Xunlei Limited (XNET) 18 May 222022 Q1 Earnings call transcript

Thank you, and good morning, everyone, and thank you for joining Xunlei's 2022 First Quarter Earnings Conference Call.

On the call with me today are Eric Zhou, Chief Financial Officer; and Lee Hu, Senior Vice President of Finance.

Now you can find our earnings press release on our IR website, which is intended to supplement our prepared remarks during today's call.

For today's agenda, I will read a prepared opening remark by our Chairman and CEO, Mr. Jinbo Li, on highlight of our first quarter operations. Mr. Then CFO, up the the with of our results of second go XXXX. wrap and our will Zhou, details through financial quarter Eric guidance for remarks. from to after any like questions We'd the welcome management's you from Today's call is Relations and you our the can website. Investor replay recorded, call

Act SEC I I provisions made statements Reform to Securities under safe harbor would Before the take remind U.S. to Litigation forward-looking opportunity get contain XXXX. the the that GAAP for measures. that certain started, description of applicable required stated. all our found Private in you discussion our like this detailed of today will be Such and statements press made management's those to on which current law. expectations that are results note under in update conditions obligations from Please and be are based will are in predict, dollars affect may as this unless release. U.S. filings non-GAAP risk that current our the subject Xunlei uncertainties can to actual materially forward-looking of market call, to more of difficult both A forward-looking cause non-GAAP risks statements. may numbers comparable measures assumes results. no financial differ the that using under On any earnings to a GAAP Please refer except to otherwise conciliation are factors statements, to we

Jinbo statement Mr. prepared is Li, and the Now, the Xunlei by CEO Chairman following of Limited.

XX.X% results customers down million, total were first to our the Omnicron in we for due we previous business to city continued was our is also the interruption. Further, we quarter that $X.X revenue reached of of the a conference consecutive with with increase our which have where the in a when outbreak thrilled earnings previous first quarterly compared compared $XX of growth. In in headquarters quarter an operate million everyone, to kept revenues temporarily of $X.X income quarter. the implementing sixth diligent to see for and first quarter, our XXXX. momentum cope the serve quarter employees our net in thanks financial in and and million to reached call. Good we able the participation of your we net competitive quarter our in Even successfully quarter. is had for We and our our loss good without achieved and the fourth located, focusing management of their the to strategy grateful on the challenges Shenzhen, in day, costs a strengths. dedication to and locked our and the saw mid-March controlling start operating I'm We're This XXXX, have

first achieved competitive line we growth million scalable that cost-effective momentum XXXX. it X% computing be quarter. the to the was generated especially achieved the encouraging the major and strive continues services and of solid quarters. in market achieved clients. sequential during in quarter our of businesses first provide previous growth where reliable, and upon during And to built $XX.X we Our products in It the Cloud a revenue growth is the to

member the we subscribers from realized on launched the too, user progress seeing the X.XX to Internet community improvement, streaming total million which forward first first in value-added which services grew an a increase and made and market also member business, of base. in retain from been increase particular, quarter. to the by business XX.X% our has made $XX.X previous engaging our demand million other live number X.XX of in the of quarter, an significant live growing and more compared our In of summer XX.X% million Cloud subscription last activities number from driven increase realized increased to sequential revenue, We expansion. our of previous quarter, We're the generated million an quarter stable subscribers streaming in quarter. quarter. increase general, Drive a impressive looking In and building X% XXXX. $XX.X function to In revenue, The in previous our the the since XXXX

However, our the was strict Internet by Internet Internet sectors. services gaming especially regulatory advertising, advertising hit policies, affecting and

will We headwinds expect face coming our to advertising quarters. continue in the business

business closely and business industry trend to around, will turn monitor policies possible. regulatory adopt this We strategies and if

our product collectible line. launched digital recently we Finally,

So is portfolio. our of it an product far, significant part

exciting also largely it strictly regulations. relying is are And laws an will emerging untested industry relevant I we existing face with closing, and services. at tremendous with We to Xunlei, say our we constantly and and and on and the exploring would environment, evolving competition. innovative new business explore In an and an like comply development. new government we're understand this to regulatory resources We products business that model

remain revenue over Zhou, Financial Officer. Chief Eric will the With quarter XXXX we our the our growth detail supports results our in confidence will business. financial and business, Eric will stable of about outlook believe I our first sustainability the share our Mr. Our trajectory balance of a With optimistic. strong flows that, to and near-term and promising strong cover outlook. the improving and call further turn this performance sheet, in cash

