Xunlei Limited (“Xunlei” or the “Company”) (Nasdaq:XNET), a leading
cloud-based acceleration technology company in China, today
announced its unaudited financial results for the first quarter
ended March 31, 2018.
First Quarter 2018
Financial Highlights:
- Total revenues were US$78.8 million,
representing an increase of 117.9% from the corresponding period of
last year and a decrease of 4.4% from the previous quarter.
- Cloud computing and other internet value-added
services (“Cloud computing and IVAS”) revenues were
US$48.1 million, representing an increase of 316.4% from the
corresponding period of last year and a decrease of 7.3% from the
previous quarter. Cloud computing revenues grew by 395.3% and 9.4%
on a year-over-year basis and sequential basis, respectively. Cloud
computing and IVAS mainly consist of cloud computing business and
live streaming business.
- Subscription revenues were US$23.4 million,
representing an increase of 12.3% from the corresponding period of
last year and an increase of 3.0% from the previous quarter.
- Online advertising revenues (consisting
primarily of revenues from mobile advertising) were US$7.3 million,
representing an increase of 92.2% from the corresponding period of
last year and a decrease of 6.8% from the previous quarter.
Recent Developments:
- Extended cloud services from CDN domain to IaaS domain through
our new cloud platform StellarCloud and the services can be
exchanged for with the LinkToken;
- Launched a high-performance blockchain infrastructure
ThunderChain capable of conducting millions of transactions per
second (TPS);
- Started co-operation with third-party partners to develop
ThunderChain applications; and
- Received a new national CDN license that allows us to offer CDN
solutions from selected cities to mainland China.
Mr. Lei Chen, Chief Executive Officer of Xunlei,
stated: “We are very pleased to report that we recorded a net
income of US$8.0 million for the first quarter of 2018 following a
profitable previous quarter. We achieved solid performance in the
first quarter despite the seasonality impact as a result of the
Chinese New Year holidays. Going forward, we will continue to
invest in shared computing technology and expand our service
portfolio. We are also very excited about the prospects of building
a Xunlei blockchain ecosystem. And finally, we will expand into
overseas markets to seek new growth opportunities. I look forward
to reporting to you our progress in the coming days.”
First Quarter
2018 Financial
Results
Total Revenues1
Total revenues were US$78.8 million, representing
an increase of 117.9% on a year-over-year basis, and a decrease of
4.4% on a sequential basis. The increase in total revenues on a
year-over-year basis was mainly attributable to the growth of our
cloud computing, live streaming and mobile advertising businesses.
The slight decrease in total revenues on a sequential basis was
mainly due to a technology solution service income generated from a
previous service cooperation between Xiaomi and us in an amount of
US$5.8 million. If such US$5.8 million service income had not been
recognized in the fourth quarter of 2017, the total revenues in the
first quarter of 2018 would have increased 2.8% sequentially.
Cloud computing and IVAS: Revenues from cloud
computing and IVAS were US$48.1 million, representing an increase
of 316.4% on a year-over-year basis and a decrease of 7.3% on a
sequential basis. Cloud computing revenues grew by 395.3% and 9.4%
on a year-over-year basis and sequentially, respectively.
Subscription: Revenues from subscriptions were
US$23.4 million, representing an increase of 12.3% on a
year-over-year basis and an increase of 3.0% on a sequential basis.
The year-over-year increase in subscription revenue was primarily
attributable to increase in average revenue per subscriber. The
average revenue per subscriber for the first quarter of 2018 was
RMB 38.8, representing an increase from RMB 34.4 as of December 31,
2017 and RMB 35.1 as of March 31, 2017, respectively. The number of
subscribers was 3.81 million as of March 31, 2018, representing a
decrease from 4.25 million as of December 31, 2017 and 4.08 million
as of March 31, 2017, respectively.
Online advertising (primarily mobile advertising):
Revenues from online advertising were US$7.3 million, representing
an increase of 92.2% on a year-over-year basis and a decrease of
6.8% on a sequential basis. Mobile advertising revenue increased by
95.4% on a year-over-year basis.
Costs of Revenues
Costs of revenues were US$40.5 million,
representing 51.5% of our total revenues.
Bandwidth costs: Bandwidth costs were US$16.5
million, representing 20.9% of our total revenues, compared with
US$14.7 million or 17.9% of the total revenues in the previous
quarter. The remaining costs of the revenues mainly consisted of
the manufacturing costs for our OneThing Cloud smart device and the
revenue-sharing costs for our live streaming product.
