Xunlei(XNET) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 2023 was $104.3 million, representing a year-over-year increase of 33.3% [6][12] - Net income for Q2 2023 was $5 million, down from $6 million in the same period of 2022 [18] - Gross profit reached $45.9 million, reflecting a 35.9% increase year-over-year, with a gross profit margin of 44% [16] - Diluted earnings per ADS was approximately $0.08, compared to $0.09 in the same period of 2022 [19] Business Line Data and Key Metrics Changes - Subscription business generated $29.7 million in revenue, a 17% year-over-year increase, with a premium subscriber conversion rate rising from 35.1% to 59.2% [7][13] - Cloud Computing business revenue was $30.7 million, an 8.2% increase year-over-year, driven by higher sales of cloud computing hardware [9][12] - Live Streaming and other Internet value-added services (IVAS) revenue reached $43.9 million, a significant 79.1% increase, although the company plans to downsize this segment [10][14] Market Data and Key Metrics Changes - The domestic audio live streaming business accounted for approximately 12.4% of total revenues in the first half of the year [23] - The company anticipates a decline of about 21.9% in total revenues for Q3 2023 due to the downsizing of the domestic live streaming business [21][23] Company Strategy and Development Direction - The company is committed to advancing core technological innovation and delivering high-quality products and services [11] - Plans to downsize the domestic live streaming services to improve operations while reallocating resources to explore new opportunities [10][23] - The focus remains on strengthening existing product lines and pursuing sustainable business development [9][10] Management Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the domestic automation business but highlighted strong operational resilience [6] - The company expects continued growth momentum in Subscription and Cloud Computing businesses despite the downsizing of the live streaming segment [10][21] - Management believes that Xunlei will emerge as a more focused company positioned for long-term growth opportunities [11] Other Important Information - Research and Development expenses were $17.2 million, representing 16.5% of total revenues, while sales and marketing expenses increased significantly to $15.4 million [17] - The company authorized a share repurchase of up to $20 million over the next 12 months, spending approximately $1 million on buybacks as of June 30, 2023 [19] Q&A Session Summary Question: What percentage of revenue does the domestic audio live streaming business account for, and what is the anticipated impact on overall revenue? - The domestic audio live streaming business accounted for approximately 12.4% of total revenues in the first half of the year, and the company anticipates a decline of about 21.9% in total revenues for Q3 2023 due to downsizing [23]