Q1 2026 Xunlei Ltd Earnings Call

May 28, 2026

Operator: Welcome, ladies and gentlemen, and thank you for your patience. You've joined Xunlei's Q1 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. Please be advised that today's conference is being recorded. I would now like to turn the call over to the host, Investor Relations Manager, Ms. Luhan Tang. Thank you. Please go ahead.

Speaker #1: Please be advised that today's conference is being recorded. I'll now like to turn the call over to the host, investor relations manager, Ms. Lu Han Tang.

Speaker #1: Thank you. Please go ahead. Good morning, everyone, and thank you for joining Xunlei's Q1 2026 earnings conference call. With me today are Eric Jo, CFO, and Li Li, Vice President of Finance.

Luhan Tang: Good morning, everyone, and thank you for joining Xunlei's Q1 2026 earnings conference call. With me today are Eric Zhou, CFO, and Li Li, Vice President of Finance. Our IR website has our earnings press release to supplement our prepared remarks during the call. Today's agenda includes a prepared opening remark from Chairman and Chief Executive Officer, Jinbo Li, on Q1 operational highlights, followed by CFO Eric Zhou's presentation of financial results details of Q1 before we open up the floor to your questions in the Q&A session. 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 the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Luhan Tang: Good morning, everyone, and thank you for joining Xunlei's Q1 2026 earnings conference call. With me today are Eric Zhou, Chief Financial Officer, and Lee Li, Vice President of Finance. Our IR website has our earnings press release to supplement our prepared remarks during the call. Today's agenda includes a prepared opening remark from Chairman and Chief Executive Officer, Jinbo Li, on Q1 operational highlights, followed by Chief Financial Officer Eric Zhou's presentation of financial results details of Q1 before we open up the floor to your questions in the Q&A session. 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 the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995.

Speaker #1: Our IR website has our earnings press release to supplement our prepared remarks during the call. Today's agenda includes a prepared opening remark from Chairman and CEO, Mr. Jingguo Li, on Q1 operational highlights, followed by CFO Eric Jo's presentation of financial results details for Q1, before opening up the floor to your questions in the Q&A session.

Speaker #1: 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 today's discussion will contain certain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Such statements are based on our management's current expectations under existing 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 forward-looking statements.

Luhan Tang: Such statements are based on our management's current expectations under existing market conditions that are subject to risks and uncertainties that are difficult to predict, which may cause actual results to differ materially from those made in the forward-looking statements. Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results. Xunlei assumes no obligations to update any forward-looking statements except as required under applicable laws. On this call, we will be using both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to comparable GAAP measures can be found in our earnings press release. Please note that all numbers are in US dollars unless otherwise stated. The following is the prepared statement by Mr. Jinbo Li, Chairman and Chief Executive Officer of Xunlei Limited. Good morning and good evening, everyone. Thank you for joining us today.

Speaker #1: Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results. Xunlei assumes no obligation to update any forward-looking statements except as required under applicable laws.

Speaker #1: On this call, we will be using both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to comparable GAAP measures can be found in our earnings press release.

Speaker #1: Please note that all numbers are in US dollars unless otherwise stated. Now, the following is the prepared statement by Mr. Jingguo Li, Chairman and CEO of Xunlei Limited.

Speaker #1: Good morning and good evening, everyone. Thank you for joining us today. We're excited to begin 2026 with a strong first quarter, one defined by disciplined execution, strategic clarity, and tangible progress in our business transformation.

Luhan Tang: Good morning and good evening everyone? Thank you for joining us today.

Luhan Tang: We're excited to begin 2026 with a strong Q1, one defined by disciplined execution, strategic clarity, and tangible progress in our business transformation. Q1 was a period of decisive action. We delivered robust revenue growth across our core segments, completed a successful corporate restructuring, and concentrated our focus on our highest potential business area after carefully balancing our resources and the business opportunities. Total revenue for Q1 2026 reached $98.6 million, that's a significant 54.1% increase year over year. This growth was driven by our strategic emphasis on consumer-oriented businesses, particularly our two key growth engines, subscription services and overseas audio live streaming business. Now, let me share with you some insights on these two vital business bottom lines. For our subscription business, it remains Xunlei's stable cornerstone, delivering consistent cash flow and steady growth. In Q1, subscription revenue reached $45 million, a solid 26.2% year-over-year increase.

