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 third quarter ended September 30, 2020.
Third Quarter 2020 Financial Highlights:
-
Total revenues were US$43.7 million, representing a decrease of
1.4% from the previous quarter.
-
Cloud computing and other internet value-added services (“Cloud
computing and other IVAS”) revenues were US$21.2 million,
representing an increase of 1.1% from the previous quarter.
-
Subscription revenues were US$19.6 million, representing a decrease
of 5.5% on a sequential basis.
-
Online advertising revenues (consisting primarily of revenues from
mobile advertising) were approximately US$3.0 million, representing
an increase of 10.8% from the previous quarter.
-
Gross profit was US$22.7 million, representing an increase of 11.3%
on a sequential basis. Gross margin was 51.9% in the third quarter
of 2020, compared with 46.0% in the previous quarter.
-
Net loss was US$1.5 million in the third quarter of 2020, compared
with a net loss of US$11.8 million in the previous quarter.
-
Diluted loss per ADS was US$0.02 as compared with a diluted loss of
US$0.17 in the previous quarter.
Recent developments
-
Collaborated with e-Surfing Cloud Storage, the cloud storage
product run by Shijilong Information Network Co., Ltd, a
wholly-owned subsidiary of China Telecom, to develop joint cloud
storage services and explore other consumer-related products to
achieve resource sharing and mutual benefits.
-
Launched a BaaS (Blockchain as a Service) platform to free
enterprises and developers from dealing with complex technical
issues in blockchain infrastructure and to drive innovation and
productivity.
Mr. Jinbo Li, Chairman and Chief Executive Officer
of Xunlei, stated that “Xunlei delivered a quarter of solid
execution. We are encouraged by meaningful improvements across
several financial and operating metrics, including an 87%
sequential improvement in our bottom-line. Through our relentless
focus on reinforcing our core competitiveness, optimizing operating
efficiencies, and placing more control on cost and expenses, we are
seeing our strengths bolstered and profitability improved across
our major product lines. And we are optimistic that the positive
momentum would be carried into the fourth quarter of 2020. ”
“We remain committed to uncovering Xunlei’s value
by offering our users reliable and secured digital experience. In
the third quarter of 2020, we expanded service capabilities in our
cloud computing business, explored new partnership and launched the
BaaS platform for our blockchain services. Looking forward, we will
continue to optimize operating metrics and drive product innovation
to deliver value to our users, partners and shareholders,”
concluded Mr. Jinbo Li.
Third Quarter
2020 Financial Results
Total Revenues
Total revenues were US$43.7 million, representing a
decrease of 1.4% from the previous quarter.
Revenues from cloud computing and other IVAS
combined were US$21.2 million, representing an increase of 1.1%
from the previous quarter.
Revenues from subscriptions were US$19.6 million,
representing a decrease of 5.5% from the previous quarter. The
number of subscribers was 3.8 million as of September 30, 2020,
compared with 3.9 million as of June 30, 2020. The average revenue
per subscriber for the third quarter of 2020 was RMB35.9, compared
with RMB37.5 for the second quarter of 2020. The decrease in
subscription revenues was attributable to the decline in pricing
and subscriber base compared with the previous quarter.
Revenues from online advertising were US$3.0
million, representing an increase of 10.8% from the previous
quarter. The increase in the third quarter was mainly due to the
application of precision targeting algorithm to achieve better
advertising placement and improve monetization efficiency.
Cost of Revenues
Total cost of revenues was US$21.0 million in the
third quarter of 2020, representing 48.1% of our total revenues,
compared with US$23.9 million, or 54.0% of our total revenues, in
the second quarter. The decrease was mainly due to decreased cost
associated with a write-down of our inventory for Onething Cloud
hardware products of US$2.5 million in the second quarter.
Bandwidth costs were US$15.4 million, representing
35.1% of our total revenues, compared with US$13.9 million, or
31.4% of our total revenues in the previous quarter, the increased
bandwidth cost was primarily due to increased demand for our cloud
computing service, which was consistent with the increase of our
cloud computing revenues.
The remaining cost of revenues mainly included
revenue-sharing costs for our live streaming products.
Gross Profit and Gross Margin
Gross profit for the third quarter of 2020 was
US$22.7 million, representing an increase of 11.3% from the
previous quarter. Gross margin was 51.9% in the third quarter,
compared with 46.0% in the previous quarter. The increase in gross
profit was mainly due to (i) an increase in revenue from online
advertising services, which have a higher gross margin compared
with other businesses, and (ii) a decrease in cost associated with
a write-down of our inventory discussed above.
