XNET

Image source: The Motley Fool. Thursday, Aug. 13, 2026 at 8:00 a.m. ET Chairman and Chief Executive Officer - Jinbo Li Chief Financial Officer - Eric Zhou Vice President of Finance - Lee Li Investor Relations Manager - Luhan Tang Operator: Welcome, ladies and gentlemen, and thank you for your patience. You've joined Xunlei's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the call over to your host, Investor Relations Manager, Ms. Luhan Tang. Luhan Tang: Good morning, and good evening, everyone, and thank you for joining Xunlei's Q2 2026 Earnings Conference Call. With me today are Eric Zhou, CFO; and Lee 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 before we open 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'd 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 that are subject to risks and uncertainties that are difficult to predict, which may cause actual results to differ materially from those made in the forward-looking statements. Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results. Xunlei assumes no obligation to update any forward-looking statements, except as required under applicable law. On this call, we'll 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 our Q2 2026 earnings call. We're pleased to report continued top line growth this quarter, building on the solid consumer-focused growth foundations we established in Q1. These results serve as clear validation that our strategic pivot towards a consumer-centric business model is delivering tangible results. Our 2 primary growth drivers, subscription services and overseas audio live streaming, each posted steady year-over-year increase in revenue. Let me walk you through the performance of these core consumer-facing businesses individually. First, our subscription business remains our stable cash flow foundation and reliable growth anchor. Q2 subscription revenue reached $44.5 million, up 22.6% year-over-year, while the growth rate softened marginally on the sequential basis. This segment maintained resilient user retention and steady monetization performance. During the quarter, we continued upgrading premium user experiences by rolling out new AI-powered features, optimizing existing functionality, deepening long-term cooperation with leading domestic smartphone partners and scaling our ecosystem user acquisition channels as planned. Looking ahead, we will continue refining our differentiated member perks to boost user penetration and expand end device cooperation coverage, capturing incremental user acquisition and revenue growth in the second half of the year. Second, our overseas audio live streaming business once again emerged as our primary growth engine. In Q2, this segment generated $58.2 million in revenue, representing a significant 54.8% year-over-year increase. We continued deploying targeted investments in high-potential emerging markets, including Southeast Asia, the Middle East, Turkey and further expansion into Latin America. Concurrently, we enhanced localized product iteration and operational capabilities, optimizing our product matrix across one-on-one social interaction scenarios and multi-person chat rooms. Additionally, we saw notable quarterly momentum for our Hupu business, which contributed $9.1 million in Q2 revenue, benefiting from the peak advertising season and the slate of major global sporting events. User discussion activity across the platform reached new highs. Our newly rolled out AI-powered features also meaningfully boosted user engagement and deepened interactive activity, creating an additional stream of incremental revenue across our consumer ecosystem. As we communicated in our previous quarterly reports, competition in the overseas entertainment market remains intense. Accordingly, we will stick to our long-term localized operational and marketing strategies instead of chasing near-term scale expansion, fostering sustainable business growth across all our core consumer verticals. Beyond operational performance, to further reinforce market confidence and deliver long-term shareholder returns, we announced a new $20 million share repurchase program at the end of June. We believe that this initiative demonstrates our unwavering confidence in the company's solid fundamentals and long-term growth potential. We will maintain disciplined capital allocation, prioritizing investment in core consumer product innovation and international market expansion while returning excess capital to shareholders when appropriate. Looking ahead, we will stay firmly committed to our user-centric development strategy. We will further accelerate feature iteration for our subscription offerings, deepen market penetration within our established overseas markets, selectively pursue new regional growth opportunities and uphold strict cost discipline to expand profit margins across all business lines. By balancing growth with profitability and through rigorous capital and operational management, we aim to promote balanced and sustainable corporate development. Against the backdrop of an evolving global market landscape, our targeted consumer positioning, 2 core business structure, advanced technological strength and localized operations serve as our key competitive edges. We are optimistic about delivering sustained long-term value to our users and shareholders alike. With that overview, I will now turn the call over to our CFO, Eric Zhou, who will walk you through our Q2 financial metrics in detail. Eric Zhou: Thank you, Luhan, and thank you all for participating in today's conference call. I will now walk you through our financial results for the second quarter of 2026. For Q2 2026, total revenues came in at $102.7 million, up 38.9% year-over-year. This steady top line growth was primarily driven by rising revenues from our subscription business and our overseas audio live streaming business as well as improved Hupu's advertising business. Breaking down our revenue performance. Subscription revenues reached $44.5 million, a 22.6% year-over-year increase. This performance reflected the sustained user demand for a full suite of our premium product offerings. Revenue from live streaming and other services totaled $58.2 million, representing a 54.8% year-over-year increase. This strong performance was driven chiefly by rapid expansion of our overseas audio live streaming operations alongside the growth in advertising revenue from our sports community during the peak sports season. Cost of revenues was $44.8 million during the quarter, accounting for 43.6% of total revenues. By comparison, in Q2 2025, cost of revenues came to $27 million, or 36.6% of total revenues. The uptick in our cost base largely aligned with the expansion of our live streaming revenue, driven mainly by increased revenue sharing expenses for our overseas audio live streaming operations. Turning to profitability. We generated $57.3 million in gross profit during the second quarter of 2026, up 23.1% year-over-year. Gross margin stood at 55.8%, compared with 63% in the prior year period. The gross profit improvement was fueled by both our subscription business and the Hupu advertising revenue. The notable margin decline stems from a structural revenue mix shift. Since live streaming carries a lower gross margin than subscription and advertising business, its larger share of total revenue mix modestly compressed our overall gross margin. On the expense front, R&D expenses were $21.4 million in Q2 2026, representing 20.8% of total revenues compared with $16.6 million or 22.4% of total revenues in Q2 2025. The year-over-year increase was mainly due to higher labor costs. Sales and marketing expenses rose to $27.9 million during the second quarter of 2026, representing 27.2% of revenue compared with $20.7 million or 28% of total revenues in Q2 2025. The increase in absolute marketing spending reflected ramp-up promotional investment across our subscription and overseas audio live streaming operations as we continued to proactively prioritize acquisition and brand visibility. G&A expenses came in at $12.7 million, equal to 12.4% of total revenues, versus $8.5 million or 11.6% of total revenue in Q2 2025. The increase was primarily driven by provision for ongoing legal litigations and higher employee-related costs year-over-year. At the operating level, we posted an operating loss of $4.8 million this quarter, a reversal from operating income of $0.3 million in the same period last year. This swing was largely due to the sequential and year-over-year rise in our selling, marketing and general and administrative expenses outlined above. We posted a net other loss of $213.8 million for the quarter versus net income of $721.5 million in Q2 2025. The dramatic swing was mainly driven by fair value volatility on our long-term investment in Arashi Vision Inc., which is accounted for on a mark-to-market basis using public stock prices after the company's IPO in June 2025. Unlike Q1, there were no discontinued operations to report for Q2 2026, following the disposal of our Shenzhen Onething business last quarter. Our net loss from continuing operations was $218.5 million this quarter compared with net income of $726.4 million in Q2 2025. The net loss was mainly due to the material net other loss just mentioned, partially offset by positive gross profit growth in our core consumer-facing business. On a non-GAAP basis, we posted a non-GAAP net loss from continuing operations of $2.1 million, down from non-GAAP net income of $7.2 million in the prior year period. On a per share basis, diluted loss per ADS from continuing operations was $3.43 for the quarter compared with diluted EPS of $11.47 in Q2 2025. Our non-GAAP diluted loss per ADS from continuing operations came to $0.03 versus non-GAAP diluted earnings of $0.12 per ADS in the same period last year. Finally, on our balance sheet. As of June 30, 2026, cash, cash equivalents and short-term investments totaled $276.9 million, down from $303.6 million as of March 31, 2026. The sequential decrease was primarily driven by net operating cash outflows, bank loan repayments, disbursements related to our newly announced share repurchase program