• Xunlei Announces Unaudited Financial Results for the Second Quarter Ended June 30, 2021

    Source: Nasdaq GlobeNewswire / 12 Aug 2021 06:00:02   America/Chicago

    SHENZHEN, China, Aug. 12, 2021 (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, 2021. 

    Second Quarter 2021 Financial Highlights:

    • Total revenues were US$55.2 million, representing an increase of 3.6% from the previous quarter.
       
    • Cloud computing and other internet value-added services (“Cloud computing and other IVAS”) revenues were US$28.9 million, representing an increase of 5.8% from the previous quarter.
       
    • Subscription revenues were US$22.7 million, representing an increase of 3.0% from the previous quarter.
       
    • Online advertising revenues (consisting primarily of revenues from mobile advertising) were US$3.5 million, representing a decrease of 8.7% from the previous quarter.
       
    • Gross profit was US$29.0 million, representing an increase of 1.2% from the previous quarter, and gross margin was 52.5% in the second quarter, compared with 53.7% in the previous quarter.
       
    • Net income was US$5.8 thousand in the second quarter, compared with a net income of US$6.8 million in the previous quarter.
       
    • Non-GAAP net income was US$1.3 million in the second quarter of 2021, compared with US$7.4 million in the previous quarter.
       
    • Diluted earnings per ADS was approximately US$0.00005 as compared with a diluted earnings per ADS of US$0.10 in the previous quarter.

    Mr. Jinbo Li, Chairman and Chief Executive Officer of Xunlei, stated that, “We met our revenue guidance and delivered total revenues of US$55.2 million for the second quarter of 2021, with growth primarily in our live streaming and subscription businesses. I’m especially pleased that our subscription membership has been relatively stable for the last twelve months and more and more members are opting for our premium services.”

    “Despite the recent high volatility in the capital market, we are maintaining normal operations with a strong balance sheet. We intend to proactively review our businesses and ensure our operations are in compliance with the evolving regulatory requirements that are applicable to us. We have entered the last phase of completing our headquarters and research center under construction. Further, we are forging cooperation with a leading domestic university to develop key technologies for big data asset management based on decentralized networking technology, and will continue to invest in new products and services and explore other strategic growth opportunities.”

    Second Quarter 2021 Financial Results

    Total Revenues

    Total revenues were US$55.2 million, representing an increase of 3.6% from the previous quarter. The increase in total revenues was mainly attributable to increased revenues from live streaming and subscription businesses.

    Revenues from cloud computing and other IVAS were US$28.9 million, representing an increase of 5.8% from the previous quarter. The increase was mainly driven by increased other IVAS revenue.

    Revenues from subscription were US$22.7 million, an increase of 3.0% from the previous quarter. The number of subscribers was 3.96 million as of June 30, 2021, compared with 4.05 million as of March 31, 2021. The average revenue per subscriber for the second quarter of 2021 was RMB 36.9, compared with RMB35.5 for the previous quarter.

    Revenues from online advertising were US$3.5 million, representing a decrease of 8.7% from the previous quarter primarily due to lower advertising placements. Further, due to the evolving regulatory environment of the Chinese internet industry, our advertising revenue is expected to continue to decline in the short term.

    Cost of Revenues

    Cost of revenues was US$26.2 million, representing 47.5% of our total revenues, compared with US$24.4 million or 45.8% of the total revenues in the previous quarter. The increased cost of revenues was mainly attributable to increased revenue-sharing costs of live streaming business.

    Bandwidth costs as included in cost of revenues were US$18.5 million, representing 33.6% of our total revenues, compared with US$17.7 million or 33.2% of the total revenues in the previous quarter.

    The remaining cost of revenues mainly consisted of costs related to the revenue-sharing costs for our live streaming business and depreciation of servers and other equipment.

    Gross Profit and Gross Margin

    Gross profit for the second quarter was US$29.0 million, representing an increase of 1.2% from the previous quarter. Gross margin was 52.5% in the second quarter, compared with 53.7% in the previous quarter. The decrease in gross margin was mainly due to decreased revenues of online advertising, which had higher gross margins than other business lines.

    Research and Development Expenses

    Research and development expenses for the second quarter were US$15.2 million, representing 27.5% of our total revenues, compared with US$13.3 million or 24.9% of our total revenues in the previous quarter. The increase was mainly due to increased staff cost as a result of merit salary adjustment and increased headcount as compared with the previous quarter.

    Sales and Marketing Expenses

    Sales and marketing expenses for the second quarter were US$6.7 million, representing 12.1% of our total revenues, compared with US$4.5 million or 8.4% of our total revenues in the previous quarter. The increased sales and marketing expenses were mainly due to more promotional activities during the quarter.

