Xunlei Announces Unaudited Fourth Quarter and Full Year 2023 Financial Results
- Solid Q4 performance with profitability for the third consecutive year
- 26.8% increase in subscription revenues for Q4
- Total revenues for full year 2023 increased by 6.5%
- Net income declined from the previous year
- Xunlei aims for business development breakthroughs in 2024
- 20.4% decrease in total revenues for Q4
- Net income decline from the previous year
Insights
Analyzing the financial results of Xunlei Limited for Q4 and the full year of 2023, several key points emerge that are of interest to investors and stakeholders. The reported 20.4% decline in Q4 revenues year-over-year, primarily due to the downsizing of live streaming operations, is a significant figure that suggests a strategic shift or a response to market challenges in that segment. Despite this, an increase in gross profit margin from 38.8% to 51.9% in Q4 indicates improved operational efficiency, particularly in the subscription sector, which saw a 26.8% increase in revenues.
For the full year, a 6.5% increase in total revenues coupled with a 15.3% increase in gross profit demonstrates resilience in the company's core business segments. However, the decrease in net income from US$21.3 million in 2022 to US$14.3 million in 2023 requires attention. This could reflect increased operating expenses or investments in R&D, which grew to 20.3% of total revenues. The financial health of the company appears robust with an increase in cash reserves to US$271.9 million, providing flexibility for future investments or to weather economic downturns.
The performance of Xunlei's subscription business, particularly the milestone of nearly 6 million subscribers, is a testament to the company's ability to adapt to consumer preferences and leverage its high-quality services. The growth in subscription revenues is a positive indicator for the company's recurring revenue model, which is often favored by investors for its predictability and stability. Nevertheless, the substantial 62.5% decline in live streaming and other internet value-added services requires scrutiny. This could signal a shift in consumer behavior or increased competition in the market, necessitating strategic pivots or enhanced innovation in this area.
Looking ahead, the company's guidance for Q1 2024 forecasts a quarter-over-quarter revenue increase of approximately 5.7%, which could instill confidence in stakeholders regarding the company's short-term growth trajectory. The commitment to explore new business opportunities and leverage R&D capabilities suggests a forward-looking strategy aimed at long-term value creation.
From a technology standpoint, Xunlei's focus on distributed cloud services in China positions it within a fast-growing sector with increasing demand for cloud infrastructure and services. The modest 3.2% year-over-year increase in cloud computing revenues indicates a stable demand but also reflects the challenges faced in expanding this line of business amidst intense competition and potential regulatory concerns within the Chinese market.
The company's investment in R&D, representing a significant portion of the revenue, is indicative of its commitment to innovation. This is particularly crucial in the technology industry where staying ahead of the curve in terms of product development and service offerings can be a key differentiator. However, the impact of these investments on the company's long-term growth will depend on their ability to convert R&D into commercially successful products and services.
SHENZHEN, China, March 14, 2024 (GLOBE NEWSWIRE) -- Xunlei Limited (“Xunlei” or the “Company”) (NASDAQ: XNET), a leading technology company providing distributed cloud services in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2023.
Fourth Quarter 2023 Financial Highlights:
- Total revenues were US
$77.1 million , a decrease of20.4% year-over-year.
- Cloud computing revenues were US
$30.5 million , a decrease of4.4% year-over-year.
- Subscription revenues were US
$31.6 million , representing an increase of26.8% year-over-year.
- Live streaming and other internet value-added services (“Live streaming and other IVAS”) revenues were US
$15.0 million , a decrease of62.5% year-over-year.
- Gross profit was US
$40.1 million , representing an increase of6.5% year-over-year, and gross profit margin was51.9% in the fourth quarter, compared with38.8% in the same period of 2022.
- Net income was US
$3.7 million in the fourth quarter, compared with US$1.6 million in the same period of 2022.
- Non-GAAP net income was US
$4.5 million in the fourth quarter, compared with US$3.5 million in the same period of 2022.
- Diluted earnings per ADS was approximately US
$0.06 in the fourth quarter, compared with US$0.02 in the same period of 2022.
Full Year 2023 Financial Highlights:
- Total revenues were US
$364.9 million , representing an increase of6.5% from 2022.
- Cloud computing revenues were US
$123.4 million , representing an increase of3.2% from 2022.
- Subscription revenues were US
$119.3 million , representing an increase of18.7% from 2022.
- Live streaming and other IVAS revenues were US
$122.2 million , representing a decrease of0.2% from 2022.
- Gross profit was US
$163.1 million , representing an increase of15.3% from 2022, and gross profit margin was44.7% , compared with41.3% in the previous year.
- Net income was US
$14.3 million , compared with US$21.3 million in the previous year.