and deferred consideration payments related to our Hupu acquisition. This concludes our prepared remarks. Operator, we are now ready to open the line for questions. Operator: [Operator Instructions] First question comes from the line of [ Zoe Zhang ], retail investor. Unknown Attendee: [Foreign Language] Eric Zhou: The question is the company announced a share repurchase program at the end of June, but she didn't see any share repurchase information in our press release and she'd like to know what's going on with the buyback program. Thanks for asking. The Board of Directors of the company approved a new share repurchase program of $20 million at the end of June, and the repurchase officially commenced on July 1. And as of August 12, we bought back approximately 1.07 million shares of ADS and spent approximately $5.9 million, and the repurchase program remains ongoing, and more details will be disclosed in our third quarter financial report. Thank you. Luhan Tang: [Foreign Language] Operator: [Operator Instructions] Next, we have [ X. J. ], individual shareholder. Unknown Attendee: [Foreign Language] Eric Zhou: Okay. Basically, his question is surrounding our stake in [indiscernible] Arashi Vision Inc. And he'd like to know our progress in reducing our stake in this investment and what our plans for the proceeds for the future. And thank you for the question. And currently, we hold more than 5% of shareholders or exactly 7.8% of Vision's equity stake. And we need to follow certain regulatory rules and regulations when we began to sell the stock and do it in an ordinary manner and make timely disclosure. And for the time being, we are following -- going through certain procedures to get ready to reduce our stake in the company. But at this time, we have no specific plans for the share disposal for the time being. And he also asked a question regarding the 1940 Investment Company Act. And according to that, 1940 Investment Act, a listed company needs to follow certain regulations to be in compliance with the requirements of the Investment Act. And we will continue to monitor our holdings of our operated assets, and we've been consulting with relevant advisers. And if needed, we will gradually seek to adjust our holdings so that Xunlei holds investment securities with a value not exceeding 45% of the company's total assets, excluding government securities and cash items. In line with the company's intention to mainly engage in the core business, which is the consumer-facing business, 2C business, we never intend to be an investment company. Thank you. Luhan Tang: [Foreign Language] Operator: Thank you. I see no further questions at this time. I will now turn the conference back to Eric for closing remarks. Eric Zhou: Thank you again your time and participation. For any follow-up inquiries, please visit our website at ir.xunlei.com or contact our Investor Relations team. Have a good day. Operator, 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. 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While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Xunlei (XNET) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

SHENZHEN, China, Aug. 13, 2026 (GLOBE NEWSWIRE) -- Xunlei Limited ("Xunlei" or the "Company") (Nasdaq: XNET), a leading technology company providing distributed cloud services in China, today announced its unaudited financial results for the second quarter ended June 30, 2026.Second Quarter 2026 Financial Highlights (results presented herein exclude Shenzhen Onething, discontinued operations, unless specified otherwise1) Total revenues were US$102.7 million, representing an increase of 38.9% year-over-year. Subscription revenues were US$44.5 million, representing an increase of 22.6% year-over-year. Live-streaming and other services revenues were US$58.2 million, representing an increase of 54.8% year-over-year. Gross profit was US$57.3 million, representing an increase of 23.1% year-over-year, and gross profit margin was 55.8% in the second quarter, compared with 63.0% in the same period of 2025. Net loss from continuing operations was US$218.5 million in the second quarter, compared with net income of US$726.4 million in the same period of 2025. Non-GAAP net loss2 from continuing operations was US$2.1 million in the second quarter, compared with non-GAAP net income of US$7.2 million in the same period of 2025. Diluted loss per ADS from continuing operations was US$3.43 in the second quarter, compared with diluted earnings per ADS of US$11.47 in the same period of 2025. Non-GAAP diluted loss per ADS3 from continuing operations was US$0.03 in the second quarter, compared with non-GAAP diluted earnings per ADS of US$0.12 in the same period of 2025. “We are pleased to report continued top-line growth in the second quarter of 2026, building on the robust momentum established in Q1. This performance fully validates our strategic pivot to be more focused on a consumer-only (To-C) business model. In Q2, we recorded total revenue of US$102.7 million, reflecting a substantial year-over-year increase of 38.9%, while gross profit rose 23.1% compared with the prior-year period. This notable growth underscores our effective business structure optimization and the continuous enhancement of operational efficiency," said Mr. Jinbo Li, Chairman and CEO of Xunlei Limited."To further reinforce market confidence and deliver sustainable long-term value for our shareholders, we recently announced a new share repurchase program. We believe that this initiative demonstrates our unwavering confidence in the company’s strong fundamentals and potential for long-term growth, positioning us well for the future.""Looking ahead, we remain committed to our user-centric development strategy. We will continue to innovate and enhance our product and service offerings, deepen our penetration into international markets, and drive sustainable growth in our core businesses. Through disciplined capital management, we are well-positioned to pursue balanced and sustainable corporate growth. We believe these strategic initiatives will help us deliver lasting value to our users and shareholders amid evolving market dynamics," Mr. Li concluded. Second Quarter 2026 Financial Results (results presented herein exclude Shenzhen Onething, discontinued operations, unless specified otherwise) Total Revenues Total revenues were US$102.7 million, representing an increase of 38.9% year-over-year. The increase in total revenues was mainly attributable to the increased revenues generated from our subscription business and overseas audio live-streaming business. Revenues from subscription were US$44.5 million, representing an increase of 22.6% year-over-year. The increase in subscription revenues was mainly driven by the increase in demand for our subscription services. Revenues from live-streaming and other services were US$58.2 million, representing an increase of 54.8% year-over-year. The increase in live-streaming and other services revenues was mainly due to the increase in revenues from our overseas audio live-streaming business and advertising business of Hupu. Cost of Revenues Cost of revenues was US$44.8 million, representing 43.6% of our total revenues, compared with US$27.0 million, or 36.6% of the total revenues, in the same period of 2025. The increase in cost of revenues was mainly attributable to the increase in revenue-sharing expenses in our overseas audio live-streaming operations, generally in line with the growth in live-streaming and other service revenues. Gross Profit and Gross Profit Margin Gross profit for the second quarter of 2026 was US$57.3 million, representing an increase of 23.1% year-over-year. Gross profit margin was 55.8% in the second quarter of 2026, compared with 63.0% in the same period of 2025. The increase in gross profit was mainly driven by the increase in gross profit generated from our advertising business of Hupu and subscription business. The decrease in gross profit margin was mainly attributable to the increased proportion of live-streaming revenues to total revenues, which has a lower gross profit margin. Research and Development Expenses Research and development expenses for the second quarter of 2026 were US$21.4 million, representing 20.8% of our total revenues, compared with US$16.6 million, or 22.4% of our total revenues, in the same period of 2025. The increase was primarily due to more labor costs incurred during the quarter. Sales and Marketing Expenses Sales and marketing expenses for the second quarter of 2026 were US$27.9 million, representing 27.2% of our total revenues, compared with US$20.7 million, or 28.0% of our total revenues, in the same period of 2025. The increase was primarily due to more marketing expenses incurred during the quarter for our subscription and overseas audio live-streaming businesses as part of our ongoing efforts to acquire users. General and Administrative Expenses General and administrative expenses for the second quarter of 2026 were US$12.7 million, representing 12.4% of our total revenues, compared with US$8.5 million, or 11.6% of our total revenues, in the same period of 2025. The increase in general and administrative expenses was primarily due to the provision for ongoing litigations and increased employee-related cost as compared with the same period of 2025. Operating (Loss)/Income Operating loss was US$4.8 million, compared with an operating income of US$0.3 million in the same period of 2025. The shift from operating income to operating loss was primarily attributable to the increase in operating expenses discussed above. Other (Losses)/Income, Net Other losses, net was US$213.8 million, compared with other income, net of US$721.5 million in the same period of 2025. The change from other income, net to other losses, net was primarily attributable to the fair value changes of our long-term investment in Arashi Vision Inc., which has been measured at fair value based on the quoted market price since its initial public offering in June 2025. Net (Loss)/Income and (Loss)/Earnings Per ADS Net loss from continuing operations was US$218.5 million compared with net income of US$726.4 million in the