Xunlei(US:XNET)2023-04-25 16:00Revenue Growth - Total revenues increased from US$186.7 million in 2020 to US$342.6 million in 2022, representing a year-over-year growth of 83.5%[599] - Total revenue increased by 43.0% from US$239.6 million in 2021 to US$342.6 million in 2022, driven by growth in live streaming, cloud computing, and subscription services[635] - Revenues from live streaming and other internet value-added services surged to US$122.4 million in 2022, a 128.2% increase from 2021[614][615] - Subscription service revenue rose by 10.3% from US$91.2 million in 2021 to US$100.6 million in 2022, with the number of subscribers increasing from 4.39 million to 4.99 million[635] - Revenue from cloud computing services increased by 26.2% from US$94.8 million in 2021 to US$119.6 million in 2022, attributed to expanded service capabilities and higher demand[635] Revenue Sources - Subscription services contributed 29.4% of total revenue in 2022, down from 45.1% in 2020, indicating a shift in revenue sources[597][611] - Cloud computing services and products accounted for 34.9% of total revenue in 2022, with revenues increasing by 26.2% year-over-year to US$119.6 million[598][610] Operating Expenses - Total operating expenses rose to US$131.4 million in 2022, accounting for 38.4% of total revenue, compared to 52.0% in 2021[624] - Cost of revenues increased to US$200.1 million in 2022, which is 58.4% of total revenue, compared to 49.5% in 2021[634] - General and administrative expenses rose to US$39.7 million in 2022, accounting for 11.6% of total revenue, compared to 15.4% in 2021[624] - Payment handling charges increased significantly to US$6.5 million in 2022, representing 1.9% of total revenue[634] - The company expects an increase in costs related to live streaming services and payment handling charges due to expanded partnerships with third-party payment providers[620][621] Profitability - The net income attributable to Xunlei Limited was US$21.5 million in 2022, a significant recovery from a net loss of US$13.8 million in 2020[634] - Net income attributable to Xunlei Limited increased significantly from US$1.2 million in 2021 to US$21.5 million in 2022[642] - Gross profit increased by 17.7% from US$120.2 million in 2021 to US$141.4 million in 2022, while gross profit margin decreased by 8.9 percentage points to approximately 41.3%[638] Research and Development - The company plans to invest significantly in research and development to maintain technology leadership and improve cloud computing and mobile services[607][608] - Research and development expenses increased to US$67.7 million in 2022, representing 19.8% of total revenue, down from 25.8% in 2021[624] - Research and development expenses increased by 9.4% from US$61.9 million in 2021 to US$67.7 million in 2022[639] - As of December 31, 2022, the company had a team of 552 engineers, emphasizing its commitment to research and development[711] Cash and Investments - As of December 31, 2022, the company had $260.8 million in cash and cash equivalents and short-term investments[686] - The company anticipates that current cash and cash equivalents will be sufficient to meet cash needs for at least the next 12 months[690] - Net cash generated from operating activities amounted to US$51.1 million in 2022, primarily due to a net income of US$21.3 million[694] - Net cash used in investing activities amounted to US$11.8 million in 2022, primarily due to short-term investments and construction costs[698] Legal and Regulatory Risks - The company faces regulatory risks that could impact subscriber growth and revenue, necessitating ongoing compliance efforts[613] - The company has five lawsuits pending against it relating to alleged copyright infringement, with an aggregate amount of claimed damages of approximately RMB5.6 million (US$0.8 million)[683] - The company has accrued for US$0.6 million litigation-related expenses as of December 31, 2022, which is the most probable and reasonably estimable outcome[683] - The company has been involved in legal proceedings related to intellectual property claims, which may impact its business and reputation[784] Corporate Governance - The board of directors consists of seven directors, with one female and six male members[747] - The audit committee is responsible for overseeing accounting and financial reporting processes, including selecting the independent registered public accounting firm[750] - The compensation committee reviews and approves the total compensation package for executives, including long-term incentive compensation[751] - The company has entered into employment agreements with senior executive officers, allowing termination for cause with written notice[742] Employee Relations - The company has not experienced any material labor disputes since its inception, indicating strong employee relations[756] - The company participates in government-organized employee benefit plans, including pensions and medical benefits[756] - As of December 31, 2022, the company had 1,097 employees, with 786 in research and development, 168 in sales and marketing, and 143 in general administration[756] Shareholder Information - The total outstanding common shares as of March 31, 2023, were 323,775,666, with 170,358,310 shares (51.6%) owned by all directors and executive officers as a group[761] - Jinbo Li, the chairman and CEO, beneficially owns 139,711,519 common shares, representing 42.7% of total outstanding shares[761] - Itui International Inc. holds 133,018,479 common shares, accounting for 41.1% of total outstanding shares[761] - The company has granted stock options and restricted shares to management and key employees to provide equity incentives[756] Technology Development - The company entered into a technology development and software license framework agreement with Xunlei Computer, which includes specific terms for technology development projects[773] - For the years ended December 31, 2020, 2021, and 2022, Shenzhen Xunlei incurred fees of US$6.4 million, US$7.2 million, and US$4.0 million for technology development services and software licenses from Xunlei Computer[776] - In 2022, Xunlei recognized revenue of US$2.5 million from Shenzhen Xiaomi, with outstanding revenue amounting to US$1.4 million as of December 31, 2022[779] - Total cloud computing service revenue from Xiaomi Technology in 2022 was US$5.0 million, with outstanding revenue of US$1.9 million as of December 31, 2022[780]