Q1 2025 Xunlei Ltd Earnings Call
Operator: Welcome, ladies and gentlemen, and thank you for the patience. You've joined Xunlei's first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded.
Welcome, ladies and gentlemen, and thank you for the patience you've joined shouldn't lives last quarter at 2025 earnings Conference call.
Speaker Change: At this time all participants are in a listen only mode. Please be advised that today's conference is being recorded I would now like to turn the call over to the highest Investor Relations manager Ms. Lu had time. Please go ahead.
Luhan Tang: I would now like to turn the call over to the host, Investor Relations Manager, Ms. Luhan Tang. Please go ahead.
Luhan Tang: Good morning, everyone, and thank you for joining Xunlei's Q1 2025 Bernie's conference. With me today are Eric Zhou, CFO, and Li Li, Vice President of Finance. Our IR website has our earnest press release to supplement our prepared remarks during the call.
Speaker Change: Good morning, everyone and thank you for joining <unk> Q1, 2025 earnings Conference call with me today are Eric Zhou CFO, Andrew Levy, Vice President of Finance.
Fred: I'll, let Fred has our earnings press release to supplement Architected remarks during the call.
Luhan Tang: Today's agenda includes a prepared opening remarks from Chairman and CEO Mr. Jinbo Li on Q1 operational highlights. followed by CFO Eric Zhou's presentation of financial results, details of Q1 2025, and a revenue guidance for the Q2 2025.
Speaker Change: Today's agenda includes a prepared opening remarks, our chairman and CEO, Mr. Jim Doherty on Q1 operational highlights.
CFO: Followed by CFO archers presentation of financial results detail, our Q1, 2025, and our revenue guidance for Q2 for instance.
Luhan Tang: Before we open up the floor to your questions in the Q&A Please note that this call is recorded and can be replayed on our Investor Relations website at ir.xunlei.com. Before we get started, I would like to take this opportunity to remind you that the discussion today will contain certain forward-looking statements made under safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are based on our management's current expectations under existing marketing market conditions and are subject to risks and uncertainties that are difficult to predict, which may cause actual results to differ materially from those made in the foregoing statements.
CFO: We'll then open up the floor to your question no Q&A session.
CFO: Please note that this call is recorded and can be replayed on our Investor Relations website at IR <unk> com.
CFO: Before we get started I would like to take this opportunity to remind you that the discussion today will contain certain forward looking statements made under safe Harbor provisions of the U S. Private Securities Litigations Reform Act of 1985.
CFO: Statements are based on our management's current expectations under existing marketing market conditions and are subject to risks and uncertainties.
CFO: Difficult to predict which may cause actual results to differ materially from those in the forward looking statements.
Luhan Tang: Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results. Xunlei assumed no obligations to update any forelooking statements except as required under applicable law. on this call will be using both GAP and non-GAP financial measures. A reconciliation of non-GAP to comparable GAP measures can be found in our earnest press release. Please note that all numbers are in U.S. dollar unless otherwise stated.
CFO: Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results.
CFO: Shall I assume no obligations to update any forward looking statements, except as required under applicable law.
CFO: On this call, we'll be using both GAAP and non-GAAP financial measures.
CFO: Affiliation of non-GAAP to comparable GAAP measures can be found in our earnings press release.
CFO: Please note that on numbers aren't in U S dollar or otherwise.
CFO: Unless otherwise stated.
Jinbo Li: Now the following is the prepared statement by Mr. Jinbo Li, Chairman and CEO of Xunlei Limited. Good morning and good evening, everyone. Thank you all for joining us today.
Speaker Change: Now the following is the Qatar statement from Mr. <unk>, <unk>, chairman and CEO of single and limited.
CFO: Good morning, and good evening, everyone. Thank you all for joining US today, we're delighted to report that we have successfully delivered and accepted quarterly revenue. If you want to kick off 2025, marking our year over year top line growth of 10, 5% to $88 8 million.