same period of 2025. The net loss was primarily due to the swing from other income, net to other losses, net and the shift from operating income to an operating loss, as discussed above. Non-GAAP net loss from continuing operations was US$2.1 million in the second quarter of 2026, compared with non-GAAP net income of US$7.2 million in the same period of 2025. Diluted loss per ADS from continuing operations in the second quarter of 2026 was US$3.43, compared with diluted earnings per ADS from continuing operations of US$11.47 in the second quarter of 2025. Non-GAAP diluted loss per ADS from continuing operations was US$0.03 in the second quarter, compared with non-GAAP diluted earnings per ADS from continuing operations of US$0.12 in the same period of 2025. Cash Balance As of June 30, 2026, the Company had cash, cash equivalents and short-term investments of US$276.9 million, compared with US$303.6 million as of March 31, 2026. The decrease in cash, cash equivalents and short-term investments was mainly due to the net cash outflows from operating activities, repayment of bank loans, payments for share repurchase and deferred consideration for the acquisition of Hupu. Conference Call Information Xunlei's management will host a conference call at 8:00 a.m. U.S. Eastern Time on August 13, 2026 (8:00 p.m. Beijing/Hong Kong Time), to discuss the Company's quarterly results and recent business developments. Participant Online Registration: https://register-conf.media-server.com/register/BIa77b2d16be874a6eb0b92ce720fd7da8 Please register to join the conference using the link provided above and dial in 10 minutes before the call is scheduled to begin. Once registered, the participants will receive an email with personal PIN and dial-in information, and participants can choose to access either via Dial-In or Call Me. A kindly reminder that "Call Me" does not work for China number. The Company will also broadcast a live audio webcast of the conference call. The webcast will be available at http://ir.xunlei.com. Following the earnings conference call, an archive of the call will be available at https://edge.media-server.com/mmc/p/qm7pbos8 About Xunlei Founded in 2003, Xunlei Limited (Nasdaq: XNET) is a leading technology company providing distributed cloud services in China. Xunlei provides a wide range of products and services across cloud acceleration and digital entertainment to deliver an efficient, smart and safe internet experience. Safe Harbor Statement This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "believes," "anticipates," "future," "intends," "plans," "estimates" and similar statements. Among other things, the management's quotations in this press release, as well as the Company's strategic, operational and acquisition plans, contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. Forward-looking statements involve inherent risks and uncertainties, including but not limited to: the Company's ability to continue to innovate and provide attractive products and services to retain and grow its user base and advertisers; the Company's ability to keep up with technological developments and users' changing demands in the internet industry; the Company's ability to convert its users into subscribers of its premium services; the Company’s ability to integrate and grow its acquired business; the Company's ability to deal with existing and potential copyright infringement claims and other related claims; the Company’s ability to react to the governmental actions for its scrutiny of internet content in China and the Company's ability to compete effectively. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by the Company is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of the press release, and the Company undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. About Non-GAAP Financial Measures To supplement Xunlei's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Xunlei uses the following measures defined as non-GAAP financial measures by the United States Securities and Exchange Commission: (1) non-GAAP operating (loss)/income, (2) non-GAAP net (loss)/income from continuing operations, (3) non-GAAP basic and diluted (loss)/earnings per share for common shares from continuing operations, and (4) non-GAAP basic and diluted (loss)/earnings per ADS attributable to continuing operations. The presentation of the non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Xunlei believes that these non-GAAP financial measures provide meaningful supplemental information to investors regarding the Company's operating performance by excluding share-based compensation expenses, and fair value changes of long-term investments, which are not expected to result in future cash payments, may recur from period to period but are subject to significant market volatility, and which are not indicative of our core operating results and business outlook. These non-GAAP financial measures also facilitate management's internal comparisons to Xunlei's historical performance and assist the Company's financial and operational decision making. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude certain items that have been and will continue to be for the foreseeable future a recurring expense in Xunlei's results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying reconciliation tables at the end of this release include details on the reconciliations between GAAP financial measures that are most directly comparable to the non-GAAP financial measures the Company has presented, excluding discontinued operations. CONTACT: Investor RelationsXunlei LimitedEmail: [email protected]: +86 755 6111 1571Website: http://ir.xunlei.com 1 In March 2026, the Company completed the disposal of its 50% stake in Shenzhen Onething Technologies Co., Ltd., or Shenzhen Onething, the operating entity of cloud computing business. The disposal qualified as discontinued operations. According to applicable accounting standards, assets and liabilities related to Shenzhen Onething were reclassified as current assets/liabilities of discontinued operations as of December 31, 2025, while results of operations related to Shenzhen Onething, including comparatives, are reported as income/(loss) from discontinued operations. Figures presented in this release are related to continuing operations only, excluding results from Shenzhen Onething as discontinued operations, unless indicated otherwise.2 Non-GAAP net (loss)/income is a non-GAAP financial measure. For more information, please see the section of “About Non-GAAP Financial Measures” and the table captioned “Reconciliation of GAAP and Non-GAAP Results” contained in this press release.3 Non-GAAP (loss)/earnings per ADS is a non-GAAP financial measure. For more information, please see the section of “About Non-GAAP Financial Measures” and the table captioned “Reconciliation of GAAP and Non-GAAP Results” contained in this press release.4 Non-GAAP reconciliation excludes the operations classified as discontinued operations. The comparative figures have been recalculated to exclude discontinued operations.

This article first appeared on GuruFocus. Total Revenue: $102.7 million, up 38.9% year over year. Subscription Revenue: $44.5 million, up 22.6% year over year. Live Streaming and Other Services Revenue: $58.2 million, up 54.8% year over year. Hupu Business Revenue: $9.1 million in Q2, benefiting from peak advertising season and major global sporting events. Cost of Revenues: $44.8 million, accounting for 43.6% of total revenues. Gross Profit: $57.3 million, up 23.1% year over year. Gross Margin: 55.8%, compared with 63% in the prior-year period. R&D Expenses: $21.4 million, representing 20.8% of total revenues. Sales and Marketing Expenses: $27.9 million, representing 27.2% of total revenues. G&A Expenses: $12.7 million, equal to 12.4% of total revenues. Operating Loss: $4.8 million, a reversal from operating income of $0.3 million in the same period last year. Net Other Loss: $213.8 million for the quarter, driven by fair value volatility on a long-term investment in Arashi Vision, Inc. Net Loss from Continuing Operations: $218.5 million, compared with net income of $726.4 million in Q2 2025. Non-GAAP Net Loss from Continuing Operations: $2.1 million, down from non-GAAP net income of $7.2 million in the prior-year period. Diluted Loss per ADS from Continuing Operations: $3.43, compared with diluted EPS of $11.47 in Q2 2025. Non-GAAP Diluted Loss per ADS from Continuing Operations: $0.03, versus non-GAAP diluted earnings of $0.12 per ADS in the same period last year. Cash, Cash Equivalents, and Short-Term Investments: $276.9 million as of June 30, 2026, down from $303.6 million as of March 31, 2026. Warning! GuruFocus has detected 5 Warning Signs with XNET. Is XNET fairly valued? Test your thesis with our free DCF calculator. Release Date: August 13, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Total revenues grew 38.9% year-over-year to $102.7 million, driven by strong performance in Subscription and Overseas Audio Live Streaming. Subscription revenue increased 22.6% year-over-year to $44.5 million, supported by AI-powered features and partnerships with smartphone makers. Overseas Audio Live Streaming revenue surged 54.8% year-over-year to $58.2 million, with expansion in Southeast Asia, the Middle East, Turkey, and Latin America. Hupu business contributed $9.1 million in Q2 revenue, benefiting from peak advertising season and major global sporting events. Announced a new $20 million share repurchase program, with $5.9 million already spent on buybacks as of August 12, demonstrating confidence in long-term growth. Gross margin declined to 55.8% from 63% in the prior-year period, due to a revenue mix shift toward lower-margin live streaming. Operating loss of $4.8 million was reported, reversing from an operating income of $0.3 million in Q2 2025, due to higher selling, marketing, and G&A expenses. Net loss from continuing operations was $218.5 million, driven by a $213.8 million net other loss from fair value volatility on the Arashi Vision investment. Non-GAAP net loss from continuing operations was $2.1 million, compared to non-GAAP net