Luhan Tang: We're excited to begin 2026 with a strong Q1, one defined by disciplined execution, strategic clarity, and tangible progress in our business transformation. Q1 was a period of decisive action. We delivered robust revenue growth across our core segments, completed a successful corporate restructuring, and concentrated our focus on our highest potential business area after carefully balancing our resources and the business opportunities. Total revenue for Q1 2026 reached $98.6 million, that's a significant 54.1% increase year-over-year. This growth was driven by our strategic emphasis on consumer-oriented businesses, particularly our two key growth engines, subscription services and overseas audio live streaming business. Now, let me share with you some insights on these two vital business bottom lines. For our subscription business, it remains Xunlei's stable cornerstone, delivering consistent cash flow and steady growth. In Q1, subscription revenue reached $45 million, a solid 26.2% year-over-year increase.

Speaker #1: Q1 was a period of decisive action, with delivered robust revenue growth across our core segments. Completed a successful corporate restructuring and concentrated our focus on our highest potential business area.

Speaker #1: After carefully balancing our resources and the business opportunities, total revenue for Q1 2026 reached $98.6 million, a significant 54.1% increase year over year.

Speaker #1: This growth was driven by our strategic emphasize on consumer-oriented businesses. Particularly, our two key growth engines: subscription services and overseas audio live streaming business.

Speaker #1: Now, let me share with you some insights on these two vital business lines. For our subscription business, it remains Xunlei's stable cornerstone, delivering consistent cash flow and steady growth.

Speaker #1: In Q1, subscription revenue reached $45 million, a solid 26.2% year over year increase. This performance reflects our two focused efforts. Firstly, by thoughtfully enhancing the premium subscription experience, listening closely to user feedback and refining features.

Luhan Tang: This performance reflects our two focused efforts. Firstly, by thoughtfully enhancing the premium subscription experience, listening closely to user feedback, and refining features, we have attracted a record number of users to use our premium services. Their trust is both our motivation and our greatest reward. Secondly, through constructive long-term collaborations with leading mobile phone manufacturers and internet platform partners, we have expanded our reach naturally and inclusively, bringing our services to new communities while staying true to our mission of enriching everyday digital life. Looking ahead, we're excited to introduce new features designed to make every interaction more intuitive, joyful, and personal. With your continued support, we are confident in sustaining this purposeful growth. Our overseas live streaming business and other services have emerged as a powerful growth engine, delivering results in line with our expectations.

Speaker #1: We have attracted a record number of users to use our premium services. Their trust is both our motivation and our greatest reward. And secondly, through constructive long-term collaborations with Li Li Mobile Phone manufacturers and internet platform partners, we have expanded our reach naturally and inclusively bringing our services to new communities while staying true to our mission of enriching everyday digital life.

Speaker #1: Looking ahead, we're excited to introduce new features designed to make every interaction more intuitive, joyful, and personal. With your continued support, we are confident in sustaining this purposeful growth.

Speaker #1: Our overseas live streaming business and other services have merged as a powerful growth engine, delivering results in line with our expectations. In Q1, this segment generated 53.6 million dollars in revenue, also an 89.3% year over year increase.

