
Diluted earnings per <unk> in 2023 was approximately 20% as compared with 30% in the previous year.
Now turning to our share repurchase program.
Incentive industry, which spanned compensating for $7 million on share buybacks.
Let's talk about our earnings guidance for the first quarter of 2010 before Q&A estimate total revenues to be between $79 million and $84 million.
And at the midpoint of range of cents a quarter over quarter increase.
With three 7%.
These estimates defense manganese preliminary view as of the date of this press release, which was faster change and any change could be material.
Now, we conclude compared to March for the conference call.
Operator, we are ready to take questions.
If you wish to ask a question. Please press star one and one on your telephone and wait for your name to be announced.
If you wish to kind of thinking request. Please press star one and one okay.
Yeah.
Once again, if you wish to ask a question. Please press star one and one on your telephone.
That seems to be no questions at this time, we have.
Have a plan and have a question in the queue.
Mhm.
Please standby.
Yes.
We will take our first question.
Your first question comes from the line of King Wang from <unk> asset management. Please go ahead. Your line is open.
Yeah.
Yeah.
Kim Your line is open please ask your question.
Okay.
Anyhow by Nintendo <unk> Oh, yes.
Just one thing I always thank you all.
Any thoughts of Atlanta, Midtown Guang approaches in play and then you said you would see that in South Australia, Sjambok catching and pay temporary shutdown can you talk to the other question Susan Cates yet.
Okay.
Adjusted for the question being ratios, thanks, Ashish and as she said Congress on.
Versus four achieving a record breaker membership for the subscription business achieved with Latin route from details regarding this specific marketing strategies, therefore in Egypt.
And this should also lead to move one of these cities are sustainable.
In the fourth quarter.
Switching business experience.
Significant growth was primarily due to strategic partnerships and collaborations with some optimism online social networks and platforms.
As well as driving committees of our own users.
We have provided attractive incentives to attract new users and effectively with tenant existing loans now.
And thereby enhancing user engagement and fostering loyalty.
And we expect this positive momentum to continue in accumulated.
As a result of continuing and exceptional marketing efforts. Thank you.
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Can you update everybody Shan Shan Nen.
Now the question is I noticed the CEO stage that over 70% of our subscribers.
<unk> members.
Could you. Please clarify this proposal for the 76% of the total number of subscribers or adjust the paid subscribers.
And Additionally plan two years anticipated a further increase in the proportion of premium members.
Approximately 73% of our paid subscribers.
<unk> members.
We continuously assess the structure of our membership by offering pop sheets for both premium and expandable subscriptions.
As well as <unk>.
Different durations for this membership.
Further we are continuously improving our operations.
Routine our existing features.
And it's starting to convert more free users to paying customers.
While encouraging Canada of scrubbers to upgrades to our premium services.
As a result, we anticipate there is still some room for further growth, but maybe at a.
Hello, Lucas at pace.
Thank you.
Forget about Antonio and companion.
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Kisha signed up by almost <unk> <unk> on the aegis annual comprehensive component shortfall.
Tragically I sure I completely understand the short position.
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<unk> can play quite a few that I think will enter a pilot on the topic, but yes generally how much is accountable at the leaf Ashish jumped up again.
Sure Luke.
Sure.
Okay.
Thank you David No further questions I would like to hand back to management for closing remarks.
Thank you again for your time and participation. If you have any questions. Please visit our website at Aha accumulator com or Thunder EMU was investor relations at <unk>.
Good day.
We conclude today's conference call. Thank you very much.
This concludes today's conference call. Thank you for participating you may now disconnect.
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Welcome, ladies and gentlemen, and thank you for your patience, you've joined <unk> fourth quarter and fiscal year 2023 earnings conference call.
At this time all participants are in a listen only mode.
Please be advised that today's conference is being recorded.
I would like like to turn the call over to the host Investor Relations manager MS. You have time.
Thank you.
And bridge funding from late 2023.
Okay.
Yeah.
John.
At least.
Please go ahead.
Our urban congrats Kathy.
Yes.
A couple of hours.
And then to supplement our prepared remarks.