Gross Profit and Gross Margin
Gross profit for the first quarter was US$37.7
million, a decrease of 5.2% compared with the previous quarter.
Gross margin was 47.8% in the first quarter of 2018, compared with
48.2% in the previous quarter.
Research and Development
Expenses
Research and development expenses for the first
quarter of 2018 were US$16.5 million, representing 20.9% of our
total revenues, compared with US$20.6 million or 24.9% of our total
revenues in the previous quarter. The decrease on a sequential
basis was mainly due to the staff performance incentive for the
year 2017 accrued in the previous quarter.
Sales and Marketing Expenses
Sales and marketing expenses for the first quarter
of 2018 were US$6.8 million, representing 8.6% of our total
revenues, compared with US$7.5 million or 9.1% of our total
revenues in the previous quarter.
General and Administrative
Expenses
General and administrative expenses for the first
quarter were US$7.0 million, representing 8.9% of our total
revenues, compared with US$7.7 million or 9.4% of our total
revenues in the previous quarter.
Operating
Income/(Loss)
Operating income was US$7.4 million, compared with
operating income of US$3.9 million in the previous quarter.
Net
Income/(Loss)
and
Earning/(Loss)
Per Share
Net income from continuing operations was US$6.7
million in the first quarter of 2018, compared with US$3.0 million
in the previous quarter. Non-GAAP net income from continuing
operations was US$7.9 million in the first quarter of 2018,
compared with US$4.8 million in the previous quarter.
Diluted earnings per ADS from continuing operations
in the first quarter of 2018 was US$0.10 as compared with a loss of
US$0.14 in the same period last year and an income of US$0.05 in
the fourth quarter of 2017.
Cash Balance and
Short-Term Investments
As of March 31, 2018, the Company had cash, cash
equivalents and short-term investments of US$355.6 million,
compared with US$372.4 million as of December 31, 2017.
Guidance for
Second Quarter
2018
For the second quarter of 2018, Xunlei estimates
total revenues to be between US$56 million and US$62 million, and
the midpoint of the range represents a year-over-year increase of
approximately 53.2%. 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 Details
Xunlei's management will host a conference call at
8:00 a.m. U.S. Eastern Time on May 15, 2018 (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:
China: |
400-120-0654 |
Hong
Kong: |
852-3018-6776 |
United
States: |
1-855-500-8701 |
International: |
65
6713-5440 |
Passcode: |
1749718 |
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: |
400-602-2065 |
Hong
Kong: |
800-963-117 |
United
States: |
1-855-452-5696 |
International: |
61-2-9003-4211 |
Replay
Passcode: |
1749718 |
Replay
End Date: |
May 23,
2018 |
About Xunlei
Xunlei Limited ("Xunlei") is a leading cloud-based
acceleration technology company in China. Xunlei operates a
powerful internet platform in China based on cloud computing to
provide users with quick and easy access to digital media content
through its core products and services, Xunlei Accelerator and the
cloud acceleration subscription services. Xunlei is increasingly
extending into mobile devices in part through potentially
pre-installed acceleration products in mobile phones. Benefitting
from the large user base accumulated by Xunlei Accelerator, Xunlei
has further developed various value-added services to meet a fuller
spectrum of its users' digital media content access and consumption
needs.
