Xunlei (XNET) Q3 2024 earnings summary

Executive summary

• Achieved continued profitability in Q3 2024 despite a 4.9% year-over-year revenue decline, mainly due to downsizing of domestic audio live streaming and reduced cloud computing sales.

• Overseas operations expansion and product mix restructuring partially offset domestic declines.

• Subscription revenues grew 15.6% year-over-year, driven by increased subscribers and higher ARPU.

• Net income remained flat at $4.4 million compared to Q3 2023; non-GAAP net income was $4.9 million, down from $5.5 million.

• Gross profit rose 7.8% year-over-year to $14.5 million, with gross margin improving to 50.8% from 44.6%.

Financial highlights

• Total revenues were $80.1 million, down 4.9% year-over-year.

• Cloud computing revenues fell 14.4% year-over-year to $25.3 million due to competition and regulatory changes.

• Live streaming and IVAS revenue was $21.6 million, down 16.7% year-over-year but up 6.7% quarter-over-quarter, mainly from downsizing domestic audio live streaming.

• Costs of revenues decreased to $39.4 million (49.1% of revenues) from $46.4 million (55.1%) in Q3 2023.

• R&D expenses were $17.7 million (22.1% of revenues), down from $19.5 million.

Outlook and guidance

• Q4 2024 revenue guidance is $77–82 million, with the midpoint representing a 0.7% quarter-over-quarter decrease.

• Management remains focused on overseas expansion, product innovation, and stabilizing cloud business.

• Management continues to implement the share repurchase plan.