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DATE
Thursday, August 14, 2025 at 8:00 a.m. ET
CALL PARTICIPANTS
Chairman and CEO — Jinbo Li
Chief Financial Officer — Eric Zhou
Vice President of Finance — Li Li
Investor Relations Manager — Luhan Tang
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TAKEAWAYS
Total Revenue-- $104,000,000 in total revenue (GAAP) for Q2 2025, reflecting 30.6% year-over-year growth mainly driven by increased revenue from major business operations.
Subscription Revenue-- $36,400,000 (GAAP) for Q2 2025, up 10.5% year over year; subscriber count reached 6,400,000 as of Q2 2025 and the premium subscription rate increased to 81%, up from 77.1% in Q2 2024.
Live Streaming and Other Services-- $37,600,000 in revenue from live streaming and other services for Q2 2025; overseas audio live streaming and the initial contribution from Hupoo were key drivers.
Hupoo Acquisition Impact-- Contributed $3,200,000 to revenue in June 2025, accounting for approximately 3.1% of total revenue in Q2 2025; management expects further impact in coming quarters.
Cloud Computing Revenue-- $30,000,000 in cloud computing revenue for Q2 2025, marking a 13.6% year-over-year increase, attributed to demand rebound and client activity recovery.
Gross Profit-- Gross profit for 2025 was $51,200,000, representing an increase of 25.9% year over year compared with the same period in 2024; gross margin (GAAP) compressed to 49.2% from 51.1% in the same period in 2024, mainly due to lower cloud computing margins.
Operating Income-- $1,100,000 in operating income for Q2 2025, compared to $1,000,000 in Q2 2024; primarily generated by the subscription business.
Net Income-- $727,400,000 in net income (GAAP) for Q2 2025, versus $2,500,000 in Q2 2024, mainly reflecting pretax capital gains of $720,000,000 from the Arashi Vision Inc. investment.
Non-GAAP Net Income-- compared with $3,200,000 in the same period in 2024; attributed to higher operating income and tax benefits.
Cash, Cash Equivalents, and Short-Term Investments-- $275,600,000 in cash, cash equivalents, and short-term investments as of June 30, 2025, a $1,000,000 increase from March 31, 2025 to June 30, 2025; changes arose from bank borrowings and operational inflow, partially offset by Hupoo acquisition cost.
Share Repurchase Program-- $6,500,000 spent as of June 4, 2025 under the share repurchase program; no shares were repurchased in the reported quarter.
Q3 2025 Revenue Guidance-- implying about a 15.4% sequential increase at the midpoint from the second quarter of 2025.
Segment Profitability-- Only the subscription segment contributed positive operating income; live streaming and cloud computing remain loss-making, while Hupoo made a positive bottom-line contribution in June 2025.
SUMMARY
The results reflect Xunlei Limited (XNET 18.30%)'s execution across subscription, live streaming, and cloud computing while highlighting the transformative effect of investment gains. Segment-specific operating dynamics reveal that subscriptions were the sole profit center for Q2 2025, with live streaming and cloud computing not yet achieving profitability. Hupoo's recent acquisition and the Arashi Vision Inc. IPO materially altered both revenue composition and bottom-line results in Q2 2025.
The premium subscriber mix increased materially to 81% in Q2 2025, up from 77.1% in Q2 2024, suggesting effective upselling efforts.
Management stated Hupoo's operations are expected to "make positive contributions to our total performance" on a full-year basis.
Revenue guidance for Q3 2025 introduces a broad forecast range, indicating possible variability in near-term outlook.
The company affirmed ongoing commitment to international expansion, new content domains, and technology investments using proceeds from investment activity.
INDUSTRY GLOSSARY
ADS: American Depositary Share; a U.S.-traded security representing shares of a foreign company.
Arashi Vision Inc.: An investee company of Xunlei Limited; its IPO generated significant capital gains for Xunlei.
Hupoo: An acquired online community and advertising platform; recently consolidated into Xunlei’s results.
Full Conference Call Transcript
Operator: Welcome, ladies and gentlemen, and thank you for your patience. You have joined Xunlei Limited's Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would now like to turn the call over to the host, Investor Relations Manager, Ms. Luhan Tang.
Luhan Tang: Good morning, and good evening, everyone, and thank you for joining Xunlei Limited's Q2 2025 Earnings Conference Call. With me today are Eric Zhou, CFO, and Li, Vice President of Finance. Our IR website has our earnings press release to supplement our prepared remarks during the call. Today's agenda includes prepared opening remarks from Chairman and CEO, Mr. Jinbo Li, on Q2 operational highlights, followed by CFO, Eric Zhou's presentation of financial results details of Q2 2025 and revenue guidance for Q3 2025 before opening up the floor to your questions in the Q&A session. Please note that this call is recorded and can be replayed on our Investor Relations website at ir.xunlei.com.
Before we get started, I would like to take this opportunity to remind you that the discussion today will contain certain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are based on our management's current expectations under existing market conditions and are subject to risks and uncertainties that are difficult to predict, which may cause actual results to differ materially from those made in forward-looking statements. Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results. Xunlei Limited assumes no obligations to update any forward-looking statements, except as required under applicable law.