- Non-GAAP net income was US
$23.9 million , compared with US$29.5 million in the previous year.
- Diluted earnings per ADS was US
$0.22 , compared with US$0.32 in the previous year.
“We closed out 2023 with a solid Q4 performance, beating our upper-end guidance and achieving profitability for the third consecutive year. Notably, our subscription business surpassed a significant milestone by reaching almost 6 million subscribers at the end of 2023, and delivered an impressive
“In 2024, we will aim high and proactively explore opportunities to seek breakthroughs in business developments while leveraging our outstanding research and development capabilities. We believe that our strong financial position and synergistic product and service lines will provide us with stability and flexibility to further our ongoing operations and pursue growth and innovation to create value for our shareholders. We look forward to sharing with you our progress in the near future," concluded Mr. Li.
Fourth Quarter 2023 Financial Results
Total Revenues
Total revenues were US
Revenues from cloud computing were US
Revenues from subscription were US
Revenues from live streaming and other IVAS were US
Costs of Revenues
Costs of revenues were US
Bandwidth costs, as included in costs of revenues, were US
The remaining costs of revenues mainly consisted of costs related to the revenue-sharing costs for our live streaming business, payment handling charges, cost of inventories sold and depreciation of servers and other equipment.
Gross Profit and Gross Profit Margin
Gross profit for the fourth quarter of 2023 was US
Research and Development Expenses
Research and development expenses for the fourth quarter were US
Sales and Marketing Expenses
Sales and marketing expenses for the fourth quarter were US
General and Administrative Expenses
General and administrative expenses for the fourth quarter were US
Operating (Loss)/Income
Operating loss was US
Other Income, Net
Other income, net was US
Net Income and Earnings Per ADS
Net income was US
Diluted earnings per ADS in the fourth quarter of 2023 was approximately US
Cash Balance
As of December 31, 2023, the Company had cash, cash equivalents and short-term investments of US
Full Year 2023 Financial Results
Total Revenues
Total revenues were US
Revenues from cloud computing were US
Revenues from subscription were US
Revenues from live streaming and other IVAS were US
Costs of Revenues
Costs of revenues were US
Bandwidth costs, a major component of costs of revenues, were US
The remaining costs of revenues mainly consisted of costs related to the revenue-sharing costs for our live streaming business, payment handling charges, cost of inventories sold and depreciation of servers and other equipment.
Gross Profit and Gross Profit Margin
Gross profit for the year was US
Research and Development Expenses
Research and development expenses for the year were US
Sales and Marketing Expenses
Sales and marketing expenses for the year were US
General and Administrative Expenses
General and administrative expenses for the year were US
Operating (Loss)/Income
Operating loss was US
Other Income, Net
Other income, net was US
Net Income and Earnings Per ADS
Net income was US
Diluted earnings per ADS in 2023 was approximately US
Cash Balance
As of December 31, 2023, the Company had cash, cash equivalents and short-term investments of US
Share Repurchase Program
During 2023, the Company had spent US
Guidance for the First Quarter of 2024
For the first quarter of 2024, Xunlei estimates total revenues to be between US
Conference Call Information.
Xunlei's management will host a conference call at 8:00 a.m. U.S. Eastern Time on March 14, 2024 (8:00 p.m. Beijing/Hong Kong Time), to discuss the Company's quarterly and fiscal year results and recent business developments.
Participant Online Registration: https://register.vevent.com/register/BIedd8f3b92c45485b9da1107f669ff922
Please register to join the conference using the link provided above and dial in 10 minutes before the call is scheduled to begin. Once registered, the participants will receive an email with personal PIN and dial-in information, and participants can choose to access either via Dial-In or Call Me. A kindly reminder that "Call Me" does not work for China number.