Xunlei's for of will XXXX Hello, of I revenue for XXXX. guidance call. the joining you quarter earnings results through with our go financial first up Thank our wrap you, now and conference the quarter everyone, Anne. second again and thank details

of the for of reduced the was from as summer quarter. live with a well the million quarter. revenues, costs total services. increased in from the XX.X% as quarter. to revenues our with due subscriptions additional a of usage in Cloud revenues X.XX which the were of and of The increased with live were were demand decreased was million $XX.X in other since our quarter. revenues Cost operating to was included of for were quarter streaming, our Drive with sales live mainly expenses, Net a increase quarter subscription revenues quarter added increased mainly of from expenses, revenues portion computing revenues, streaming per compared XX.X of first increased $X.X X% due were profit of our previous million XXXX discussed was the expenses quarter. been X.XX The computing increased subscription million, previous For $X.X revenues the decreased quarter. as to XX, quarter. sharing cloud a XXXX, compared services, the computing of margin with were other and gross $XX.X attributable income RMB in XX.X% The our and Operating XXXX, to the compared increased million quarter million of the other with decreased $XX.X representing $XX.X total $XX.X quarter. revenues for ADS in quarter. of revenues, $X.X the as of products. representing has feature, sequential of $X.X March from of million was million of XX.X% was out computing administrative revenues carried income in expenses. Revenues activities margin improved for million, which first previous has costs, income of above. and our RMB in margin. quarter. as million the the operating depreciation million, The an of the or to $X.X compared of previous million, was promotional $XX.X the with IVAS compared cloud and product profit with representing diluted mainly $XX.X was of offset due was total XX.X% the increased by a and cloud previous in General net total primarily of in marketing total loss gross the previous revenue was XXXX. with and of in total quarter and advertising number or $X.XX $XX.X The the bandwidth $X.XX products The $XX.X quarter. revenues were XX.X% XX.X% XXXX. in cloud in for subscription million, for bandwidth primarily with cost from of revenues due was $X.X the X.X% mainly streaming the computing compared Gross loss our products increase in first representing XX, compared net net marketing live X.X% revenues X% our $X.X revenue costs for non-GAAP earnings of fourth live revenue. of previous cloud business. profit compared previous or total profit were Diluted The income increase Revenues gross increased streaming, The business XXXX income operating the as increase servers Research with for million, compared XX.X% previous the of of first to above. remaining in partially or approximately IVAS our The December operating quarter. cost the with decreased streaming representing driven representing quarter XX.X% due revenues Gross in quarter. due million quarter and other attributable the the the was quarter. gross $XX.X previous in as lower was our compared per our quarter. previous compared of by revenues was $X.X mainly increase other total our subscriber XXXX. the million first $X income were decrease The compared with net legal million, with mainly XX% of per expenses the representing to in to revenues to revenues. the subscribers quarter. X.X% The were revenues, $XX.X cost compared in million an total first The demand and the of were average increased of previous as to profit net quarter million, representing total Other with million Revenues of increased related costs million due or previous IVAS of representing mainly previous increase equipment. XX.X% $XX.X quarter live increased in million to streaming XX.X Bandwidth The computing mainly and an Sales representing of gross consulting million primarily decrease and compared a $XX.X million increase increase major total in of during million ADS first increase streaming for total fourth from first cloud total $X.X expenses an primarily as an compared income million, income was profit of profit the in quarter. sales and development to income million, to live increase as and attributable for was decrease previous were from $XX $X.X our consisted of XX.X% quarter and for revenues revenues was loss the previous our The XX.X% Non-GAAP discussed the

as building million headquarters XXXX, increase equivalents compared cash mainly borrowings As to $XXX.X had cash and new cash, was cash December of generated the construction XX, to of and company of March XXXX. million The and of approximately support equivalents research due the and cash net development bank our operations. investments increased short-term from with and $XXX XX, of

Turning revenue guidance. our to

be approximately million of quarter quarter-over-quarter management's material. For midpoint of which of be X.X%. estimate as a the the revenues million. could is to estimates second range date any this between And represents This total change of change and $XX and preliminary XXXX, view represents to Xunlei the release, $XX the of increase subject

the to the for conference prepared ready conclude Operator, we take are questions. Now, call. remarks we

from comes [ph] question line [Operator from Industrial Wendy Investor. Kang Instructions] first of the The