Jinbo Li: We're delighted to report that we have successfully delivered an expected quarterly revenue in Q1 to kick off 2025, marking a year over year top line growth of 10.5% to $88.8 million. This positive outcome reflects the hard work and dedication of our team, as well as the trust and support from our valued users and clients. The growth we achieved is primarily attributable to two key areas, our subscription business and our overseas audio live streaming operations. Specifically, subscription revenue increased by 7.7% year-over-year to $35.7 million, while the total number of subscribers grew by 5% year-over-year to 6.04 million.
CFO: This positive outcome reflects the hard work and dedication of our team as well as the trust and support from our value to users and clients clients.
CFO: The growth we achieved is primarily attributable to two key areas, our subscription business and our overseas audio live streaming operations.
CFO: Specifically subscription revenue increased by seven 7% year over year to $35 $7 million, while the total number of subscribers grew by 5% year over year to $6 4 million.
Jinbo Li: This robust growth can be attributed to our intensified efforts in diversifying marketing channels for new user acquisition. Through innovative strategies such as targeted advertising, intense social media engagement, and strategic partnerships with well-known mobile phone manufacturers, we successfully expanded our reach to a broader audience. Moreover, we will continue to focus on creating more convenient and innovative features while enhancing service efficiency. Our goal is to ultimately elevate the overall user experience and strengthen user retention, thereby ensuring long-term sustainability.
CFO: This robust growth can be attributed to our intensified efforts in diversifying marketing channels for new user acquisition.
CFO: Through innovative strategies, such as targeted advertising enhanced social media engagement and strategic partnerships with well known mobile phone manufacturers.
CFO: Successfully expanded our reach to a broader audience.
CFO: We will continue to focus on creating more convenient and innovative features while enhancing service efficiency.
CFO: Our goal is to ultimately elevate the overall user experience and strengthen user retention, thereby ensuring long term sustainability.
Jinbo Li: In addition to our subscription business, we observed a significant 66% year-over-year growth in revenue from livestreaming and other services. Notably, overseas audio live streaming revenue increased by 79.2% year over year, reflecting the recovery from the downsizing of our domestic audio live streaming business, and a significant increase in overseas revenue demonstrates that our efforts to adapt to international markets are yielding tangible results.
CFO: In addition to our subscription business, we observed a significant 66, 66% year over year growth in revenue from live streaming and other services.
CFO: Notably overseas audio live streaming revenue increased by 79, 2% year over year, reflecting the recovery from the downsizing of our domestic audio live streaming business and a significant increase in overseas revenue demonstrates that our efforts to adapt to international markets are yielding tangible.
CFO: Results.
Jinbo Li: Over the past year, we have intensified our focus on expanding and strengthening our presence in the Opus Dei region. A key component of this strategy has been the implementation of a more refined and targeted marketing approach. by customizing our service to align with the specific preferences and the cultural nuances of users in different regions. will have been able to effectively engage with the broader and more diverse user base.
CFO: Over the past year, we have intensified our focus on expanding and strengthening our presence in this region.
CFO: A key component of this strategy has been the limitation of a more refined and targeted marketing approach.
CFO: By customizing, our service to align with the specific preferences and cultural nuances of users in different regions.
CFO: We have been able to effectively engage with the broader and more diverse user base.
Jinbo Li: However, our cloud computing business has been facing significant challenges due to intensified competition and pricing pressures within the rapid evolving industry environment. since the latter part of 2024. As a result, in Q1, revenue from the cloud computing business declined by 18% year-over-year to $24.7 million.
CFO: However, our cloud computing business has been facing significant challenges due to intensified competition and pricing pressures within the rapidly evolving industry environment since.
CFO: Since the latter part of 2024.
CFO: As a result in Q1 revenue from the cloud computing business declined by 18% year over year to $24 $7 million.
Jinbo Li: Looking ahead, we intend to proactively address these challenges. We will explore all viable options to minimize the impact of the cloud computing business on the company's overall performance.
CFO: Looking ahead, we intend to proactively address these challenges.
CFO: We'll explore all vehicle options to minimize the impact of the cloud computing business on the company's overall performance.
