Xunlei(XNET) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q2 2024 were $79.6 million, a decrease of 23.7% year-over-year, primarily due to reduced revenues from the live streaming business [11] - Subscription revenues increased to$ 32.9 million, reflecting a year-over-year growth of 10.8%, driven by an increase in the subscriber base to 5.71 million [12] - Cloud computing revenues decreased by 13.8% year-over-year to $26.4 million, attributed to reduced sales volume and competition [13] - Gross profit was$ 14.7 million, down 11.3% year-over-year, with a gross profit margin of 51.1%, an increase from 44% in the same period of 2023 [15] - Net income attributable to common shareholders was $4.8 million, compared to$ 5 million in the same period of 2023, with diluted earnings per ADS at approximately $0.04 [18] Business Line Data and Key Metrics Changes - The subscription business saw a significant increase in user engagement, with a growth of about 1 million users over the past year [6] - The cloud computing business faced challenges, leading to a revenue decline of$ 26.4 million, a decrease of 13.8% year-over-year [8] - Revenue from live streaming and IVAS reached $20.3 million, showing a quarter-over-quarter increase of 18.7% but a year-over-year decline of 53.9% due to strategic downsizing [9][13] Market Data and Key Metrics Changes - The company is focusing on expanding its overseas market to mitigate the decline in domestic audio live streaming revenues [9] - The average revenue per subscriber decreased to RMB 39.5 from RMB 42.9 year-over-year, attributed to increased promotional activities [12] Company Strategy and Development Direction - The company aims to maintain its position as a leading distributed cloud service provider by focusing on innovation and user-centric strategies [10] - Xunlei has launched a new browser that integrates with its subscription services, enhancing user experience and engagement [6][22] - The company is exploring strategic partnerships to drive growth and improve product exposure [22] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining profitability and highlighted the importance of adapting strategies to the evolving industrial landscape [8][10] - The company anticipates total revenues for Q3 2024 to be between$ 81 million and $86 million, indicating a quarter-over-quarter increase of approximately 4.9% [20] Other Important Information - The company has authorized a share repurchase program of up to$ 20 million, with approximately $4.7 million spent as of June 30, 2024 [19] - Cash, cash equivalents, and short-term investments totaled$ 263.4 million as of June 30, 2024, down from $272.5 million as of March 31, 2024 [18] Q&A Session Summary Question: Any new initiatives for the subscription business? - Management highlighted the evolution of the subscription product over 20 years, incorporating new features and launching a browser that synergizes with existing services, receiving positive user feedback [22] Question: Will the company consider dividends to boost investor confidence? - Management stated that the Board has not discussed any relief measures yet but will keep investors updated, focusing on capital allocation for growth opportunities [24]