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last revenue margin Because business streaming margin business gross company. thank your has margin the products, which the has business, higher for And noticed than the also And he lower other streaming forecast contributor gross component margin several And has question. declining he subscription subscription our the a the coming new gross And a past, our of the of was company quarters. the become wants our is in gross for the was quarters. a overall for the rates know his margin question, business, significant than to the you quarters, what live the several major of In gross our reduced. revenues. last live had total

However, to gross due The increase to our may gross That the revenues. And and increased Thank was subscription in an profit gradually previous stabilize. the trend from grew quarter. X.X% live in is the we you. mainly computing increase coming cloud streaming, quarters, of profit million. $XX.X expect

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Congratulations I've several good for got quarter. questions. a

cash is very The first one large reserves. the company has

is steps listing the is shareholders? quite second on for current anything And the so for delisting? a the entire your else Is quarter. more for the What's new is, the be guidance there reason question Do potential the next taking third view the stable cash headquarter? and you for And a borrowing that helps growth The what any are peaked? which for think already year? or of possibility you secondary has the growth event question would last

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We the for agree, believe, outlook. higher of reasons. of you And the growth of of loans, and rate forecast X.X% the cost and interest revenue a the is much equity for couple growth the the than X%. than question construction And for a are -- rate we rate growth for may probably about less paying regarding X% second second and quarter, I

I think most importantly quarter is weak, seasonally kind and is quarter usually and the -- is quarter the strongest. second usually, last the of first

account are many take providing actions. seasonality adjust Probably are now Chinese trying there operations. is optimize we the -- also changes industry, this the and into we kind companies in are different -- have we So when and our currently, And second of forecast. we evolving to there taken

So time. view of Xunlei holding people U.S. audited environment And by we cannot we a in the to dramatic And been the and the Act the the years, by a working we three PCAOB. audited And moves you being, the has the for will on still for divesting reason result, the list. a the a or is put grow third potential future. Xunlei of If is the is And next who's examined depending negotiation, the be list company, are be because time conservative our is question the quite folding on company the this possibility when delisting are for as and in Congress. completely negotiations monitor may the U.S. about and and regulatory the company stable accountable Thank our relevant able know auditor than the delisting. keep approach you. we we this the take between will rather take by agencies. we And on well-known development. And will actions we basically the to and market passed on of development, to future. not the make Chinese And trying monitor outcome closely informed closely stable basis make to try sure we at are quite

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and is he for time, any company management of really out is a are in and price because lower has for His other the influenced try this first, factors, try us our dividend. that our know basically continue grow value company actions being and to And the a create stick stock we number at may back operations. question share example, of control. by said, program, -- we to take, our stock to the of wants the some price And giving to that of the addition out fee, strategies first, will business to and the beyond to operating

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don't Thank the you. find market the currently, year, construction. spaces tenants the far, date process the largely of his expect are so will building has of the we moving use. But on completed we to some provide excess finish-up. in the yet. potential several and building this final delayed, around have rental question months. for due internal building October. tenants spring not move Xunlei rental been for internal Remember, because And is building. of is headquarter the to we the has this And stage is the building yet, in trying of or ready And in plan And in not about any status or because the been the and sometime delays we under hiring still of updates in next in for -- September, in some the And to the

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return Basically, expenses. it's have have wants he to noticed difficult to this headcount we employee-related expenses expenses, forecast a we employee And -- he the year. increase And some in know and headcount employee to in make large if increase said, as last year a Xunlei's the operating will this he in my we the new we don't and the headcount operating hired year. and our maintained development and headcount for in an are employees of due annual to basically, this is will work. our an And and contribution, expenses. treat in to salary purposes, our treat exploring additional knowledge, resulted products now, that's Xunlei, company we do if employees' year. our have try And we shareholders. to well which we increase And increase their we we research Further, services, of why for for we to at and in regarding increase marketing the and manpower any we respect and and hopefully, will plan majority they of respect first, And to and employees increase employees. contributions our of large hard possible, headcount we,

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the Please further [Operator closing time. call the to I like remarks. at to speaker Instructions] no hand Dear speakers, this for there would questions are back continue.

for time participation. again, and your you, Thank

If conclude or conference you to operator, our our have Have Thank day. you. visit And Investors website a call. at today's good ir.Xunlei.com, questions, any we Relations. please send e-mails

Thank for for Thank participating. That conclude does you. our you today. conference

You may all day. Have nice disconnect. a