Jinbo Li: To conclude, I think this year will be a pivotal year for Xunlei. Our strategic priorities are centered on fostering growth through innovation while exploring business restructuring opportunities to enhance focus and operational dynamism.
CFO: To conclude I think this year will be a pivotal year for Chile, our strategic priorities are centered on fostering growth through innovation, while exploring business restructuring opportunities to enhance focus and operational dynamism.
Jinbo Li: In January, we announced the acquisition of HuPu with the aim of expanding our market presence and diversifying our service offering. Additionally, we're actively developing AI-driven applications, leveraging large language models to broaden our product portfolio and unlock new growth opportunities. Supported by strong capital structure and robust financial liquidity, our objectives are to deliver enhanced user value, capitalize on our technological expertise, and generate sustainable long-term value for shareholders.
CFO: In January we announced the acquisition of hopeful with the aim of expanding our market presence and diversifying our service offerings.
CFO: Italy, we're actively developing AI driven applications, leveraging large language models to broaden our product portfolio and unlock new growth opportunities.
CFO: Supported by strong capital structure, and robust financial liquidity, our objectives are to deliver enhanced user value capitalized on our technological expertise and generate sustainable long term value for shareholders.
Luhan Tang: With that, I'll now pass the call over to Eric. Eric will give a detailed review of our Q1 2025 financial results and provide revenue guidance for the second quarter of 2025. Thank you, Luhan.
Eric Zhou: With that I'll now pass the call over to Eric.
Eric Zhou: <unk> will give a detailed review of our Q1 2025 financial results and provide revenue guidance for the second quarter of 2025.
Eric Zhou: Thank you. Thank you all again for participating in todays conference call to discuss the financial results of the first quarter of 2025.
Eric Zhou: Thank you all again for participating in Xunlei's conference call to discuss the financial out of the first quarter of 2025. In the first quarter, our total revenues were $88.8 million, representing an increase of 10.5% year-over-year. The increase in total revenues was mainly attributable to the increased revenues from our subscription business as well as OFC's audio live streaming business. Revenues from subscription were $35.7 million, representing an increase of 7.7% year-over-year. The increase in subscription revenues was mainly driven by the increase in the number of subscribers. The number of subscribers was 6.04 million as of March 31st, 2025, compared with 5.76 million as of March 31st, 2024.
Eric Zhou: In the fourth quarter <unk> revenues were $88 8 million.
Eric Zhou: While 2000, an increase of 10%.
Eric Zhou: Yes.
Eric Zhou: The increase in revenue was mainly attributable to the increased revenues.
Eric Zhou: Okay.
Eric Zhou: Okay.
CFO: <unk> disease.
CFO: Revenues from subscription were $35 million, representing an increase of $7.
CFO: Year over year.
CFO: The increase in subscription revenues was mainly driven by the increase in that number.
CFO: Squabbles.
CFO: The number of subscribers was $6 4 million.
CFO: At March 30, <unk> and if any fire.
CFO: One 6 million as of March 31st.
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Eric Zhou: The average revenue subscriber for the first quarter of 2025 was RMB 14.9 compared with RMB 39.5 in the same period last year. The higher average revenue per subscriber was due to the increased proportion of premium subscribers, which have higher average revenue per subscriber. Revenues from live streaming and other services were $28.4 million. representing an increase of 66% year-over-year. The increase in live streaming and other services revenues was mainly due to the increase in revenues from our overseas audio live streaming business. revenues from cloud computing were $24.7 million, representing a decrease of 18% year over year.
CFO: The average revenue per subscriber for the first quarter of 2025.
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CFO: Period last year.
CFO: The higher average revenue per.
CFO: The playbook was due to the increased proportion of premium subscribers, which have higher average revenue.
CFO: Subscriber.
CFO: Revenues from large kidney and other services were $28 4 million.
CFO: Representing an increase of 66% year over year.
CFO: The increase in live streaming and other services revenues was mainly due to the increase in revenues from our overseas audio live streaming business.
CFO: Revenues from cloud computing were $24 7 million.
CFO: The.