income of $7.2 million in the prior-year period. Cash and short-term investments decreased to $276.9 million from $303.6 million sequentially, due to operating cash outflows, loan repayments, and buyback disbursements. Q: What is the status of the company's newly announced $20 million share repurchase program, and why wasn't it reflected in the press release?A: CFO Eric Zhou confirmed that the Board approved the new $20 million repurchase program at the end of June, with the buyback officially commencing on July 1. As of August 12, the company had repurchased approximately 1.07 million shares, spending around $5.9 million. The program remains ongoing, and detailed disclosures will be provided in the third-quarter financial report. Q: What progress has Xunlei made in reducing its stake in Arashi Vision Inc., and what are the plans for the proceeds?A: CFO Eric Zhou stated that Xunlei currently holds a 7.8% equity stake in Arashi Vision. The company is going through regulatory procedures to prepare for an orderly reduction of its stake, but has no specific disposal plans at this time. He also addressed the 1940 Investment Companies Act, noting that Xunlei is consulting advisors to ensure its investment securities do not exceed 45% of total assets (excluding government securities and cash), reaffirming the company's commitment to its core consumer-facing business rather than becoming an investment entity. Q: What drove the significant year-over-year revenue growth in the second quarter of 2026?A: CFO Eric Zhou reported total revenues of $102.7 million, up 38.9% year over year. This growth was primarily driven by a 22.6% increase in Subscription revenues to $44.5 million and a 54.8% surge in live streaming and other services revenues to $58.2 million, fueled by the rapid expansion of Overseas Audio Live Streaming and improved Hupu advertising revenue during the peak sports season. Q: Why did the company's gross margin decline from 63% to 55.8% year over year?A: CFO Eric Zhou explained that the gross margin decline was due to a structural revenue mix shift. As the lower-margin live streaming business now accounts for a larger share of total revenue, it compressed the overall gross margin, despite gross profit increasing 23.1% year over year to $57.3 million. Q: What caused the swing to an operating loss of $4.8 million in Q2 2026?A: CFO Eric Zhou attributed the operating loss to a significant rise in selling, marketing, and general administrative expenses. Sales and marketing expenses increased to $27.9 million (27.2% of revenue) due to promotional investments in Subscription and Overseas Audio Live Streaming, while G&A expenses rose to $12.7 million, driven by provisions for ongoing legal litigations and higher employee-related costs. Q: What was the reason behind the massive net other loss of $213.8 million in Q2 2026?A: CFO Eric Zhou explained that the dramatic swing from a net income of $721.5 million in Q2 2025 to a net other loss of $213.8 million was primarily driven by fair value volatility on the company's long-term investment in Arashi Vision, Inc., which is accounted for on a mark-to-market basis using public stock prices following its IPO in June 2025. Q: How did the company's cash position change during the quarter?A: CFO Eric Zhou noted that cash, cash equivalents, and short-term investments totaled $276.9 million as of June 30, 2026, down from $303.6 million at the end of Q1. The decrease was driven by net operating cash outflows, bank loan repayments, disbursements related to the new share repurchase program, and deferred consideration payments related to the Hupu acquisition. Q: What are the key strategic priorities for the company going forward?A: Chairman and CEO Jinbo Li emphasized the company's commitment to its user-centric development strategy. Key priorities include accelerating feature iteration for subscription offerings, deepening market penetration in established overseas markets, selectively pursuing new regional growth opportunities, and upholding strict cost discipline to expand profit margins across all business lines, balancing growth with profitability. Q: How is the company addressing competition in the overseas entertainment market?A: CEO Jinbo Li stated that competition remains intense, and the company will stick to its long-term localized operational and marketing strategies instead of chasing near-term scale expansion. This approach is designed to foster sustainable business growth across all core consumer verticals, including the Overseas Audio Live Streaming business. Q: What contributed to the strong performance of the Hupu business in Q2 2026?A: CEO Jinbo Li highlighted that Hupu contributed $9.1 million in Q2 revenue, benefiting from the peak advertising season and a slate of major global sporting events. User discussion activity reached new highs, and newly rolled out AI-powered features meaningfully boosted user engagement and deepened interactive activity, creating an additional stream of incremental revenue. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Xunlei Limited? Here are five stocks we like better. Revenue grew 38.9% year over year to $102.7 million, driven by subscription services, overseas audio live streaming and Hupu advertising. Subscription revenue increased 22.6%, while live streaming and other services rose 54.8%. Gross margin narrowed to 55.8% from 63% as live streaming expanded and revenue-sharing costs increased. Higher research, marketing and administrative expenses also contributed to a $4.8 million operating loss. A mark-to-market loss on Xunlei’s Arashi Vision investment drove a $218.5 million net loss, compared with $726.4 million in net income a year earlier. The company began a new $20 million share-repurchase program and had bought back approximately 1.07 million ADSs for $5.9 million by Aug. 12. Xunlei (NASDAQ:XNET) reported second-quarter 2026 revenue growth led by its subscription services, overseas audio live-streaming operations and advertising revenue from the Hupu sports community, while a mark-to-market loss on its investment in Arashi Vision Inc. drove a substantial net loss for the period. Total revenue rose 38.9% year over year to $102.7 million in the quarter. Chairman and Chief Executive Officer Jinbo Li said the results reflected the company’s consumer-focused strategy, with subscription services and overseas audio live streaming serving as its main growth drivers. → AST SpaceMobile Earnings Just Reminded Investors How Risky Space Can Be Subscription revenue reached $44.5 million, up 22.6% from a year earlier. Li described subscriptions as the company’s “stable cash flow foundation and reliable growth anchor,” citing user retention and monetization performance. During the quarter, Xunlei introduced new artificial intelligence-powered features, optimized existing functions, expanded cooperation with domestic smartphone partners and developed user-acquisition channels, according to Li. The company said it plans to continue refining member benefits and broaden device-partnership coverage during the second half of the year in an effort to increase user penetration and revenue. → Nebius’ Q2 Beat Shows the AI Bottleneck Is Capacity, Not Demand Revenue from live streaming and other services totaled $58.2 million, a 54.8% increase from the prior-year period, according to Chief Financial Officer Eric Zhou. Zhou attributed the increase primarily to the expansion of overseas audio live streaming and growth in Hupu advertising revenue during the sports season. Li said overseas audio live-streaming revenue increased 64.8% year over year to $58.2 million. The business continued to invest in emerging markets including Southeast Asia, the Middle East, Turkey and Latin America. Xunlei also worked on localized product updates and operations, including offerings for one-on-one social interactions and multiperson chat rooms. → On Holding's Price Stumble May Be an Opening for a Company Built to Run Hupu contributed $9.1 million in second-quarter revenue, according to Li. He said major global sporting events and the peak advertising season helped drive user discussion activity on the platform. AI-powered features also increased engagement and interactive activity, he added. Cost of revenue increased to $44.8 million, or 43.6% of revenue, from $27 million, or 36.6% of revenue, in the second quarter of 2025. Zhou said the higher cost base was aligned with growth in live-streaming revenue, particularly increased revenue-sharing expenses associated with overseas audio live-streaming operations. Gross profit rose 23.1% year over year to $57.3 million. However, gross margin declined to 55.8% from 63% a year earlier. Zhou said the margin contraction reflected a shift in revenue mix, as live streaming carries lower gross margins than subscription and advertising businesses. Research and development expense rose to $21.4 million from $16.6 million, largely because of higher labor costs. Sales and marketing expense increased to $27.9 million from $20.7 million as Xunlei increased promotional spending across subscription and overseas audio live-streaming operations. General and administrative expense rose to $12.7 million from $8.5 million, which Zhou attributed to provisions for ongoing legal litigation and higher employee-related costs. The company posted an operating loss of $4.8 million, compared with operating income of $300,000 in the prior-year quarter. Xunlei recorded a net other loss of $230.8 million, compared with net other income of $721.5 million in the second quarter of 2025. Zhou said the swing was driven mainly by fair-value volatility related to the company’s long-term investment in Arashi Vision, which is valued on a mark-to-market basis using public stock prices following Arashi Vision’s June 2025 initial public offering. Net loss from continuing operations was $218.5 million, compared with net income from continuing operations of $726.4 million a year earlier. On a non-GAAP basis, net loss from continuing operations was $2.1 million, compared with non-GAAP net income of $7.2 million in the prior-year period. Diluted loss per ADS from continuing operations was $3.43, compared with