Xunlei (NASDAQ:XNET) Announces Quarterly Earnings Results

Key Points

• Revenue rose 38.9% year over year to approximately $102.7 million, led by subscription growth and overseas audio live streaming in Southeast Asia, the Middle East, Turkey and Latin America.
• Profitability deteriorated as the lower-margin live-streaming business increased costs: gross margin fell to 55.8%, while Xunlei recorded a $4.8 million operating loss and a $2.1 million non-GAAP net loss.
• A $230.8 million net other loss tied mainly to mark-to-market volatility in its Arashi Vision investment drove a $218.5 million GAAP net loss; meanwhile, Xunlei repurchased about 1.07 million ADSs for $5.9 million under its new buyback program.

Xunlei (NASDAQ:XNET - Get Free Report) issued its quarterly earnings results on Thursday. The software maker reported ($0.03) EPS for the quarter, FiscalAI reports. The firm had revenue of $102.11 million for the quarter. Xunlei had a net margin of 185.71% and a return on equity of 1.47%.

Here are the key takeaways from Xunlei's conference call:

• Revenue increased 38.9% year over year to $102.7 million, driven by 22.6% growth in subscription revenue and strong expansion in overseas audio live streaming, alongside improved Hupu advertising.
• Overseas audio live streaming remained the primary growth engine, generating $58.2 million in revenue as Xunlei expanded in Southeast Asia, the Middle East, Turkey and Latin America through localized products and operations.
• Profitability weakened as the lower-margin live-streaming mix increased costs; gross margin fell to 55.8% from 63.0%, the company posted a $4.8 million operating loss, and non-GAAP net loss was $2.1 million.
• A $230.8 million net other loss, primarily from mark-to-market volatility in Xunlei’s Arashi Vision investment, drove a $218.5 million GAAP net loss from continuing operations versus $726.4 million of net income a year earlier.
• Xunlei began its newly authorized $20 million share repurchase program on July 1 and had repurchased approximately 1.07 million ADSs for $5.9 million by August 12, while preparing to potentially reduce its 7.8% Arashi Vision stake in compliance with regulatory requirements.

Xunlei Stock Up 3.6%

Shares of XNET traded up $0.18 during trading hours on Thursday, reaching $5.15. The stock had a trading volume of 286,120 shares, compared to its average volume of 277,657. Xunlei has a 12 month low of $4.52 and a 12 month high of $11.03. The firm has a 50-day simple moving average of $5.37 and a 200 day simple moving average of $5.78. The company has a current ratio of 2.11, a quick ratio of 2.11 and a debt-to-equity ratio of 0.03. The company has a market capitalization of $327.80 million, a price-to-earnings ratio of 0.38 and a beta of 1.15.

Institutional Inflows and Outflows

Several institutional investors have recently bought and sold shares of XNET. Walleye Capital LLC acquired a new position in shares of Xunlei during the second quarter valued at about $51,000. NewEdge Advisors LLC raised its holdings in shares of Xunlei by 9,106.5% in the 1st quarter. NewEdge Advisors LLC now owns 18,413 shares of the software maker's stock worth $83,000 after acquiring an additional 18,213 shares during the last quarter. Mangrove Partners IM LLC acquired a new stake in shares of Xunlei in the 4th quarter worth about $128,000. Russell Investments Group Ltd. bought a new position in Xunlei in the 3rd quarter valued at about $153,000. Finally, Headlands Technologies LLC bought a new position in Xunlei in the 4th quarter valued at about $214,000. Institutional investors and hedge funds own 5.07% of the company's stock.

Xunlei declared that its Board of Directors has authorized a share repurchase program on Friday, June 26th that permits the company to buyback $0.00 in outstanding shares. This buyback authorization permits the software maker to purchase shares of its stock through open market purchases. Shares buyback programs are typically a sign that the company's leadership believes its shares are undervalued.

Analysts Set New Price Targets

Several equities research analysts recently commented on the company. Weiss Ratings raised Xunlei from a "hold (c)" rating to a "hold (c+)" rating in a research note on Wednesday, June 3rd. Wall Street Zen downgraded shares of Xunlei from a "buy" rating to a "hold" rating in a research report on Saturday, May 2nd. One investment analyst has rated the stock with a Hold rating, According to MarketBeat.com, Xunlei currently has a consensus rating of "Hold".

About Xunlei

Xunlei Limited NASDAQ: XNET is a China-based technology company specializing in content acceleration and cloud services. Its core offerings include the Xunlei download manager, which integrates peer-to-peer (P2P) and cloud-based acceleration technologies to enhance file delivery speeds for large downloads. The company has expanded its suite of products to encompass cloud storage solutions, media streaming applications and mobile browsing tools, all aimed at improving digital content distribution and user experience.

Founded in 2003 and headquartered in Shenzhen, Xunlei originally gained traction by addressing bandwidth constraints in China's burgeoning internet market.

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