CFO: A decrease of 18% year over year.
Eric Zhou: The decrease in cloud computing revenues was mainly due to the reduced sales of cloud computing services and hardware services as a result of heightened competition, pricing pressure and evolving regulatory environment. Costs of revenues were $44.4 million, representing 50% of our total revenues, compared with $37.1 million, or 46.2% of the total revenues in the same period of 2024. The increase in cost of revenues was mainly attributable to the increase in revenue-sharing expenses in our overseas audio live streaming operations, which were consistent with the growth in live streaming and other services revenue. Gross profit for the first quarter of 2025 was $44.1 million, representing an increase of 2.9% year-over-year.
CFO: The decrease in cloud computing revenues was mainly due to the reduced sales of our cloud computing services and hardware services as a result of heightened the comp tissue.
CFO: Our fee pressure and evolving regulatory environment.
CFO: Cost of revenues were $44 4 million.
CFO: Representing 50% of our total revenues.
CFO: <unk> herbicide in one meeting.
CFO: While 46, 2% of the total revenues in the same period of 2024.
CFO: The increase in cost of revenues was mainly attributable to the increase in revenue sharing expenses.
CFO: Our overseas audio live streaming operations, which were consistent with the growth in <unk> and other services revenues.
CFO: Gross profit for the first quarter of 2025 was 44 1 million, representing an increase of 2%.
Eric Zhou: Goh's profit margin was 49.7% in the first quarter, compared with 53.3% in the same period of 2024. The increase in gross profit was mainly driven by the increase in gross profit generated from our overseas live streaming business and subscription business. The decrease in gross profit margin was mainly attributable to the decreased gross profit margin of our cloud computing business. Research and development expenses for the first quarter of 2025 were $18.7 million, representing 21.1% of our total revenues, compared with $17.6 million, or 22% of our total revenues in the same period of 2024. The increase was primarily due to the increased labor costs incurred during the quarter.
CFO: For the year.
CFO: Gross profit margin was 49, 7% in the first quarter compared with 53 six in the same period of 2010 before.
CFO: The decrease in gross profit was mainly driven by the increase in gross profit generated from our overseas last June.
CFO: <unk> disease and <unk>.
CFO: Subscription business with.
CFO: The decrease in gross profit margin was mainly attributable to the decrease of gross profit margin of our cloud computing business.
CFO: Research and development.
CFO: <unk> for the first quarter of 2025.
CFO: Or $18 $70 million, representing 21, 1% of our total revenues.
CFO: Paired with $17 6 million.
CFO: Or 24% all compared to revenues in the same period of 2024.
CFO: The increase was primarily due to the increase of labor costs incurred during the quarter.
Eric Zhou: Sales and marketing expenses for the fourth quarter were $15.5 million, representing 17.5% of our total revenues, compared with $10.1 million, or 12.5% of our total revenues, in the same period of 2024. The increase was primarily due to more marketing expenses incurred during the first quarter of 2025 for our subscription and overseas audio live streaming business as part of our ongoing efforts on user acquisition. GNA expenses for the fourth quarter of 2025 were $11.8 million, representing 13.3% of our total revenues, compared with $11.1 million, or 13.9% of our total revenues in the same period of 2024.
CFO: Sales and marketing expenses for the fourth quarter were $15 $5 million, representing 17% of our total revenues.
CFO: <unk> was $10 $1 million or 12, 5%.
CFO: Total revenues in the same period of 2024.
CFO: The increase was primarily due to more marketing expenses incurred during the fourth quarter of 2025, all subscription and oversee all the luxury business.
CFO: Ongoing efforts on user acquisition.
CFO: G&A expenses for the fourth quarter of 2025.
CFO: $11 $8 million representing.
CFO: Representing 13, 3% of our total revenues compared with $11 1 million.
CFO: Or 39% of our total revenues in the state period of 'twenty 'twenty four.