diluted earnings per ADS of $11.47 in the second quarter of 2025. Non-GAAP diluted loss per ADS was $0.03, versus non-GAAP diluted earnings of $0.12 a year earlier. Xunlei said there were no discontinued operations in the second quarter following the disposal of its Shenzhen Wanxin business in the prior quarter. Cash equivalents and short-term investments totaled $276.9 million as of June 30, down from $303.6 million as of March 31. Zhou said the decrease reflected net operating cash outflows, bank loan repayments, share-repurchase disbursements and deferred consideration payments related to the Hupu acquisition. The board approved a new $20 million share-repurchase program at the end of June, and the program began July 1. During the question-and-answer session, Zhou said that as of Aug. 12, Xunlei had repurchased about 1.07 million ADSs for approximately $5.9 million. The program remains in progress, with further details expected in the third-quarter financial report. Regarding Arashi Vision, Zhou said Xunlei held a 7.8% equity interest and was completing procedures that would allow it to reduce the position, though it had no specific disposal plan at the time of the call. He added that Xunlei is monitoring its appreciated assets and may gradually adjust holdings if necessary to keep investment securities below 45% of total assets, excluding government securities and cash items. The company said it intends to remain focused on its consumer-facing core business rather than operate as an investment company. Xunlei Limited (NASDAQ: XNET) is a China-based technology company specializing in content acceleration and cloud services. Its core offerings include the Xunlei download manager, which integrates peer-to-peer (P2P) and cloud-based acceleration technologies to enhance file delivery speeds for large downloads. The company has expanded its suite of products to encompass cloud storage solutions, media streaming applications and mobile browsing tools, all aimed at improving digital content distribution and user experience. Founded in 2003 and headquartered in Shenzhen, Xunlei originally gained traction by addressing bandwidth constraints in China's burgeoning internet market. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Xunlei Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Image source: The Motley Fool. Thursday, May 28, 2026 at 8 a.m. ET Chairman and Chief Executive Officer — Jinbo Li Chief Financial Officer — Eric Zhou Vice President of Finance — Lee Li Investor Relations Manager — Luhan Tang Need a quote from a Motley Fool analyst? Email [email protected] Operator: Welcome, ladies and gentlemen, and thank you for your patience. You've joined Xunlei's First Quarter 2026 Earnings Conference Call. [Operator Instructions] 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. Thank you. Please go ahead. Luhan Tang: Good morning, everyone, and thank you for joining Xunlei's Q1 2026 Earnings Conference Call. With me today are Eric Zhou, CFO; and Lee 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 a prepared opening remarks from Chairman and CEO, Mr. Jinbo Li, on Q1 operational highlights, followed by CFO, Eric Zhou's presentation of financial results details of Q1 before opening up the floor to your questions in the Q&A session. Please note that this call is recorded and can be replayed in 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 that are subject to risks and uncertainties that are difficult to predict, which may cause actual results to differ materially from those made in the forward-looking statements. Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results. Xunlei assumes no obligation to update any forward-looking statements, except as required under applicable laws. On this call, we'll 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 the prepared statement by the Mr. Jinbo Li, Chairman and CEO of Xunlei Limited. Jinbo Li: [Interpreted] Good morning, and good evening, everyone. Thank you for joining us today. We're excited to begin 2026 with a strong first quarter, one defined by disciplined execution, strategic clarity and tangible progress in our business transformation. Q1 was a period of decisive action. We delivered robust revenue growth across our core segments, completed a successful corporate restructuring and concentrated our focus on our highest potential business area after carefully balancing our resources and the business opportunities. Total revenue for Q1 2026 reached $98.6 million, a significant 54.1% increase year-over-year. This growth was driven by our strategic emphasis on consumer-oriented businesses, particularly our two key growth engines, subscription services and overseas audio live streaming business. Now let me share with you some insights on these two vital business lines. For our subscription business, it remains Xunlei's stable cornerstone, delivering consistent cash flow and steady growth. In Q1, subscription revenue reached $45 million, a solid 26.2% year-over-year increase. This performance reflects our two focused efforts. Firstly, by thoughtfully enhancing the premium subscription experience, listening closely to user feedback and refining features, we have attracted a record number of users to use our premium services. Their trust is both our motivation and our greatest reward. And secondly, through constructive long-term collaborations with leading mobile phone manufacturers and Internet platform partners, we have expanded our reach naturally and inclusively, bringing our services to new communities while staying true to our mission of enriching everyday digital life. Looking ahead, we're excited to introduce new features designed to make every interaction more intuitive, joyful and personal. With your continued support, we are confident in sustaining this purposeful growth. Our overseas live streaming business and other services have emerged as a powerful growth engine, delivering results in line with our expectations. In Q1, this segment generated $53.6 million in revenue, also an 89.3% year-over-year increase. This exceptional growth validates our strategic focus on overseas markets, especially high-growth emerging regions such as Southeast Asia and the Middle East. These markets benefit from supportive platform policies and growing user demand. We have leveraged our strength in product refinement, user engagement and monetization to enhance local operations. The diverse user base, high engagement levels and increasing willingness to pay in these regions create substantial opportunities. Our ability to adapt services to local market preference, combining geographic and cultural insights with digital entertainment consumption is a key driver for this remarkable growth. We will continue to intensify our overseas expansion, exploring new markets and optimizing service offerings to sustain momentum. That said, given the ever-changing competitive landscape, our rapid growth may experience a modest slowdown in future quarters. In conclusion, Q1 2026 was a transformative period of Xunlei. We achieved strong financial results, executed a strategic restructuring to concentrate fully on To C operations and saw our overseas live streaming business emerge as a leading growth driver. We have demonstrated our ability to make both strategic decisions, adapt to market dynamics and drive growth through focus and innovation. With a clear strategic direction, robust business momentum and optimized resource allocation, we believe we are well positioned to capture growing opportunities in the To C market, sustain our growth trajectory and create long-term value for our shareholders. We remain committed to executing our strategy with discipline and agility, and we're excited about the future ahead. I will now hand the call over to our CFO for a detailed review of our Q1 2026 financial results. Eric Zhou: Thank you, Luhan, and thank you all for participating in today's conference call. I will now walk you through our financial results for the first quarter of 2026. Please note that in Q1, we restructured our cloud computing business and it's no longer consolidated in our financial statements. Hence, the following financials exclude discontinued operations. For the first quarter of 2026, our total revenues came in at $98.6 million, up 54.1% year-over-year. This strong top line growth was mainly driven by higher revenue from our subscription business as well as solid gains from our overseas audio live streaming business. Breaking down our revenue performance, subscription revenues reached $45 million, representing a 26.2% year-over-year increase. This growth reflects stronger user demand for our subscription offerings. Our live streaming and other services delivered $53.6 million in revenue, jumping 89.3% year-over-year, thanks primarily to the robust expansion of our overseas audio live streaming business. Our cost of revenues were $40.4 million in the quarter, making up 41% of total revenues. For comparison, we recorded $24.1 million or 37.8% of total revenues in the same period of 2025. The higher cost of revenues aligned closely with our live streaming revenue growth, driven mainly by increased revenue sharing expenses for our overseas audio live streaming operations. The remaining portion of revenue costs mainly came from payment handling fees and bandwidth expenses. Moving to profitability. We generated $57.7 million in gross profit this quarter, up 45.1% year-over-year. Our gross margin stood at 58.5% compared to 61.9% in the prior year quarter. The gross profit improvement was fueled by both our overseas audio live streaming business and our subscription business. The slight margin decline was a structural mix change. Live streaming, which carries a lower gross margin than subscription now accounts for a larger share of our total revenues, which compressed our overall gross margin modestly. On the expense front, our R&D expenses were $20.2 million in Q1 2026, representing 20.4% of total revenues. This compares with $16 million or 25.1% of total revenues in the first quarter of 2025. The year-over-year increase was mainly due to higher labor costs this quarter. Sales and marketing expenses rose