    General and Administrative Expenses

    General and administrative expenses for the second quarter were US$7.7 million, representing 14.0% of our total revenues, compared with US$6.6 million or 12.5% of our total revenues in the previous quarter. The increase in general and administrative expenses was primarily due to increased employee-related cost as compared with the previous quarter.

    Operating Income/(Loss)

    Operating loss was US$1.1 million, compared with an operating income of US$4.2 million in the previous quarter.

    Other Income

    Other income was US$0.9 million, compared with other income of US$2.3 million in the previous quarter. The variance was primarily due to the increased foreign exchange loss.

    Net Income and Earnings Per ADS

    Net income was US$5.8 thousand, compared with a net income of US$6.8 million in the previous quarter. Non-GAAP net income was US$1.3 million in the second quarter of 2021, compared with US$7.4 million in the previous quarter. The decreased net income and non-GAAP net income were primarily due to increased operating expenses as discussed above.

    Diluted earnings per ADS in the second quarter of 2021 was approximately US$0.00005 as compared with a diluted earnings per ADS of US$0.10 in the previous quarter.

    Cash Balance

    As of June 30, 2021, the Company had cash, cash equivalents and short-term investments of US$245.0 million, compared with US$245.2 million as of March 31, 2021.

    Guidance for Third Quarter of 2021

    For the third quarter of 2021, Xunlei estimates total revenues to be between US$54 million and US$58 million, and the midpoint of the range represents a quarter-on-quarter increase of approximately 1.4%. This estimate represents management’s preliminary view as of the date of this release, which is subject to change and any change could be material.

    Conference Call Preregistration

    Due to the outbreak of COVID-19, operator assisted conference calls are not available at the moment. All participants wishing to attend the call must preregister online before they can receive the dial-in numbers. Preregistration may require a few minutes to complete. The Company would like to apologize for any inconvenience caused by not having an operator as a result of COVID-19.

    Please register in advance to join the conference using the link provided below and dial in 10 minutes before the call is scheduled to begin. Conference access information will be provided upon registration.

    Participant Online Registration: http://apac.directeventreg.com/registration/event/5540038 

    Once preregistration has been completed, participants will receive dial-in numbers, an event passcode, and a unique registrant ID.

    To join the conference, please dial the number you receive, enter the event passcode followed by your unique registrant ID, and you will be joined to the conference instantly.

    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:

    China (Mandarin):400-602-2065
    Hong Kong:800-963-117
    United States:1-855-452-5696
    International:61-2-8199-0299
    Replay Passcode:5540038
    Replay End Date:August 20, 2021

    About Xunlei

    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.

    Safe Harbor Statement

    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 risk that Covid-19 or other health risks in China or globally could adversely affect the Company's operations or financial results; 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.

    About Non-GAAP Financial Measures

    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) from continuing operations, (3) non-GAAP basic and diluted earnings per share for common shares attributable to continuing operations, and (4) non-GAAP basic and diluted earnings per ADS attributable to continuing operations. 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.

     

         
    XUNLEI LIMITED
    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
    (Amounts expressed in thousands of USD, except for share, per share (or ADS) data)
     June 30, December 31, 
     2021 2020 
     US$ US$ 
    Assets    
         
    Current assets:    
    Cash and cash equivalents128,725 137,248 
    Short-term investments116,318 117,821 
    Accounts receivable, net28,848 22,983 
    Inventories920 1,726 
    Due from related parties14,438 10,970 
    Prepayments and other current assets12,817 11,534 
    Total current assets302,066 302,282 
         
    Non-current assets:    
    Restricted cash1,556 1,541 
    Long-term investments26,792 26,734 
    Property and equipment, net56,705 50,725 
    Intangible assets, net8,431 8,857 
    Goodwill22,833 22,607 
    Other long-term prepayments and other current assets933 905 
    Right-of-use assets963 1,954 
    Total assets420,279 415,605 
         
    Liabilities    
    Current liabilities:    
    Accounts payable23,290 20,644 
    Due to related parties1,665 5,389 
    Contract liabilities and deferred income, current portion35,256 34,040 
    Lease liabilities, current portion683 1,961 
    Income tax payable2,261 2,553 
    Accrued liabilities and other payables36,859 38,689 
    Total current liabilities100,014 103,276 
         
    Non-current liabilities:    
    Contract liabilities and deferred income, non-current portion764 920 
    Lease liabilities, non-current portion5 27 
    Deferred tax liabilities1,007 1,085 
    Bank borrowings17,736 19,924 
    Total liabilities119,526 125,232 
         
