Xunlei Announces Unaudited Financial Results for the Second Quarter Ended June 30, 2019

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SHENZHEN, China, Aug. 14, 2019 (GLOBE NEWSWIRE) -- Xunlei Limited (“Xunlei” or the “Company”) (Nasdaq: XNET), a leading innovator in shared cloud computing and blockchain technology in China, today announced its unaudited financial results for the second quarter ended June 30, 2019.

Mr. Lei Chen, the Chief Executive Officer of Xunlei, stated: “For the second quarter, we exceeded the top end of our earnings guidance as a result of revenue growth from our cloud computing and other internet value-added services. We believe the increased demand for our shared cloud computing products and services, and expanded IaaS customer base, validated the potential of our shared cloud computing business. We will continue growing our network capacity and maintain the momentum going forward. In addition, we have accumulated extensive blockchain-related experience in both academic and industrial practice, and applied for additional blockchain patents based on our recent blockchain initiatives. As 2019 unfolds, we expect to continue to strengthen our competitive positions in shared cloud computing and blockchain and to lay a firm foundation for long-term sustainable growth.”        

Total revenues were US$47.8 million, representing an increase of 15.7% from the previous quarter.

Revenues from cloud computing and other IVAS combined were US$22.5 million, representing an increase of 40.6% from the previous quarter. The revenues from cloud computing and other IVAS mainly consist of StellarCloud’s IaaS revenues, cloud product revenues and live streaming revenues. The increase was mainly due to increased demand for our shared cloud computing products and services, and enhanced seasonal marketing activities for our live streaming platform during the quarter. 

Revenues from subscriptions were US$21.4 million, representing an increase of 0.9% from the previous quarter. The number of subscribers was approximately 4.30 million as of June 30, 2019, compared with 4.57 million as of March 31, 2019. The average revenue per subscriber for the second quarter of 2019 was RMB33.9, compared with RMB31.1 as of March 31, 2019.

Revenues from online advertising were US$3.9 million, representing a decrease of 5.4% from the previous quarter.

Total cost of revenues was US$25.3 million, representing 52.9% of our total revenues.

Bandwidth costs were US$12.7 million, representing 26.6% of our total revenues, compared with US$10.8 million or 26.0% of our total revenues in the previous quarter.

The remaining cost of revenues mainly consisted of revenue-sharing costs for our live streaming product and cloud product costs.

Gross profit for the second quarter was US$22.3 million, representing an increase of 5.5% primarily attributable to the improved cloud computing and live streaming business. Gross margin was 46.7% in the second quarter, compared with 51.2% in the previous quarter. The decrease in gross margin was mainly due to the lower margin associated with revenues from a seasonal campaign on our live streaming platform, as well as the rapid expansion of our cloud computing network capacity.

Research and development expenses for the second quarter of 2019 were US$17.8 million, representing 37.3% of our total revenues, compared with US$18.8 million or 45.6% of our total revenues in the previous quarter. The decrease was mainly due to reduced employee compensation costs.

Sales and marketing expenses for the second quarter of 2019 were US$6.8 million, representing 14.3% of our total revenues, compared with US$7.6 million or 18.4% of our total revenues in the previous quarter. The decrease was mainly due to less one-time marketing expenses incurred this quarter.

General and administrative expenses for the second quarter of 2019 were US$10.2 million, representing 21.4% of our total revenues, compared with US$9.4 million or 22.6% of our total revenues in the previous quarter.

Impairment of assets, net for the second quarter of 2019 was a credit of US$0.7 million, representing a net recovery of previously impaired assets, compared with a credit balance of US$0.9 million in the previous quarter.

Operating loss was US$11.8 million, compared with an operating loss of US$13.7 million in the previous quarter. The decrease was mainly due to increased revenue from cloud computing sales and live streaming income and less operating expenses incurred during the quarter.

Net loss was US$2.0 million in the second quarter of 2019, compared with a net loss of US$8.6 million in the previous quarter. Non-GAAP net loss was US$0.7 million in the second quarter of 2019, compared with Non-GAAP net loss of US$7.2 million in the previous quarter. The decreased net loss and non-GAAP net loss were primarily due to an approximately US$6.7 million gain on disposal of LinkToken operations and its related assets and liabilities.

Diluted loss per ADS in the second quarter of 2019 was US$0.03, compared with a diluted loss per ADS of US$0.13 in the previous quarter.

As of June 30, 2019, the Company had cash, cash equivalents and short-term investments of US$284.8 million, compared with US$298.7 million as of March 31, 2019.

For the third quarter of 2019, Xunlei estimates total revenues to be between US$45 million and US$51 million, and the midpoint of the range represents a quarter-over-quarter increase of approximately 0.4%. This estimate represents management’s preliminary view as of the date of this release, which is subject to change and any changes could be material.

Xunlei's management will host a conference call at 8:00 a.m. U.S. Eastern Time on August 14, 2019 (8:00 p.m. Beijing/Hong Kong Time), to discuss its quarterly results and recent business activities.

To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time:

The Company will also broadcast a live audio webcast of the conference call. The webcast will be available at http://ir.xunlei.com.

Following the earnings conference call, an archive of the call will be available by dialing:

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.

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 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.

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 significant recurring expense in Xunlei’s results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying reconciliation tables at the end of this release include details on the reconciliations between GAAP financial measures that are most directly comparable to the non-GAAP financial measures the Company has presented.

CONTACT: Investor RelationsXunlei LimitedEmail: ir@xunlei.comTel: +86 755 86338443Website: http://ir.xunlei.com 

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Globe Newswire: 11:00 GMT Wednesday 14th August 2019

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