to $22.4 million this quarter, flat as a percentage of revenue at 22.8% compared with $14.5 million or 22.7% of our total revenues. The higher absolute spending this year reflects increased marketing investments across our subscription and overseas audio live streaming business as we continue to prioritize user acquisition. G&A expenses came in at $10.9 million, equal to 8.5% of our total revenues versus $10 million or 15.7% of total revenues in Q1 2025. The increase was primarily driven by higher share-based compensation expenses. On an operating level, we delivered operating income of $4.3 million this quarter, improving from an operating loss of $1 million in the prior year period. This turnaround was largely driven by stronger gross profit across our core businesses. We recorded a net other loss of $195.1 million this quarter compared with a net other income of $1.1 million in Q1 2025. This year-over-year shift was mainly attributable to the fair value changes related to our long-term investment in Arashi Vision Inc., which completed its IPO back in June 2025. Turning to discontinued operations, which relates entirely to our Shenzhen Onething business, which we recognized in March and recognized income of $17.7 million in Q1 2026, which comprised the operating loss of $1.8 million from discontinued operations and a disposal gain of $4.3 million as well as the income tax benefits related to the disposal of $15.2 million. Our net loss from continuing operations was $192.4 million this quarter compared with net loss of $0.2 million in Q1 2025. The large net loss was mainly due to the net other loss we just discussed, partially offset by our improved operating performance. On a non-GAAP basis, we achieved solid growth in non-GAAP net income from continuing operations, which rose to $4.1 million, up from $0.9 million in the prior year period. On a per share basis, our diluted loss per ADS from continuing operations was $3.06 for the quarter compared with a diluted EPS of $0 in Q1 2025. Our non-GAAP diluted earnings per ADS from continuing operations increased to $0.10 -- to increased to $0.07 versus $0.02 in the same quarter last year. Finally, on the balance sheet, as of March 31, 2026, our cash, cash equivalents and short-term investments totaled $303.6 million, up from $283.5 million as of December 31, 2025. The increase was primarily driven by positive operating cash flows and proceeds from the disposal of our 50% equity stake in Shenzhen Onething. These gains were partially offset by deferred consideration payments for our Hupu acquisition. This concludes our prepared remarks. Operator, we are now ready to take questions. Operator: [Operator Instructions] You have a question from the line of George Kim. Unknown Attendee: [Foreign Language] Eric Zhou: The first question is he noticed from our annual report that in November last year, Hupu was sued for the alleged unauthorized dissemination of NBA game content and the unauthorized use of the NBA trademark. And the claimed damage amounted to approximately USD 12.1 million in total. And he would like us to provide more details regarding such copyright litigation and he wants to know if it has -- or if it will have any material impact on this business. Thanks for the question. And as it is an ongoing case, we can't comment on it right now. But that said, we have set aside some allowances to cover any potential expenses related to this litigation, and we don't expect this case will have a significant impact on our operations. Thank you. Unknown Attendee: [Foreign Language] Eric Zhou: And the second question is he mentioned that there is a 1940 Investment Act that requires companies to maintain the ratio of investment income to total assets below a certain threshold. And it is expected that equity gains will exceed that ratio. And he would like to know if any measures the company would take to address this regulation by SEC. This is a good question. And you are correct. We will continue to monitor our holdings of our appreciated assets in Arashi Inc. And we've been consulting with relevant advisers. And if needed, we will gradually seek to adjust our holdings so that Xunlei will hold investment in securities with a value not exceeding 45% of the company's total assets, excluding government securities and cash items, in line with the company's intention to mainly engage in our core To C business. And in fact, we never intend to be an investment company. Thank you. Operator: [Operator Instructions] At this time, no further questions from the line. Allow me to hand the call back to Eric for closing. 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 e-mails to our Investor Relations. Have a good day. Operator, we conclude today's conference call. Thank you. Operator: That does conclude today's conference call. Thank you for your participation. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.] Before you buy stock in Xunlei, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Xunlei wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $463,900!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,294,401!* Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of June 1, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Xunlei (XNET) Q1 2026 Earnings Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Total Revenue: $98.6 million, a 54.1% increase year-over-year. Subscription Revenue: $45 million, a 26.4% increase year-over-year. Live Streaming and Other Services Revenue: $53.6 million, an 89.3% increase year-over-year. Cost of Revenues: $14.4 million, representing 41% of total revenues. Gross Profit: $57.7 million. Gross Margin: 58.5%, down from 61.9% in the prior-year quarter. R&D Expenses: $20.2 million, 20.4% of total revenues. Sales and Marketing Expenses: $22.4 million, 22.8% of total revenues. G&A Expenses: $10.9 million, 8.5% of total revenues. Operating Income: $4.3 million, compared to an operating loss of $1 million in the prior year period. Net Other Loss: $195.1 million, compared to net other income of $1.1 million in Q1 2025. Net Loss from Continuing Operations: $192.4 million, compared to a net loss of $0.2 million in Q1 2025. Non-GAAP Net Income from Continuing Operations: $4.1 million, up from $0.9 million in the prior year period. Cash, Cash Equivalents, and Short-term Investments: $303.6 million as of March 31, 2026. Warning! GuruFocus has detected 5 Warning Signs with XNET. Is XNET fairly valued? Test your thesis with our free DCF calculator. Release Date: May 28, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Xunlei Ltd (NASDAQ:XNET) reported a significant 54.1% year-over-year increase in total revenue for Q1 2026, reaching $98.6 million. The subscription business generated $45 million in revenue, marking a 26.2% year-over-year increase, driven by enhanced premium subscription experiences and strategic partnerships. The overseas audio live streaming business saw an 89.3% year-over-year revenue increase, reaching $53.6 million, highlighting successful expansion in emerging markets like Southeast Asia and the Middle East. The company achieved a gross profit of $57.7 million, reflecting strong performance in its core businesses. Xunlei Ltd (NASDAQ:XNET) reported a positive operating income of $4.3 million, a significant improvement from an operating loss in the prior year period. The gross margin declined to 58.5% from 61.9% in the prior-year quarter due to a structural mix change, with live streaming accounting for a larger share of total revenues. The company recorded a net other loss of $195.1 million, primarily due to fair value changes related to its long-term investment in Arashi Vision Inc. Net loss from continuing operations was $192.4 million, compared to a net loss of $0.2 million in Q1 2025, driven by the aforementioned net other loss. Sales and marketing expenses increased to $22.4 million, reflecting higher marketing investments, which could impact profitability if not managed effectively. The ongoing copyright litigation involving Hupu and the NBA could potentially incur expenses, although the company has set aside allowances to cover these. Q: Can you provide more details regarding the copyright litigation involving Hupu and its potential impact on the business? A: As this is an ongoing case, we cannot comment in detail. However, we have set aside allowances to cover potential expenses related to this litigation, and we do not expect it to have a significant impact on our operations. - Eric Zhou, Chief Financial Officer Q: How is Xunlei addressing the 1940 Investment Act's requirement regarding the ratio of investment income to total assets? A: We are monitoring our holdings in Arashi Inc. and consulting with advisors. If necessary, we will adjust our holdings to ensure that investment securities do not exceed 45% of our total assets, aligning with our focus on core business activities. We do not intend to become an investment company. - Eric Zhou, Chief Financial Officer Q: What were the main drivers behind the strong revenue growth in Q1 2026? A: The growth was driven by our subscription services and overseas audio live streaming business. Subscription revenue increased by 26.2% year-over-year, while the live streaming segment saw an 89.3% increase, particularly in emerging markets like Southeast Asia and the Middle East. - Jinbo Li, Chairman and CEO Q: How did the restructuring of the computing business affect the financial results? A: The restructuring led to the exclusion of the computing business from our financial statements, focusing our resources on more promising areas. This contributed to improved operating income and a stronger gross profit from our core businesses. - Eric Zhou, Chief Financial Officer Q: What are the future plans for the overseas live streaming business? A: We plan to intensify our expansion into new markets and optimize service offerings to sustain growth. Despite potential modest slowdowns due to competitive dynamics, we remain focused on leveraging our strengths in product refinement and user engagement. - Jinbo Li, Chairman and CEO For the complete transcript of the earnings call, please refer to the full earnings call transcript.

