Xunlei’s November Earnings Showed Broad Strength, and Margin Trade-Offs

Core Insights - Xunlei Limited has demonstrated strong performance as a small-cap tech stock, with significant revenue growth and operational improvements in Q3 [1][2] Financial Performance - Total revenue for Q3 increased by 57.7% year over year, reaching $126.4 million, driven by growth in subscriptions ($40.7 million, +22%), live-streaming and other services ($49.1 million, +127%), and cloud computing ($36.6 million, +45%) [1] - Gross profit rose by 50% to $60.5 million, although gross margin decreased to 47.9% due to lower margins in cloud services and a higher proportion of live-streaming revenue [1] - Operating income was reported at $2.7 million, a turnaround from a small loss in the previous year [2] - GAAP net income surged to $550.1 million, largely due to unrealized gains from the investment in Arashi Vision Inc.; non-GAAP net income was $5.3 million with a diluted EPS of $0.09 [2] Future Guidance - The company has provided guidance for Q4 revenue to be between $131 million and $139 million, indicating an approximate sequential growth of 6.8% at the midpoint [2] Company Overview - Founded in 2003, Xunlei Limited focuses on distributed cloud services, including cloud acceleration, shared cloud computing, and digital entertainment, aimed at enhancing internet efficiency [3]