Research and Development
Expenses
Research and development expenses for the third
quarter of 2020 were US$12.1 million, representing 27.6% of our
total revenues, compared with US$14.5 million or 32.8% of our total
revenues in the previous quarter. The decrease was mainly due to
decreased labor cost as a result of optimization of our
organizational structure during the past quarters.
Sales and Marketing Expenses
Sales and marketing expenses for the third quarter
of 2020 were US$4.2 million, representing 9.6% of our total
revenues, compared with US$4.4 million or 9.9% of our total
revenues in the previous quarter.
General and Administrative
Expenses
General and administrative expenses for the third
quarter of 2020 were US$7.5 million, representing 17.1% of our
total revenues, compared with US$10.1 million or 22.8% of our total
revenues in the previous quarter. The decrease was mainly due to
decreased employee and rental expenses as there were more employee
severance compensation as a result of organizational optimization
in the previous quarter and the incurrence of a one-time expense
associated with terminating several office leases in the second
quarter.
Impairment of Assets, Net of
Recoveries
No impairment of assets was accrued in the third
quarter. The amount for the second quarter was approximately US$5.1
million, which represented a one-time write-off of certain
receivables and prepayments in connection with our cloud computing
business as we determined that those receivables and prepayments
were not recoverable.
Operating Loss
Operating loss was US$1.0 million, compared with
US$13.7 million in the previous quarter. The decrease was mainly
due to higher gross profit and less operating expenses incurred
this quarter as discussed above.
Net Loss
and Loss Per
ADS
Net loss was US$1.5 million in the third quarter of
2020, compared with a net loss of US$11.8 million in the previous
quarter. Non-GAAP net loss was US$0.9 million in the third quarter
of 2020, compared with a Non-GAAP net loss of US$11.2 million in
the previous quarter.
Diluted loss per ADS in the third quarter of 2020
was US$0.02, compared with a diluted loss per ADS of US$0.17 in the
previous quarter.
Cash Balance and
Short-Term Investments
As of September 30, 2020, the Company had net
current assets of approximately US$195.3 million. With cash, cash
equivalents and short-term investments of US$246.0 million,
compared with US$257.1 million as of June 30, 2020. The Company
anticipates adequate liquidity to meet its current obligations.
Share Repurchase Program
The Company approved a share repurchase program to
repurchase up to US$20 million of its outstanding shares before
June 30, 2021. As of September 30,2020, the Company has repurchased
1,191,392 ADSs using cash of US$4.47 million.
Guidance for
Fourth Quarter
2020
For the fourth quarter of 2020, Xunlei estimates
total revenues to be between US$45 million and US$49 million, and
the midpoint of the range represents a quarter-over-quarter
increase of approximately 8.0%. This estimate represents
management’s preliminary view as of the date of this release, which
is subject to change and any changes could be material.
Conference Call Details
Xunlei's management will host a conference call at
8:00 a.m. U.S. Eastern Time on November 12, 2020 (9:00 p.m.
Beijing/Hong Kong Time), to discuss its quarterly results and
recent business activities.
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/8999108
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: |
8999108 |
Replay End
Date: |
November 20,
2020 |
|
|
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: (i)
the Company's ability to continue to innovate and provide
attractive products and services to retain and grow its user base;
(ii) the Company's ability to keep up with technological
developments and users' changing demands in the internet industry;
(iii) the Company's ability to convert its users into subscribers
of its premium services; (iv) the Company's ability to deal with
existing and potential copyright infringement claims and other
related claims; (v) the risk that Covid-19 or other health risks in
China or globally could adversely affect the Company's operations
or financial results; (vi) 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. Additionally,
these forward‑looking statements, particularly our guidance,
involve risk, uncertainties and assumptions, including those
related to the impacts of COVID‑19 on our business and global
economic conditions. Many of these assumptions relate to matters
that are beyond our control and changing rapidly, including, but
not limited to, the timeframes for and severity of social
distancing and other mitigation requirements, the impact of
COVID‑19 on our customers’ purchasing decisions and the length of
our sales cycles, particularly for customers in certain industries
highly affected by COVID‑19. Significant variation from the
assumptions underlying our forward‑looking statements could cause
our actual results to vary, and the impact could be significant.