SHENZHEN, China, May 28, 2026 (GLOBE NEWSWIRE) -- Xunlei Limited ("Xunlei" or the "Company") (Nasdaq: XNET), a leading technology company providing distributed cloud services in China, today announced its unaudited financial results for the first quarter ended March 31, 2026. First Quarter 2026 Financial Highlights (results presented herein exclude Shenzhen Onething, discontinued operations, unless specified otherwise1) Total revenues were US$98.6million, representing an increase of 54.1% year-over-year. Subscription revenues were US$45.0 million, representing an increase of 26.2% year-over-year. Live-streaming and other services revenues were US$53.6 million, representing an increase of 89.3% year-over-year. Gross profit was US$57.7 million, representing an increase of 45.8% year-over-year, and gross profit margin was 58.5% in the first quarter, compared with 61.9% in the same period of 2025. Net loss from continuing operations was US$192.4 million in the first quarter, compared with net loss of US$0.2 million in the same period of 2025. Non-GAAP net income2 from continuing operations was US$4.1 million in the first quarter, compared with non-GAAP net income of US$0.9 million in the same period of 2025. Diluted loss per ADS from continuing operations was US$3.06 in the first quarter, compared with diluted earnings per ADS of US$0.00 in the same period of 2025. Non-GAAP diluted earnings per ADS3 from continuing operations were US$0.07 in the first quarter, compared with non-GAAP diluted earnings per ADS of US$0.02 in the same period of 2025. "In the first quarter, we witnessed meaningful growth, strategic evolution, and strong momentum across Xunlei. We refined our organizational structure to better serve both our teams and users, while concentrating our focus on a user-centered, direct-to-consumer business model", said Mr. Jinbo Li, Chairman and CEO of Xunlei. "We are proud to report total revenue growth of 54.1% year over year—a clear testament to the collaborative progress driving every part of our business. Our subscription business rose 26.2% year over year, fueled by steady user growth and tangible product experience improvements. Meanwhile, our overseas audio live-streaming business continued its rapid expansion, with revenue increasing significantly by 89.3% year over year. This performance reflects not only our team’s agility in product iteration and localized operations but also the growing global trust and resonance of the Xunlei brand—paving the way for more community-driven product updates and partnerships ahead." "With a healthy liquidity, we believe we are well-positioned to continue delivering meaningful value to users. At the same time, we will thoughtfully leverage our innovative technology and operational expertise to pursue new initiatives and emerging opportunities—always with an eye on building sustainable, long-term value for our shareholders," Mr. Li concluded. First Quarter 2026 Financial Results (results presented herein exclude Shenzhen Onething, discontinued operations, unless specified otherwise) Total Revenues Total revenues were US$98.6 million, representing an increase of 54.1% year-over-year. The increase in total revenues was mainly attributable to the increased revenues generated from our subscription business and overseas audio live-streaming business. Revenues from subscription were US$45.0 million, representing an increase of 26.2% year-over-year. The increase in subscription revenues was mainly driven by the increase in demand for our subscription services. Revenues from live-streaming and other services were US$53.6 million, representing an increase of 89.3% year-over-year. The increase in live-streaming and other services revenues was mainly due to the increase in revenues from our overseas audio live-streaming business. Costs of Revenues Costs of revenues were US$40.4 million, representing 41.0% of our total revenues, compared with US$24.1 million, or 37.8% of the total revenues, in the same period of 2025. The increase in costs of revenues was mainly attributable to the increase in revenue-sharing expenses in our overseas audio live-streaming operations, generally in line with the growth in live-streaming and other service revenues. The remaining costs of revenues mainly consisted of payment handling charges and bandwidth costs. Gross Profit and Gross Profit Margin Gross profit for the first quarter of 2026 was US$57.7 million, representing an increase of 45.8% year-over-year. Gross profit margin was 58.5% in the first quarter of 2026, compared with 61.9% in the same period of 2025. The increase in gross profit was mainly driven by the increase in gross profit generated from our overseas audio live-streaming business and subscription business. The decrease in gross profit margin was mainly attributable to the increased proportion of live-streaming revenues to total revenues, which has lower gross profit margin. Research and Development Expenses Research and development expenses for the first quarter of 2026 were US$20.2 million, representing 20.4% of our total revenues, compared with US$16.0 million, or 25.1% of our total revenues, in the same period of 2025. The increase was primarily due to the increased technical service fees and labor costs incurred during the quarter. Sales and Marketing Expenses Sales and marketing expenses for the first quarter of 2026 were US$22.4 million, representing 22.8% of our total revenues, compared with US$14.5 million, or 22.7% of our total revenues, in the same period of 2025. The increase was primarily due to more marketing expenses incurred during the quarter for our subscription and overseas audio live-streaming businesses as part of our ongoing efforts on user acquisition. General and Administrative Expenses General and administrative expenses for the first quarter of 2026 were US$10.9 million, representing 11.0% of our total revenues, compared with US$10.0 million, or 15.7% of our total revenues, in the same period of 2025. Operating Income/(Loss) Operating income was US$4.3 million, compared with an operating loss of US$1.0 million in the same period of 2025. The increase in operating income was primarily attributable to the increase in gross profit. Other (Losses)/Income, Net Other losses, net was US$195.1 million, compared with other income, net of US$1.1 million in the same period of 2025. The change from other income, net to other loss, net was primarily attributable to the fair value changes of our long-term investment in Arashi Vision Inc., which has been measured at fair value through earnings since its initial public offering in June 2025. Income/(Loss) from Discontinued Operations Income from discontinued operations was US$17.7 million, which comprised the operating loss of US$1.8 million from discontinued operations and a disposal gain of Shenzhen Onething of US$4.3 million together with the allocated income tax benefit related to the disposal of US$15.2 million, compared with a loss from discontinued operations of US$0.8 million in the corresponding period of last year. Net Loss and (Loss)/Earnings Per ADS Net loss from continuing operations was US$192.4 million compared with net loss of US$0.2 million in the same period of 2025. The net loss was primarily due to the increase in other losses, net, partially offset by the increased operating income as discussed above. Non-GAAP net income from continuing operations was US$4.1 million in the first quarter of 2026, compared with US$0.9 million in the same period of 2025. Diluted loss per ADS from continuing operations in the first quarter of 2026 was US$3.06, compared with diluted earnings per ADS from continuing operations of US$0.00 in the first quarter of 2025. Non-GAAP diluted earnings per ADS from continuing operations was US$0.07 in the first quarter, compared with non-GAAP diluted earnings per ADS from continuing operations of US$0.02 in the same period of 2025. Cash Balance As of March 31, 2026, the Company had cash, cash equivalents and short-term investments of US$303.6 million, compared with US$283.5 million as of December 31, 2025. The increase in cash, cash equivalents and short-term investments was mainly due to the net cash inflow from operating activities and the proceeds from disposal of 50% equity interest in Shenzhen Onething, but partially offset by the payment of deferred consideration for acquisition of Hupu. Conference Call Information Xunlei's management will host a conference call at 8:00 a.m. U.S. Eastern Time on May 28, 2026 (8:00 p.m. Beijing/Hong Kong Time), to discuss the Company's quarterly results and recent business developments. Participant Online Registration: https://register-conf.media-server.com/register/BIe6e4f25f2a6e46a89978bb034282601f Please register to join the conference using the link provided above and dial in 10 minutes before the call is scheduled to begin. Once registered, the participants will receive an email with personal PIN and dial-in information, and participants can choose to access either via Dial-In or Call Me. A kindly reminder that "Call Me" does not work for China number. The Company will also broadcast a live audio webcast of the conference call. The webcast will be available at http://ir.xunlei.com. Following the earnings conference call, an archive of the call will be available at https://edge.media-server.com/mmc/p/g2ngg7tn About Xunlei Founded in 2003, Xunlei Limited (Nasdaq: XNET) is a leading technology company providing distributed cloud services in China. Xunlei provides a wide range of products and services across cloud acceleration and digital entertainment to deliver an efficient, smart and safe internet experience. Safe Harbor Statement This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "believes," "anticipates," "future," "intends," "plans," "estimates" and similar statements. Among other things, the management's quotations in this press release, as well as the Company's strategic, operational and acquisition plans, contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. Forward-looking statements involve inherent risks and uncertainties, including but not limited to: the Company's ability to continue to innovate and provide attractive products and services to retain and grow its user base; the Company's ability to keep up with technological developments and users' changing demands in the internet industry; the Company's ability to convert its users into subscribers of its premium services; the Company's ability to deal with existing and potential copyright infringement claims and other related claims; the Company’s ability to react to the governmental actions for its scrutiny of internet content in China and the Company's ability to compete effectively. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by the Company is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of the press release, and the Company undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. About Non-GAAP Financial Measures To supplement Xunlei's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Xunlei uses the following measures defined as non-GAAP financial measures by the United States Securities and Exchange Commission: (1) non-GAAP operating income, (2) non-GAAP net income from continuing operations, (3) non-GAAP basic and diluted earnings per share for common shares from continuing operations, and (4) non-GAAP basic and diluted earnings per ADS attributable to continuing operations. The presentation of the non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Xunlei believes that these non-GAAP financial measures provide meaningful supplemental information to investors regarding the Company's operating performance by excluding share-based compensation expenses, impairment of goodwill, and fair value changes of long-term investments, which are not expected to result in future cash payments, may recur from period to period but are subject to significant market volatility, and which are not indicative of our core operating results and business outlook. These non-GAAP financial measures also facilitate management's internal comparisons to Xunlei's historical performance and assist the Company's financial and operational decision making. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude certain items that have been and will continue to be for the foreseeable future a recurring expense in Xunlei's results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying reconciliation tables at the end of this release include details on the reconciliations between GAAP financial measures that are most directly comparable to the non-GAAP financial measures the Company has presented, excluding discontinued operations. The Company has not recast prior period non-GAAP measures in the first quarter of 2025 to exclude fair value changes of long-term investments, as such amounts in prior period was immaterial and would not affect investors’ understanding of period-to-period comparisons. CONTACT: Investor RelationsXunlei LimitedEmail: [email protected]: +86 755 6111 1571Website: http://ir.xunlei.com ______________________________ 1 In March 2026, the Company completed the disposal of its 50% stake in Shenzhen Onething Technologies Co., Ltd., or Shenzhen Onething, the operating entity of cloud computing business. The disposal qualified as discontinued operations. According to applicable accounting standards, assets and liabilities related to Shenzhen Onething were reclassified as current assets/liabilities of discontinued operations as of December 31, 2025, while results of operations related to Shenzhen Onething, including comparatives, are reported as income/(loss) from discontinued operations. Figures presented in this release are related to continuing operations only, excluding results from Shenzhen Onething , unless indicated otherwise.2 Non-GAAP net income is a non-GAAP financial measure. For more information, please see the section of “About Non-GAAP Financial Measures” and the table captioned “Reconciliation of GAAP and Non-GAAP Results” contained in this press release.3 Non-GAAP earnings per ADS is a non-GAAP financial measure. For more information, please see the section of “About Non-GAAP Financial Measures” and the table captioned “Reconciliation of GAAP and Non-GAAP Results” contained in this press release.4 Non-GAAP reconciliation excludes the operations classified as discontinued operations. The comparative figures have been recalculated to exclude discontinued operations.