Luhan Tang: In Q1, this segment generated $53.6 million in revenue, also an 89.3% year-over-year increase. This exceptional growth validates our strategic focus on overseas markets, especially high-growth emerging regions such as Southeast Asia and the Middle East. These markets benefit from supportive platform policies and growing user demand. We have leveraged our strength in product refinement, user engagement, and monetization to enhance local operations. The diverse user base, high engagement levels, and increasing willingness to pay in these regions create substantial opportunities. Our ability to adapt services to local market preference, combining geographic and cultural insights with digital entertainment consumption, is a key driver for this remarkable growth. We will continue to intensify our overseas expansion, exploring new markets and optimizing service offerings to sustain momentum. That said, given the ever-changing competitive landscape, our rapid growth may experience a modest slowdown in future quarters.

Speaker #1: This exceptional growth validates our strategic focus on overseas markets, especially high growth emerging regions such as Southeast Asia and the Middle East. These markets benefit from supportive platform policies and growing user demand.

Speaker #1: We have leveraged our strengths in product refinement, user engagement, and monetization to enhance local operations. The diverse user base, high engagement levels, and increasing willingness to pay in these regions create substantial opportunities.

Speaker #1: Our ability to adapt services to local market preference, combining geographic and cultural insights with digital entertainment consumptions, is a key driver for this remarkable growth.

Speaker #1: We will continue to intensify our overseas expansion exploring new markets and optimizing service offerings to sustain momentum. That said, given the ever-changing competitive landscape, our rapid growth may experience a modest slowdown in future quarters.

Luhan Tang: In conclusion, Q1 2026 was a transformative period of Xunlei. We achieved strong financial results, executed a strategic restructuring to concentrate fully on To C operations, and saw our overseas live streaming business emerge as a leading growth driver. We have demonstrated our ability to make both strategic decisions, adapt to market dynamics, and drive growth through focus and innovation. With a clear strategic direction, robust business momentum, and optimized resource allocation, we believe we are well-positioned to capture growing opportunities in the To C market, sustain our growth trajectory, and create long-term value for our shareholders. We remain committed to executing our strategy with discipline and agility, and we're excited about the future ahead. I will now hand the call over to our CFO for a detailed review of our Q1 2026 financial results.

Speaker #1: In conclusion, Q1 2026 was a transformative period for Xunlei. We achieved strong financial results, executed a strategic restructuring to concentrate fully on QC operations, and saw our overseas live streaming business emerge as a leading growth driver.

Speaker #1: We have demonstrated our ability to make both strategic decisions, adapt to market dynamics, and drive growth through focus and innovation. With a clear strategic direction, robust business momentum, and optimized resource allocation, we believe we will we are well positioned to capture growing opportunity in the QC markets, sustain our growth trajectory, and create long-term value for our shareholders.

Speaker #1: We remain committed to executing our strategy with discipline and agility, and we're excited about the future ahead. I will now hand the call over to our CFO for a detailed review of our Q1 2026 financial results.

Speaker #2: Thank you, Wuhan, and thank you all for participating in today's conference call. I will now walk you through our financial results for the first quarter of 2026.

Naijiang Zhou: Thank you, Han, and thank you all for participating in today's conference call. I will now walk you through our financial results for Q1 2026. Please note that in Q1, we restructured our cloud computing business, and it's no longer consolidated in our financial statements. Hence, the following financials exclude discontinued operations. For Q1 2026, our total revenues came in at $98.6 million, up 54.1% year-over-year. This strong top-line growth was mainly driven by higher revenue from our subscription business, as well as solid gains from our overseas audio live streaming business. Breaking down our revenue performance, subscription revenues reached $45 million, representing a 26.2% year-over-year increase. This growth reflects stronger user demand for subscription offerings.

Eric Zhou: Thank you, Han, and thank you all for participating in today's conference call. I will now walk you through our financial results for Q1 2026. Please note that in Q1, we restructured our cloud computing business, and it's no longer consolidated in our financial statements. Hence, the following financials exclude discontinued operations. For Q1 2026, our total revenues came in at $98.6 million, up 54.1% year-over-year. This strong top-line growth was mainly driven by higher revenue from our subscription business, as well as solid gains from our overseas audio live streaming business. Breaking down our revenue performance, subscription revenues reached $45 million, representing a 26.2% year-over-year increase. This growth reflects stronger user demand for subscription offerings.

