Xunlei Ltd ((XNET)) has held its Q4 earnings call. Read on for the main highlights of the call.
Xunlei Ltd’s recent earnings call painted a mixed picture for investors. While the company celebrated strong growth in its subscription and live-streaming sectors, it faced significant hurdles in its cloud computing segment. These challenges led to a goodwill impairment and an increased operating loss. However, strategic moves like the acquisition of Hupu and a robust cash position offer a promising foundation for future growth.
Record-Breaking Subscription Growth
Xunlei Ltd achieved a milestone in its subscription business, reaching a record-breaking 6.38 million subscribers in Q4 2024. This marks a 9% increase year-over-year and a 12% growth rate from 2023 to 2024, highlighting the company’s success in expanding its subscriber base.
Live-Streaming Revenue Surge
The company reported a significant surge in live-streaming revenue, generating $27.2 million in Q4 2024. This represents an impressive 80.7% year-over-year increase, driven by a strategic pivot to emerging regions and product refinement.
Solid Cash Position
Xunlei’s financial health remains strong, with cash, cash equivalents, and short-term investments totaling $287.5 million as of December 31, 2024. This is an increase from $272 million as of September 30, 2024, providing a solid foundation for future investments and growth.
Strategic Acquisition of Hupu
The acquisition of Hupu is a strategic move expected to unlock significant cross-platform synergies and enhance user engagement. This acquisition is part of Xunlei’s broader strategy to strengthen its market position and drive growth.
Cloud Computing Revenue Decline
Xunlei’s cloud computing segment faced challenges, with revenue declining by 25.6% year-over-year and 10.1% quarter-over-quarter in Q4 2024. This decline is attributed to heightened competition, pricing pressures, and regulatory challenges.
Goodwill Impairment
The company recorded a $20.7 million goodwill impairment in Q4 2024 due to the significant decline in cloud computing revenue. This impairment contributed to the increased operating loss for the quarter.
Decreased Total Annual Revenue
Total revenues for 2024 were $324.4 million, representing an 11.1% decrease year-over-year. This decline was mainly due to reduced revenues from the cloud computing and live-streaming businesses.
Increased Operating Loss
Xunlei reported an operating loss of $20.5 million for Q4 2024, compared to a loss of $0.7 million in Q4 2023. The increased loss was primarily due to the goodwill impairment.
Forward-Looking Guidance
Looking ahead, Xunlei provided revenue guidance for Q1 2025, estimating total revenues between $85 million and $89 million. This suggests a potential quarter-over-quarter increase of about 3.2%, indicating optimism for future growth despite current challenges.
In summary, Xunlei Ltd’s earnings call highlighted a mixed performance with strong growth in subscriptions and live-streaming offset by challenges in the cloud computing sector. The company’s strategic initiatives and solid cash position provide a positive outlook for future growth, despite the current hurdles.