Interested in Xunlei Limited? Here are five stocks we like better. Revenue surged 54.1% year over year to $98.6 million in Q1 2026, driven mainly by subscription services and overseas audio live streaming, even as Xunlei’s restructuring removed its cloud computing business from consolidated results. Operating performance improved, with operating income rising to $4.3 million from an operating loss of $1 million a year earlier. Gross profit increased 45.1%, though margins were pressured by the larger share of lower-margin live streaming revenue. Net results were heavily hit by investment losses, as Xunlei posted a $192.4 million net loss from continuing operations due largely to fair-value changes on its stake in Arashi Vision. The company ended the quarter with $303.6 million in cash and said it is monitoring regulatory and litigation risks. Xunlei (NASDAQ:XNET) reported a sharp increase in first-quarter 2026 revenue as growth in subscription services and overseas audio live streaming offset the effects of a recent restructuring that removed its cloud computing business from consolidated results. On the company’s earnings call, Investor Relations Manager Luhan Tang said the financial results discussed excluded discontinued operations. Chairman and CEO Jinbo Li described the quarter as “a transformative period” for Xunlei, citing disciplined execution, a completed corporate restructuring and a sharper focus on consumer-facing, or “To C,” operations. → Rocket Lab Keeps Making Headlines and Highs—Here's What's Driving the Latest Move Total revenue for the quarter was $98.6 million, up 54.1% from the prior-year period. Management said the increase was driven primarily by subscription services and the company’s overseas audio live streaming business. Li said Xunlei’s subscription business remained a “stable cornerstone,” generating $45 million in revenue during the quarter, a 26.2% year-over-year increase. He attributed the growth to improvements in the premium subscription experience, user feedback-driven feature refinements and partnerships with mobile phone manufacturers and internet platforms. → Quantum Stocks Just Got a Lifeline—Who Benefits Most? “We have attracted a record number of users to use our premium services,” Li said in prepared remarks. He added that Xunlei plans to introduce new features intended to make interactions “more intuitive, joyful, and personal.” The company’s live streaming and other services segment generated $53.6 million in revenue, up 89.3% year over year. Li said the performance reflected strong growth in overseas markets, particularly Southeast Asia and the Middle East, where Xunlei sees supportive platform policies and rising user demand. → 5 Stocks Winning the AI Race While Everyone Watches NVIDIA Management said the business has benefited from product refinement, user engagement and monetization efforts tailored to local markets. Li said Xunlei will continue to pursue overseas expansion and optimize its service offerings, though he cautioned that rapid growth could see “a modest slowdown in future quarters” due to the changing competitive landscape. Chief Financial Officer Naijiang Zhou said cost of revenues rose to $40.4 million, or 41% of total revenue, from $24.1 million, or 37.8% of revenue, in the same period last year. The increase was mainly tied to higher revenue-sharing expenses from overseas audio live streaming operations, along with payment handling fees and bandwidth expenses. Gross profit rose 45.1% year over year to $57.7 million. Zhou said the improvement was supported by both the overseas audio live streaming and subscription businesses. He also said the company’s margin was affected by a structural shift in revenue mix, as live streaming carries a lower gross margin than subscription services and now represents a larger share of total revenue. Operating income was $4.3 million, compared with an operating loss of $1 million in the prior-year quarter. Zhou said the turnaround was largely driven by stronger gross profit across Xunlei’s core businesses. Operating expenses increased in absolute terms. Research and development expenses were $20.2 million, or 20.4% of revenue, compared with $16 million, or 25.1% of revenue, a year earlier. Sales and marketing expenses rose to $22.4 million, or 22.8% of revenue, from $14.5 million, or 22.7% of revenue, as Xunlei increased marketing investments in its subscription and overseas audio live streaming businesses. General and administrative expenses were $10.9 million, or 8.5% of revenue, compared with $10 million, or 15.7% of revenue, with the increase attributed primarily to higher share-based compensation. Despite the improvement in operating performance, Xunlei reported a net loss from continuing operations of $192.4 million, compared with a net loss of $0.2 million in the first quarter of 2025. Zhou said the loss was mainly due to a net other loss of $195.1 million, driven by fair value changes related to the company’s long-term investment in Arashi Vision Inc., which completed its initial public offering in June 2025. On a non-GAAP basis, Xunlei reported net income from continuing operations of $4.1 million, up from $0.9 million in the year-earlier period. Diluted loss per American depositary share from continuing operations was $3.06, compared with diluted earnings per ADS of $0 in the first quarter of 2025. Non-GAAP diluted earnings per ADS from continuing operations rose to $0.07 from $0.02. For discontinued operations, Zhou said the amount related entirely to the Shenzhen Wanting business, which was reorganized in March. Xunlei recognized income of $17.7 million from discontinued operations in the quarter, including an operating loss of $1.8 million, a disposal gain of $4.3 million and income tax benefits related to the disposal of $15.2 million. As of March 31, 2026, Xunlei had $303.6 million in cash equivalents and short-term investments, up from $283.5 million at the end of 2025. Zhou said the increase was primarily driven by positive operating cash flow and proceeds from the disposal of the company’s 50% equity stake in Xinjiang, partially offset by deferred consideration payments related to the Hupoo acquisition. During the question-and-answer session, an analyst asked about litigation disclosed in Xunlei’s annual report involving Hupoo and alleged unauthorized dissemination of NBA game content and unauthorized use of the NBA trademark, with claimed damages of about $12.1 million. Zhou declined to comment on the ongoing case but said the company has set aside allowances for potential expenses and does not expect the case to have a significant impact on operations. Another question focused on whether Xunlei’s investment gains could raise issues under the Investment Company Act of 1940. Zhou said the company is monitoring its holdings of appreciated assets in Arashi Vision and has been consulting advisors. If needed, he said Xunlei would “gradually seek to adjust” its holdings so that investment securities do not exceed 45% of total assets, excluding government securities and cash items. Zhou said the company’s intention remains to focus on its core consumer-facing business and that Xunlei “never intend[ed] to be an investment company.” Xunlei Limited (NASDAQ: XNET) is a China-based technology company specializing in content acceleration and cloud services. Its core offerings include the Xunlei download manager, which integrates peer-to-peer (P2P) and cloud-based acceleration technologies to enhance file delivery speeds for large downloads. The company has expanded its suite of products to encompass cloud storage solutions, media streaming applications and mobile browsing tools, all aimed at improving digital content distribution and user experience. Founded in 2003 and headquartered in Shenzhen, Xunlei originally gained traction by addressing bandwidth constraints in China's burgeoning internet market. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Xunlei Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.