Eric Zhou: Operating loss was $1.9 million compared with an operating income of $4 million in the same period of 2024. The decrease in operating income was primarily attributable to the decrease in gross profit margin and the increase in sales and marketing expenses during the quarter. Net loss was $0.9 million compared with net income of $3.6 million in the same period of 2024. The net loss was primarily due to the increase in operating loss, partially offset by the increased other income. Non-debt net income was $0.1 million in the first quarter of 2025, compared with $4.5 million in the same period of 2024.
CFO: Operating loss was $1 9 million.
CFO: Compared with an operating income of $4 million.
CFO: In the same period of 2024.
CFO: The decrease in operating income was primarily attributable to the decrease in gross profit margin and the increased sales and marketing expenses during the quarter.
CFO: Net loss was $9 million compared with net income of $3 6 million in the same period of 2024.
CFO: The net loss was primarily due to the decrease in operating loss, partially offset by the increased other income.
CFO: non-GAAP net income was $4 million in the first quarter ended in the plan.
CFO: Compared with $4 5 million in the same period of time.
CFO: Before.
Eric Zhou: Diluted loss per ADS in the first quarter of 2025 was 1 cent compared with diluted earnings per ADS of 6 cents in the first quarter of 2024. Non-GAAP dilute earnings per ADS was $0.004 in the first quarter compared with non-GAAP dilute earnings of $0.07 per ADS in the same period of 2024. As of March 31, 2025, the company had cash equivalents and short-term investments of $274.6 million compared with $287.5 million as of March 31, 2004. The decrease in cash cash equivalents and short term investments was mainly due to the first trench of payment for the acquisition of Hukou, spending on share of the project, and the payment of bank loans during the quarter, partially offset by the net income.
CFO: Diluted loss for eight years in the first quarter was one <unk>.
CFO: Compared with diluted earnings per areas of expense in the fourth quarter.
CFO: non-GAAP diluted earnings.
CFO: It is.
CFO: Oh for <unk> in the fourth quarter compared with non-GAAP diluted earnings of <unk> <unk> in.
CFO: In the same period of 2024.
CFO: As of March 31st 2020 pounds.
CFO: Company had cash cash equivalents and short term investments of 200% before $6 million.
CFO: <unk> was $287 million.
CFO: As of March 31 presentable.
CFO: The decrease in cash cash equivalents and short term investments was mainly due to the full potential payment for the acquisition of <unk> spending on share repurchases and the payment of bank loans during the quarter.
CFO: Partially offset by the net income.
Eric Zhou: Inflow from Operating Activity on June 4, 2024, Xunlei announced that its Board of Directors had authorized a new plan for the purchase of up to $20 million of its ADFs or shares of the 12 months that followed. As of March 31, 2025, the company had spent $6.5 million on share buybacks under the new share repurchase program, of which about $0.9 million was spent in the first quarter of 2025.
CFO: Inflow from operating activities.
CFO: On June four 2010 before truly announced that its board of directors has authorized and your plan for the repurchase of up to $20 million of its eight years or shares after 12 months. Therefore.
CFO: As of March 31, 2025, the company has spent $6 $5 million on share buybacks.
CFO: Under the new share repurchase program.
CFO: Which about $9 million or the spend in the first quarter of two independent brands.
Eric Zhou: Now let's turn to the guidance for the second quarter of 2025. For the second quarter of 2025, Xunlei estimates total revenues to be between $91 million and $96 million. and the midpoint of the range represents a quarter over quarter increase of approximately 5.3% This estimate represents management's preliminary view of the date of this price raise, which is subject to change, and any change could be material.
CFO: Now, let's turn to the guidance for the second quarter of 2025.
CFO: For the second quarter of 2025 extremely estimate total revenues to be beauty $91 million.
CFO: Len.
CFO: $6 million.
CFO: And at the midpoint of the range represents a quarter over quarter increase of approximately five 3%.
CFO: These estimates represent management's preliminary to bill as of the date of this press release, which is subject to change and any change could be material.
Operator: Now we conclude prepared remarks for the conference call.
CFO: Now we conclude our prepared remarks for the conference call operator, we are ready to take your questions.
Operator: Operators, we are ready to take questions. Thank you.