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) |
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
2020 |
|
2019 |
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
Cash and
cash equivalents |
123,835 |
|
162,465 |
|
Short-term
investments |
122,176 |
|
102,847 |
|
Accounts
receivable, net |
23,623 |
|
27,533 |
|
Inventories |
1,748 |
|
5,537 |
|
Due from
related parties |
6,304 |
|
1,658 |
|
Prepayments
and other current assets |
12,762 |
|
16,543 |
|
Total current assets |
290,448 |
|
316,583 |
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
Restricted
cash |
1,588 |
|
2,983 |
|
Long-term
investments |
26,495 |
|
26,365 |
|
Deferred tax
assets |
165 |
|
1,118 |
|
Property and
equipment, net |
42,962 |
|
38,770 |
|
Intangible
assets, net |
8,758 |
|
9,426 |
|
Goodwill |
21,660 |
|
20,382 |
|
Other
long-term prepayments and receivables |
213 |
|
313 |
|
Right-of-use
assets |
1,999 |
|
8,747 |
|
Total assets |
394,288 |
|
424,687 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts
payable |
20,260 |
|
24,213 |
|
Due to
related parties |
5,002 |
|
5,002 |
|
Contract
liabilities and deferred income, current portion |
32,901 |
|
31,988 |
|
Lease
liabilities |
2,084 |
|
4,693 |
|
Income tax
payable |
2,807 |
|
2,550 |
|
Accrued
liabilities and other payables |
32,117 |
|
42,840 |
|
Total current liabilities |
95,171 |
|
111,286 |
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
Contract
liabilities and deferred income, non-current portion |
932 |
|
1,223 |
|
Lease
liabilities, non-current portion |
19 |
|
4,132 |
|
Deferred tax
liabilities, non-current portion |
1,082 |
|
1,179 |
|
Interest-bearing bank borrowing |
19,089 |
|
11,324 |
|
Total liabilities |
116,293 |
|
129,144 |
|
|
|
|
|
|
Equity |
|
|
|
|
Common
shares (US$0.00025 par value, 1,000,000,000 shares authorized,
368,877,205 shares issued and 339,165,241 shares outstanding as at
December 31, 2019; 368,877,205 issued and 334,401,981shares
outstanding as at September30, 2020) |
84 |
|
85 |
|
Additional
paid-in-capital |
469,687 |
|
472,052 |
|
Accumulated
other comprehensive loss |
(9,798 |
) |
(13,425 |
) |
Statutory
reserves |
5,132 |
|
5,132 |
|
Treasury
shares (29,711,964 shares and 29,056,264 shares as at December 31,
2019 and June 30, 2020, respectively) |
9 |
|
7 |
|
Accumulated
deficits |
(185,459 |
) |
(166,973 |
) |
Total Xunlei Limited's shareholders' equity |
279,655 |
|
296,878 |
|
Non-controlling interests |
(1,660 |
) |
(1,335 |
) |
Total liabilities and shareholders' equity |
394,288 |
|
424,687 |
|
|
|
|
|
|
|
|
|
|
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 |
|
Sep 30, |
|
Jun 30, |
|
Sep30, |
|
|
2020 |
|
2020 |
|
2019 |
|
|
|
|
|
Revenues,
net of rebates and discounts |
43,722 |
|
44,328 |
|
43,839 |
|
Business
taxes and surcharges |
(34 |
) |
(8 |
) |
(77 |
) |
Net
revenues |
43,688 |
|
44,320 |
|
43,762 |
|
Cost of
revenues |
(21,004 |
) |
(23,931 |
) |
(24,450 |
) |
Gross profit |
22,684 |
|
20,389 |
|
19,312 |
|
|
|
|
|
Operating expenses |
|
|
|
Research and
development expenses |
(12,069 |
) |
(14,548 |
) |
(17,593 |
) |
Sales and
marketing expenses |
(4,185 |
) |
(4,382 |
) |
(6,241 |
) |
General and