Speaker #2: Please note that in Q1, we restructured our cloud computing business and it is no longer consolidated in our financial statements. Hence, the following financials exclude discontinued operations.

Speaker #2: For the first quarter of 2026, our total revenues came in at $98.6 million, up 54.1% year over year. This strong pipeline growth was mainly driven by higher revenue from a subscription business as well as solid gains from our overseas audio live streaming business.

Speaker #2: Breaking down our revenue performance, subscription revenues reached $45 million, representing a 26.2% year-over-year increase. This growth reflects stronger user demand for subscription offerings.

Speaker #2: Our live streaming and other services delivered $53.6 million in revenue, jumping 89.3% year over year, thanks primarily to the robust expansion of our overseas audio live streaming business.

Naijiang Zhou: Our live streaming and other services delivered $53.6 million in revenue, jumping 89.3% year over year, thanks primarily to the robust expansion of our overseas audio live streaming business. Our cost of revenues were $40.4 million in the quarter, making up 41% of total revenues. For comparison, we recorded $24.1 million or 37.8% of total revenues in the same period of 2025. The higher cost of revenues aligned closely with our live streaming revenue growth, driven mainly by increased revenue sharing expenses for our overseas audio live streaming operations. The remaining portion of revenue costs mainly came from payment handling fees and bandwidth expenses. Moving to profitability, we generated $57.7 million in gross profit this quarter, up 45.1% year over year. Our gross margin stood at 38.5%, compared to 61.9% in the prior year quarter.

Eric Zhou: Our live streaming and other services delivered $53.6 million in revenue, jumping 89.3% year over year, thanks primarily to the robust expansion of our overseas audio live streaming business. Our cost of revenues were $40.4 million in the quarter, making up 41% of total revenues. For comparison, we recorded $24.1 million or 37.8% of total revenues in the same period of 2025. The higher cost of revenues aligned closely with our live streaming revenue growth, driven mainly by increased revenue sharing expenses for our overseas audio live streaming operations. The remaining portion of revenue costs mainly came from payment handling fees and bandwidth expenses. Moving to profitability, we generated $57.7 million in gross profit this quarter, up 45.1% year over year. Our gross margin stood at 38.5%, compared to 61.9% in the prior year quarter.

Speaker #2: Our cost of revenues were $40.4 million in the quarter, making up 41% of total revenues. For comparison, we recorded 24.1 million or 37.8% of total revenues.

Speaker #2: In the same period of 2025, the higher cost of revenues aligned closely with our live streaming revenue growth, driven mainly by increased revenue sharing expenses, for our overseas audio live streaming operations.

Speaker #2: The remaining portion of revenue costs mainly came from payment handling fees and bandwidth expenses. Moving to profitability, we generated $57.7 million in gross profit this quarter, up 45.1% year over year.

Speaker #2: Our gross margin stood at 58.5%, compared to 61.9% in the prior year quarter. The gross profit improvement was fueled by both our overseas audio live streaming business and our subscription business.

Naijiang Zhou: The gross profit improvement was fueled by both our overseas audio live streaming business and our subscription business. The slight margin decline was a structural mix change. Live streaming, which carries a lower gross margin than subscription, now accounts for a larger share of our total revenues, which compressed our overall gross margin modestly. On the expense front, our R&D expenses were $20.2 million in Q1 2026, representing 20.4% of total revenues. This compares with $16 million or 25.1% of total revenues in Q1 2025. The year-over-year increase was mainly due to higher labor costs this quarter. Sales and marketing expenses rose to $22.4 million this quarter, flat as a percentage of revenue at 22.8%, compared with $14.5 million or 22.7% of our total revenues.