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
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) |
|
March
31, |
December 31, |
|
2018 |
2017 |
|
US$ |
US$ |
Assets |
|
|
|
|
|
Current assets: |
|
|
Cash and
cash equivalents |
200,164 |
233,479 |
Short-term investments |
155,461 |
138,915 |
Accounts
receivable, net |
36,386 |
40,632 |
Inventories |
5,204 |
3,879 |
Due from
related parties |
694 |
6,986 |
Prepayments and other current assets |
7,008 |
6,866 |
Held-for-sale assets |
- |
26 |
Total current assets |
404,917 |
430,783 |
|
|
|
Non-current assets: |
|
|
Long-term investments |
43,800 |
42,741 |
Deferred
tax assets |
5,293 |
6,072 |
Property
and equipment, net |
24,429 |
24,685 |
Intangible assets, net |
5,446 |
5,511 |
Goodwill |
22,612 |
21,760 |
Other
long-term prepayments and receivables |
2,237 |
1,885 |
Total assets |
508,734 |
533,437 |
|
|
|
Liabilities |
|
|
Current liabilities: |
|
|
Accounts
payable |
34,198 |
49,819 |
Due to a
related party |
6 |
10 |
Deferred
revenue and income, current portion |
29,652 |
28,046 |
Income
tax payable |
3,351 |
3,128 |
Accrued
liabilities and other payables |
35,137 |
59,871 |
Held-for-sale liabilities |
- |
822 |
Total current liabilities |
102,344 |
141,696 |
|
|
|
Non-current liabilities: |
|
|
Deferred
revenue and income |
2,992 |
3,242 |
Due to
related parties, non-current portion |
4,787 |
4,737 |
Other
long-term payable |
934 |
925 |
Total liabilities |
111,057 |
150,600 |
|
|
|
Equity |
|
|
Common
shares (USD0.00025 par value, 1,000,000,000 shares authorized,
368,877,209 shares issued and 333,643,560 shares outstanding as at
December 31, 2017; 368,877,209 issued and334,430,280 shares
outstanding as at March31, 2018) |
83 |
83 |
Additional paid-in-capital |
462,545 |
461,330 |
Accumulated other comprehensive loss |
(1,313) |
(7,031) |
Statutory reserves |
5,132 |
5,132 |
Treasury
shares (35,233,649 shares and 34,446,929 shares as at December
31,2017 and March 31, 2018, respectively) |
9 |
9 |
Accumulated deficits |
(66,495) |
(74,526) |
Total Xunlei Limited's shareholders' equity |
399,961 |
384,997 |
Non-controlling interests |
(2,284) |
(2,160) |
Total liabilities and shareholders' equity |
508,734 |
533,437 |
|
|
|
|
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 |
|
Mar
31, 2018 |
Mar
31, 2017 |
Dec
31, 2017 |
|
US$ |
US$ |
US$ |
|
|
|
|
Revenues, net of rebates and discounts |
78,768 |
36,155 |
82,416 |
|
|
|
|
Business
taxes and surcharges |
(564) |
(140) |
(702) |
Net
revenues |
78,204 |
36,015 |
81,714 |
Cost of
revenues |
(40,541) |
(23,217) |
(41,983) |
Gross profit |
37,663 |
12,798 |
39,731 |
|
|
|
|
Operating expenses |
|
|
|
Research
and development expenses |
(16,451) |
(16,230) |
(20,558) |
Sales
and marketing expenses |
(6,781) |
(2,563) |
(7,486) |
General
and administrative expenses |
(7,009) |
(7,317) |
(7,744) |
Total operating expenses |
(30,241) |
(26,110) |
(35,788) |
|
|
|
|
Operating
income/(loss) |
7,422 |
(13,312) |
3,943 |
Interest
income |
553 |
624 |
460 |
Interest
expense |
(60) |
(60) |
(60) |
Other
income/(loss), net |
(261) |
3,331 |
833 |
Share of
loss from equity investee |
(14) |
(93) |
(1,567) |
Loss from continuing operations before income
taxes |
7,640 |
(9,510) |
3,609 |
Income
tax (expenses)/benefits |
(910) |
173 |
(560) |
Net
income/(loss)
from continuing operations |
6,730 |
(9,337) |
3,049 |
|
|
Discontinued operations |
|
|
|
Income
from discontinued operations before income taxes |
139 |
3,085 |
1,279 |
Gain on
disposal |
1,394 |
- |
- |
Income
tax expense |
(230) |
(463) |
(192) |
Net income from
discontinued operations |
1,303 |
2,622 |
1,087 |
|
|
|
|
Net
income/(loss) |
8,033 |
(6,715) |
4,136 |
Less:
net profit/(loss) attributable to non-controlling interest |
2 |
5 |
(4) |
Net
income/(loss)
attributable to common shareholders |
8,031 |
(6,720) |
4,140 |
|
|
|
|
|
Three months
ended |
|
Mar
31, 2018 |
Mar
31, 2017 |
Dec
31, 2017 |
