DoNews reported on November 14 that on November 14, Xunlei (XNET) released its third quarter financial report for 2023. The financial report showed that the company’s gross profit increased by 6.6% year-on-year, and its net profit reached US$4.4 million.
Xunlei’s third quarter financial report total revenue was US$84.2 million, with gross profit of US$37.5 million, a year-on-year increase of 6.6%. Gross profit margin was 44.6%, compared with 39.9% in the same period last year. The increase in gross profit was due to an increase in the proportion of membership revenue with higher gross profit margins and a decrease in the proportion of domestic voice live broadcast revenue with lower gross profit margins.
Based on generally accepted accounting principles (GAAP), net income for the quarter was $4.4 million, compared with net income of $8.3 million in the same period last year. On a non-GAAP basis, net income for the quarter was $5.5 million, compared with net income of $9.0 million in the same period last year.
“Despite the continued challenges in the market environment, our third quarter total revenue exceeded the upper limit of the total revenue guidance given in the previous quarter.” Li Jinbo, Xunlei Chairman and CEO, said: “These results demonstrate our commitment to The unremitting efforts to reduce the impact of business adjustments have been fruitful and have further strengthened existing business development, with the two major businesses continuing to maintain year-on-year growth momentum during the quarter.”
The number of members continues to rise, and the cloud computing business is growing steadily
In the third quarter, the number of Xunlei members continued to rise, and the payment per member increased to 39.9 yuan. The financial report shows that membership service revenue was US$28.7 million, a year-on-year increase of 15.2%. As of September 30, 2023, the number of member users was approximately 5.02 million, an increase of 650,000 compared to the same period last year.
In the third quarter of 2023, the average revenue per member was 39.9 yuan, compared with 39.1 yuan in the same period last year. The increase in membership business revenue was mainly due to the increase in average revenue per user.
Cloud computing revenue remained stable during the quarter, with revenue of $29.5 million, up 1.4% year-over-year. The growth in cloud computing revenue was mainly due to the increase in sales of new generation cloud computing hardware equipment. Revenue from live broadcasting and other Internet value-added services was US$26 million, a year-on-year decrease of 24.1%. The decrease in revenue was mainly due to the reduction of our domestic voice live broadcast business. At the same time, revenue from other Internet value-added services increased compared with the same period in 2022.
Li Jinbo said: “Driven by our user growth strategy, the number of Xunlei members has reached a record high in the third quarter.”
Increased R&D investment and good cash and equivalent reserves
In the third quarter, Xunlei increased the proportion of R&D investment. R&D expenses were US$19.5 million, accounting for 23.1% of total revenue, compared with US$16.2 million in the same period last year, accounting for 18.3% of total revenue.
At the same time, the company has good cash reserves. In June 2023, Xunlei announced that its board of directors authorized the repurchase of up to $20 million in shares within the next 12 months. As of September 30, 2023, the company has spent approximately $2.6 million on stock repurchases. During the same period, the company held $264.7 million in cash, cash equivalents and short-term investments.
Li Jinbo said: “With a healthy cash position and capital structure, we will invest in other businesses, explore emerging technologies, and explore new growth opportunities. Looking ahead, we will continue to strengthen our financial position, pay close attention to industry trends and consumer demand, and Adopt corresponding response strategies. We will continue to look for growth opportunities that are in line with our core competitiveness and create sustainable value for shareholders. As an Internet company with a history of 20 years, every action and decision-making of Xunlei always adheres to the core values of the enterprise and strives to Practice to provide users with safe and high-quality products and services.”
Xunlei expects total revenue in the fourth quarter of 2023 to range from US$70 million to US$75 million. On an average basis, fourth-quarter revenue fell approximately 8.6% sequentially. The decrease was due to the impact of the reduction in our domestic live voice business, while the operations of our membership and cloud computing businesses were not affected. This outlook only reflects Xunlei’s current preliminary view, which may change in the future.