Eric Zhou: The gross profit improvement was fueled by both our overseas audio live streaming business and our subscription business. The slight margin decline was a structural mix change. Live streaming, which carries a lower gross margin than subscription, now accounts for a larger share of our total revenues, which compressed our overall gross margin modestly. On the expense front, our R&D expenses were $20.2 million in Q1 2026, representing 20.4% of total revenues. This compares with $16 million or 25.1% of total revenues in Q1 2025. The year-over-year increase was mainly due to higher labor costs this quarter. Sales and marketing expenses rose to $22.4 million this quarter, flat as a percentage of revenue at 22.8%, compared with $14.5 million or 22.7% of our total revenues.

Speaker #2: The slight margin decline was due to a structural mix change. Live streaming, which carries a lower gross margin than subscriptions, now accounts for a larger share of our total revenues. This has modestly compressed our overall gross margin.

Speaker #2: On the expense front, our R&D expenses were 20.2 million dollars in Q1 2026, representing 20.4% of total revenues. This compares with 16 million dollars or 25.1% of total revenues.

Speaker #2: In the first quarter of 2025, the year-over-year increase was mainly due to higher labor costs this quarter. Sales and marketing expenses rose to $22.4 million this quarter, flat as a percentage of revenue at 22.8%.

Speaker #2: Compared with 14.5 million or 22.7% of our total revenues. The high absolute spending, this year, reflects increased marketing advancement investments, across our subscription and overseas audio live streaming business, as we continue to prioritize user acquisition.

Naijiang Zhou: The higher absolute spending this year reflects increased marketing investments across our subscription and overseas audio live streaming business as we continue to prioritize user acquisition. G&A expenses came in at $10.9 million, equal to 8.5% of our total revenues versus $10 million or 15.7% of total revenues in Q1 2025. The increase was primarily driven by higher share-based compensation expenses. On an operating level, we delivered operating income of $4.3 million this quarter, improving from an operating loss of $1 million in the prior year period. This turnaround was largely driven by stronger gross profit across our core businesses. We recorded a net other loss of $195.1 million this quarter, compared with a net other income of $1.1 million in Q1 2025.

Eric Zhou: The higher absolute spending this year reflects increased marketing investments across our subscription and overseas audio live streaming business as we continue to prioritize user acquisition. G&A expenses came in at $10.9 million, equal to 8.5% of our total revenues versus $10 million or 15.7% of total revenues in Q1 2025. The increase was primarily driven by higher share-based compensation expenses. On an operating level, we delivered operating income of $4.3 million this quarter, improving from an operating loss of $1 million in the prior year period. This turnaround was largely driven by stronger gross profit across our core businesses. We recorded a net other loss of $195.1 million this quarter, compared with a net other income of $1.1 million in Q1 2025.

Speaker #2: G&A expenses came in at $10.9 million, equal to 8.5% of our total revenues, versus $10 million, or 15.7% of total revenues, in Q1 2025.

Speaker #2: The increase was primarily driven by higher share-based competition expenses. On an operating level, we delivered operating income of $4.3 million dollars this quarter, improving from an operating loss of $1 million dollars in the prior year period.

Speaker #2: This turnaround was largely driven by stronger gross profit across our core businesses. We recorded a net other loss of $195.1 million dollars, this quarter, compared with a net other income of $1.1 million dollars in Q1 2025.

Naijiang Zhou: This year-over-year shift was mainly attributable to the fair value changes related to our long-term investment in Arashi Vision Inc., which completed its IPO back in June 2025. Turning to discontinued operations, which relates entirely to our Shenzhen Wanxing business, which we reorganized in March. We recognized income of $17.7 million in Q1 2026, which comprised the operating loss of $1.8 million from discontinued operations, a disposal gain of $4.3 million, as well as the income tax benefits related to the disposal of $15.2 million. Our net loss from continuing operations was $192.4 million this quarter, compared with net loss of $0.2 million in Q1 2025. The large net loss was mainly due to the net other loss we just discussed, partially offset by our improved operating performance.