|
US$ |
US$ |
US$ |
Earnings/(loss)
per share for common shares, basic |
|
|
|
Continuing operations |
0.0202 |
(0.0282) |
0.0092 |
Discontinued operations |
0.0039 |
0.0079 |
0.0033 |
Total
earnings/(loss) per share for common shares, basic |
0.0241 |
(0.0203) |
0.0125 |
|
|
|
|
Earnings/(loss)
per share for common shares, diluted |
|
|
|
Continuing operations |
0.0198 |
(0.0282) |
0.0090 |
Discontinued operations |
0.0038 |
0.0079 |
0.0032 |
Total
earnings/(loss) per share for common shares, diluted |
0.0236 |
(0.0203) |
0.0122 |
|
|
|
|
Earnings/(loss)
per ADS, basic |
|
|
|
Continuing operations |
0.1010 |
(0.1410) |
0.0460 |
Discontinued operations |
0.0195 |
0.0395 |
0.0163 |
Total
earnings/(loss) per ADS, basic |
0.1205 |
(0.1015) |
0.0623 |
|
|
|
|
Earnings/(loss)
per ADS, diluted |
|
|
|
Continuing operations |
0.0990 |
(0.1410) |
0.0450 |
Discontinued operations |
0.0192 |
0.0395 |
0.0161 |
Total
earnings/(loss) per ADS, diluted |
0.1182 |
|
(0.1015) |
0.0611 |
|
|
|
|
Weighted average number of common shares used in
calculating continuing operations: |
|
|
|
Basic |
333,660,495 |
330,565,587 |
332,986,916 |
Diluted |
340,311,476 |
330,565,587 |
338,685,290 |
|
|
|
|
Weighted average number of ADSs used in calculating
continuing operations : |
|
|
|
Basic |
66,732,099 |
66,113,117 |
66,597,383 |
Diluted |
68,062,295 |
66,113,117 |
67,737,058 |
|
|
|
|
|
|
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 |
|
Mar
31, 2018 |
Mar
31, 2017 |
Dec
31, 2017 |
|
US$ |
US$ |
US$ |
|
|
|
|
GAAP
operating income/(loss) |
7,422 |
(13,312) |
3,943 |
Share-based compensation expenses |
1,215 |
2,323 |
1,718 |
Non-GAAP operating
income/(loss) |
8,637 |
(10,989) |
5,661 |
|
|
|
|
GAAP net
income/(loss) from continuing operations |
6,730 |
(9,337) |
3,049 |
Share-based compensation expenses |
1,215 |
2,323 |
1,718 |
Non-GAAP net
income/(loss)
from continuing operations |
7,945 |
(7,014) |
4,767 |
|
|
|
|
GAAP
earnings/(loss)
per share for common shares attributable to continuing
operations: |
|
|
|
Basic |
0.0202 |
(0.0282) |
0.0092 |
Diluted |
0.0198 |
(0.0282) |
0.0090 |
|
|
|
|
GAAP
earnings/(loss)
per ADS attributable to continuing
operations: |
|
|
|
Basic |
0.1010 |
(0.1410) |
0.0460 |
Diluted |
0.0990 |
(0.1410) |
0.0450 |
|
|
|
|
Non-GAAP
earnings/(loss)
per share for common shares attributable to continuing
operations: |
|
|
|
Basic |
0.0238 |
(0.0212) |
0.0143 |
Diluted |
0.0233 |
(0.0212) |
0.0141 |
|
|
|
|
Non-GAAP
earnings/(loss)
per ADS attributable to continuing
operations: |
|
|
|
Basic |
0.1190 |
(0.1060) |
0.0715 |
Diluted |
0.1165 |
(0.1060) |
0.0705 |
|
|
|
|
Weighted average number of common shares used in
calculating: |
|
|
|
Basic |
333,660,495 |
330,565,587 |
332,986,916 |
Diluted |
340,311,476 |
330,565,587 |
338,685,290 |
|
|
|
|
Weighted average number of ADSs used in
calculating: |
|
|
|
Basic |
66,732,099 |
66,113,117 |
|
66,597,383 |
Diluted |
68,062,295 |
66,113,117 |
67,737,058 |
|
|
|
|
|
|
|
CONTACT: Investor RelationsXunlei LimitedEmail:
ir@xunlei.comTel: +86 755 86338443Website: http://ir.xunlei.com
1Due to the strategic shift of our operations, we entered into
agreement to sell our web game business in December
2017. According to applicable accounting standards, assets and
liabilities related to web game business, including comparatives,
are reclassified as assets/liabilities held for sale, while the
result related to web game business, including comparatives, are
reported as discontinued operations. Figures presented in this
earning release are related to continuing operations only and
exclude results from web game business unless indicated
otherwise. We believe the disposal can allow us to better
manage our internal resources, including internal traffic referral
and corporate allocation, and focus on the Company’s current
strategy. The disposal was completed in January, 2018.
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