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

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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 equivalents

128,725

137,248

Short-term investments

116,318

117,821

Accounts receivable, net

28,848

22,983

Inventories

920

1,726

Due from related parties

14,438

10,970

Prepayments and other current assets

12,817

11,534

Total current assets

302,066

302,282

Non-current assets:

Restricted cash

1,556

1,541

Long-term investments

26,792

26,734

Property and equipment, net

56,705

50,725

Intangible assets, net

8,431

8,857

Goodwill

22,833

22,607

Other long-term prepayments and other current assets

933

905

Right-of-use assets

963

1,954

Total assets

420,279

415,605

Liabilities

Current liabilities:

Accounts payable

23,290

20,644

Due to related parties

1,665

5,389

Contract liabilities and deferred income, current portion

35,256

34,040

Lease liabilities, current portion

683

1,961

Income tax payable

2,261

2,553

Accrued liabilities and other payables

36,859

38,689

Total current liabilities

100,014

103,276

Non-current liabilities:

Contract liabilities and deferred income, non-current portion

764

920

Lease liabilities, non-current portion

5

27

Deferred tax liabilities

1,007

1,085

Bank borrowings

17,736

19,924

Total liabilities

119,526

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-capital

471,462

469,887

Accumulated other comprehensive loss

(417

)

(2,145

)

Statutory reserves

5,746

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' equity

302,559

292,154

Non-controlling interests

(1,806

)

(1,781

)

Total liabilities and shareholders' equity

420,279

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,

2021

2021

2020

US$

US$

US$

Revenues, net of rebates and discounts

55,172

53,275

44,328

Business taxes and surcharges

(29

)

(256

)

(8

)

Net revenues

55,143

53,019

44,320

Cost of revenues

(26,179

)

(24,401

)

(23,931

)

Gross profit

28,964

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 income

143

124

408

Interest expense

(23

)

(25

)

-

Other income, net

885

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 shareholders

16

6,754

(11,528

)






Three months ended

Jun 30,

Mar 31,

Jun 30,

2021

2021

2020

US$

US$

US$

Earnings/(loss) per share for common shares

Basic

0.0000

0.0202

(0.0339

)

Diluted

0.0000

0.0202

(0.0339

)

Earnings /(loss) per ADS

Basic

0.0000

0.1010

(0.1695

)

Diluted

0.0000

0.1010

(0.1695

)

Weighted average number of common shares used in calculating continuing operations:

Basic

334,656,399

334,404,699

339,816,984

Diluted

342,804,044

334,879,910

339,816,984

Weighted average number of ADSs used in calculating continuing operations :

Basic

66,931,280

66,880,940

67,963,397

Diluted

68,560,809

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,

2021

2021

2020

US$

US$

US$

GAAP operating (loss)/income

(1,119

)

4,224

(13,701

)

Share-based compensation expenses

1,248

625

547

Non-GAAP operating income/(loss)

129

4,849

(13,154

)

GAAP net income/(loss)

6

6,738

(11,775

)

Share-based compensation expenses

1,248

625

547

Non-GAAP net income/(loss)

1,254

7,363

(11,228

)

GAAP earnings/(loss) per share for common shares:

Basic

0.0000

0.0202

(0.0339

)

Diluted

0.0000

0.0202

(0.0339

)

GAAP earnings/(loss) per ADS:

Basic

0.0000

0.1010

(0.1695

)

Diluted

0.0000

0.1010

(0.1695

)

Non-GAAP earnings/(loss) per share for common shares:

Basic

0.0038

0.0221

(0.0323

)

Diluted

0.0037

0.0220

(0.0323

)

Non-GAAP earnings/(loss) per ADS:

Basic

0.0190

0.1105

(0.1615

)

Diluted

0.0185

0.1100

(0.1615

)

Weighted average number of common shares used in calculating:

Basic

334,656,399

334,404,699

339,816,984

Diluted

342,804,044

334,879,910

339,816,984

Weighted average number of ADSs used in calculating:

Basic

66,931,280

66,880,940

67,963,397

Diluted

68,560,809

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