Eric Zhou: This year-over-year shift was mainly attributable to the fair value changes related to our long-term investment in Arashi Vision Inc., which completed its IPO back in June 2025. Turning to discontinued operations, which relates entirely to our Shenzhen Wanxing business, which we reorganized in March. We recognized income of $17.7 million in Q1 2026, which comprised the operating loss of $1.8 million from discontinued operations, a disposal gain of $4.3 million, as well as the income tax benefits related to the disposal of $15.2 million. Our net loss from continuing operations was $192.4 million this quarter, compared with net loss of $0.2 million in Q1 2025. The large net loss was mainly due to the net other loss we just discussed, partially offset by our improved operating performance.

Speaker #2: This year-over-year shift was mainly attributable to the fair value changes related to our long-term investment in AirAsia Vision, Inc., which completed its IPO back in June 2025.

Speaker #2: Turning to discontinued operations, which relates entirely to our Shenzhen Wanxing business, which we reorganized this in March and recognized income of $17.7 million in Q1 2026.

Speaker #2: Which comprised the operating loss of $1.8 million from discontinued operations, and a disposal gain of $4.3 million dollars, as well as the income tax benefits related to the disposal of $15.2 million?

Speaker #2: Our net loss from continuing operations was $192.4 million, this quarter, compared with net loss of $0.2 million in Q1 2025. The large net loss was mainly due to the net other loss we just discussed.

Speaker #2: Partially offset by our improved operating performance. On a non-GAAP basis, we achieved solid growth in non-GAAP net income from continuing operations, which rose to $4.1 million, up from $0.9 million in the prior-year period.

Naijiang Zhou: On a non-GAAP basis, we achieved solid growth in non-GAAP net income from continuing operations, which rose to $4.1 million, up from $0.9 million in the prior year period. On a per share basis, our diluted loss per ADS from continuing operations was $3.06 for the quarter, compared with a diluted EPS of $0 in Q1 2025. Our non-GAAP diluted earnings per ADS from continuing operations increased to $0.07 versus $0.02 in the same quarter last year. Finally, on the balance sheet, as of 31 March 2026, our cash equivalents, and short-term investments totaled $303.6 million, up from $283.5 million as of 31 December 2025. The increase was primarily driven by positive operating cash flows and proceeds from the disposal of our 50% equity stake in Shenzhen Wanxing. These gains were partially offset by deferred consideration payments for our Hupu acquisition. This concludes our prepared remarks.

Eric Zhou: On a non-GAAP basis, we achieved solid growth in non-GAAP net income from continuing operations, which rose to $4.1 million, up from $0.9 million in the prior year period. On a per share basis, our diluted loss per ADS from continuing operations was $3.06 for the quarter, compared with a diluted EPS of $0 in Q1 2025. Our non-GAAP diluted earnings per ADS from continuing operations increased to $0.07 versus $0.02 in the same quarter last year. Finally, on the balance sheet, as of 31 March 2026, our cash equivalents, and short-term investments totaled $303.6 million, up from $283.5 million as of 31 December 2025. The increase was primarily driven by positive operating cash flows and proceeds from the disposal of our 50% equity stake in Shenzhen Wanxing. These gains were partially offset by deferred consideration payments for our Hupu acquisition. This concludes our prepared remarks.

Speaker #2: On a per-share basis, our diluted loss per ADS from continuing operations was $3.06 for the quarter, compared with a diluted EPS of zero in Q1 2025.

Speaker #2: Our non-GAAP diluted earnings per ADS from continuing operations increased to $0.70, versus $0.02 in the same quarter last year. Finally, on the balance sheet, as of March 31, 2026, our cash, cash equivalents, and short-term investments totaled $303.6 million, up from $283.5 million as of December 31, 2025.

Speaker #2: The increase was primarily driven by positive operating cash flows and proceeds from the disposal of our 50% equity stake in Shenzhen Wanxing. These gains were partially offset by deferred consideration payments for our Hu Po acquisition.

Speaker #2: This concludes our prepared remarks, operate we are now ready to take questions.