    Equity    
    Common shares (US$0.00025 par value, 1,000,000,000 shares authorized, 368,877,205 shares issued and 334,401,981 shares outstanding as at December31, 2020; 368,877,205 issued and 334,687,981 shares outstanding as at June 30, 2021)84 84 
    Additional paid-in-capital471,462 469,887 
    Accumulated other comprehensive loss(417)(2,145)
    Statutory reserves5,746 5,414 
    Treasury shares (34,475,224 shares and 34,189,224 shares as at December 31, 2020 and June 30, 2021, respectively)9 9 
    Accumulated deficits(174,325)(181,095)
    Total Xunlei Limited's shareholders' equity302,559 292,154 
    Non-controlling interests(1,806)(1,781)
    Total liabilities and shareholders' equity420,279 415,605 
         

     

     
    XUNLEI LIMITED
    Unaudited Condensed Consolidated Statements of Income
    (Amounts expressed in thousands of USD, except for share, per share (or ADS) data)
     
     Three months ended 
       
     Jun 30,Mar 31,Jun 30, 
     202120212020 
     US$US$US$ 
    Revenues, net of rebates and discounts55,172 53,275 44,328  
    Business taxes and surcharges(29)(256)(8) 
    Net revenues55,143 53,019 44,320  
    Cost of revenues(26,179)(24,401)(23,931) 
    Gross profit28,964 28,618 20,389  
         
    Operating expenses    
    Research and development expenses(15,195)(13,275)(14,548) 
    Sales and marketing expenses(6,697)(4,456)(4,382) 
    General and administrative expenses(7,708)(6,642)(10,100) 
    Asset impairment loss, net of recoveries(483)(21)(5,060) 
    Total operating expenses(30,083)(24,394)(34,090) 
         
    Operating (loss)/income(1,119)4,224 (13,701) 
    Interest income143 124 408  
    Interest expense(23)(25)-  
    Other income, net885 2,261 1,772  
    (Loss)/Income before income taxes(114)6,584 (11,521) 
    Income tax benefit/(expense)120 154 (254) 
    Net income/(loss) 6 6,738 (11,775) 
    Less: net loss attributable to non-controlling interests(10)(16)(247) 
    Net income/(loss) attributable to common shareholders16 6,754 (11,528) 


     
    		    

     Three months ended 
     Jun 30,Mar 31,Jun 30,
     202120212020
     US$US$US$ 
    Earnings/(loss) per share for common shares    
    Basic0.0000 0.0202 (0.0339) 
    Diluted0.0000 0.0202 (0.0339) 
         
    Earnings /(loss) per ADS    
    Basic0.0000 0.1010 (0.1695) 
    Diluted0.0000 0.1010 (0.1695) 
         
    Weighted average number of common shares used in calculating continuing operations:    
    Basic334,656,399 334,404,699 339,816,984  
    Diluted342,804,044 334,879,910 339,816,984  
         
    Weighted average number of ADSs used in calculating continuing operations :    
    Basic66,931,280 66,880,940 67,963,397  
    Diluted68,560,809 66,975,982 67,963,397  
         
         
      
    XUNLEI LIMITED
    Reconciliation of GAAP and Non-GAAP Results (Excluding discontinued operations)
    (Amounts expressed in thousands of USD, except for share, per share (or ADS) data)
     Three months ended
      
     Jun 30,Mar 31,Jun 30,
     202120212020
     US$US$US$
        
    GAAP operating (loss)/income(1,119)4,224 (13,701)
    Share-based compensation expenses1,248 625 547 
    Non-GAAP operating income/(loss)129 4,849 (13,154)
        
    GAAP net income/(loss)6 6,738 (11,775)
    Share-based compensation expenses1,248 625 547 
    Non-GAAP net income/(loss) 1,254 7,363 (11,228)
        
    GAAP earnings/(loss) per share for common shares:   
    Basic0.0000 0.0202 (0.0339)
    Diluted0.0000 0.0202 (0.0339)
        
    GAAP earnings/(loss) per ADS:   
    Basic0.0000 0.1010 (0.1695)
    Diluted0.0000 0.1010 (0.1695)
        
    Non-GAAP earnings/(loss) per share for common shares:   
    Basic0.0038 0.0221 (0.0323)
    Diluted0.0037 0.0220 (0.0323)
        
    Non-GAAP earnings/(loss) per ADS:   
    Basic0.0190 0.1105 (0.1615)
    Diluted0.0185 0.1100 (0.1615)
        
    Weighted average number of common shares used in calculating:   
    Basic334,656,399 334,404,699 339,816,984 
    Diluted342,804,044 334,879,910 339,816,984 
        
    Weighted average number of ADSs used in calculating:   
    Basic66,931,280 66,880,940 67,963,397 
    Diluted68,560,809 66,975,982 67,963,397 

    CONTACT:
    Investor Relations
    Xunlei Limited
    Email: ir@xunlei.com
    Tel: +86 755 8633 8443
    Website: http://ir.xunlei.com


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