On this call, we will be using both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to comparable GAAP measures can be found in our earnings press release. Please note that all numbers are in U.S. Dollars unless otherwise stated. Now the following is prepared statements by Mr. Jinbo Li, Chairman and CEO of Xunlei Limited. Good morning and good evening, everyone. Thank you for joining us today. The 2025 marked a significant milestone for Xunlei Limited. During this period, we achieved a series of notable achievements. The successful acquisition of Hupoo, a leading online community for support enthusiasts, expanded Xunlei Limited's reach into new user segments and content domains.
Meanwhile, the IPO of Arashi Vision Inc, one of our invested companies, highlighted our strategic investment capabilities and our ability to identify high-potential ventures. Additionally, we reported year-over-year revenue growth of 30.6%, driven by strong performance across key business segments. This growth underscores the resilience of our business model and the effectiveness of our growth strategy. Just as I mentioned earlier, all of our core businesses showed robust growth during the second quarter. I would like to take a moment to walk you through each segment and share some insights into the key drivers behind this performance. In Q2, our subscription business generated $36,400,000 in revenue, reflecting a 10.5% increase compared to the same period in 2024.
Notably, we achieved a new record with the number of subscribers reaching 6,400,000. This growth was primarily driven by our continuous improvements on the existing features, our efforts to meet evolving user needs, as well as more refined marketing strategies aimed at expanding our diverse user base. Additionally, the percentage of users choosing our premium subscription, our highest tier offering, rose to 81%, up from 77.1% in Q2 2024. It serves as evidence that our products and services have achieved user affirmation, and we are confident that our subscription offerings will continue to gain popularity among our valued user base.
We are also excited to report our live streaming and other services achieved a strong year-over-year revenue growth of 85.5% in the second quarter, reaching $37,600,000. This growth was largely fueled by the expansion of our overseas audio live streaming business, as well as advertising revenue from the recent acquisition of Hupoo. We remain committed to deepening our presence in international markets by improving user engagement and continuously enhancing our features and services. Additionally, we are pleased to welcome Hupoo to our Xunlei Limited family. We expect integration of Hupoo will bring valuable complementary strengths and synergies, particularly in the areas of community-driven content, sports and lifestyle sectors, as well as in advertising resources and strategies.
We believe this collaboration will create promising new opportunities for future growth. Additionally, our cloud computing business brought in $30,000,000 in revenue, marking a 13.6% increase compared to the same period in 2024. This growth is largely due to the recovery from previous setbacks and a rising demand from our major clients as we focused on providing cost-effective, scalable and secure solutions that meet the diverse needs of our enterprise clients. At the same time, we actively tackled ongoing challenges such as competition and market uncertainties, turning them into opportunities for innovation and expansion. Our team's acute business sense and agile approach helped to strengthen our market position and capacity to explore future options.
During the second quarter, we have booked approximately $720,000,000 on realized pretax capital gains on our investment in Arashi Vision Inc. I believe that the future returns on this investment will provide a solid foundation for our sustained efforts to enhance operational efficiency and pursue innovative growth opportunities in emerging industries. Looking ahead, I am confident that the financial flexibility gained from this success will enable us to further strengthen our core business, invest in cutting-edge technologies and expand into high-growth markets. We intend to explore all options to create value for our shareholders as well as all stakeholders. With that, I will now pass the call over to Eric.
Eric will give a detailed review of our Q2 2025 financial results and provide revenue guidance for the 2025.
Eric Zhou: Thank you, Luhan. Thank you all again for participating in Q3's conference call to discuss the financial results of the 2025. In the second quarter, our total revenues were $104,000,000 representing an increase of 30.6% year over year. The increase in total revenues was mainly attributable to the increased revenues generated from our major business operations. Revenues from subscription were $36,400,000 representing an increase of 10.5% year over year. The increase in subscription revenues was mainly driven by the increase in the number of subscribers and the increased average revenue per subscriber. The number of subscribers was 6,400,000 as of 06/30/2025, compared with 5,710,000 as of 06/30/2024.
The average revenue per subscriber for the second quarter was RMB 40.8 compared with RMB 39.5 in the same period of last year. The higher average revenue per subscriber was due to the increased proportion of premium subscribers, which have higher average revenue per subscriber. Revenues from live streaming and other services were $37,600,000 representing an increase of 85.5% year over year. The increase was mainly due to the growth of our overseas audio live streaming businesses as well as advertising business as a result of the acquisition of in June. The second quarter results included one month financial results from Hupoo. Revenues from cloud computing were $30,000,000 representing an increase of 13.6% year over year.
The increase in cloud computing revenues was mainly attributable to the recovery from previous loads and increased demand from our niche customers for cloud computing services. Cost of revenues were $52,300,000 representing 50.3% of our total revenues, compared with $38,600,000 or 48.5% of the total revenues in the same period of 2024. The increase in cost of revenues was mainly attributable to the increase in bandwidth costs and revenue sharing expenses in our overseas audio live streaming operations, generally in line with the growth in revenues. Gross profit for the 2025 was $51,200,000 representing an increase of 25.9% year over year. Gross profit margin was 49.2% in the 2025, compared with 51.1% in the same period of 2024.