Naijiang Zhou: Operators, we are now ready to take questions.

Eric Zhou: Operators, we are now ready to take questions.

Speaker #1: Thank you. We will now begin the question-and-answer session. To ask a question, please press star 1 and 1, and wait for an MDB announce.

Operator: Thank you. We will now begin the question and answer session. To ask a question, please press star one and one and wait for your name to be announced. To cancel your request, please press star one and one again. One moment for the first question. You have a question from the line of George Kim. Please ask your question.

Speaker #1: To cancel your request, please press star 1 and 1 again. One moment for the first question. You have a question from the line of George Keene.

Speaker #1: Please ask your question.

Speaker #3: What is the new 去年我看到你们和MBA存在这个商标的纠纷，而且被起诉1000多万。但是在年报上没有看到，这个能否提供更多的细节？这个起诉会不会对公司的一些业务产生重大的影响？谢谢。

Speaker #1: 你

Naijiang Zhou: The caller's question is, he noticed from our annual report that in November last year, Hupu was sued for the alleged unauthorized dissemination of NBA game content and the unauthorized use of the NBA trademark. The claimed damages amounted to approximately $12.1 million in total. He would like us to provide more details regarding such copyright litigation. He wants to know if it will have any material impact on this business. Thanks for the question. As it is an ongoing case, we can't comment on it right now. That said, we have set aside some allowances to cover any potential expenses related to this litigation, and we don't expect this case will have a significant impact on our operations. Thank you.

Eric Zhou: The caller's question is, he noticed from our annual report that in November last year, Hupu was sued for the alleged unauthorized dissemination of NBA game content and the unauthorized use of the NBA trademark. The claimed damages amounted to approximately $12.1 million in total. He would like us to provide more details regarding such copyright litigation. He wants to know if it will have any material impact on this business. Thanks for the question. As it is an ongoing case, we can't comment on it right now. That said, we have set aside some allowances to cover any potential expenses related to this litigation, and we don't expect this case will have a significant impact on our operations. Thank you.

Speaker #2: Quarter's question is that he noticed from an annual report that in November last year, Hu Po was sued for the alleged unauthorized dissemination of NBA game content under the unauthorized use of the NBA trademark.

Speaker #2: And the claimed damage amounted to approximately $12.1 million in total. And he would like us to provide more details regarding such copyright litigation and he wants to know if it has if it will have any material impact on the business.

Speaker #2: And thanks for the question. And as it is an ongoing case, we can't comment on it right now. But that said, we have set aside some allowances to cover any potential expenses related to this litigation.

Speaker #2: And we don't expect this case will have a significant impact on our operations. Thank you.

Speaker #4: 谢谢您的提问。目前这个案件还在进行审理当中。我们还暂时没有办法对这个事情发表我们的评论。不过我们也预留了一部分的资金来应对这起诉讼相关的潜在费用。目前来看，我们预计这个案子不会对Hu Po的运营产生重大的影响。谢谢您的问题。

Speaker #3: 谢谢。然后我还看到年报里关于美国证监会1940法案这个关于投资占比不能投资收益占比不能超过45%的这个规定。但是你们在饮食的这个收益应该是超过了，所以想问一下贵司对这个有什么应对的措施。谢谢。

Naijiang Zhou: The second question is, he mentioned that there's a Investment Company Act of 1940 that requires companies to maintain the ratio of investment income to total assets below a certain threshold, and it is expected that in this equity gains will exceed that ratio. He would like to know if any measures the company would take to address this regulation by SEC. This is a good question, and you are correct. We will continue to monitor our holdings of our appreciated assets in Arashi Vision Inc. We have been consulting with relevant advisors, and if needed, we will gradually seek to adjust our holdings so that Xunlei will hold investment securities with a value not exceeding 45% of the company's total assets, excluding government securities and cash items, in line with the company's intention to mainly engage in our core To C business.

