Xunlei Ltd. Earnings Call: Mixed Results and Future Prospects

Xunlei Ltd ((XNET)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Xunlei Ltd. presented a mixed bag of results, highlighting significant growth in certain areas while also revealing challenges in others. The company demonstrated robust growth in its subscription and overseas audio live streaming businesses, yet faced hurdles in its cloud computing segment, which impacted overall profitability.

Year-over-Year Revenue Growth

Xunlei reported a commendable year-over-year revenue growth of 10.5% in the first quarter of 2025, reaching $88.8 million. This growth underscores the company’s ability to expand its market presence and generate increased revenue streams despite a challenging economic environment.

Subscription Business Performance

The subscription business was a bright spot for Xunlei, with revenue increasing by 7.7% year-over-year to $35.7 million. The number of subscribers also grew by 5%, reaching 6.04 million, indicating a strong demand for Xunlei’s subscription services.

Overseas Audio Live Streaming Growth

Xunlei’s overseas audio live streaming segment experienced remarkable growth, with revenue from live streaming and other services surging by 66% year-over-year. Notably, overseas audio live streaming revenue increased by an impressive 79.2%, highlighting the company’s successful expansion into international markets.

AI-Driven Applications Development

The company is actively investing in AI-driven applications, including an AI-powered auto-editing tool and an effective AI companion. These developments leverage large language models, positioning Xunlei at the forefront of technological innovation.

Cloud Computing Revenue Decline

Despite successes in other areas, Xunlei’s cloud computing business faced challenges, with revenue declining by 18% year-over-year to $24.7 million. This decline was attributed to intensified competition and pricing pressures in the cloud computing market.

Decreased Profitability

Xunlei reported a net loss of $0.9 million for the quarter, a significant drop from a net income of $3.6 million in the same period of 2024. The operating loss stood at $1.9 million, reflecting decreased profitability due to a reduced gross profit margin and increased marketing expenses.

Increased Expenses

The company’s sales and marketing expenses rose to $15.5 million, accounting for 17.5% of total revenues, up from 12.5% in the same period of 2024. This increase in expenses highlights the company’s efforts to bolster its market presence, albeit at the cost of reduced profitability.

Forward-Looking Guidance

Looking ahead, Xunlei projected its Q2 2025 revenues to range between $91 million and $96 million, indicating a quarter-over-quarter increase of approximately 5.3% at the midpoint. This optimistic forecast is largely driven by anticipated continued growth in subscription and overseas audio live streaming services.

In conclusion, Xunlei’s earnings call painted a picture of a company navigating through a complex landscape, with notable growth in key areas offset by challenges in others. While the subscription and overseas audio live streaming segments are thriving, the cloud computing business remains a concern. The company’s forward-looking guidance suggests cautious optimism, with expectations of continued revenue growth in the upcoming quarter.