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 at https://edge.media-server.com/mmc/p/i7erbhna
About Xunlei
Founded in 2003, Xunlei Limited (NASDAQ: XNET) is a leading technology company providing distributed cloud services 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," "estimates" and similar statements. Among other things, the management's quotations and the "Guidance" section 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, (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 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) | |||||
| December 31, | December 31, | ||||
| 2023 | 2022 | ||||
| US$ | US$ | ||||
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | 170,802 | 177,154 | |||
| Short-term investments | 101,078 | 83,626 | |||
| Accounts receivable, net | 31,210 | 29,763 | |||
| Inventories | 2,219 | 457 | |||
| Due from related parties | 12,644 | 32,917 | |||
| Prepayments and other current assets | 9,423 | 8,267 | |||
| Total current assets | 327,376 | 332,184 | |||
| Non-current assets: | |||||
| Restricted cash | - | 7,654 | |||
| Long-term investments | 32,134 | 30,811 | |||
| Deferred tax assets | 478 | 213 | |||
| Property and equipment, net | 60,028 | 61,734 | |||
| Intangible assets, net | 5,697 | 6,546 | |||
| Goodwill | 20,826 | 21,179 | |||
| Due from a related party, non-current portion | 19,619 | - | |||
| Long-term prepayments and other assets | 1,953 | 2,137 | |||
| Operating lease assets | 575 | 865 | |||
| Total assets | 468,686 | 463,323 | |||
| Liabilities | |||||
| Current liabilities: | |||||
| Accounts payable | 24,430 | 25,432 | |||
| Due to related parties | - | 1,560 | |||
| Contract liabilities, current portion | 36,375 | 38,967 | |||
| Lease liabilities | 276 | 283 | |||
| Income tax payable | 6,391 | 5,586 | |||
| Accrued liabilities and other payables | 53,708 | 49,438 | |||
| Bank borrowings, current portion | 6,906 | 7,024 | |||
| Total current liabilities | 128,086 | 128,290 | |||
| Non-current liabilities: | |||||
| Contract liabilities, non-current portion | 846 | 876 | |||
| Lease liabilities, non-current portion | 229 | 299 | |||
| Deferred tax liabilities | 513 | 687 | |||
| Bank borrowings, non-current portion | 15,539 | 24,750 | |||
| Total liabilities | 145,213 | 154,902 | |||
| Equity | |||||
| Common shares (US | 81 | 81 | |||
| Additional paid-in-capital | 482,484 | 477,495 | |||
| Accumulated other comprehensive loss | (18,913 | ) | (14,668 | ) | |
| Statutory reserves | 8,142 | 7,036 | |||
| Treasury shares (49,954,204 shares and 51,476,384 shares as at December 31, 2022 and December 31, 2023, respectively) | 12 | 12 | |||
| Accumulated deficits | (146,944 | ) | (160,063 | ) | |
| Total Xunlei Limited's shareholders' equity | 324,862 | 309,893 | |||
| Non-controlling interests | (1,389 | ) | (1,472 | ) | |
| Total liabilities and shareholders' equity | 468,686 | 463,323 | |||
| 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 | Year ended | ||||||||||
| Dec 31, | Sept 30, | Dec 31, | Dec 31, | Dec 31, | |||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | |||||||
| US$ | US$ | US$ | US$ | US$ | |||||||
| Revenues, net of rebates and discounts | 77,143 | 84,235 | 96,963 | 364,911 | 342,564 | ||||||
| Business taxes and surcharges | (287 | ) | (286 | ) | (319 | ) | (1,189 | ) | (1,067 | ) | |
| Net revenues | 76,856 | 83,949 | 96,644 | 363,722 | 341,497 | ||||||
| Cost of revenues | (36,785 | ) | (46,409 | ) | (59,027 | ) | (200,649 | ) | (200,054 | ) | |
| Gross profit | 40,071 | 37,540 | 37,617 | 163,073 | 141,443 | ||||||
| Operating expenses | |||||||||||
| Research and development expenses | (19,497 | ) | (19,483 | ) | (19,234 | ) | (74,201 | ) | (67,680 | ) | |
| Sales and marketing expenses | (9,350 | ) | (9,507 | ) | (8,676 | ) | (43,509 | ) | (24,841 | ) | |
| General and administrative expenses | (11,618 | ) | (11,093 | ) | (9,799 | ) | (46,875 | ) | (39,701 | ) | |
| Credit loss (expenses)/write back, net | (293 | ) | 28 | 496 | (100 | ) | 844 | ||||
| Total operating expenses | (40,758 | ) | (40,055 | ) | (37,213 | ) | (164,685 | ) | (131,378 | ) | |
