Xunlei Ltd ((XNET)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Xunlei Ltd’s recent Q2 2025 earnings call painted a generally positive picture, highlighting significant revenue growth across various segments, successful strategic acquisitions, and strong guidance for the upcoming quarter. However, the call also acknowledged challenges such as increased costs, a decreased gross profit margin, and ongoing losses in key segments, which slightly tempered the overall optimistic sentiment.
Acquisition of Hupu
Xunlei successfully acquired Hupu, a leading online community for sports enthusiasts. This strategic move is expected to expand Xunlei’s reach into new user segments and content domains, potentially driving further growth and diversification of its user base.
IPO of Arashi Vision Inc.
The earnings call highlighted Xunlei’s strategic investment capabilities with the IPO of Arashi Vision Inc., which resulted in approximately $720 million in unrealized pretax capital gains. This underscores Xunlei’s ability to leverage investments for substantial financial gains.
Revenue Growth
Xunlei reported a remarkable year-over-year revenue growth of 30.6%, driven by strong performances across its key business segments. This growth is a testament to the company’s effective strategies and market positioning.
Subscription Business Growth
The subscription business saw a 10.5% increase in revenue, reaching $36.4 million. The subscriber base expanded to a record 6.4 million, indicating strong customer retention and acquisition efforts.
Live Streaming Revenue Surge
Live streaming and other services experienced a significant year-over-year revenue growth of 85.5%, reaching $37.6 million. This surge was partly fueled by the acquisition of Hupu, enhancing Xunlei’s content offerings.
Cloud Computing Revenue Increase
Cloud computing revenue grew by 13.6% year-over-year, reaching $30 million. This growth reflects a recovery from previous setbacks and increased demand for cloud services.
Guidance for Q3 2025
Looking ahead, Xunlei anticipates Q3 2025 revenues to range between $116 million and $124 million, representing a quarter-over-quarter increase of approximately 15.4%. This forecast is driven by strong performances across its business segments.
Increased Costs
The cost of revenues increased to $52.3 million, representing 50.3% of total revenues. This rise was mainly due to higher bandwidth costs and revenue sharing expenses, impacting the overall profitability.
Decreased Gross Profit Margin
Xunlei’s gross profit margin decreased to 49.3% from 51.1% in the same period of 2024. This decline was primarily due to decreased margins in the cloud computing business.
Ongoing Losses in Key Segments
Despite revenue growth, the live streaming and cloud computing businesses continue to report losses as they are still in the growth stage. This highlights the challenges Xunlei faces in achieving profitability in these segments.
Increased Sales and Marketing Expenses
Sales and marketing expenses rose significantly to $21.6 million, representing 20.8% of total revenues, up from $10.9 million or 13.7% in the same period of 2024. This increase reflects Xunlei’s efforts to expand its market presence.
Forward-Looking Guidance
Xunlei’s forward-looking guidance for Q3 2025 is optimistic, with expected revenues ranging between $116 million and $124 million. This forecast is supported by strong performances across its business segments, despite the challenges of increased costs and ongoing losses in certain areas.
In summary, Xunlei Ltd’s Q2 2025 earnings call conveyed a positive outlook with impressive revenue growth and strategic achievements, despite facing challenges such as increased costs and decreased profit margins. The company’s forward-looking guidance remains strong, suggesting continued growth and expansion in the upcoming quarter.