The decrease in gross profit was mainly driven by our overseas audio live streaming business, subscription business and advertising business. The decrease in gross profit margin was mainly attributable to the decreased gross profit margin of our cloud computing business. Research and development expenses for the 2025 were $18,400,000 representing 17.7% of our total revenues, compared with $17,500,000 or 21.9% of our total revenues in the same period of 2024. The increase in R and D spending was primarily due to the increased labor costs incurred during the quarter. Sales and marketing expenses for the 2025 were $21,600,000 representing 20.8% of our total revenues, compared with $10,900,000 or 13.7% of our total revenues in the same period of 2024.
The increase was primarily due to more marketing expenses incurred during the quarter for our subscription and overseas audio live streaming business as part of our ongoing efforts on acquisition. G and A expenses for the 2025 were $9,800,000 representing 9.4% of our total revenues, compared with $11,200,000 or 14.1% of our total revenues in the same period of 2024. The decrease was primarily due to the decrease in provision for the expenditure, depreciation expenses, and labor costs during the 2025. Operating income was $1,100,000 compared with an operating income of $1,000,000 in the same period of 2024. Other income net was $721,800,000 compared with other income net of $2,500,000 in the same period of 2024.
The decrease was primarily attributable to the fair value changes in our long-term investment in Arashi Vision Inc, which completed its IPO in June 2025. Net income was $727,400,000 compared with net income of $2,500,000 in the same period of 2024. The increase in net income was primarily due to the increase in other income. Non-GAAP net income was $8,300,000 in the 2025 compared with $3,200,000 in the same period of 2024. The increase in non-GAAP income was primarily due to the increase in operating income and income tax benefits. Diluted income per ADS in the 2025 was $11.48 compared with diluted earnings per ADS of $0.04 in the 2024.
Non-GAAP diluted earnings per ADS was $0.13 in the second quarter compared with non-GAAP diluted earnings per ADS of $0.05 in the same period of 2024. As of 06/30/2025, the company had cash, cash equivalents, and short-term investments of $275,600,000 compared with $274,600,000 as of 03/31/2025. The increase was mainly due to the increase in proceeds from bank borrowings and net cash inflow from operating activities, partially offset by the payment for acquisition of Hupoo. On 06/04/2024, Xunlei Limited announced that its Board of Directors authorized a new plan for the purchase of up to $20,000,000 of its stocks over the twelve months that followed.
As of 06/04/2025, the company has spent $6,500,000 on share buybacks under the new share repurchase program. No shares were repurchased during the 2025. Let's turn to guidance for the 2025. For the 2025, Xunlei Limited estimates total revenues to be between $116,000,000 and $124,000,000 and the midpoint of the range represents a quarter-over-quarter increase of approximately 15.4%. This estimate represents management's preliminary view as of the date of this press release, which is subject to change, and any change could be material. Now we conclude prepared remarks for the conference call. Okay. We are ready to take questions.
Operator: Thank you. We will now begin the question and answer session. We will now take our first question from the line of Tee Lee. Your line is open, Tee. Please go ahead.
Tee Lee: For your good performance for the 2025. And she mentioned that our last streaming business achieved more than 80% in a quarter of quarter increase. And she would like to know the breakdown of the components of the live streaming and other services for the Hupoo. And thanks for the question. And the acquisition of Hupoo was completed at the May year. And during the second quarter, only Hupoo's financial debt for the month of June was consolidated, contributing about $3,200,000 or approximately 3.1% of our total revenues. And we expect to report more Hupoo's operational debt during the coming quarters. And she said, if excluding Hupoo's contribution, what would be the growth rate of our overseas live streaming business?
And the revenue from live streaming and other services together were $37,600,000 representing an increase of 85.5% year over year. And if we exclude Hupoo's contribution, the growth rate for the second quarter for overseas live streaming business alone was about 80.3%. Thank you.
Operator: All right. Thank you. We will now take our next question from the line of Wei Zhou from HWS Fund. Please go ahead, Wei.
Wei Zhou: Okay, at this stage, he would like to know the performance of each of our three main business segments, and he would love to also know that if our Q4 operations will make positive contributions to our total performance, just speak English. Speak Okay. As I mentioned, we have three main businesses. And for subscription business, basically it contributed all our positive operating income. And for our live streaming business, and it is still in the growth stage, and we are still investing heavily in this business, and so far it is still losing money. And for our cloud computing business, and recently it has improved its performance, but overall the sector is still losing money.
So we have one segment making money, and two other segments are still losing money. And for our Hupoo business, and in June, it contributed to our top line, and also it made positive contributions to the bottom line. And though we do not provide earnings or net income guidance, but we do expect Hupoo business on a yearly basis, we will make positive contributions to our total performance. Thank you.
Operator: Thank you. I am showing no further questions. I would now like to turn the conference back to the management team for closing comments.
Eric Zhou: Thank you again for your time and participation. If you have any questions, please visit our website at ir.xunlei.com or send emails to our Investor Relations. Have a good day. Okay, we conclude today's conference call. Thank you.
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect your lines.