| Operating (loss)/income | (687 | ) | (2,515 | ) | 404 | (1,612 | ) | 10,065 | |||
| Interest income | 1,318 | 1,163 | 735 | 4,619 | 1,898 | ||||||
| Interest expense | (300 | ) | (361 | ) | (23 | ) | (1,514 | ) | (93 | ) | |
| Other income, net | 3,523 | 7,329 | 703 | 16,904 | 13,545 | ||||||
| Income before income taxes | 3,854 | 5,616 | 1,819 | 18,397 | 25,415 | ||||||
| Income tax expense | (137 | ) | (1,251 | ) | (247 | ) | (4,131 | ) | (4,068 | ) | |
| Net income | 3,717 | 4,365 | 1,572 | 14,266 | 21,347 | ||||||
| Less: net income/(loss) attributable to non-controlling interest | 12 | (30 | ) | (58 | ) | 41 | (116 | ) | |||
| Net income attributable to common shareholders | 3,705 | 4,395 | 1,630 | 14,225 | 21,463 | ||||||
| Earnings per share for common shares | |||||||||||
| Basic | 0.0114 | 0.0134 | 0.0049 | 0.0436 | 0.0639 | ||||||
| Diluted | 0.0114 | 0.0134 | 0.0049 | 0.0435 | 0.0638 | ||||||
| Earnings per ADS | |||||||||||
| Basic | 0.0570 | 0.0670 | 0.0245 | 0.2180 | 0.3195 | ||||||
| Diluted | 0.0570 | 0.0670 | 0.0245 | 0.2175 | 0.3190 | ||||||
| Weighted average number of common shares used in calculating: | |||||||||||
| Basic | 325,898,568 | 328,229,170 | 330,049,995 | 326,390,687 | 336,040,378 | ||||||
| Diluted | 326,160,722 | 328,738,450 | 330,277,252 | 326,849,502 | 336,235,501 | ||||||
| Weighted average number of ADSs used in calculating: | |||||||||||
| Basic | 65,179,714 | 65,645,834 | 66,009,999 | 65,278,137 | 67,208,076 | ||||||
| Diluted | 65,232,144 | 65,747,690 | 66,055,450 | 65,369,900 | 67,247,100 | ||||||
| XUNLEI LIMITED | |||||||||||
| Unaudited Reconciliation of GAAP and Non-GAAP Results | |||||||||||
| (Amounts expressed in thousands of USD, except for share, per share (or ADS) data) | |||||||||||
| Three months ended | Year ended | ||||||||||
| Dec 31, | Sept 30, | Dec 31, | Dec 31, | Dec 31, | |||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | |||||||
| US$ | US$ | US$ | US$ | US$ | |||||||
| GAAP operating (loss)/income | (687 | ) | (2,515 | ) | 404 | (1,612 | ) | 10,065 | |||
| Share-based compensation expenses | 787 | 1,106 | 1,879 | 9,676 | 8,184 | ||||||
| Non-GAAP operating income/(loss) | 100 | (1,409 | ) | 2,283 | 8,064 | 18,249 | |||||
| GAAP net income | 3,717 | 4,365 | 1,572 | 14,266 | 21,347 | ||||||
| Share-based compensation expenses | 787 | 1,106 | 1,879 | 9,676 | 8,184 | ||||||
| Non-GAAP net income | 4,504 | 5,471 | 3,451 | 23,942 | 29,531 | ||||||
| GAAP earnings per share for common shares: | |||||||||||
| Basic | 0.0114 | 0.0134 | 0.0049 | 0.0436 | 0.0639 | ||||||
| Diluted | 0.0114 | 0.0134 | 0.0049 | 0.0435 | 0.0638 | ||||||
| GAAP earnings per ADS: | |||||||||||
| Basic | 0.0570 | 0.0670 | 0.0245 | 0.2180 | 0.3195 | ||||||
| Diluted | 0.0570 | 0.0670 | 0.0245 | 0.2175 | 0.3190 | ||||||
| Non-GAAP earnings per share for common shares: | |||||||||||
| Basic | 0.0138 | 0.0168 | 0.0106 | 0.0732 | 0.0882 | ||||||
| Diluted | 0.0138 | 0.0167 | 0.0106 | 0.0731 | 0.0882 | ||||||
| Non-GAAP earnings per ADS: | |||||||||||
| Basic | 0.0690 | 0.0840 | 0.0530 | 0.3660 | 0.4410 | ||||||
| Diluted | 0.0690 | 0.0835 | 0.0530 | 0.3655 | 0.4410 | ||||||
| Weighted average number of common shares used in calculating: | |||||||||||
| Basic | 325,898,568 | 328,229,170 | 330,049,995 | 326,390,687 | 336,040,378 | ||||||
| Diluted | 326,160,722 | 328,738,450 | 330,277,252 | 326,849,502 | 336,235,501 | ||||||
| Weighted average number of ADSs used in calculating: | |||||||||||
| Basic | 65,179,714 | 65,645,834 | 66,009,999 | 65,278,137 | 67,208,076 | ||||||
| Diluted | 65,232,144 | 65,747,690 | 66,055,450 | 65,369,900 | 67,247,100 | ||||||
CONTACT:
Investor Relations
Xunlei Limited
Email: ir@xunlei.com
Tel: +86 755 6111 1571
Website: http://ir.xunlei.com
FAQ
What was Xunlei Limited's (XNET) total revenue decrease in Q4 2023?
How did Xunlei's subscription revenues perform in Q4 2023?
Did Xunlei achieve profitability in 2023?
What are Xunlei's plans for business development in 2024?
What was Xunlei's net income in Q4 2023?