administrative expenses |
(7,463 |
) |
(10,100 |
) |
(9,113 |
) |
Assets
impairment loss, net of recoveries |
- |
|
(5,060 |
) |
427 |
|
Total operating expenses |
(23,717 |
) |
(34,090 |
) |
(32,520 |
) |
|
|
|
|
Operating loss |
(1,033 |
) |
(13,701 |
) |
(13,208 |
) |
Interest
income |
404 |
|
408 |
|
801 |
|
Interest
expense |
- |
|
- |
|
- |
|
Other
income, net |
(335 |
) |
1,772 |
|
(11,761 |
) |
Loss
before income taxes |
(964 |
) |
(11,521 |
) |
(24,168 |
) |
Income tax
expenses |
(498 |
) |
(254 |
) |
(448 |
) |
Net
loss |
(1,462 |
) |
(11,775 |
) |
(24,616 |
) |
Less: net
loss attributable to non-controlling interest |
(3 |
) |
(247 |
) |
(59 |
) |
Net
loss attributable to common shareholders |
(1,459 |
) |
(11,528 |
) |
(24,557 |
) |
|
|
|
|
|
|
|
Three months
ended |
|
|
|
Sep
30, |
|
Jun
30, |
|
Sep
30, |
|
|
2020 |
|
2020 |
|
2019 |
|
|
|
|
|
Loss
per share for common shares |
|
|
|
Basic |
(0.0043 |
) |
(0.0339 |
) |
(0.0726 |
) |
Diluted |
(0.0043 |
) |
(0.0339 |
) |
(0.0726 |
) |
|
|
|
|
Loss
per ADS |
|
|
|
Basic |
(0.0215 |
) |
(0.1695 |
) |
(0.3630 |
) |
Diluted |
(0.0215 |
) |
(0.1695 |
) |
(0.3630 |
) |
|
|
|
|
Weighted average number of common shares used in
calculating : |
|
|
|
Basic |
336,371,957 |
|
339,816,984 |
|
338,473,633 |
|
Diluted |
336,371,957 |
|
339,816,984 |
|
338,473,633 |
|
|
|
|
|
Weighted average number of ADSs used in calculating
: |
|
|
|
Basic |
67,274,391 |
|
67,963,397 |
|
67,694,727 |
|
Diluted |
67,274,391 |
|
67,963,397 |
|
67,694,727 |
|
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 |
|
Sep 30, |
|
Jun 30, |
|
Sep 30, |
|
|
2020 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
GAAP
operating loss |
(1,033 |
) |
(13,701 |
) |
(13,208 |
) |
Share-based
compensation expenses |
548 |
|
547 |
|
1,508 |
|
Non-GAAP operating loss |
(485 |
) |
(13,154 |
) |
(11,700 |
) |
|
|
|
|
GAAP net
loss from continuing operations |
(1,462 |
) |
(11,775 |
) |
(24,616 |
) |
Share-based
compensation expenses |
548 |
|
547 |
|
1,508 |
|
Non-GAAP net loss |
(914 |
) |
(11,228 |
) |
(23,108 |
) |
|
|
|
|
GAAP
loss per share for common shares: |
|
|
|
Basic |
(0.0043 |
) |
(0.0339 |
) |
(0.0726 |
) |
Diluted |
(0.0043 |
) |
(0.0339 |
) |
(0.0726 |
) |
|
|
|
|
GAAP
loss per ADS: |
|
|
|
Basic |
(0.0215 |
) |
(0.1695 |
) |
(0.3630 |
) |
Diluted |
(0.0215 |
) |
(0.1695 |
) |
(0.3630 |
) |
|
|
|
|
Non-GAAP loss per share for common shares: |
|
|
|
Basic |
(0.0027 |
) |
(0.0323 |
) |
(0.0681 |
) |
Diluted |
(0.0027 |
) |
(0.0323 |
) |
(0.0681 |
) |
|
|
|
|
Non-GAAP loss per ADS: |
|
|
|
Basic |
(0.0135 |
) |
(0.1615 |
) |
(0.3405 |
) |
Diluted |
(0.0135 |
) |
(0.1615 |
) |
(0.3405 |
) |
|
|
|
|
Weighted average number of common shares used in
calculating: |
|
|
|
Basic |
336,371,957 |
|
339,816,984 |
|
338,473,633 |
|
Diluted |
336,371,957 |
|
339,816,984 |
|
338,473,633 |
|
|
|
|
|
Weighted average number of ADSs used in
calculating: |
|
|
|
Basic |
67,274,391 |
|
67,963,397 |
|
67,694,727 |
|
Diluted |
67,274,391 |
|
67,963,397 |
|
67,694,727 |
|
CONTACT: Investor RelationsXunlei LimitedEmail:
ir@xunlei.comTel: +86 755 86338443Website: http://ir.xunlei.com
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