Xunlei Ltd. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Chairman's Remarks: Closed 2024 with solid Q4 results, revenue exceeded guidance range. Subscription business had 6.38 million subscribers in Q4. Cloud computing faced challenges leading to goodwill impairment. Live-streaming pivoted to overseas markets with 80.7% YOY revenue growth in Q4.
• CFO's Financial Details: Total Q4 2024 revenues $84.3 million. Cost of revenues $40.4 million. Gross profit $43.6 million. Research and development expenses $18.7 million. Sales and marketing expenses $12.5 million. G&A expenses $12.1 million. Operating loss $20.5 million. Net loss $9.9 million. FY 2024 total revenues $324.4 million. Cost of revenues $155.6 million. Gross profit $167.6 million. Research and development expenses $71.6 million. Sales and marketing expenses $44.8 million. G&A expenses $45.8 million. Operating loss $15.7 million. Net income $0.7 million. Cash, cash equivalents, and short-term investments $287.5 million as of December 31, 2024.

Segment Performance

• Subscription: In Q4 2024, revenue was $34.4 million, a 9% year-over-year increase. For FY 2024, subscription revenue was $133.7 million, a 12% year-over-year increase. In Q4, subscription revenue contributed ~40.8% to total revenues ($84.3 million), and for FY 2024, it contributed ~41.2% to total revenues ($324.4 million). The number of subscribers was 6.38 million as of December 31, 2024.
• Cloud Computing: In Q4 2024, cloud computing revenue was $22.7 million, a 25.6% year-over-year decrease. For FY 2024, cloud computing revenue was $104.6 million, a 15.3% year-over-year decrease. This was due to heightened competition, pricing pressure, and evolving regulatory environment.
• Live-streaming and IVAS: In Q4 2024, revenue was $27.2 million, an 80.7% year-over-year increase. For FY 2024, revenue was $86.1 million, a 29.5% year-over-year decrease. The increase in Q4 was due to growth in overseas audio live-streaming, while the FY decrease was due to downsizing domestic audio live-streaming operations since June 2023. In Q4, it contributed ~32.3% to total revenues, and for FY 2024, ~26.5%.

Guidance

• For the first quarter of 2025, Xunlei estimates total revenues to be between $85 million and $89 million, with the midpoint representing a quarter-over-quarter increase of approximately 3.2%. This is management's preliminary view as of the press release date, subject to change.

Risks

• Cloud Computing Challenges: Decline in cloud computing revenue due to intensified competition, pricing pressure, and evolving regulatory environment. Resulted in a non-cash goodwill impairment expense due to significant revenue decline in the cloud computing business in late 2024.

Question and Answer

Q: Congrats on recent capital market performance and what's the company's plan following IPO and if they want to sell shares A: Jinbo Li responded that it's too early to address the question as the company hasn't completed its IPO and expressed confidence in future success.

Q: Recently acquired Hupu, what is its business model and revenue/profit conditions A: Jinbo Li stated Hupu is a sports blog established in 2004 with comprehensive sports coverage, main revenue source is advertising; the deal is expected to be immediately earnings accretive after closing in the first half of the year, but financial numbers couldn't be discussed yet as the deal wasn't closed