Operator: If you would like to ask a question, you'll need to press star one and one on your telephone and wait for your name to be announced.
Speaker Change: Thank you if you would like to ask a question you will need to press star one and one on your telephone and wait for your name to be announced.
Operator: To withdraw your question, please press star one and one again. Please stand by while we compile the Q&A roster. below.
CFO: Withdraw your question. Please press star one and once again, please standby, while we compile the Q&A roster.
CFO: Okay.
Unknown Attendee: You can Hello. Can you hear me? Yes.
CFO: Hello.
CFO: Hello.
CFO: Paul.
CFO: Can you hear me yes.
Unknown Attendee: Unknown Attendee, Zhou Naijiang, Luhan Tang, Jinbo Li, Xunlei Hello, I noticed that the CEO mentioned that we are developing AI related products. So I want to ask, what specific AI related products are being developed? And what is the specific progress?
CFO: Got it.
CFO: We will just have all Sean.
CFO: She got one guy.
CFO: One the turnkey for yourselves.
CFO: Sure John.
CFO: Glen.
CFO: The <unk> total score.
Unknown Attendee: Thank you. Unknown Attendee, Zhou Naijiang, Luhan Tang, Jinbo Li, Xunlei are developing some AI products. and she would like to know what they are and what the status of this exploration is.
CFO: Yeah.
CFO: And then of course that initially from the Companys press release that she leaves.
CFO: King.
CFO: AI products.
Speaker Change: Sure would love to know what they are and what the status of this.
CFO: <unk>.
Unknown Attendee: Thanks for asking. Currently, our team is engaged in developing and testing several AI-driven applications, products, leveraging mainstream large language models. The product under development includes an AI-powered auto editing tool. and Effective AI Companion AI. as well as an AI-integrated toolbar solution. While these products are currently under development and testing, We will launch them when ready and we will keep you updated. We appreciate your interest and encourage you to stay tuned for further upgrades.
Bob: Thanks, Bob.
CFO: Asking the currency.
Speaker Change: Our team is engaged in developing and testing several AI driven applications.
Speaker Change: Leveraging mainstream large language models.
Speaker Change: The product.
Speaker Change: Elements in quotes.
Speaker Change: Hi, Paul the auto editing tool.
Speaker Change: And effective AI companion App.
Wes: As Wes and AI integrated <unk> solution.
Speaker Change: Solution.
Speaker Change: While this work are currently under development and SD.
Speaker Change: We will launch them ready.
Speaker Change: <unk> updated.
Speaker Change: We appreciate your interest and we encourage you to stay tuned for further upgrades.
Unknown Attendee: Thank you for your question. Currently, our company is developing and testing many AI applications based on the current mainstream big model. These include AI picture processing, emotional AI companion apps, and some tool-based AI products. Currently, these products are under development and testing. We will also launch these products at the right time. Please look forward to it.
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Speaker Change: I appreciate it.
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Unknown Attendee: Thank you for your questions. Thank you.
Speaker Change: You can see that kick in in the branches.
Speaker Change: Okay.
Speaker Change: Thank you.
Operator: Once again, if you would like to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. And to withdraw your question, you can press star one and one again.
Speaker Change: Once again, if you would like to ask a question you will need to press star one and one on your telephone and wait for your name to be announced to withdraw. Your question you can press star one on one again.
Operator: There are no further questions at this time, so I will hand the conference back to the speakers. Thank you again for your time and participation. If you have any questions, please feel free to visit our website at ir.xunlei.com or send emails to our investigations. Have a good day.
Speaker Change: There are no further questions at this time, so I will hand, the conference back to the speakers.
Speaker Change: Thank you again for your time and participation. If you have any questions. Please feel free to visit our website at IR <unk> <unk>.
Speaker Change: <unk> com or E mails to our Investor Relations have a good day operate we conclude today's conference call. Thank you.
Operator: We conclude this conference call. Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect. Unknown Attendee, Zhou Naijiang, Luhan Tang, Jinbo Li, Xunlei
Speaker Change: Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.
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