Speaker #2: And the second question is, and he mentioned that the there is a 1940 investment act that requires companies to maintain the ratio of investment income to total assets below a certain threshold.

Eric Zhou: The second question is, he mentioned that there's a Investment Company Act of 1940 that requires companies to maintain the ratio of investment income to total assets below a certain threshold, and it is expected that in this equity gains will exceed that ratio. He would like to know if any measures the company would take to address this regulation by SEC. This is a good question, and you are correct. We will continue to monitor our holdings of our appreciated assets in Arashi Vision Inc. We have been consulting with relevant advisors, and if needed, we will gradually seek to adjust our holdings so that Xunlei will hold investment securities with a value not exceeding 45% of the company's total assets, excluding government securities and cash items, in line with the company's intention to mainly engage in our core To C business.

Speaker #2: And it is expected that, in such, equity gains will exceed that ratio. He would like to know if there are any measures the company would take to address this regulation by ACC?

Speaker #2: And this is a good question. And you are correct. We will continue to monitor our holdings of our appreciated assets in a ratio, Inc. And we've been consulting with relevant advisors and, if needed, we will gradually seek to adjust our holdings so that Xunlei's hold Xunlei will hold investment securities with a value not exceeding $45% of the company's total assets.

Speaker #2: Excluding government securities and cash items, in line with the company's intention to mainly engage in our core 2C business. In fact, we have never intended to be an investment company.

Naijiang Zhou: In fact, we never intend to be an investment company. Thank you.

Eric Zhou: In fact, we never intend to be an investment company. Thank you.

Speaker #2: Thank you.

Speaker #4: 这是一个非常好的问题。我们会持续对这个饮食的这部分的资产进行一个监控，并与相关的中介机构进行协商。如果需要的话，我们会逐步地对持有的这部分股权资产进行调整。确保公司持有的证券投资证券价值不超过公司总资产价值的45%。这也与公司专注于核心2C业务的发展目标相一致。实际上，我们从未打算成为一家投资公司。谢谢您的问题。

Li Li: 这是一个非常好的问题。我们会持续对这部分的资产进行监控，并与相关的中介机构进行协商。如果需要的话，我们会逐步地对持有的这部分股权资产进行调整，确保公司持有的投资证券价值不超过公司总资产价值的45%。这也与公司专注于核心To C业务的发展目标相一致。实际上，我们从未打算成为一家投资公司。谢谢您的问题。

Eric Zhou: 这是一个非常好的问题。我们会持续对这部分的资产进行监控，并与相关的中介机构进行协商。如果需要的话，我们会逐步地对持有的这部分股权资产进行调整，确保公司持有的投资证券价值不超过公司总资产价值的45%。这也与公司专注于核心To C业务的发展目标相一致。实际上，我们从未打算成为一家投资公司。谢谢您的问题。

Speaker #3: 谢谢。

George Kim: 谢谢。

[Unknown Analyst]: 谢谢。

Speaker #1: Thank you for the questions. Once again, if you'd like to ask a question, please press star 1 and 1. At this time, there are no further questions on the line.

Operator: Thank you for the questions. Once again, if you'd like to ask a question, please press star one and one. At this time, no further questions from the line. Allow me to hand the call back to Eric for closing.

Speaker #1: Allow me to call back to Eric for closing.

Naijiang Zhou: Thank you again for your time and participation. If you have any questions, please visit our website at ir.xunlei.com or send emails to our investor relations. Have a good day. Operator, we conclude today's conference call. Thank you.

Eric Zhou: Thank you again for your time and participation. If you have any questions, please visit our website at ir.xunlei.com or send emails to our investor relations. Have a good day. Operator, we conclude today's conference call. Thank you.

Speaker #2: Yeah. Thank you again for your time and participation. If you have any questions, please visit our website at irxunlei.com or send emails to our investors relations.

Speaker #2: Have a good day. Operator, we conclude today's conference call. Thank you.

Operator: That does conclude today's conference call. Thank you for your participation. You may now disconnect.